Maximize FDI without worrying about the colour of money but act to minimize security threats too

It is welcome that India is liberalizing inward investment from countries that share a land border with India. Investments up to 10% of a company’s paid-up capital that involve no board-seat control will be allowed under the automatic route. Investment proposals that need government approval would also be fast-tracked for nods within 60 days in specified sectors, including the manufacture of capital goods, capital goods for electronics, electronic components, polysilicon and the conversion of polysilicon into ingots and their slicing into wafers.

A precondition is that the investee company should be majority owned and controlled by Indians or Indian entities. The move eases curbs imposed back in 2020 and signals a lower guard against the role played by Chinese capital in India’s economy. In general, a policy tweak that aims to maximize foreign inflows is good for GDP growth and job creation.

For us to join global value chains, the colour of money should matter less than what it can do for us. However, in today’s times, investment, technology and national security are interlinked. Many countries, the US included, no longer allow Chinese gear in their core telecom networks even though it is both effective and economical.

Such caution must apply to some electronic components as well.Every such component is not amenable to remote control by its maker and exposed to the risk of being turned against our interests. Those that are should be kept strictly indigenous in design and production; drone control units are an example. Complex electronic equipment is assembled from simpler parts that are not vulnerable to foreign misuse or sabotage.