New Delhi: Allowing large companies to manufacture 212 product categories hitherto reserved for the small-scale sector, the Centre on Tuesday reduced the number of items that could be made only by small firms to 114.
Small-scale sectors are those in which investment in plant and machinery does not exceed Rs5 crore. The announcement came less than 24 hours before the Union Budget.
Of the 212, de-reservation of 87 items has already been notified. This includes several items of consumer interest ranging from paracetamol, an over-the-counter drug, to door locks and from toothbrushes to cigarette lighters. The list also includes floor and roof tiles, boats, and parts used in truck-body building. A commerce and industry ministry statement said the de-reservation of the 87 items from the reserved list was part of “a continuous exercise to streamline the industrial policy”.
The government has been removing items from the list in a phased manner since 2002. Prior to 2002, 812 items were reserved. The government had also decided to de-reserve 125 more items, which would be notified soon.
While the items are yet to be identified, sources close to the development said this could include items such as dyes and chemicals, stationery, plastic, electrical products and essential oils and organic chemicals.
Companies that do not classify as small-scale can manufacture product categories in the reserved list, but should export 50% of their output.
“Having decided to remove quantitative restrictions, the policy of reservation has become redundant, because in any case imports of these items are freely allowed,” Anil Bhardwaj, secretary general of the Federation of Indian Micro and Small and Medium Enterprises told Mint.
He added that the government had not kept its side of the bargain.
“When we decided to de-reserve items, it was based on the recommendation of the Abid Hussain committee, which had suggested that an allocation of Rs2,500 crore be made to help us tide over this phase of transition, which the government has never fulfilled,” Bhardwaj said.