The government is likely to begin the de-reservation process of 35 remaining items reserved exclusively for small-scale units, signalling an end to the licence permit raj era. The move will open up the items for all players and end monopoly of the small-scale sector on these items.
Sources said the government was set to begin talks with stakeholders and industry on the issue soon. The 35 items include food products, such as pickles, chutneys and breads, wood & wood products, paper & paper product, plastic products, drugs & drug intermediates and a few mechanical engineering equipment and electrical appliances. “Barring bread and PVC pipes, we feel most other items are of marginal significance. We feel that there will not be too much opposition on de-reserving these 33 items. But we would strike a consensus before taking any decision,” a ministry official pointed out. Even after opening up these areas, most of the items will continue to be manufactured by small units due to cost-effectiveness, he pointed out.
Recently, the commerce and industry ministry de-reserved 71 items kept exclusively for small-scale industries. Items are reserved for the SSI sector by putting a limit on investments in plant and machinery and through this bigger players are barred from manufacturing them.
After 17 years of liberalisation, the government is finally comfortable with the idea of ending the era of reservation. Such a policy would not only help domestic manufacturers to compete with imports, but also achieve economies of scale and create job opportunities, experts pointed out. The government has been gradually opening up sectors. For instance, in 2007, 212 items were de-reserved, while in 2006, 180 items were thrown open to all kinds of manufacturers.