National Security Review of Foreign Direct Investment: An Analysis of Indias Proposed National Sec urity Exce ption Act

Susrut Carpenter,is a May 2008 J.D. candidate at American University- Washington College of Law and a December 2008 M.A., International Politics candidate at American University-School of International Service. He is the Managing Editor of the Business Law Brief. Originally from Philadelphia, Pennsylvania, he graduated from Boston University in 2005 with a B.A. in Economics and International Relations.

Domestic Reform-The National Security Exception Act

Foreign Direct Investment (FDI) is important to India's economic development and its maintenance of security because, as exemplified by India's changing relationship with China and Pakistan, a growing economy enhances national security.1 Ironically, the acquisition of FDI that India needs to preserve its regional security can pose a threat to domestic security because of the fear that foreign companies, through investment and ownership, can gain significant access to India's industries, critical infrastructure, and government.2 Specifically, India's recent increase of permissible foreign ownership in Indian companies from 49% to 74% has added fuel to the fear that India is relinquishing its sovereignty.3 Competing domestic security concerns therefore require India to strike a balance between the acquisition and promotion of FDI and the preservation of domestic security.4 In the future, to prevent corporate espionage and the entry of foreign governments into sensitive sectors, India's government must institute a comprehensive plan to evaluate F...

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