It may be curtains for 250 items on SSI reserved list

NEW DELHI: Small is beautiful seems to have lost relevance. Now the government is thinking big. Budget ���06 may see small scale industry (SSI) losing exclusive manufacturing rights over 250 reserved items, including sports goods, auto components & ancillaries, and food & allied industry.

Sources said there is a proposal under active consideration to dereserve 250 of the 508 items reserved for SSIs. An announcement to the effect is expected by finance minister P Chidambaram in his Budget speech, sources indicated.

Even in the past, dereservation decisions had been announced in the Budget.

While delivering the Budget last year, FM had announced the decision of the SSI ministry to dereserve 108 items including knitwear. It is understood that the SSI ministry had already expressed its willingness to dereserve the entire SSI list.

Considering political implications of scrapping the entire list, the government may select only 250 items to be deleted from the SSI list.

Individual items under consideration include pickles, chutneys, bread, pastry and hard-boiled sugar candy in the foods & allied industry segment.

There are 36 items such as hose pipes, horn buttons, radiator grills, seat cushions, side lamp assembly, fuel tank caps, rubber mats, door channels and clutch & break pedals clubbed in the auto components & ancillaries category.

Sports goods include all types of sports nets, shuttle-cocks, hockey sticks and cricket and hockey balls. The list of individual items is yet to be finalised. Sources said that technology-intensive industries are most likely to be dereserved to face global competition.

Advocates of dereservation argue that the SSI protection seems to be irrelevant in a free market economy where domestic industry is exposed to global competition.

Due to low import duty regime, cheap Chinese goods have already flooded the domestic market. Due to the small-scale nature, domestic industries are unable to face the Chinese threat.

Instead of losing to foreign imports, they suggest lifting restrictions for large-scale production within the country.