India eases FDI norms for small scale sector news
05 September 2009

The department of industrial policy and promotion (DIPP) has come out with new liberalised foreign direct investment (FDI) norms for micro and small enterprises (MSEs) in order to help attract more foreign investment in the sector.

These industries will now be guided like other large enterprises as far as FDI is concerned, an official release said.

"The present policy on FDI in MSE permits FDI subject only to the sectoral equity caps, entry routes and other relevant regulations," according to a press note issued by DIPP yesterday.

However, if non-medium and small enterprises manufacture any of the 21 items, including pickles, aluminium utensils, reserved for MSEs, any FDI above 24 per cent will require the Foreign Investment Promotion Board's approval.

The new note replaces Press Note 18 of 1997, which stipulated that for foreign collaboration, maximum equity participation for small-scale units was 24 per cent.

The note defines a small-scale industrial (SSI) undertaking in terms of: (i) investment in fixed assets in plant and machinery and (ii) equity participation (both domestic and foreign) in the SSI, by other industrial undertakings prior to 2006.

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India eases FDI norms for small scale sector