The Government may change the definition of Medium, Small and Micro Enterprises (MSME) to facilitate foreign direct investment (FDI) in single-brand retail.

The indication comes at a time when Swedish furniture major IKEA has applied for 100 per cent FDI in single-brand retail. The company has sought some changes in the MSME provision.

Policy evolution

Although the MSME Ministry is yet to respond to the demand, the Department of Industrial Policy and Promotion (DIPP) is hopeful of a solution.

Commerce and Industry Minister Anand Sharma said, “Policy evolution is a continuous process.

Once Indian SMEs are engaged (with global players), the definition will require a change because you have an SME and you have global major taking 30 per cent sourcing (clause)….”

He said that when MSMEs start selling to global majors, they may not remain MSMEs by the current definition.

“In one year, you may double your revenue and profit, so a (new) definition (is needed). The department concerned will discuss and change...” The present norms define MSME with investment of Rs 25 lakh to Rs 10 crore in plant and machinery.

Ties with Lanka

The Minister also announced co-operation between India and Sri Lanka in the textiles sector. There are plans to take over sick and closed units in the island nation and modernise them. A delegation of textile manufacturers is slated to visit Sri Lanka in September.

This is the third major announcement during the Minister’s ongoing visit. India has already agreed to set up an investment-linked manufacturing special zone for auto components and engineering and a pharma hub.

At the same time, Sri Lankan company Brandix Apparels is looking at a four-fold increase in exports from Visakhapatnam. At present, it exports 50 million pieces of lingerie from its Indian unit to Victoria’s Secret. Two Lankan companies, Toray and MAS Fabrics, also have big India plans.

>Shishir.Sinha@ thehindu.co.in

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