SMEs welcome government decision on 100 % FDI in single-brand retail
28 Jan 2012
Welcoming the government's decision to allow 100-per cent foreign direct investment in single-brand retail, India's small and medium enterprises (SMEs) said, the mandatory 30-per cent sourcing from micro and small industries would facilitate their achievement of higher growth.
India allows 100 per cent FDI in wholesale or cash-and- carry segment but restricts it to 51 per cent in single- brand retail, but no foreign investment is allowed in the multi-brand, or supermarket retail.
In a recent bid to open up multi-brand retail, the government ran into strong opposition from various quarters which blocked the move. The government has also proposed 100 per cent FDI in single-brand stores.
A Confederation of Indian Industry (CII) survey found that the government's move enjoyed the support of a large section of the SME sector.
According to the survey, the government's decision of mandatory sourcing of a minimum of 30 per cent from Indian micro and small industry would help SMEs achieve higher growth in sales, size of the industry, capacity addition, increased orders, qualitative improvements and branding of the products, technology upgradation, employment, etc.
According to the survey, mandatory sourcing would also provide for expansion of the scales of production facilitating domestic value-addition in manufacturing, which would create a multiplier effect on employment, technology upgradation and income generation, demand and further investment.
