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Scrap reservation policy for SSIs, says CII

Sandip Das

The government's reservation policy for the small scale industry is hindering the growth of the sector, a study by the Confederation of Indian Industry has said while recommending doing away with the policy.

"Even if all the items are dereserved, medium and large scale units will not be interested in producing these items," the study said. As many as 174 items belong to the organic chemicals and allied industries category and the medium and large industries are allowed to produce these commodities for industrial use, it said.

As many as 97 items are reserved for the fabrics and knit-wear sectors. For upgrading the technology and boosting the export potential, there is need to dereserve the sector, the study titled 'SSI reservation: for whom' said.

The study pointed out that there was no restriction on large units for spinning, weaving or processing but knit fabrics were excluded and, therefore, an integrated composite textile unit for knitted fabrics was not allowed in medium and large sectors.

At present, 814 items are reserved for the SSI sector. The items cover sectors such as chemicals, textiles, plastic, rubber, wood, paper, mechanical appliances and vehicle parts. The machinery and mechanical appliances sector has 71 items under the reservation.

The study said most of the items were such that they would continue to be manufactured by the SSI sector whether reserved or not.

The iron & steel, copper and aluminum sector has 66 items under the reservation and the CII study said most of those items would continue to be produced by the SSI sector.

As many as 61 items reserved in the vehicle parts and accessories sector are parts and accessories of cycles, and the small scale industry has been meeting the requirements of cycle manufacturers for a long time.

However, the study has cautioned that small units might face problems arising out of cheaper imports of cycles and their parts from China.

The study said that big industries would be interested only in items such as prepared food stuff, consumer goods like hair oil, tooth paste and powder, leather articles and glass products.

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