FDI can help develop MSMEs: Muniyappa

Tags: Economy
Union Micro, Small and Medium enterprises (MSME) Minister K H Muniyappa today said allowing FDI into the sector will not only ensure fund flows but also help the overall development of the segment.

"FDI (foreign direct investment) in MSME will ensure availability of more capital necessary for the overall growth of the sector, which contributes nearly 40 per cent to the country's total exports," Muniyappa told reporters after a meeting with the officials of Khadi & Village Industries Commission (KVIC) here.

He also clarified that FDI would be allowed in the sector without impacting the interest of the players.

"We are in favour of FDI in the sector, but at the same time we will not allow the interest of the local players to be impacted. We are currently formulating a detailed plan for the same," he said.

Last month, the government tweaked sourcing norms for FDI and diluted the previous condition to source 30 per cent of requirements 'mandatorily' from MSMEs, by stating that sourcing should be done 'preferably from MSMEs'.

The government has allowed 51 per cent FDI in multi-brand retail and 100 per cent FDI in single-brand retail.

"Investments and FDI is necessary mainly to bring the modern concept of marketing in the sector, which is currently very weak," a KVIC official said.

He said 51 per cent investment by private sector is expected in the Khadi Reform and Development Programme initiated by the Asian Development Bank (ADB) with the government, which aims at revitalising the khadi industry through a comprehensive reform package.

"Leading private players in the organised retail sector have shown interest in partnering with us. We are working out the modalities in this regards. We plan to offer them 51 per cent stake," the official said.

Meanwhile, the ministry has also proposed to increase the project size to Rs 50 lakh from Rs 25 lakh for the availability of finance with banks and financial institutions.

"We have already held talks with bankers and they have agreed to provide full assistance to the sector," minister said, adding, "besides, the allocation of funds for the sector will be doubled in the 12th Five Year Plan as compared to the 11th plan."

EDITORIAL OF THE DAY

  • Not warnings, total prohibition of smoking is the only answer to restoring citizens’ health

    In a landmark judgment the Supreme Court on Wednesday said the tobacco industry must adhere to government rules requiring stringent health warnings on

FC NEWSLETTER

Stay informed on our latest news!

TODAY'S COLUMNS

Urs Schoettli

Japan’s seismic shocks raise big questions

In the middle of April the region of Kumamoto on ...

Zehra Naqvi

The flame of hate

Pyre. The name itself evokes a sense of foreboding, casting ...

Bubbles Sabharwal

Whiners and complainers, please exit

We all know WC stands for a water closet, a ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture