The report that the government is likely to begin the process of removing the last 35 items on the list of industries reserved exclusively for small scale units, after talks with stakeholders and industry, is welcome for many reasons. For one, the UPA government can claim this piece of reform as a triumph. In whittling down the list, the UPA?s record has been better than that of its predecessor, the NDA. Though the NDA government pruned the list by around 141 products in four instalments over its term in power, the UPA has been bolder, cutting the list by 664 products in six instalments. The very fact that only 35 products are left, and that the earlier pruning was achieved without any major protest being raised by key stakeholders, speaks of the success of the dereservation programme. With so much done, why leave the last bit undone?
The list of 35 items that continue under SSI reservation is in itself a strange mix, and in the absence of any unifying rationale, only points to the influence of lobby groups rather than any economic logic. For instance, the list includes food products like pickles & chutneys and bread, several ground and processed spices, and such edible oils as non-solvent extracted mustard and groundnut oils. Labour-intensive production methods are not a common characteristic of these. Within food processing industries, rice and dal milling are more labour-intensive, but they were taken off the list of reserved industries almost a decade ago. Export potential does not seem to be a consideration either. Readymade garments, toys and leather shoes have been axed from the list, while other important products like steel furniture and domestic utensils remain reserved for SSIs. While countries like China export office equipment and kitchen goods worth billions of dollars, India misses out on this vast opportunity because of the shackles of reservation that make economies of scale impossible and quality control difficult to achieve. Other products left on the list are wax candles, laundry soap, matches, fireworks and incence sticks. Retaining these, presumably, has something to do with romantic old notions of sustaining village employment. Yet, hazardous industries like fireworks being kept outside the scope of large-scale production has only resulted in a shameful safety record. It?s time to be realistic, and lift them up by the bootstraps.