Investments coming in from Bangladesh have come under the highest level of scrutiny by the security agencies. This is evident from the lack of relevant clearances been given to the various proposals involving firms or individuals from Bangladesh.
In recent past, at least half-dozen proposals involving Bangladeshi firms have come before the Foreign Investment Promotion Board (FIPB) which are yet to get the nod. According to sources, obtaining the mandatory security clearances for such proposals is a time-consuming process and that is the main reason why such proposals have not been able to obtain the nod from the government. “Authorities have to perform checks at several levels including background checks on the promoters, shareholders, etc to ensure that there is no involvement of any nationals from Pakistan at the backend of these Bangladeshi firms,” a government source said.
This is because Pakistani nationals or companies incorporated in Pakistan cannot invest in India. “A non-resident entity (other than a citizen of Pakistan or an entity incorporated in Pakistan) can invest in India, subject to the FDI Policy,” says the FDI circular of 2010. For FDI from Bangladesh, it says a citizen of Bangladesh or an entity incorporated in Bangladesh can invest in India under the FDI Policy, only under the government route. Which means, it is mandatory for proposals from Bangladesh to go to the FIPB. In a recent FIPB meeting, an Indian company seeking investments from Bangladesh had to provide an undertaking that there was no direct or indirect investment from individuals from Pakistan in any of its companies.
Also, the home ministry has to examine the proposals from political angle for any future political ramifications, which delays the clearances to such proposal, sources said. But the government is concerned by the growing instances of Bangladeshi firms trying to enter India by setting up joint ventures. Also, the FDI in such proposals is also curiously between not more than R25 crore collectively. “A couple of proposals only involve FDI of a few lakh of rupees. There are several angles from which everything is examined,” the source said.
As a result of the exhaustive security clearances, the Indian companies seeking such alliances also have to wait. Currently, proposals from Indian companies like Southern CNG from Kolkata and Pran Beverages, also from Kolkata are stuck for over six months with the FIPB.
However, there are also direct proposals from Bangladeshi firms seeking permission to set up subsidiaries in India. These include proposals from Bangladeshi nationals like M Rezaul Hassan and Monnujan Nargis who want to set up an Indian firm to undertake software development. Then there is a proposal from Rahimafrooz Batteries of Bangladesh which wants to undertake import and wholesale distribution of batteries and its servicing from Bangladesh.