Kuala Lumpur, August 25 :

India is planning legislation to require screening of foreign investment in certain industries for national security reasons, commerce minister Kamal Nath said. Such screening typically takes place in developed economies, Nath said.

“This is in line with what’s there in Europe, the US and every country,” Nath said yesterday, “There are certain sectors where there are security considerations.”

Nath was in Kuala Lumpur for meetings with trade ministers of the 10-member Association of Southeast Asian Nations. He said India’s home ministry will determine the sectors where investments may be screened for security reasons, but didn’t say when the proposed law would be introduced in Parliament.

Nath did not specify the areas of sensitivity.

A Dubai-owned company’s bid to manage ports in the US fell through earlier this year over claims that the Bush administration had ignored national security concerns in signing off on the transaction.

Singapore Telecommunications Ltd also came under fire in Australia after it purchased a key stake in Optus, one of Australia’s biggest telecommunications companies. India will need investment exceeding $1.5 trillion over a five-year long period, starting this fiscal year, to achieve and sustain annual economic growth of over eight per cent, a government-appointed commission of top industrialists said recently.

The commission said that of the total investment amount, foreign direct investment of $72 billion will be needed.

The commission also said that to attract higher investment flows into India, the government needs to lift foreign investment restrictions in sectors like insurance, banking and retail and allow flexibility in labor laws.