Imports from China affecting Indian MSMEs

In a written reply to a question in Rajya Sabha on Wednesday,the minister said that as per information compiled from the data provided by Director General of Commercial Intelligence & Statistics, of 11 major product groups, largely manufactured by MSMEs in India, imports from China have grown at a higher rate than their respective imports from all countries combined during 2012-13 to 2015-16.

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, the minister said.

These product groups pertain to Electrical and Electronics, Mechanical and Metallurgical products on the one hand and Chemical, Glass & Ceramics based products on the other.

Union Minister for MSME, Kalraj Mishra, during his visit to China in October 2016, invited Chinese businesses to have partnership with Indian businesses, including MSMEs, for technological collaboration and manufacturing in India.

FDI policy places certain restrictions on foreign investment in certain sectors. Subject to such restrictions, foreign investors can setup enterprises in India without a lower level ceiling on investment. Such investment could be greenfield as well as brownfield in existing enterprises.

India has one of the most liberalized FDI policies in the world, wherein 100 per cent 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 conditions. The FDI policy equally applies to the MSME sector.

Image: Giriraj Singh Twitter