Government reflects on restrictions on foreign companies in strategic areas

NEW DELHI: Government agencies have begun discussions on possible controls of foreign players participating in certain strategic areas, such as the implementation of telecommunications infrastructure or construction projects in sensitive parts of the country.

So far, discussions related to security settings and some ministries have been preliminary and no decision has been made on the issue, including the identification of areas that may face restrictions, a government official told TOI. Several countries, including the US UU. And even parts of Europe have such restrictions where certain sectors or projects are beyond the reach of entities abroad given the sensitivities involved, said a source, who did not want to be identified.

While the idea is to look at all foreign players, the focus is on companies from countries such as China, which are considered sensitive. The talks for a set of possible restrictions occur at a time when the Center is considering the option of allowing the largest Chinese telecommunications company Huawei to participate in 5G tests, amid pressure to keep the largest 5G equipment manufacturer in the world. world out of court due to security concerns. .

A section of officials believes that the superfast services that will be launched soon are more susceptible to surveillance and that the world's largest manufacturer of 5G equipment may be a threat, a charge Huawei has denied.

The company has already been blocked to sell equipment in the US. UU., Which is also putting pressure on other countries.

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Separately, government departments and the Reserve Bank of India (RBI) are also reviewing the need for greater scrutiny of foreign direct investment coming via the automatic route, where companies are only required to inform the regulator about the fund flow within a stipulated time. Barring a handful of sectors, a majority of segments are now under the automatic route for foreign direct investment (FDI) with the government periodically easing norms.

The discussions follow fears that a foreign company may venture into the northeast or other areas, which may be sensitive, and it may be necessary to monitor this investment more closely.

At the same time, the government is also aware of the need to keep scrutiny to a minimum, as it wants to avoid a situation where officials and enforcement agencies abuse the provisions.

The Reserve Bank of India has detailed disclosure requirements on investments via the automatic route and the process has been reviewed in recent months. In the past, the government has resorted to steps such as putting foreign direct investment in pharmaceuticals beyond a certain value out of the ambit of automatic approval.