‘Defence FDI will affect security’

The Congress on Wednesday attacked the government for easing foreign direct investment (FDI) norms in the defence sector, saying the move could hurt national security.

Speaking during Question Hour in Rajya Sabha, senior Congress leader and former defence minister AK Antony said the decision to do away with Cabinet Committee on Security (CCS) clearance for getting higher FDI was a “callous” move and could “jeopardise national security”.

New norms allow FDI up to 100% if these brought in “modern technology”. The Foreign Investment Promotion Board, the nodal authority for all overseas investment proposals, can approve applications on a case-to-case basis, removing the need for CCS clearance. Previous rules allowed higher FDI for technologies that were “cutting-edge, state of the art and modern”. New rules announced last month have done away with the riders “cutting edge and state of the art”.

Commerce minister Nirmala Sitharaman said the riders were dropped as lot of time was wasted in understanding and interpreting the meaning. She said “modern” was retained to simplify the process.

But Antony said the government would regret narrowing the scope of technology to just “modern” and research and development in the country would be the first casualty.

Sitharaman said the government had carried out broad consultations before taking the decision and those involved with decision-making were concerned about national security.