April 28, New Delhi: Indian Govt policies to block unwind M&A could take place soon. NSCS report on foreign investment in sensitive sectors in India.

A new policy to be implemented in near future through which the head of the Govt in India will get authority to block or unwind M&A. implemented in the USA long before, this mechanism is going to take place because of the investment of foreign country like China in some of the sensitive sectors in India. These sectors include seaports, airports, telecom and aviation which could make threats to national security.

The said issue took place because of an inter-ministerial discussion between India and China under PM Narendra Modi’s Make-in-India campaign. Recently a report was prepared by NSCS (National Security Council Secretariat) in order to focus security related matters in India.

NSCS proposed in a meeting that India needs legislative measures which will be similar to that of 1950 US Defense Production Act. According to this mechanism, Head of the Govt in the country have the authority to block or unwind mergers and acquisitions.

National Security Council Secretariat Statement

Report produced by NSCS stated that, “It has been expressed in certain quarters that India needs legislative measures similar to the Exon-Florio Amendment to the US Defence Production Act 1950 which provides the US President the authority to block or unwind mergers and acquisitions by foreign companies that could threaten national security.”

The report also focuses on existing Govt policy under which a proper approval is required in order to transfer ownership or partially control Indian companies in sectors where chances of foreign investments are more.

Further in NSCS report it is mention that, “Department of Industrial Policy and Promotion (DIPP) may consider taking up the matter with legislative department of the Ministry of Law and Justice to work out an appropriate legislative framework.”