Rise of Foreign Investments in the Indian SME Sector

The number of NRIs investing their investments in the Indian SME sector was found to be continuously increasing. These foreign investments were to the tune of about Rs.10 crores which is a significant number. But often, the multi-billion dollar deals made by Indian MNCs overshadow them.

Also, the investments by the Indian SME sector in global firms were found to increase. The Indian SME owners have been showing interest to invest in mineral resources like gold, coal and diamonds and global multi-national corporations (MNCs).

The main reason behind these investments could be the saturation of the western markets and the expected high growth rates of the Indian economy. Indian SMEs sector is the largest GDP contributor. It also provides great employment opportunities reducing the unemployment in the country.

Realizing the importance of SMEs for the country’s economic development, the Government of India has been implementing various schemes to promote and increase the growth of Indian SMEs. A task force was set up by the government in 1999. There was a growth in the Indian SME sector with the SME loans and special schemes of the government. With this scenario, an investment in Indian SME sector can yield double digit returns. However, this is very rare for investments of same value elsewhere in developed economies.

With the developed maturity markets and the recent growth trend shown by the Indian economy, NRIs found India as a lucrative investment destination.

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