No data on FDI in MSME sector maintained by govt: MoS MSME Bhanu Pratap Singh Verma

Credit and Finance for MSMEs: The country saw its highest ever annual FDI inflow of $83.57 billion in FY22, up from the previous year’s FDI worth $81.97 billion and $74.39 billion in FY20 despite the Ukraine conflict and Covid pandemic.

No data on FDI in MSME sector maintained by govt: MoS MSME Bhanu Pratap Singh Verma
Former MSME Minister and the current Road Transport and Highways Minister Nitin Gadkari had earlier this year called for attracting more FDI into the MSME sector. (Image: pixabay)

Credit and Finance for MSMEs: The specific data for foreign direct investment (FDI) in the country’s micro, small and medium (MSME) sector is not maintained, Minister of State for MSMEs Bhanu Pratap Singh Verma told Parliament on Thursday. The clarification comes amid the government’s interest in attracting more foreign investments into the MSME sector and the overall growth in India’s FDI inflow.

The country saw its highest ever annual FDI inflow of $83.57 billion in FY22, up from the previous year’s FDI worth $81.97 billion and $74.39 billion in FY20 despite the Ukraine conflict and Covid pandemic, according to the government data. FDI inflow in manufacturing sectors jumped by 76 per cent in FY22 to $21.34 billion vis-a-vis $12.09 billion in FY21. Computer software and hardware was the top recipient segment of FDI equity inflow during FY22 with around 25% share followed by 12 per cent each in the services sector and automobile industry. 

Former MSME Minister and the current Road Transport and Highways Minister Nitin Gadkari had earlier this year called for attracting more FDI into the MSME sector as such entities are “giving excellent viability and income to investors”. According to a PTI report citing Gadkari speaking at a virtual event organised by the chartered accountants’ body ICAI, the minister asked chartered accountants to suggest ways for attracting maximum foreign investment into the sector.

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The minister back in July 2020 had also said that the country needs FDI worth Rs 50 to 60 lakh crore to get back on the growth track and increase liquidity in the market. In an interview with PTI, Gadkari noted that the money can be tapped mainly through infrastructure projects as well as the MSME sector as the coronavirus-hit economy needs a major push. 

The extant FDI policy allows 100 per cent FDI in the manufacturing sector under the automatic route. With respect to the single brand retail involving foreign investment beyond 51 per cent, the policy stipulates sourcing of 30 per cent of the value of goods purchased preferably from MSMEs, village and cottage industries, artisans and craftsmen across sectors. Likewise, for FDI in multi-brand retail, minimum 30 per cent value of the procurement of manufactured or processed products purchased should be sourced from MSMEs that have a total investment of up to $2 million in their plant and machinery.

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