Why not ban FDI instead?

The proposals in the discussion paper on the National Security Exception Bill cannot be faulted. India, like several other countries, has multiple security threats and it is well within its rights to keep away suspicious money from buying into its companies. So, if the National Security Exception Bill wants some extra details of ownership, to pierce the corporate veil that is very much a part of the international business scene, and promises to give a Go-No Go decision within a month, that it would seem is not a heavy price to pay for improving national security.

That's the theory. The practice can be quite different. If you look at the list of sensitive sectors, where investment proposals will trigger special scrutiny by the intelligence agencies, it covers practically everything""seaports, airports, aviation, telecom, hydrocarbon exploration, roads, drugs and pharmaceuticals, data networks, electronic hardware, and so on""and can be further expanded. As can the area-triggers, right now restricted to investment intentions in the north-eastern states and Jammu & Kashmir. As for the 30-day period in which a decision has to be given, knowing India's bureaucracy, the 30-day period will probably mean the outer limit for sending the first letter asking for more information.

The problem with the proposal is that the government doesn't quite know where the security threat is going to come from. This is natural, given the amorphous nature of terror groups, and so it seeks to cover itself on all fronts. As a result, India's policy remains. Hutchison is a Chinese company and is the country's second-largest cellular mobile phone firm; it would, under normal circumstances, attract various triggers; ditto for various Chinese telecom equipment and instrument suppliers such as Huawei and ZTE. So what would the government have done with these firms had the National Security Exception Bill been in place? The chances are that each one of these firms would have been asked to put their investment plans on hold. Now ask yourself if any of these firms is a security threat, and the answer is that you just don't know, just as you don't know about any genuine Indian firm or individual""you have laws and investigating agencies whose job is to keep finding out, and taking action when there's a problem, not before.