People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)

Vol. XXX

No. 45

November 05, 2006



Security Concerns or Paranoia


COMING close on the heels of the refusal to approve the construction of a deep-sea port of the Kerala coast to a consortium of Chinese companies is the decision now to scrap the joint venture bid floated by the BSNL, which was won by the Chinese telecom enterprise ZTE. The latter has happened after final stage talks between the BSNL and ZTE on concerns raised by intelligence agencies regarding security threat perceptions. 


Media reports suggest that the government is currently finalising a new foreign direct investment (FDI) policy that will, for the first time, include China on a list of countries that are considered sensitive for India’s national security. 


Until now, India was selective about imposing restrictions. For instance, only investments in sectors like ports, aviation and telecom and Internet services were selectively screened. But the new framework has reportedly increased the security filter to cover a cross-section of important sectors, such as drugs and pharmaceuticals, metallurgy, IT hardware, data processing, hydrocarbon exploration, pipelines and refineries and consumer goods.


Needless to add, on concerns of security, there can be no compromises. However, such concerns must be expressed sectorwise and not country specific. Naturally, in sectors such as telecommunications, for instance, which has serious security implications, we have to be very circumspect. In fact, one of the factors for CPI(M)’s opposition of increasing the FDI cap in this sector was based on this consideration. The government of India, however, thought otherwise then. 


It is, indeed, ironic that such a decision should come in the declared year of friendship between India and China. Further, it comes barely a month before the official State visit of the Chinese President, Hu Jintao. 


The government’s declared policy of attracting FDI in today’s globalised world will loose credibility, if it is perceived as a country that does not provide a level-playing field. The CPI(M) has always held that FDI which satisfies the three conditions --- augmenting India’s existing productive capacities; upgrading India technologically; and enlarging employment opportunities --- is welcome. While at the same time, security sensitive areas and sectors must be carefully scrutinised for the entry of FDI. However, omnibus banning of countries smacks more of a paranoia than concern for security interests. 


Globally today, both India and China are being perceived as emerging economies. China, in fact, has an enviable unprecedented record of an eight per cent plus growth rate per annum for the last three decades. It is by now well-established that India with its relative advantage in IT and software sectors, China with its relative advantage in manufacturing in hardware sectors can combine together to produce a new economic synergy. Obviously, there would be powerful vested interests globally who would not wish to see such a development taking place. This may be perceived by some of the advanced countries as a threat to their pre-eminent position. It can only be hoped that the current Indian concern is not the product of such pressures from interested quarters. The country has recently seen the proclivity of the present government in bending under US pressures on the Iran nuclear issue.


India must emerge as an economic powerhouse on the basis of offering and accepting a level-playing field in the world today. By all means, we should take all measures to secure our interests. But this needs to be done sector specific and not country specific.