After finding that Chinese and Hong Kong investors were creating alternative structures to circumvent the April 2020 restrictions on foreign investment, the government has decided to allow Indian companies to appoint Chinese nationals and Hong Kongers as directors. It has been made mandatory to obtain security clearance before such appointments. A government notification in this regard was issued on June 1 for ET’s report.
If the person seeking appointment is a citizen of a country that shares land borders with India, the consent form will also require necessary security clearance from the Ministry of Home Affairs, as per the Companies (Appointment and Qualification of Directors) Rules. , 2014, released on June 1.
These rules will substantially affect Chinese construction companies that have subsidiaries. India and China.
Foreign investment guidelines issued in April 2020 required government approval for foreign investment coming from countries sharing land borders with India. A committee was set up to provide case-by-case security clearance for such investments. The measure was seen as largely targeted at Chinese investments following border skirmishes.
In 2020 also, the cabinet also approved a proposal to secure telecom infrastructure by designating “trusted sources” for procurement of equipment by service providers.
Announcing the decision, the then Law, Telecom and IT Minister Ravi Shankar Prasad had said, “Considering the need to ensure India’s national security, the Cabinet has approved the National Security Directive on the Telecom Sector.”
Under the provisions of this Directive, the Government declares a list of reliable sources and reliable products for installation in the country’s telecom network. The directive has provisions for qualifying telecom gear made by domestic players in a reliable category. The credible source and product list is decided based on the approval of the committee headed by the Deputy National Security Advisor.
Now, Chinese telecom gear makers Huawei and ZTE are struggling to meet requirements under the Security Directive on the Supply of Network Equipment. According to a recent ET report, both Huawei and ZTE are yet to complete the paperwork to seek approval from credible sources.
In 2020, India also banned the import of equipment from China for use in sectors ranging from telecommunications to power, citing national security reasons. These restrictions were motivated by concerns such as spyware or malicious software – known as “malware” – being embedded in imported devices.
In 2019, the government banned the import of Chinese handsets without an International Mobile Equipment Identity, or IMEI, number, again citing security reasons such as using stolen handsets to make panic or fraudulent calls. was.
The IMEI number of a mobile phone is a 15-digit number for each mobile handset. This prevents calling stolen handsets and allows security agencies to track down a specific user.
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