| Date: |
20-02-2014
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| Notification No: |
RBI/2013-14/498 A.P. (DIR Series) Circular No.107
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| Issuing Authority: |
RBI
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| Type: |
A.P.D.(Series) Circulars
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| File No: |
RBI/2013-14/498 |
| Subject: |
Foreign Direct Investment (FDI) into a Small Scale Industrial Undertakings (SSI) / Micro & Small Enterprises (MSE) and in Industrial Undertaking manufacturing items reserved for SSI/MSE
|
RBI/2013-14/498 A
RBI/2013-14/498
A.P. (DIR Series) Circular No.107
February 20, 2014
To
All Category – I Authorised Dealer Banks
Madam / Sir,
Foreign Direct Investment (FDI) into a Small Scale Industrial Undertakings (SSI)
/ Micro & Small Enterprises (MSE) and in Industrial Undertaking manufacturing
items reserved for SSI/MSE
Attention of Authorised Dealer Category – I (AD Category-I) banks is invited to
Schedule 1 of the Foreign Exchange Management (Transfer or Issue of Security by
a Person Resident outside India) Regulations, 2000 notified by the Reserve Bank
vide
Notification No. FEMA. 20/2000-RB dated 3rd May 2000, as amended from time
to time.
- In terms of the Schedule 1 of the Notification, ibid, an Indian company which
is a small scale industrial unit and which is not engaged in any activity or in
manufacture of items included in Annex A, may issue shares or convertible
debentures to a person resident outside India, to the extent of 24% of its paid
-up capital provided that such company may issue shares in excess of 24% of its
capital if:
(a) it has given up its small scale status,
(b) it is not engaged or does not propose to engage in manufacture of items
reserved for small scale sector, and
(c) it complies with the ceilings specified in Annex B to Schedule I of the
Notification.
- With the promulgation of the Micro, Small and Medium Enterprises Development
(MSMED) Act, 2006, the extant policy for foreign direct investment (FDI) in
Small Scale Industrial unit and in a company which has de-registered its small
scale industry status and is not engaged or does not propose to engage in
manufacture of items reserved for small scale sector, has since been reviewed
and it has been decided that;
- a company which is reckoned as Micro and Small Enterprises (MSE) (earlier Small
Scale Industries) in terms of MSMED Act, 2006 and not engaged in any
activity/sector mentioned in Annex A to schedule 1 to the Notification, ibid may
issue shares or convertible debentures to a person resident outside India,
subject to the limits prescribed in Annex B to schedule 1, in accordance with
the entry routes specified therein and the provision of Foreign Direct
Investment Policy, as notified by the Ministry of Commerce & Industry,
Government of India, from time to time.
- any Industrial undertaking, with or without FDI, which is not an MSE, having an
industrial license under the provisions of the Industries (Development &
Regulation) Act, 1951 for manufacturing items reserved for manufacture in the
MSE sector may issue shares in excess of 24per cent of its paid up capital with
prior approval of the Foreign Investment Promotion Board of the Government of
India.
- Further, in terms of the provisions of MSMED Act, (i) in the case of the
enterprises engaged in the manufacture or production of goods pertaining to any
industry specified in the first schedule to the Industries (Development and
Regulation) Act, 1951, a micro enterprise means where the investment in plant
and machinery does not exceed twenty five lakh rupees; a small enterprise means
where the investment in plant and machinery is more than twenty five lakh rupees
but does not exceed five crore rupees; (ii) in the case of the enterprises
engaged in providing or rendering services, a micro enterprise means where the
investment in equipment does not exceed ten lakh rupees; a small enterprise
means where the investment in equipment is more than ten lakh rupees but does
not exceed two crore rupees.
- Copy of Press Note No. 6(2009) dated September 4, 2009 issued by Department
of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry,
Government of India in this regard is enclosed.
- AD Category - I banks may bring the contents of the circular to the notice of
their customers/constituents concerned.
- Reserve Bank has since amended the Regulations and notified vide
Notification
No. FEMA. 230/2012-RB dated May 29, 2012, notified vide. G.S.R. No.797(E) dated
October 30, 2012 read with Corrigendum dated September 10, 2013 notified vide.
G.S.R. No.624(E) dated September 12, 2013 .
- The directions contained in this circular have been issued under sections
10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and
are without prejudice to permissions / approvals, if any, required under any
other law.
Yours faithfully,
(Rudra Narayan Kar)
Chief General Manager In-Charge
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