Lok Sabha Question No. 1986 (UNSTARRED), answered on 2022-07-28
Subject: FDI in MSME Sector
Ministry: MICRO,SMALL AND MEDIUM ENTERPRISES
Asked by: Reddeppa Nallakonda Gari, Midhun Reddy

## GOVERNMENT OF INDIA MINISTER OF MICRO, SMALL AND MEDIUM ENETRPRISES

## LOK SABHA UNSTARRED QUESTION NO.1986 TO BE ANSWERED ON 28.07.2022

## FDI IN MSME SECTOR

1986.

SHRI N. REDDEPPA: SHRI P.V. MIDHUN REDDY:

Will the Minister of MICRO, SMALL AND MEDIUM ENTERPRISES be pleased to state:

- (a) the details of Foreign Direct Investment (FDI) brought into MSME sector in the country during the  last two years and the current year;
- (b) whether the government has taken measures to attract FDI into MSMEs sector; and
- (c) if so, the details thereof and if not, the reasons therefor ?

## ANSWER

## MINISTER OF STATE FOR MICRO, SMALL AND MEDIUM ENETRPRISES (SHRI BHANU PRATAP SINGH VERMA)

(a) to (c): Specific data for Foreign Direct Investment (FDI), brought into MSME sector is not maintained. However, sector-wise details of FDI Equity inflow reported in all sectors during last two financial years i.e. 2020-21, 2021-22 and current financial year i.e. 2022-23 (up to May, 2022) is Annexed herewith.

Further,  Government  has  put  in  place  a  liberal  and  transparent  policy  for  attracting  FDI wherein most sectors, except certain strategically important sectors, are open for 100% FDI under the automatic route.

As  per  extant  FDI  Policy,  100%  FDI  is  permitted  in  manufacturing  sector  is  under automatic route. Manufacturing activities may be either self-manufacturing by the investee entity or contract manufacturing in India through a legally tenable contract, whether on Principal to Principal or Principal to Agent basis. Further, a manufacturer is permitted to sell its products manufactured in India  through  wholesale  and/or  retail,  including  through  e-commerce,  without  Government approval.  Further, notwithstanding  the  FDI  policy  provisions  on  trading  sector,  100%  FDI  under Government approval route is allowed for retail trading, including through e-commerce, in respect of food products manufactured and/or produced in India.

Further, Para 5.2.15.3 of the FDI Policy provides provisions for FDI in Single Brand Retail Trading which inter-alia stipulate that in respect of proposals involving foreign investment beyond 51%, sourcing of 30% of the value of goods purchased, will be done from India, preferably from MSMEs,  village  and  cottage  industries,  artisans  and  craftsmen,  in  all  sectors. Similarly  Para  5.2.15.4  of  the  FDI  Policy  provides  provisions  for  FDI  in  Multi  Brand  Retail Trading which inter-alia stipulate that at least 30% of the value of procurement of manufactured/processed products purchased shall be sourced from Indian micro, small and medium industries, which have a total investment in plant & machinery not exceeding US $ 2.00 million.

*******

## Annexure referred to in reply to part (a)to(c) of the Lok Sabha Unstarred Question No. 1986 for answer on 28.07.2022

## STATEMENT ON FINANCIAL YEAR WISE FDI EQUITY INFLOW FROM April 2020 TO May 2022

| Sr.No.                    | Sector                                                                                                      | 2020-21                 | 2021-22                 | 2022-23 (Till MAY2022)   | Cumulative FDI                     |
|---------------------------|-------------------------------------------------------------------------------------------------------------|-------------------------|-------------------------|--------------------------|------------------------------------|
|                           |                                                                                                             | Amount (In USD Million) | Amount (In USD Million) | Amount (In USD Million)  | Cumulative Amount (In USD Million) |
| 1                         | AGRICULTURAL MACHINERY                                                                                      | 142.5893                | 268.7335                | -                        | 411.3228                           |
| 2                         | AGRICULTURE SERVICES                                                                                        | 117.1039                | 258.4651                | 46.6318                  | 422.2007                           |
| 3                         | AIR TRANSPORT (INCLUDING AIR FREIGHT)                                                                       | 204.0961                | 584.8250                | 19.7615                  | 808.6826                           |
| 4                         | AUTOMOBILE INDUSTRY                                                                                         | 1,637.4449              | 6,993.5511              | 645.2469                 | 9,276.2429                         |
| 5                         | BOILERS AND STEAM GENERATING PLANTS                                                                         | 0.9026                  | -                       | -                        | 0.9026                             |
| 6                         | CEMENT AND GYPSUM PRODUCTS                                                                                  | 3.7809                  | 204.4085                | -                        | 208.1893                           |
| 7                         | CERAMICS                                                                                                    | 20.6084                 | 1.3368                  | 0.0447                   | 21.9898                            |
| 8                         | CHEMICALS (OTHER THAN FERTILIZERS)                                                                          | 847.0709                | 965.7818                | 713.5966                 | 2,526.4492                         |
| 9                         | COMMERCIAL, OFFICE& HOUSEHOLD EQUIPMENTS                                                                    | 47.2469                 | 17.2416                 | 0.2587                   | 64.7472                            |
| 10                        | COMPUTER SOFTWARE& HARDWARE                                                                                 | 26,144.6948             | 14,461.3525             | 2,675.5353               | 43,281.5826                        |
| 11                        | CONSTRUCTION (INFRASTRUCTURE) ACTIVITIES                                                                    | 7,874.5429              | 3,247.5090              | 357.8332                 | 11,479.8850                        |
| 12                        | CONSTRUCTION DEVELOPMENT: Townships, housing, built-up infrastructure and construction-development projects | 422.0907                | 124.9882                | 10.2609                  | 557.3398                           |
| 13 CONSULTANCY SERVICES   | 13 CONSULTANCY SERVICES                                                                                     | 938.4423                | 1,150.4041              | 44.2803                  | 2,133.1267                         |
| 14 DEFENCE INDUSTRIES     | 14 DEFENCE INDUSTRIES                                                                                       | 0.6308                  | 2.3631                  | 0.6503                   | 3.6442                             |
| 15 DIAMOND,GOLD ORNAMENTS | 15 DIAMOND,GOLD ORNAMENTS                                                                                   | 13.8286                 | 22.2168                 | -                        | 36.0454                            |
| 16 DRUGS &PHARMACEUTICALS | 16 DRUGS &PHARMACEUTICALS                                                                                   | 1,490.4937              | 1,414.2358              | 413.4098                 | 3,318.1393                         |
| 17 DYE-STUFFS             | 17 DYE-STUFFS                                                                                               | 4.4449                  | 2.9433                  | -                        | 7.3882                             |
| 18 EARTH-MOVING MACHINERY |                                                                                                             | 39.3927                 | 60.5991                 | 0.1085                   | 100.1002                           |
| 19                        | EDUCATION                                                                                                   | 1,250.3659              | 3,228.6787              | 161.6916                 | 4,640.7362                         |
| 20                        | ELECTRICAL EQUIPMENTS                                                                                       | 1,411.9465              | 683.7012                | 369.8282                 | 2,465.4759                         |
| 21                        | ELECTRONICS                                                                                                 | 375.3117                | 416.9984                | 64.5150                  | 856.8251                           |
| 22                        | FERMENTATION INDUSTRIES                                                                                     | 84.7742                 | 869.5196                | 204.1268                 | 1,158.4205                         |

## STATEMENT ON FINANCIAL YEAR WISE FDI EQUITY INFLOW FROM April 2020 TO May 2022

|   23 | FERTILIZERS                                           | 17.8922    | 6.0724     | 0.0173     | 23.9819     |
|------|-------------------------------------------------------|------------|------------|------------|-------------|
|   24 | FOOD PROCESSING INDUSTRIES                            | 393.4104   | 709.7147   | 168.0686   | 1,271.1938  |
|   25 | GLASS                                                 | 42.3621    | 588.2155   | 34.4835    | 665.0611    |
|   26 | GLUE AND GELATIN                                      | 0.7446     | 4.5603     | 0.4911     | 5.7960      |
|   27 | HOSPITAL &DIAGNOSTIC CENTRES                          | 501.1625   | 697.5012   | 98.2679    | 1,296.9316  |
|   28 | HOTEL &TOURISM                                        | 368.9632   | 729.0804   | 73.5729    | 1,171.6165  |
|   29 | INDUSTRIAL INSTRUMENTS                                | 0.7011     | 0.1058     | -          | 0.8070      |
|   30 | INDUSTRIAL MACHINERY                                  | 253.3266   | 320.6621   | 26.8576    | 600.8464    |
|   31 | INFORMATION& BROADCASTING (INCLUDING PRINT MEDIA)     | 313.8941   | 152.2729   | 96.5054    | 562.6723    |
|   32 | LEATHER,LEATHER GOODS ANDPICKERS                      | 8.8872     | 7.1486     | 0.2596     | 16.2954     |
|   33 | MACHINE TOOLS                                         | 20.9056    | 31.2321    | 0.2744     | 52.4121     |
|   34 | MEDICAL ANDSURGICAL APPLIANCES                        | 68.9069    | 208.0477   | 103.0769   | 380.0315    |
|   35 | METALLURGICAL INDUSTRIES                              | 1,340.4721 | 2,272.3503 | 33.5581    | 3,646.3806  |
|   36 | MINING                                                | 168.7706   | 344.6062   | 160.0267   | 673.4035    |
|   37 | MISCELLANEOUS INDUSTRIES                              | 767.5168   | 492.9095   | 47.6392    | 1,308.0655  |
|   38 | MISCELLANEOUS MECHANICAL& ENGINEERING INDUSTRIES      | 64.1028    | 411.1702   | 22.5622    | 497.8352    |
|   39 | NON-CONVENTIONAL ENERGY                               | 797.2063   | 1,600.9318 | 822.4966   | 3,220.6347  |
|   40 | PAPER ANDPULP (INCLUDING PAPER PRODUCTS)              | 22.4166    | 158.4769   | -          | 180.8934    |
|   41 | PETROLEUM &NATURAL GAS                                | 102.8069   | 56.4087    | 2.6417     | 161.8573    |
|   42 | POWER                                                 | 373.6348   | 525.6590   | 501.7732   | 1,401.0669  |
|   43 | PRIME MOVER (OTHER THAN ELECTRICAL GENERATORS)        | 279.9708   | 25.0769    | -          | 305.0477    |
|   44 | PRINTING OF BOOKS (INCLUDING LITHO PRINTING INDUSTRY) | 81.2097    | 316.9538   | 22.4284    | 420.5919    |
|   45 | RAILWAY RELATED COMPONENTS                            | 119.6366   | 1.2632     | 0.0582     | 120.9580    |
|   46 | RETAIL TRADING                                        | 1,338.0720 | 497.1292   | 120.9256   | 1,956.1267  |
|   47 | RUBBER GOODS                                          | 265.9423   | 70.7302    | 29.9001    | 366.5727    |
|   48 | SCIENTIFIC INSTRUMENTS                                | 9.4199     | 7.5653     | 0.0872     | 17.0723     |
|   49 | SEA TRANSPORT                                         | 294.2040   | 393.8058   | 106.2302   | 794.2400    |
|   50 | SERVICES SECTOR (Fin., Banking, Insurance, Non        | 5,060.2237 | 7,131.4383 | 1,942.6931 | 14,134.3551 |

## STATEMENT ON FINANCIAL YEAR WISE FDI EQUITY INFLOW FROM April 2020 TO May 2022

|    | Fin/Business, Outsourcing, R&D, Courier, Tech. Testing and Analysis, Other)   |             |             |             |              |
|----|-------------------------------------------------------------------------------|-------------|-------------|-------------|--------------|
| 51 | SOAPS, COSMETICS &TOILET PREPARATIONS                                         | 103.5282    | 548.8914    | 10.8998     | 663.3195     |
| 52 | SUGAR                                                                         | 24.9363     | 0.5489      | 0.0516      | 25.5368      |
| 53 | TEA ANDCOFFEE (PROCESSING& WAREHOUSING COFFEE& RUBBER)                        | 8.6515      | 3.0878      | -           | 11.7393      |
| 54 | TELECOMMUNICATIONS                                                            | 392.1075    | 668.1440    | 618.2639    | 1,678.5154   |
| 55 | TEXTILES (INCLUDING DYED,PRINTED)                                             | 298.6735    | 247.7544    | 14.4639     | 560.8918     |
| 56 | TIMBER PRODUCTS                                                               | 5.8898      | 20.4526     | 4.0229      | 30.3653      |
| 57 | TRADING                                                                       | 2,608.2203  | 4,537.5933  | 1,809.3768  | 8,955.1903   |
| 58 | VEGETABLE OILS AND VANASPATI                                                  | 44.9660     | 5.8534      | 11.1522     | 61.9716      |
|    | Total:                                                                        | 59,635.5390 | 58,773.2681 | 12,610.9065 | 131,019.7137 |

Source: Ministry of Commerce & Industries, DPIIT