Press Release on Foreign Investment in MSMEs Sector


Foreign Direct Investment (FDI) is an enabling policy, which is uniformly applicable irrespective of scale and size of eligible investee entities. To promote FDI, the Government has put in place an investor-friendly policy. In this policy most sector/activities including Micro, Small and Medium Enterprises (MSMEs) are open for 100% FDI under the automatic route/ However, the policy is subject to sectoral laws, regulations/rules, security conditions and state/local/laws/regulations. Furthermore, certain strategically important sectors/activities are kept outside the purview of this policy.

Pertinently, the Government has not conducted any specific study on the advantages and disadvantages of foreign investment in MSMEs sector from competitiveness and viability point of view.

The Ministry of Micro, Small and Medium Enterprises (MSME) also implements various schemes and programmes aimed at promotion and development of MSME Sector in the country.

These schemes/programmes include MSME Champions Scheme, Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), Prime Minister’s Employment Generation Programme (PMEGP), Micro and Small Enterprises – Cluster Development Programme (MSE-CDP). Further Government has taken a number of initiatives under Aatma Nirbhar Bharat Abhiyan to support the MSME Sector.

Some of them are:

i)       Rs. 5 lakh crore collateral free automatic loans for business under Emergency Credit Line Guarantee Scheme (ECLGS), including MSMEs.

ii)     Rs. 50,000 crore equity infusion through Self Reliant India Fund. This scheme has a provision for corpus of Rs.10,000 crore from Government of India.

iii)     New revised criteria for classification of MSMEs.

iv)     New registration of MSMEs through ”Udyam Registration” for Ease of Doing Business.

v)      No global tenders for procurement up to Rs. 200 crore.

vi)     Inclusion of retail and whole sale trades as MSMEs w.e.f. 02 July, 2021.

vii)    Non-tax benefits extended for 3 years in case of an upward change in status of MSMEs.

viii) Integration of Udyam Portal and National Career Service (NCS) of Ministry of Labour & Employment, as an outcome registered MSMEs are able to search for jobseekers on NCS.

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