Move likely to clear hurdles in way of investments
Shruti Srivastava
The government is seriously considering tweaking the definition of small and medium enterprises (SMEs) for giving a boost to single brand retail in the country. Aiming at bringing in more foreign investments in the country, the government wants to remove hurdles in way of such investments from across the sectors, including single brand retail.
Though 100% FDI in single brand retail was notified in January, only two proposals ? IKEA and Pavers ? have been received by the government so far. As per the present definition, all entities having investment of $1 million in plant and machinery would fall under the ambit of SMEs for the purpose of single brand retail. However, as the sector thrives, SMEs would grow and the $1 million definition would need tweaking.
?Policy evolution is a continuous process. Once the Indian SMEs are engaged with (foreign players), the definition will require a change because you have a SME performing well and you cannot punish it for that. Global majors are already sourcing from them? When you are selling this kind of material (30%) to a global major, you may not remain a SME under the present definition,? commerce and industry minister Anand Sharma, who is on a visit to Sri Lanka, told reporters.
?In one year, revenue and profit may be doubled, therefore, the definition has to keep on evolving. The department concerned will discuss and change…,? he said, adding that the guidelines will have absolute clarity.
IKEA had earlier written a letter to the department of industrial policy and promotion (DIPP), asking for certain concessions in the existing FDI policy regarding the SME definition, definition of brand and had asked for 10 years to meet the 30% sourcing clause. The minister further said the government has received four more proposals for setting up national manufacturing investment zones (NMIZ), of which ?three are being seriously considered?. ?By the end of August, we will have 12 NMIZs and then we will focus on establishing these,? Sharma said.
He added that the country will also cooperate with Sri Lanka for revival of closed textile mills and establishing manufacturing units for both textiles and apparel.
Exports to revive post-Sept: Sharma
India said on Saturday it expects exports, which have declined for two consecutive months, to turn around by September end. ?We are seriously monitoring the situation. I think with the steps that have been taken and the announcements made, there will be some revival in exports and turnaround this autumn (around September),? Anand Sharma said. ?There is a contraction in demand in the traditional market and there is wobbly recovery in the EU. We have been able to survive because of diversification of market,? he added.