The Department of Industrial Policy & Promotion has issued Press note 6 (2009) dealing with FDI into SSI/MSE and Industrial undertaking manufacturing items reserved for SSI/MSI and is briefly discuss below:
FDI into SSI /MSE
- Prior to 2006, A SSI was defined in terms of Investment in fixed asset in plant & machinery and equity participation.
- Vide press note 18 (1997), In case of FDI of more than 24% in SSI was subject to following:
– the company would get itself de-registered as small-scale unit
– obtain Industrial licence or file Industrial entrepreneur Memorandum wit SIA
Now with the enactment of Micro, Small and Medium Enterprises Development Act, 2006, theceiling for equity participation in Micro and small enterprise (MSE) is removed and defined solely based on the investment in plant & machinery.
Accordingly, FDI in MSE is subject only to the sectoral equity caps, entry routes and other relevant regulations.
FDI in undertaking manufacturing items reserved for SSI/MSE
- An Industrial licence would be required for undertaking, whether with or without FDI, who
– is not a MSE; and
– manufacture item reserved item for SSI
- Further, such industrial undertaking would also require prior government approvalwhere FDI is more than 24% in equity capital and would be subject to other conditions.
Courtesy: Sudha Gupta (email@example.com)