Govt removes remaining 20 items from MSME's exclusive ambit

Moneylife Digital Team 14 April 2015

Now even big corporates can manufacture pickles and chutneys, wooden furniture, exercise books and registers, wax candles, agarbatties and glass bangles that were monopoly of the MSME segment

The union government has removed remaining 20 items like fireworks, safety matches, bread, wood and steel furniture and agarbatties, from the exclusive reserved category for micro, small and medium enterprises (MSMEs). This move will allow big players to manufacture these items.

The 20 items include pickles & chutneys, mustard oil (except solvent extracted), groundnut oil (except solvent extracted), wooden fixtures, exercise books and registers, wax candles, laundry soap, glass bangles, steel almirah, rolling shutters, steel chairs and tables, padlocks, stainless steel and aluminium utensils.

In a statement, the Ministry of Commerce & Industry, said, "The policy initiatives have been taken to encourage greater investment, including the existing MSME units, to incorporate better technologies, standard and branch building to enhance competition in Indian and global markets for these products."

The last 20 items are from the original list of over 800 items reserved for exclusive production by the MSME sector. This brings to an end a policy regime being followed since the 1960s to promote and facilitate the small sector, considered a big employment generator.

The Ministry said an Advisory Committee constituted under Section 29B(2C) of the Industries (Development & Regulation) Act, 1951 on de-reservation periodically evaluates products /items reserved for exclusive production by micro and small enterprises.

“India has opened up its economy since 1991 through a forward looking policy which led to de-licensing of items. Over the years, list of items reserved for manufacture by MSME sector has been reduced from over 800 to 20,” the statement said.

Comments

User

kapil bajaj

1 decade ago

The move is based on an obviously fraudulent assumption and is a further blow to open competition and free market.

It is small scale production (i.e. the so called 'informal economy'), not big companies, that make up the free market and open competition, making available a wide variety of products at every street market across the length and breadth of the country at competitive and highly negotiable prices.

Small producers can do that because they have no power to manipulate market in their favour and so play fair and square, keeping low their costs and the expectation of prices they can charge.

Small production thus works self-regulatedly and has little power to hold the society hostage.

The big companies, on the other hand, will be there not to actually make those products, but to act as capitalistic middlemen in the market in order to extract ever increasing profits.

They will be able to do that either by buying the products in bulk or contract manufacturing or by taking over a number of small producers.

Either way, they will damage competition and the interests of both small producers and customers.

So whatever "greater investment" that the new "policy initiative" promises will be riding on expectations of anti-competitive profits rather than into "better technologies, standard and branch building".

Competition and free market is already being damaged by the so called "organized retailers" whose shelves are stuffed with products made by big business and through contract manufacturing, leaving little space for commodities produced by more efficient and low-cost local producers.

B. Yerram Raju

1 decade ago

The next move could be merging the MSME ministry with the Ministry of Commerce and Industry. It is incredible that these items that are now removed could be manufactured by the large industry? Again, through myriad of small units giving them their Brand, eating away the margins that should legitimately go to the small and micro enterprises?