There are long pending demands from MSME sector like overhauling of import laws, high anti-dumping duty on import of certain goods, implementing schemes which fuel the export of MSMEs etc. All theses demand are aimed at checking the entry of cheap products from China, Vietnam and Bangladesh, damaging Indian MSMEs on a large scale.
“Indian Micro, Small and Medium Enterprises (MSMEs) are facing tough competition from cheap Chinese products and it is evident from the high growth of imports from China.”, Union Minister of State, MSME, Giriraj Singh said in Rajya Sabha on November 16, 2016. He was replying to a question asked of Samajwadi Party MP, Sanjay Seth.
On the first day of winter session, the Minister in a written reply said that as per information compiled from the data provided by Director General of Commercial Intelligence & Statistics, Imports in respect of 11 major product groups, largely manufactured by MSMEs in India, have grown from China at a higher rate than their respective imports from all Countries combined during 2012-13 to 2015-16.
He said, “As these 11 product groups accounted for 74% of India’s total imports from China in 2015-16, a significant proportion of Indian MSMEs seem to be adversely affected from Chinese imports as compared to the rest of the World.”
These product groups are Electrical and Electronics, Mechanical and Metallurgical products on the one hand and Chemical, Glass & Ceramics based products on the other.
Referring to recent visit of Union MSME Minister Kalraj Mishra to China in October 2016, Singh said that Mishra invited Chinese businesses to partner Indian businesses including MSMEs for technological collaboration and manufacturing in India.
He clarified that FDI policy, places certain restrictions on foreign investment in some sectors. Subject to such restrictions, foreign investors could setup enterprises in India without a lower level ceiling on investment. Such investment could be greenfield as well as brownfield in existing enterprises.
On question of whether current MSME Act permits foreign investments in the MSME regardless of the sectoral FDI cap, Singh said, “India has one of the most liberalized FDI policies in the world, wherein 100% FDI under automatic route is permitted in most of the sectors/activities. There is only a small list of sectors/activities where FDI is regulated i.e. subjected to government approval, cap or having other conditionalities. The FDI policy equally applies to MSME sector.”
