Several Rajya Sabha members cutting across party lines on Friday supported a private member's bill, which seeks to set up a committee to scrutinise foreign investments in financial services, critical infrastructure and technology sectors having bearing on national security.
Members hailing from the BJP, the Congress and other parties raised concerns over data security and said it was an issue of national security and that there was a need to ensure that foreign direct investments (FDI) in sectors such as financial services are scrutinised.
The members were taking part in a debate on the Foreign Investment in Financial Services, Critical Infrastructure and Technology Affecting National Security (Regulation) Bill, moved by Narendra Jadhav, a nominated member of Rajya Sabha.
The bill was moved by Jadhav on December 6, 2019 during the last session, but he could not conclude his opening speech then. He concluded his submission on Friday.
According to Jadhav, the FDI level has increased to an unprecedented level $284 billion and "we are still giving a free hand to foreign investors" in sensitive areas such as financial sectors in the rapidly changing digital environment.
"What about NBFCs and payments firms. There is no limit for foreign ownership of NBFCs. 100 per cent ownership is allowed in this through automatic route," he said. "Can we simply sit and allow the foreign firms have controlling stake in NBFCs and payment firms? We simply cannot. The cost of inaction would be huge national security risk. There is also absence of data protection law in this country and we are finally moving in that direction," said Jadhav, who is also an economist, educationist and public policy expert.
This will make personal and financial data of millions of Indians available to foreign governments, which would include the data of key politicians and military personnel, and "this could be misused and weaponised". "These data could be misused and undermine our national security. We must act and act without any further delay," he said.
The bill seeks to establish a committee on foreign investment headed by the economic affairs secretary to effectively guard against the risk to national security posed by certain types of foreign investment in financial services, critical infrastructure and technology sectors.
Citing an example, Jadhav said that two years ago the US government had thwarted attempts by Chinese ecommerce major
Alibaba founder Jack Ma's plan to acquire money transfer company MoneyGram over national security concerns.
MoneyGram was to be bought by Ant Financial, a financial services and payment processing company Ma owns. Moreover, even a country like China has limited FDI in the finance sector to around 1.5 per cent. Even countries such as Malaysia, Thailand and Indonesia allow only 25 to 40 per cent FDI in the finance sector, but India has allowed 74 per cent. "Why we are so desperate or too liberal to get it," he said.
Participating in the debate on the bill, BJP member Shiv Pratap Shukla said that in the current scenario, FDI is necessary for the growth of the economy, but it should not be above national security concerns.
Anil Desai of the Shiv Sena said there should be a high- powered committee to scrutinise such FDI proposals. Ram Kumar Verma of the BJP said there should be due diligence by the committee on foreign investments as suggested by Jadav.
Supporting the bill, Congress member Rajeev Gowda said there was a need for wider participation in a committee on FDI that currently includes government secretaries and officials. He suggested that security experts and other sections of people are taken on board of the panel, who should be equal members.
BJP member D P Vats, RJD's Manoj Jha and T K S Elangovan also supported the bill. BJP members Ashok Bajpai, Mahesh Poddar and Vikas Mahatme were of the view that there were enough safeguards in place to deal with any such security challenge.