Right time for Indian SMEs to acquire foreign firms: MSME Sec

Business Standard

5 October, 2011

NEW DELHI: The uncertainty in major world economies presents a "good opportunity" and it is the "right time" for Indian SMEs to acquire small firms in the US and Europe, the MSME Ministry today said.

"Europe is bright for acquisition. US is right for acquisition," Micro, Small and Medium Enterprises (MSME) Secretary Uday Kumar Varma told here.

The European and US sovereign debt problems are a "good opportunity" for advanced SMEs to establish an international presence through acquisitions. "Yes, this is the right time," he said.

The ministry also plans to introduce a special package during the 12th Five-Year Plan for units that are ready to buy-out overseas firms. "Uncertainty (global situation) has to be replaced by certainty and confidence," the secretary said.

Varma said this can be accomplished by offering information to units through fortnightly discussions with a panel of experts that will advise them on the ways and benefits of the incentive mechanism that is proposed to be rolled out by the government.

Furthermore, "... incentives could be more substantial," he added.

Citing the example of Italy, whose credit rating has been downgraded by rating agency Standard & Poor's, he said Italian firms are willing to set up joint ventures in India, but they are conscious of their Intellectual Property Rights.

An Italian delegation is coming to India in October-end, he said, adding, "We have decided that we must sign a formal MoU with the Italian government for business to business."

Small and medium enterprises (SMEs) have been globally recognised as a priority sector for growth and development.

In India, MSMEs contribute over 45 per cent of the country's industrial production and around 40 per cent of total exports.

He said the major challenges faced by the sector are access to easy credit, infrastructure, technology and skill development of the 60 million workers employed by 26 million small and medium enterprises.