Page 15 - Banking Finance July 2020

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"automatic route" for these nations "A fresh infusion of funds into these or supply chains. The health of these
through which an increasing number of Chinese firms wanting to exit their ex- MSMEs have a bearing on the entire
foreign firms and individuals had begun isting investments will now have to supply chain, including the large
to invest of late. require the government's approval. corporates; therefore, special, imme-
This step seems to be aimed at having diate and substantive support mea-
The sudden move has been attributed
to the rising possibility of "opportunis- a hostile takeover control measure sures are required to see the MSMEs
tic takeovers" of Indian companies by against China, given that it is investing through this crisis", said Chandrajit
in and acquiring companies all over the Banerjee, Director-General, CII.
those in neighbouring nations, as the
ongoing Covid-19 pandemic wreaks world," said Atul Pandey, partner at Following its suggestions on the eco-
law firm Khaitan & Co.
havoc on the domestic economy. Until nomic package for the industry, the CII
now, Chinese investments were auto- has submitted its recommendations
matically allowed, similar to those No more global tenders to targeted at providing relief specifically
from other nations, in all but 16 sec- procure goods up to Rs. to MSMEs, to the government.
tors, such as telecom, defence, and 200 cr It has recommended that the the UK
national security. Sinha Committee recommended fund
The government has notified amend-
According to Press Note 3 issued by for MSMEs be expedited, to support
ments to General Financial Rules(GFR)
the Department for Promotion of In- to ensure that goods and services val- venture capital/ private equity firms
dustry and Internal Trade (DPIIT), an investing in the MSME sector.
ued less than Rs 200 crore are being
entity of a country that shares a land The CII further recommended that
procured from domestic firms, a move
border with India can invest only after which will benefit MSMEs. government departments making pur-
receiving government approval. chases should not impose delay penal-
"Govt has notified the amendments to
"A non-resident entity can invest in the General Financial Rules 2017 to ties, as delays are bound to happen
India, subject to the FDI policy, except ensure that henceforth global tenders due to disruptions caused by the
in those sectors/activities which are will be disallowed in government pro- lockdown.
prohibited. However, an entity of a curement up to Rs 200 crore, as an-
country, which shares a land border nounced in the #AatmanirbharBharat Panel suggests institute to
with India or where the beneficial Package. A big boost to domestic sup- regulate valuers
owner of investment into India is situ- pliers, especially MSMEs," the Office of A government-appointed committee
ated in or is a citizen of any such coun- Finance Minister Nirmala Sitharaman of experts has proposed an institu-
try, can invest only under the govern- said in a tweet. tional framework for valuers by way of
ment route," the note stated. setting up the National Institute of
Besides China, the new rule will impact CII suggests relief mea- Valuers.
residents of Nepal, Myanmar, Bhutan, sures for MSMEs amid The panel, headed by IBBI (Insolvency
Afghanistan, Pakistan, and and Bankruptcy Board of India) Chair-
Bangladesh. So far, similar conditions Covid-19 person M S Sahoo, has also submitted
were in place for the residents and There is a need for enhanced working the 'Draft Valuers Bill, 2020'.
entities from the latter two countries. capital, relaxed collateral norms, ex- The corporate affairs ministry sought
tended moratorium and wage support
The new rules will also apply to all the comments on the bill, which has rec-
existing and planned investments by to provide relief to micro, small and ommended setting up of the institute.
medium enterprises (MSMEs) through
foreign firms in Indian businesses, the the Covid-19 crisis, said the Confedera- The panel was constituted by the min-
DPIIT said. Several Indian start-ups tion of Indian Industry (CII). istry on August 30, 2019 to examine
have existing investment from Chinese the need for an institutional frame-
investors. For instance, Flipkart has an "With limited resources, MSMEs do not work for regulation and development
investment from Tencent (about 5 per have the capacity to withstand massive of valuation profession.
cent) and Alibaba owns a significant shocks like Covid-19. In addition, many
stake in Paytm. MSMEs are an important part of larger "Based on a comprehensive study and

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