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New FDI policy evokes mixed response among SMEs

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CIOL Bureau
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NEW DELHI, INDIA: The new government policy allowing 100 per cent foreign direct investment (FDI) in single-brand retail has evoked mixed response among SMEs in the country.

While the Federation of Indian Micro, Small and Medium Enterprises (FISME) is of a view that the new norm in the policy that makes it mandatory for foreign SMEs to procure 30 per cent from Indian SMEs will not make much difference, the Federation of Indian Export Organizations (FIEO) says the new policy will boost domestic manufacturing, value addition and will provide greater exposure to Indian suppliers enabling them to compete successfully in overseas market adding to our exports.

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The government on Tuesday had allowed 100 per cent FDI in single brand retail, notifying all wholly- owned international brands will need to source at least 30 per cent of their requirement from domestic small and cottage industries.

“Indian MSEs do not believe in the assurance of the government. There is a suspicion in the industry that this condition of 30 per cent outsourcing may not stick for very long as it will not comply with the WTO norms,” says FISME president V K Agarwal.

Meanwhile, FIEO's president Rafeeque Ahmed says he expects the new policy to encourage major global players to invest in India and existing single brand retailer to bring more FDI in the country.

The Micro, Small and Medium Enterprises (MSME) ministry said that the decision of mandatory procurement from Indian small-scale firms by foreign retailers will create a readymade market for the sector.