FDI Screening - National Security Exception Act

With a view to curb security threats caused by inflow of FDI in various sectors, the National Security Council (NSC) has decided to promulgate an umbrella legislation known as National Security Exception Act (NSEA) aimed at imposing checks on the FDI flow into India.

The NSC has raised concerns that foreign investment from various notified countries are likely to pose security threats as there is a possibility of multinational corporations in such countries being used for catalyzing anti-national activities and breach of national security.

The NSEA would be based on the lines of the Exon-Florio Act of USA, 1988 that empowers the Committee of Foreign Investment in the US, to prohibit takeover of any American company likely to cause a threat to the country's security. Such legislations are very common to countries viz. England (Golden Share), Mexico (Foreign Investment Law), Canada, Australia, Thailand and China who have enacted similar laws to block anti-national