Bengal set to attract FDI

In a bid to attract foreign direct investment into the small and medium enterprises sector in West Bengal, the state government intends to notify a new foreign direct investment policy for minor investors from overseas.

The SME sector, particularly engineering and chemicals, has seen some action in this regard, inducing the government to look at a policy to accelerate FDI flow to SMEs.

For example, Patton International, an engineering and the storage tank manufacturing group recently signed a deal for investment. A similar deal was signed by a small precision tools company based in Kolkata, which also has a guaranteed buy-back arrangement in place.

"Enterprises abroad are looking at small scale manufacturing to service niche markets for manufactured goods and even some electrical items and there is adequate scope for FDI in this," said a leading exporter based in Kolkata.

On its part, the state government intends to roll out a policy for SME investors from Germany, Japan and Italy as trade teams from these countries have visited the state and traditional trade ties with these nations are strong.

The state industry secretary, Sabyasachi Sen, recently announced that the government was planning to set up dedicated industrial parks for German and Italian SMEs.

The state government had announced before this that it would set up an industrial park for Japanese SMEs.

Sen pointed out that the state government is planning to set up clusters for several SMEs from each country in one zone to provide a comfort factor, as it had received feedback that many SMEs are not willing to work in standalone sites.

"We need FDI and our observation is that German, Italian and Japanese SMEs are the best bet. But we need infrastructure to attract them. This is why we are contemplating a dedicated industrial park which will be the first of its kind in the country. Unlike big corporate houses the threat perception of these industrial outfits is higher so they prefer to invest in clusters," he added.

The state industry minister Nirupam Sen along with industry secretary Sabyasachi Sen had approached SMEs in Japan during their visit in October 2006, during a meeting with the Japan India Chamber of Commerce in Tokyo, Nagoya Chamber of Commerce in Nagoya and Osaka Chamber of Commerce in Osaka.

The Bengal government is trying to rope in the $22 billion Sumitomo Corporation as the anchor developer for the proposed Japanese SME park. It has proposed that the diversified conglomerate should develop the park along with an investment in the auto component sector.

Sumitomo develops industrial parks as one of its core businesses. Land will identified once the Japanese company agrees. Sumitomo has developed industrial parks in China, Vietnam, Indonesia and Philippines.