Lok Sabha Question No. 774 (UNSTARRED), answered on 2023-12-07
Subject: Foreign Investment in MSME Sector
Ministry: MICRO,SMALL AND MEDIUM ENTERPRISES
Asked by: Poonam (Mahajan) Vajendla Rao, Debasree Chaudhuri

## 774.

## GOVERNMENT OF INDIA MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

## LOK SABHA UNSTARRED QUESTION NO. 774 TO BE ANSWERED ON 07.12.2023

## FOREIGN INVESTMENT IN MSME SECTOR

## SHRIMATI POONAM MAHAJAN: MS. DEBASREE CHAUDHURI:

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

- (a) whether the Government is aware of the need for foreign investment in the Micro, Small and Medium Enterprises (MSMEs) sector in the country;
- (b) if  so,  whether  any  study  has  been  conducted  on  the  advantages  and  disadvantages  of  foreign investment in MSMEs sector from competitiveness and viability point of view;
- (c) if so, the details thereof and if not, the reasons therefor; and
- (d) the  action  taken/proposed  to  be  taken  by  the  Government  to  improve  viability,  income  and employment in MSME sector?

## ANSWER

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

- (a): 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, wherein most sector/activities including Micro, Small and Medium Enterprises (MSMEs) except certain strategically important sectors/activities are open for 100% FDI under the automatic route, subject to sectoral laws, regulations/rules, security conditions and state/local/laws/regulations.
- (b) & (c): No  specific  study  has  been  conducted  on the advantages and disadvantages of foreign investment in MSMEs sector from competitiveness and viability point of view by the Ministry.
- (d): The Ministry of Micro, Small and Medium Enterprises (MSME) 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) and Raising and Accelerating MSME Performance (RAMP).

Further Government has taken a number of initiatives to support the MSME Sector. Some of them are:

- i. Collateral  free  loan  up  to  a  limit  of  Rs.  500  lakh  (w.e.f.  01.04.23)  to  MSEs  with  guarantee coverage up to 85 % for various categories of loan through Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) under Credit Guarantee Scheme.

- 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. 02.07.2021.
- vii. Non-tax benefits extended for 3 years in case of an upward change in status of MSMEs.
- viii. Roll out of Raising and Accelerating MSME Performance (RAMP) programme with an outlay of Rs. 6,000 crore over 5 years.
- ix. 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.
- x. Under Vivad  se  Vishwas  -  I,  relief  by  way  of  refund  of  95%  of  the  deducted  performance security,  bid  security  and  liquidated  damages  was  provided  to  MSMEs.  Relief  was  also provided to MSMEs debarred for default in execution of contracts.
- xi. Launch of Udyam Assist Platform (UAP) to bring the Informal Micro Enterprises (IMEs) under the formal ambit for availing the benefit under Priority Sector Lending (PSL).
- xii. Launch  of  'PM  Vishwakarma'  Scheme  on  17.09.2023  to  provide  benefits  to  the  traditional artisans and craftspeople engaged in 18 trades.

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