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A clerk of ICBC bank counts Chinese one hundred Yuan at its branch in Beijing, China, April 13, 2016.Reuters file

China's largest bank has lined up a sizeable investment in India's burgeoning micro, small and medium enterprises (MSME) sector. The Industrial and Commercial Bank of China (ICBC) will funnel as much as $200 million into the Indian small scale sector, through its Mumbai-based Indian unit, PTI reported.

India's fast-paced economic development and unique demographic advantages have made the MSME sector promising, but the ongoing NBFC crisis has caused a paralysing funding crisis.

In the current round of funding, seven to eight start-ups could get a commitment to the tune of $30 million, the Indian embassy said in a statement issued in Beijing.

"... the ICBC India has established a USD 200 million fund for investing in the promising Indian micro, small and medium enterprises (MSMEs) and ventures," the embassy statement said.

The offer from Chinese venture capitalists came at a pitching session and seminar organised by the Indian Embassy in partnership with the Start-up India Association (SIA) and Venture Gurukool.

Last year, the start-up India investment event hosted by the embassy had resulted in funding to the tune of $15 million to four Indian firms.

Last month, a parliamentary committee report said rising imports from China badly affected the micro, small and medium enterprises (MSMEs) sector. The sector's employment-generation potential was particularly hit by the influx of Chinese goods, the report said.

Fund crunch in small scale sector

Sectors like textile, steel and power were especially hit, the report said. "The stainless-steel industry is a case in point, where a number of MSMEs have had to close down, particularly manufacturers of stainless steel grades of the 200 series due to Chinese imports," the 'Impact of Chinese goods on Indian industry,' report said.

Earlier this month, Prime Minister Narendra Modi unveiled an ambitious credit scheme for the sector. Entrepreneurs in the small and medium sector would get loans of up to Rs 1crore in 59 minutes, the PM said.

The 12-point 'Support and Outreach Initiative' came at a time when the liquidity crunch at non-banking finance companies (NBFCs), spawned by an unravelling at the colossus IL&FS, threatened to hit credit flow to the MSME sector.