MSME UPDATES SOURCE THE HINDU

The Narendra Modi Government is actively considering revising the investment caps for micro, small and medium enterprises (MSMEs), and can soon work out a system to implement government programs for the sector through accredited industry associations.

MSME Secretary Madhav Lal said the government was looking to revise the caps on investment limits for the MSME sector.

“We have received several representations about the revision of investment limits...some have even argued for including other factors besides capital,” Mr. Lal told The Hindu on the sidelines of the seventh national cluster summit, organised by the Confederation of Indian Industry (CII) here on Wednesday.

The current investment caps, defined by the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006, stand at Rs.25 lakh for micro; more than Rs.25 lakh to Rs.5 crore for small; and over Rs.5 crore to Rs.10 crore for medium enterprises in the manufacturing sector. For MSMEs in the services sector, these limits are less than Rs.10 lakh, over Rs.10 lakh to Rs.2 crore and over Rs.2 crore to Rs.5 crore, respectively.

“However, any such move can only be brought about by amending the MSMED Act,” said Mr. Lal.

He also said the Ministry, based on its experiences with accredited industry associations, could work out a system to implement government schemes for the sector through these associations.

In August, the Ministry, in partnership with the Quality Council of India and Deutsche Gesellsschaft fur Internationale Zusammenarbeit (GIZ), had launched an accreditation system for industry associations and business membership organisations (BMOs)

Mr. Lal said the MSMEs would play a major role in Mr. Modi’s flagship ‘Make in India’ initiative.

“MSMEs are already contributing 8 per cent to the manufacturing GDP, 45 per cent to manufacturing output, 40 per cent to exports...but we have to improve competitiveness of the entire manufacturing and value chain of the sector,” he said.

“That’s why we are looking to strengthen professional relationships in this sector (using the accreditation system). If an association is capable of supporting its members then many government programs could be routed through these associations,” he said.

Mr. Lal said lessons from China, if any, would have to be tweaked according to local conditions.

“It is important to focus on the value addition component and not just on expansion of manufacturing base because they have a lot of opportunities in the global market and hence will face challenges of innovation, efficiency of business models and the like,” he said.

Keywords: MSME sector, micro small and medium enterprises, Madhav Lal

Cabinet relaxes norms for FDI in construction source Business Line

Source  Business  Line Cabinet relaxes norms for FDI in construction OUR BUREAU eases minimum area rule and minimum capital requirement NEW DELHI, OCTOBER 29:   The Cabinet has relaxed norms for foreign direct investment (FDI) in construction development to make the sector more attractive for overseas investors. The minimum built-up area requirement for FDI in construction projects has been reduced from 50,000 sq metres to 20,000 sq metres, according to an official release. The Government has also halved the minimum capital requirement for such projects from $10 million to $5 million. Projects that commit at least 30 per cent of the total project cost toward low-cost affordable housing will be exempted from the minimum built-up area and capitalisation requirements. Land use norms However, there has been no relaxation in land-use norms. The previous UPA Government was examining the option of allowing Indian companies with foreign investments to buy agricultural land with a promise to change it into non-agriculture use later. Last month, the BJP-led Government relaxed FDI norms for the railways sector. “The announcement has come in the nick of time. The construction sector’s share in total FDI has slipped from over 20 per cent in 2009-10 to about 3 per cent this year, as developers reel under high levels of debt,” said Anuj Puri, Chairman & Country Head, JLL India. The easier rules will help speed up completion of projects, which are being delayed by a squeeze on funds due to elevated debt levels, he added. In the case of development of serviced plots, there is no condition of minimum land area. The existing FDI policy allows 100 per cent foreign direct investment in the construction sector subject to minimum built-up area and minimum capitalisation requirements. Exit option According to the new rules, an investor will be permitted to exit on completion of the project or three years after the date of final investment, subject to development of trunk infrastructure. The Government may permit repatriation of foreign investment or transfer of stake by one non-resident investor to another non-resident investor before the completion of the project. These proposals will be considered by the Foreign Investment Promotion Board on a case by case basis. (This article was published on October 29, 2014)