New Industrial Policy seeks forex pile for financing companies: Report

The Ministry of Commerce and Industry is working on a new industrial policy and is exploring the formation of a Development Finance Institution (DFI). The DFI could offer low-cost finance to companies and set up a technology fund to enable them in moving up the value chain, according to a Mint report. The draft “Industrial Policy 2022—Make in India for the world” has been disseminated for consultations with other ministries. The industrial policy which is being developed now intends to boost the access of companies to finance for rapid industrial growth. The policy contains a proposal for establishing a technology fund that would incentivise pioneer firms in areas of advanced technology and identify them for acquisitions. The proposed industrial policy focuses on some key areas, such as achieving international scale, improving competitiveness, integration with global supply chains, improving the ease of doing business, and creating skills and employment. The policy also intends to facilitate the movement of the local industry up the value chain, and become an innovative knowledge economy. But, not everyone is in agreement about the benefits of DFI. N.R. Bhanumurthy, vice-chancellor of Dr B.R. Ambedkar School of Economics University, Bengaluru told Mint that “currency reserves are not assets to be used.” He further said that the government cannot invest its forex anywhere. Additionally, the policy contains a plan for developing mega clusters that can integrate with global supply chains and serves the requirements of key sectors like electronics, food processing, heavy engineering, drugs, semiconductors, and automobiles. One of the proposals under the new industrial policy is to help small businesses in accessing the corporate bond markets. According to V.K. Agarwal, former president of the Federation of Indian Micro and Small & Medium Enterprises (FISME) and present chairman of its policy committee, financing is the biggest concern for micro, small & medium enterprises (MSMEs). He went on to add that banks look for collateral in order to offer funds to a growing medium-scale industry that eats into an MSME’s working capital as most of them are unable to offer collateral over the years. Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.