The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, has removed the ceiling for equity participation (both domestic and foreign) in the micro and small enterprises, by other enterprises. Under this Act Micro and Small Enterprises (MSE) (earlier small scale industries) are defined solely on the basis of investment in plant & machinery (for micro and small enterprise engaged in manufacturing) and equipment (for micro and small enterprise engaged in providing or rendering of services).
The Press Note amends Press Note 18 (1997 Series) but stating that FDI in MSE is subject only to the sectoral equity caps, entry routes and other relevant sectoral regulations.
2. FDI in an Industrial Undertaking manufacturing items reserved for SSI/MSE
This Press Note clarifies the position, as stated at Part III (ii) of Annex to Press Note 7 (2008), in respect of FDI in an industrial undertaking manufacturing items reserved for SSI/MSE. Accordingly, any industrial undertaking, with or without FDI, which is not an MSE, manufacturing items reserved for manufacture in the MSE sector (presently 21 items) as per the Industrial Policy, would:
a) Require an Industrial License under the Indus-tries (Development & Regulation) Act, 1951, for manufacture of the reserved items.
b) Apart from fulfillment of certain general conditions, the undertaking will have to export a minimum of 50% of the new or additional annual production of the MSE reserved items to be achieved within a maximum period of three years.
c) The export obligation will be applicable from the date of commencement of commercial production.
d) Such an industrial undertaking would also require prior approval of the Government (FIPB) where foreign investment is more than 24% in the equity capital.
5. A.P. (DIR Series) Circular No. 8 dated September 14, 2009 — Foreign Currency Account by diplomatic missions — Credit of Visa Fees.
Notification No. FEMA 193/2009-RB dated June 2, 2009 — Foreign Exchange Management (Deposit) (Amendment) Regulations, 2009.
Presently, Diplomatic Missions are permitted to credit proceeds of inward remittances received from outside India through normal banking channels to their foreign currency accounts.
This circular, in addition to the existing permission, permits Diplomatic Missions to transfer visa fees collected in India in Indian rupees from their rupee accounts to their foreign currency accounts.
Part D : Miscellaneous
The Government of India has signed a Social Security Agreement with the Government of Switzerland on 3rd September, 2009. The said agreement is intended to benefit cross-border operations in the two countries by avoiding the hardship of double payment of the social security (by employer and employee) in India and Switzerland. The same will come into effect after the fulfillment of the necessary requirements in both the countries.
