The full sentence is "...certain industries that it (government) considers to be ..." The that is omitted or elliptical; it is allowed. The are two constituent sentences to the clause: 1. Government considers certain industries to be of strategic importance. 2. Government forbids foreign ownership in certain industries. If you combine the two, you get: Government forbids foreign ownership in certain industries that it considers to be of strategic importance.

Here, 'it' refers to the government. The government "considers [foreign ownership] to be of strategic importance but lacks the expertise for operation..."