Can't accept FDI blindly, need safeguards: Sitharaman

India will place restrictions on foreign direct investment (FDI) in the national interest to ensure safeguards because of its location in a highly sensitive neighbourhood, Finance Minister Nirmala Sitharaman said during an interactive session at the Wharton Business School in the US on Tuesday.

“I cannot blindly accept FDI simply because we need investment, unmindful of where it is coming from.

"We want business, we want investment, but we also need some safeguards, because India is located in a neighbourhood that is very, very sensitive,” Sitharaman said.

The finance minister’s comments came ahead of the bilateral meeting between Prime Minister Narendra Modi and Chinese Premier Xi Jinping on the sidelines of the Brics Summit in Kazan, the capital of the Republic of Tatarstan.

Sitharaman said that the disclosure norms put in place by the Securities and Exchange Board of India (Sebi) provide information about the ultimate beneficiary.

“Sometimes the ultimate beneficiary is a concern not because of who it is but where it is,” she said.

She noted that many countries have regulations through which they control such investments.

“FDI, otherwise, is welcome, and we have opened it up. Sebi has been very forward-looking in reducing the regulations,” the finance minister added.

Sitharaman indicated that to achieve the growth rate India aims for, it might need $100 billion to meet investment requirements.

Currently, the figure stands in the range of $70–80 billion.

“It is about how much the economy can absorb today. It is improving,” she said.

The finance minister is in Washington, D.C., to attend the annual meetings of the International Monetary Fund and the World Bank.

Without mentioning any countries, India, in 2020, stepped up security clearances as part of its scrutiny of investments from companies based in neighbouring countries.

Discussing India’s journey toward becoming a developed country by 2047, Sitharaman said that infrastructure, investment, innovation, and inclusiveness are the four key focus areas for the Narendra Modi government to drive this goal.

“India is at a critical juncture when you look at how it has to move forward.

"These four ‘Is’ will address the challenging path we want to take to become a developed nation by 2047,” she said.

Sitharaman emphasised that public investment in capital asset building has played an important role in reviving the economy.

She also noted that the robustness of India’s economy is due to the government’s public expenditure in creating a digital network.

“India wouldn’t have been the fastest-growing economy if the people hadn’t utilised the digital infrastructure, which was available to them free of cost,” the finance minister said.