Foreign firms flouting MSME tendering norms

New Delhi: An engineering professionals body has written to Union Minister Nitin Gadkari alleging that foreign companies are flouting the MSME tendering norms.

The Consulting Engineers Association of India (CEAI), in a letter to Gadkari, Union Minister for Micro, Small and Medium Enterprises (MSME) and Ministry of Road Transport and Highways (MoRTH) has drawn the attention of the government towards flouting of the MSME tendering norms by "the powerful foreign companies".

"The Union Government had recently changed the tendering system to benefit the small and medium enterprises in the country by limiting tenders below Rs 200 crore for Indian companies only. But the provisions are being flouted by powerful foreign companies wherein they set up business operations in India by incorporating a company under Companies Act 2013 either as Joint Ventures or Wholly owned subsidiaries or a Liaison/Representative Office.

"These entities operate as an Indian Company, duly complying with the provisions of the Indian Company Law and Indian tax laws. The current definition allows such companies to enjoy all benefits provided to Indian companies, especially the MSME's," said Amitabha Ghosal,President, Consulting Engineers Association of India (CEAI).

At present for all practical purposes, these foreign companies become Indian company under the ACT, do their business and after paying due taxes, accrue the profits after tax to their parent company abroad, there by depleting the country of precious Forex reserves, said KK Kapila, Chairman, Infrastructure Committee, CEAI.