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Larger turf for big firms

Partha Ghosh & Sidhartha

The government is set to end the small-scale reservation regime for 51 items, including toothpaste, wall clocks, watch parts and mathematical and survey instruments.

This will be the largest case of dereservation in one round. It will take the number of items dereserved in the last two years to nearly 75. At present, there are 799 items reserved for small-scale industrial units with investment capped at Rs 10 million in most sectors.

The move is expected to help Colgate-Palmolive, Hindustan Lever and SmithKline Beecham in the toothpaste business, Titan and Timex in the watch business and Faber Castell and Camlin in the mathematical instruments business.

The list of items for dereservation includes agricultural implements (10 items including Persian wheel, threshers, winnowers and water filters), automobile parts, components and equipment (bulb horns, automobile radiators and exhaust mufflers), chemicals, drugs and intermediaries (five items), and one item from the knitwear and hosiery sector.

For mathematical and survey instruments and wall clocks and watches, the numbers are 29 and three, respectively.

An interesting product in the list is synthetic knitted gas mantle fabric, included among the 27 items reserved for the knitwear and hosiery sector.

Last year, the government had enhanced the investment limit in the sector from Rs 10 million to Rs 50 million to aid investment for technological upgradation in the sector.

The decision to dereserve the 51 items was taken last month at a meeting of the advisory committee on dereservation headed by small-scale industry secretary Ashok Pradhan.

The list is now awaiting clearance by minister of state for small- scale industry Vasundhara Raje before the decision is notified. Official sources said the notification would be issued after the budget was passed by Parliament. Finance minister Yashwant Sinha had announced the dereservation of 50 items while presenting this year's budget.

Officials said the decision was taken after consultations with the industry associations concerned. The items to be dereserved will not affect the small-scale sector.

Toothpaste is essentially outsourced from the small-scale sector. But to get the benefits of economies of scale to capture export markets, higher investments are necessary. This is possible after dereservation.

However, for toothpaste some manufacturers have carry-on business licences because they were manufacturing the product at the time of its reservation.

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