Government plans to invest in MSMEs, looks to chase foreign investment
Jun 29, 2020
The Union Government plans to start investing in micro, small, and medium enterprises through a ‘rolling fund’ of Rs 50,000 crore ($7.52 billion), and aims to increase foreign investment in the sector.
As India learns to live with Covid-19, business in the country could be back to 70% to 80% of pre-lockdown levels this month, MSME Minister Nitin Gadkari, told ET Digital in an interview. The minister, who quashed rumours of a potential second lockdown, said that the government plans to support the MSME sector through a number of measures including loans and upgrading technology.
“India's domestic market is a strength, skilled manpower is available, raw material is obtainable, and we have a good presence in the international markets,” said Gadkari.
“This is the opportunity for our industry to take advantage and increase our exports. We are taking all measures to ensure that those interested can get all clearances as early as possible. We want to roll out the red carpet for foreign investment.”
Prior to the lockdown, the government had named the MSME sector as important for India’s next phase of economic growth and announced plans to boost MSME production and exports as part of its ‘Make in India’ campaign.
“We do not want to make new exchanges, but we need to make some arrangements,” said Gadkari about the government’s new rolling investment and exchange scheme for MSMEs.
“The thought is that the Government will give 15% equity infusion to MSMEs that want to take the capital market route. When they raise funds on these exchanges in two to three years or when their share prices appreciate, we can sell our equity and reinvest in another promising SME. The amount of Rs 50,000 crore will be a rolling fund, which we will use to constantly invest. We are currently making the rules and regulations because this is a new concept and we will launch this scheme as early as possible.”
MSMEs have been especially hit by the halt in business caused by the pan-India lockdown. Over 70% of MSMEs plan to cut back on jobs to keep business going, the All India Manufacturers Organisation reported in its latest survey.
Moreover, the Federation of Indian Micro, Small and Medium Enterprises told ET Digital that the sector had already been struggling before lockdown and the drop in business brought “havoc” on the sector.
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