The Indian government’s stipulation of mandatory sourcing of a minimum of 30 per cent from Indian micro and small industry in any 100 per cent FDI deal is expected to lead to employment generation and also help SMEs achieve growth in sales, size of the industry, capacity addition, increased contracts and orders, qualitative improvements and technology upgrade.
Chandrajit Banerjee, Confederation of Indian Industry (CII) director-general, said: “India’s growing retail boom is a success story. FDI of 51 per cent in multi-brand retail and its early implementation would give a major boost to the all round growth of organised retail in the country having substantial positive impact on the growth of SMEs.”
The latest CII survey is based on a large sample size covering different categories of SMEs from different regions of the country.
A majority of the SMEs surveyed support the government’s notification allowing 100 per cent FDI in single-brand retail and 52 per cent of them hope for an early implementation of 51 per cent FDI in multi-brand retail.
On the question of whether the SME industry considers the entry of multinational retailers a threat or an opportunity, majority of the respondents (66.7 per cent) see it as an opportunity for their sector while around 21 per cent perceive it as a threat. Only 12.5 per cent of respondents are of the opinion that the decision would have little or no impact on their business.
Majority of the respondents (98.6 percent) also believe the opening of FDI in retail will augment growth of sales of their products and only 6 per cent feel the decision would have a negative impact.
Nearly 68.7 per cent of those surveyed said the opening up of the sector would lead to improvements in supply chain efficiencies, which in turn will integrate SMEs into the modern trade process and lead to substantial knowledge and skills transfer.