Lack of proper FDI policy for sensitive sectors holding up projects, admits Govt

The Government has acknowledged that the delay in finalising a comprehensive policy on Foreign Direct Investment...

The Government has acknowledged that the delay in finalising a comprehensive policy on Foreign Direct Investment in sensitive sectors had resulted in a setback in some crucial sectors like hydro power projects.

The minutes of a meeting of the Committee of Secretaries held on December 17, chaired by Cabinet Secretary K M Chandrasekhar, has revealed that lack of security clearance for foreign entities investing in hydro projects located in sensitive areas resulted in a delay in several projects. These include the Kotli Behl Stage 1A, IB and Stage II projects in Uttarakhand. For these projects, pre qualification bids were opened in May 2007, but are still held up for want of security clearances.

Besides the above, three other proposals for hydro projects, having multilateral funding, and located in “sensitive sectors,” have been held up with the Ministry of Home Affairs since September 2007.

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During the meeting, some projects in Himachal Pradesh too came up for a special mention. The state Government had allocated them to foreign developers though these are located within 50 km of the International Border.

According to sources, while the Ministry of External Affairs wanted a case-by-case approval for all the projects, the Home Ministry was in favour of a comprehensive FDI policy on the issue.

In view of the conflicting approach, the Cabinet Secretary advised that “it would be useful to work out a broad criteria by the Ministry of Power for hydro projects falling in sensitive areas, though at this stage we are not in a position to lay down general guidelines. Case-by-case scrutiny may be required to address the security concerns as all the parameters may not be possible to be incorporated in the guidelines.”

Regarding Kotli Behl IA, IB and II projects, he said: “The stress should be on identification of specific threats involved in the proposals and steps required to mitigate them.”

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In the meeting, it was decided that the Ministry of Power would now prepare a note for the Cabinet Committee on Security (CCS) for expeditious approval of the Kotli Behl projects while “generic guidelines” would be drawn by them in consultation with the MHA and MEA for participation of foreign companies for hydro projects located in sensitive areas.