A short note on the FDI in MSEs

A Micro & Small Enterprise, in terms of MSMED Act, 2006 can now go ahead and issue shares imagesor convertible debentures to a person resident outside India (PROI), exceeding 24% of its paid -up capital. The only conditions which need to be fulfilled is w.r.t the sectors prohibited and the maximum limits in Schedule 1 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000. Nonetheless, it should comply with FDI Policy, as notified by Ministry of Commerce & Industry, G.O.I., from time to time.

Further, any Industrial Undertaking, which is not an MSE and having an industrial license under the provisions of Industries (Development & Regulation) Act, 1951 for manufacturing items reserved for MSE sector, can issue shares exceeding 24% of its paid up capital with prior approval of FIPB.