The department of industrial policy & promotion on Friday issued a notification dereserving 51 items pertaining to chemicals and drugs, mechanical engineering, mathematical and survey instruments, clocks and watches, auto components, and textiles from the SSI list.
The move is based on the recommendations of the advisory committee to the department, as also following the representations made by concerned associations to the SSI ministry.
With 51 more items off the quota list, there are only 748 items on the reserved list now.
The move has been welcomed by various sections. According to Federation of Indian Micro and Small & Medium Enterprises general-secretary Anil Bhardwaj, there should be no reservation at all.
“It is good that the government is moving in this direction and, more importantly, industry associations are realising that reservation is harming their interests,” he said, adding it is at the behest of the concerned industry bodies that more and more items are being removed from the quota list.
Mr Bhardwaj also pointed out that dereservation will help SSIs upgrade in terms of technology and size, leading to economies of scale. This will also increase exports and help form joint ventures.
In the same vein, National Council of Applied Economic Research’s chief economist Shashanka Bhide said the government move is not surprising but it is welcome nonetheless. “The general direction of the policy has been known for quite some time.”
At any rate, he said, the logic of SSI reservation has become untenable with trade liberalisation. So, there is no point in keeping out the big industry from certain areas of production. What remains to be seen is what kind of support can be given to the SSIs so that they can grow and become competitive, he added.
According to Planning Commission member SP Gupta, who headed a study group on SSI development, the move is in line with his recommendations on dereserving items on a case-to-case basis. “We had recommended that de-reservation should be done on a case-to-case basis and the affected industries should be given a time-frame beforehand so that they get time to adjust to the situation. The SSI ministry is, by and large, doing just that.” Dr Gupta also said the ministry consults representatives from all sectors concerned before arriving at its decision to de-reserve certain items.