What is stopping you from investing, FM asks India Inc

Finance Minister Nirmala Sitharaman on Tuesday asked Indian companies what is stopping them from investing in the economy at a time when India is trusted by foreign direct investors, foreign portfolio investors and domestic retail investors.

The finance minister also criticized some large companies that delayed payments to micro, small and medium-sized enterprises (MSMEs).

The direct question posed by the finance minister at the Mindmine 2022 Summit in the capital reveals a degree of frustration at the failure of domestic private investment to take off, even after the central government took the initiative to increase capital spending with hoping to crowd in private. investments.

The minister reminded the industry of government policy measures taken to encourage companies to invest, including lowering corporate tax rates in 2019.

“If it’s not a bit flippant to say this now, I’d still like to hear from the Indian industry what they are hesitant about…Since 2019, when I took over the Ministry of Finance, I’ve heard that the industry doesn’t think it’s conducive (for investments). (They said) ‘Okay, lower the rate’; the tax rate was reduced. ‘Give incentive linked to production’ (PLI): we have given PLI. I want to hear from India Inc., what’s stopping you?” Sitharaman asked business leaders at the event, which was broadcast online.

The minister asked if this was a case where the Indian industry was unaware of its own strengths and capabilities. “When overseas countries and industries think this is the place to be, right now, FDI is coming in, FPIs are coming in, the stock market is also so confident, the Indian retail investor believes in them. .. Is it, like Hanuman, you don’t believe in your ability, in your own strength, and there has to be someone standing by and saying, ‘Hey, you’re Hanuman, do it.’ And who is that person to tell Hanuman? That certainly cannot be the government.”

The ministry has emphasized increasing capital spending and providing long-term loans to states so they can boost spending in hopes of attracting private investment, which in turn could help speed economic recovery.

He also noted delays in payments from large companies to MSMEs. “Support for MSMEs is not just what the government can give. It largely depends on that. I can take an example where all of you can help equally.”

Sitharaman said the government had reviewed MSME fees, which included fees from the central and state governments, as well as public sector companies from the Center and the states. “But I was surprised to find that the sizeable outstanding payments were from large industries.”

Sitharaman said he checked this against Companies Registry data on declarations made by companies. There were quotas declared by the big companies.

“I can boost public sector companies, I can petition states, I can make sure departments pay. (But) I can only appeal to the industry. For all the tears we shed for MSMEs, my tears, your tears, can we limit the time that MSMEs will collect their dues?

However, Sitharaman acknowledged that the companies were disclosing their fees to small businesses in their legal documents.

An RBI survey released in August showed capacity utilization in manufacturing topped 75% in the fourth quarter of FY22, up from 69% a year ago, but has yet to touch 80%, a threshold companies hope to achieve before making further investments.

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