First, the law does not require someone to be, nor does it require grounds to suspect that.
Bear in mind, Schedule 7 ONLY applies at border areas, that is, essentially, ports and airports, for people getting on of off planes, boats, etc, or intending to do so.
It is INTENDED to be broad-ranging, not least because it has to be because the alternative may well be to let a terrorist get on a plane, and blow it out of the sky, while the police are still worrying about whether they have "reasonable grounds" to suspect someone is a terrorist.
Remember not just what this law permits police to do, but what it's introduction was a reaction to. It is an extreme measure, designed for an extreme situation.