Need for review Constitution of Committee of officials to review reservation Meetings of the Committee Criteria adopted for review Recommendations Dereservation Change in nomenclature LIST-I LIST-II Rational for changes in Reserved Items Recommended by the Committee

1.	Reservation of products for exclusive manufacture in the small scale sector as a policy instrument for its promotion owes its origin to the Industries (Development & Regulation) Act, 1951 (section 11B). As per this policy, creation of fresh capacity in the large/medium sector in reserved areas is permitted only if the unit agrees to an export obligation of a minimum of 75% of its production. The main rationale for reservation of items for exclusive production in the SSI sector were the feasibility of producing an item in the SSI Sector without compromising on quality; level of employment generation, diffusion of entrepreneurial talent and prevention of economic concentration etc.
2.	The reservation policy was initiated in 1967 with 47 items which was enlarged to 504 items by 1978. In 1978, the reservation list was recast into NIC codes which converted these items to 807. Since then, from time to time some items have been added and also some items have been delated from the list. In addition based on the requirements, the nomenclature of certain items has also been changed. As on today, there are 836 items reserved for exclusive manufacture in the small scale sector. It may be mentioned that the small scale sector produces over 7500 items. As per the second All India Census of small scale industries held for 1987-88, reserved items accounted for 11.3% of the total number of items produced and 28.3% of the total production in the SSI sector.
3.	The term reservation for SSI was introduced in I(D&R) Act 1951 in 1984 through an amendment and thus the policy got a statutory backing. The 1984 amendment also provided for constitution of an Advisory Committee on Reservation, which meets periodically and considers reservation issues. The Committee was reconstituted in August, 1995 with Secretary (SSI & ARI) as Chairman and Secretary (ID), Secretary (IP & P), Chairman BICP, and AS&DC (SSI) as members. Review of items in the reserved list is a continuous process by the Advisory committee. While taking a decision for reservation, the Committee is required to go into aspects like, i) economy in production, ii) level of employment generation, iii) scope of diffusing entrepreneurship and iv) prevention of concentration of economic power.
4.	There are about 2.7 million small scale units producing around Rs. 3,37,000 crores worth of goods and employing about 15 million people. Exports from SSI sector for 1995-96 has been estimated at about Rs. 34000 crores. At present, the small scale sector at present accounts for about 40% of industrial production and 35% of the exports of the country.
5.	The new industrial policy announced on 24th July, 1991 as part of the process of economic reforms has stated that the policy of reservation of products in the small scale industries sector will continue.
6.	It is argued that the policy of reservation has led to rapid growth of the SSI Sector, since a significant number of units have come up in the reserved field. According to the Second All India Census, while only about 11% of items are reserved, the units producing reserved items accounted for 36% of the total number of registered units and as etch, employ a large number of persons. It is also argued that the policy has also action a price control mechanism for consumer items like a broad, biscuits, electrical and electronic goods, safety matches, looks, etc. and that it has led to the promotion of ancillaries as the large units have to obtain reserved components from the small scale units in sectors such as auto mobiles, mechanical and electrical engineering etc. It is also argued that has helped export promotion, since it is obligatory for the large scale units to export 75% of the produce in case they decide to manufacture reserved items.
7.	Need for review: After the introduction of economic reforms with emphasis on liberalisation, delicensing and deregulation a need has been felt for a review of the reservation policy. In today's environment, one has to not only globally compete but has also to compete in the domestic market when the imports are freely allowed except in consumer items. The items produced must be competitive and must meet the needs of consumers from the angles of quality, safety and hygiene. It is being argued that SSI reservation has resulted in monopoly like situation in the production of some consumer items by some large scale units who were having an approved capacity prior to reservation and thus dismantling the very objective for which reservation was made. According to a study carried out by National Informatics Centre (NIC) based on data made available by the Second All India Census of Registered SSI Units (1987-88). It was reported that a large number of items as are reserved for small scale are not even produced in the country (The Office of Development Commissioner, however, verified this from the State Governments and SSI Associations and found that many of these items are manufactured in the SSI Sector). Necessity for a relook has also arisen on account of better awareness on safety, quality, environment pollution, productivity etc.
8.	Constitution of Committee of officials to review reservation : The Advisory Committee on Reservation in its 14th meeting held on 28th August, 1995 has appointed a Committee of Officials to review the reservation list and submit recommendations to the Advisory Committee from time to time. The order of the Committee was issued on 17th October, 1995. The Committee consists of following members:

- Shri T.S. Vijayaraghvan, additional Secretary, Ministry of Commerce - Chairman.

- Shri B.D. Jethra, Addl. Adviser, Planning commission - Member.

- Shri B. Bhanct, Deputy Director General, Department of I.D. - Member.

- Dr. Ahmad Masood, Member Technical, BICP - Member.

- Dr. C.S. Prasad, Addl. Development Commissioner and Economic Adviser, DC(SSI) -   Member.

- Ms. Aditi Ray, Deputy Economic Adviser, Department of IP&P - Member.

- Shri M.C. Singhi, Deputy Economic Adviser, Ministry of Industry - Member.

- Shri Bhahm Dutt, Joint Secretary, Department of SSI&ARI - Member-Convenor.

9.	The Committee was asked to keep in mind the following factors while examining the list of items reserved :
i)	Interests of small industries.
ii)	The minimum economic scale of production.
iii)	The need for technological upgradation.
iv)	National and international competitiveness.
v)	Productivity.
vi)	Serving consumer interests.
vii)	The import and export policy particularly export orientation of small enterprises.
viii)	Labour intensity.
ix)	Other related considerations as deemed appropriate.

A copy of the letter is at Annexure-I.

10.	Meetings of the Committee :In all, the committee held eight meetings. The Committee decided to elicit the views of the State Governments, concerned Ministries of Central Government and Small Scale Industrial Institutions through the office of the Development Commissioner for Small Scale Industry. Dr. C.S. Prasad, Economic Adviser in the Office of the Development Commissioner for Small Scale Industries and Member of the Committee was entrusted with this responsibility. The view and suggestions received from State Governments and various Central Ministries/Departments were made available to the Committee.
11.	Dr. C.S. Prasad, Economic Adviser, Office of DC(SSI) and Shri M.C. Singhi, Dy. Economic Adviser, Office of the Economic Adviser, Ministry of Industry submitted two independent papers on Reservation Policy which were gone through by the Committee and the criteria indicated above were decided after discussion on the points raised in these two notes. Notes on specific items were also received from Shri B. Bhanot also a member of the committee. The notes received from Industrial Advisers/Directors of DC(SSI) against the dereservation of particular items were also considered by the committee.
12.	In the first meeting, the Committee discussed and decided upon the general approach to be followed by it in its review of the reserved list. At its meeting, it was also decided that the concerned Advisors/Directors in the Office of the DC(SSI) and representatives of the concerned Central Ministries should be invited to attend the meeting of the Committee as and when items relating to their area of working were taken up for review.
13.	The committee heard the Industrial Advisors and Directors of the Office of the DC(SSI) and representatives of various Departments viz. Department of Industrial Policy and Promotion, Department of Chemicals, Leather Associations etc. It may be mentioned that the officers of the office of Development Commissioner who attended the meetings strongly opposed any move for Dereservation of any items on the ground that :
i)	Reservation has played important role in the growth of small scale sector, generation of large scale employment and diffusion of entrepreneurship.
ii)	In the context of liberalised regime the need for reservation has assumed added importance because the sector is now more exposed to competition from large scale sector including multi-nationals and also due to drastic reduction in protection as result of lowering down of excise and customs duties.
iii)	There is no complaint against the quality of the goods produced in the SSI Sector as is evident from the fact that, at present, this sector is the largest contributor of Indian exports.
iv)	It is not correct to say that about 200 items which are reserved, are not produced in the SSI Sector (as revealed by Second All India Census). It was clarified that an enquiry was made with State Governments, Associations which revealed that many of these items are produced in the SSI Sector and it was due to some technical reason in the interpretation of registration of items by Directorate of Industries that these items could not be listed as independent items under production by the SSI units. Further it has been informed that many of these items are being manufactured in the unregistered SSI Sector. The nature of many of these items are such that they can be manufactured only by the Small Scale Sector (tent pole, radio, panel bulbs, cycle, dynamo bulb, water heaters, egg boiler, ash trays, spokes & nipples, babies bath tubs, safety pins, nail pullers, shoe nails, buckets, penstand etc.)
v)	That it is technically feasible to produce the reserved items within the present investment ceiling of Rs. 60/75 lakhs within the SSI Sector without compromising quality, safety and hygiene angle.
vi)	Government permission for non-SSI units to export at least 75% of output in case they decide to produce any of the SSI reserved items. The reservation policy by stipulatively minimum 75% of output to be exported by the SSI Sector in fact promoted exports.
14.	Criteria adopted for review : While reviewing the various items reserved for SSI sector, the deliberations finally got categorised into following Sub-Groups :-
(i)	Research and Development : For some of the items, product improvement or innovation has not taken place on account of limited R&D and negligible competition from within the country or abroad. Local R&D was also restricted on account of protective market.
(ii)	Monopoly : In some areas, as a result of reservation, only limited number of units could play a role in the domestic market. In a few large scale units, monopolistic trends also emerged as a result of certain established brands which were existing prior to reservation and which continue to enjoy the monopolistic position even today. Items like shoe polish, tooth-paste etc. are worth noting.
(iii)	quality/technical improvement : On account of protective market quality for some of the items has not kept pace with developments abroad. This has either encouraged smuggling or dumping under the new Import Policy. One could mention simple items like nail cutters, knives and blades, hair clips etc.
(iv)	Safety, health and Noise consideration : Consumers suffer for non-compliance to safety regulation and BIS is not able to implement compulsory quality certification in large number of consumer durable products. Electrical goods may be worth mentioning.
(v)	Energy Saving Devices : On account of technological innovations & mass production technology, products are now available wherein on saves significant amount of energy which is so important in these days of overall power shortage in the country. One of the items which modern mass production technology consumes significantly less copper and results in electrical losses in the overall design. Similar is the situation in electrical chokes exclusively used for fluorescent tubes.
(vi)	Pollution Control : Some of the products could be classified into such categories which have a direct bearing on the environment pollution and conservation of natural resources e.g. wood based product and selected chemical processes.
(vii)	Productivity : Mass production technology and modern machinery has enhanced the productivity significantly. This has given competitive edge for product marketing not only in domestic market but abroad as well. Consumer is presently denied the price benefits as accrue on account of productivity increase.
(viii)	Minimum economic capacity plants : Some of the scales of operation are limited in our country and are of semi-automatic nature. Small capacity plants are no more available abroad and the machinery has to be tailor-made for SSI requirements. Some of our operations are in the nature of pilot projects abroad. In these days of global economy, it is difficult to survive on domestic market alone. One has to supplement by marketing abroad. Local industry finds it difficult to even quote for large requirements for a single order as are coming in abundance now. Neighbouring Asian countries take advantage of this lacunae for a large number of products. For bulk marketing, one has to ensure standardisation which is difficult to comply while multiscurcing.
(ix)	Export potential : Reservation policy is coming in way in building exports in potential areas of thrust. In identified area which have an export potential, one should either lower the export obligation or dde-reserve the items keeping in view long term national gains.
(x)	Import-Export policy Related Items : After the liberalised economy, most of the items are freely allowed for import without any relevance to the reservation policy. In such a situation, local industry is denied the opportunity to manufacture a product in reasonable quality and scale, whereas foreign companies including MNCs are freely allowed to market their products. In today's environment, there is no scrutiny in regard to import of an item and the overall duty tariff is also getting gradually reduced. Consumer pressure on quality and productivity is also increasing. There is, therefore, a need for having a re-look for certain tategories of items e.g. hand tools, knives/blades etc.
(xi)	Vague Description : Some of the reserved items are described in a very general way. This results in numerous delays on account of interpretation problems. There are certain products which need minor modification in the description. General vague description has also led to a limited option for the actual user as the entire range is not produced in the country.
(xii)	Items not produced in the country at all : Quite a few items, though reserved in SSI, are either not produced in the country or are being made in negligible quantities. There is a case for de-reservation of such products, lest free imports take place.
15.	RECOMMENDATIONS : Though the Committee gave an interim report covering the reserved items belonging to Food and allied Industries and Glass and Ceremic Industry Group on 14th December, 1995, it is felt necessary to include the recommendations made in the interim report as part of the final report at appropriate places so that recommendations of the Committee in respect of each of the items could appear in the same order in which the respective items appear in the reserved list.
(1)	The Committee has prepared two lists for the consideration of the Advisory Committee which are as under :
(a)	Dereservation :-
	LIST-I Items recommended for deletion from Reservation List. The list contains 91 items which have been recommended for dereservation on the grounds :
(i)	That it is not technically feasible to manufacture quality products within the specified investment ceiling of Rs. 60 lakhs.
(ii)	There has been product innovation as a result of which the scope of producing new items have emerged and these require higher investment.
(iii)	On the ground of safety, hygiene and production of quality goods and to meet the changed demand of consumers for quality goods.
(iv)	On the ground of export potential and export promotion.
(v)	Better utilisation of available resources.
(vi)	Monopoly like situation have been created in some products by large scale units under the cover of COB licence.
(b)	Change in nomenclature
	LIST-II :Items recommended for change in nomenclature/modifications. The list contains 56 items. The modifications have been recommended in order to bring :
(i)	Harmony and clarity in description and to avoid confusion;
(ii)	To reflect the existing situations more accurately ;
(iii)	Change in technology of production;
(iv)	To provide for integrated production wherever possible.
	A list giving itemwise details of changes, recommended by the Committee alongwith the rationale at Annexure II.
(2).	In Order to facilitate the growth of SSI units into medium and large categories so that they are able to reap the economies of scale and are able to modernise and upgrade their technology and also to enable them to contribute fully to the export earnings of the country, the Committee recommends that the SSI units which have been in commercial production for a minimum of five years may be allowed to graduate to large/medium scale unit and continue to manufacture the products reserved for small scale sector subject to their exporting at least 30% of additional production (which will be average of the production achieved by the unit during last three years of their graduation to medium/large scale unit). This will also help safeguard the interests of consumers against the pricing of products of large units manufacturing reserved items in a near monopoly situation.
(3).	The Committee genuinely feels that the main problem faced by the small scale units is that of the paucity of working capital. The working capital made available to them in most of the cases is inadequate; there has been delay in sanction and the rate of interest charged is very high. All these problems lead to their sickness. The Committee is aware that the small scale units cannot have the advantages of economies of scale. This added with the high cost of borrowing makes their product uncompetitive. The small scale units also face difficulties in marketing their products because they cannot develop their own brand name and they cannot bear the heavy expenditure on advertisement which is considered essential these days for marketing the products. This has been one of the reasons for the Government to continue with the policy of reservation of some products for exclusive manufacture in the small scale sector. The have also been complaints that as a result of policy of reservation, manu small scale units which want to graduate to large/medium scale unit do not find any incentive for the same. In view of the above, though outside the scope, the Committee recommends that the banks lending rates for expansion, modernisation etc. for SSI units should be 50% of the prime lending rate, unitwise so that SSI units graduate to the large medium scale.
	(B.D. Jethra) / (Dr. Ahmed Masood) / (Aditi S. Ray)

Sl. No.
(of the Reservation List)

Product Code

Name of the product

Food Allied Industries (Product Code 20-21)

5

204200

Rice Milling

8

20530101

Biscuits

15

21620101

Poultry feed except in pellet from

16(C)

224302

Synthetic Syrups

Wood and Wood Products (Product Code 27)

40

273002

Seasoned wood

Leather and Leather Products including foodwear (Product Code 29)

82

290201

Sole Leather

83

290202

Kattai and bunwar leather

4

290302

Picking band leather

92

291102

Leather shoes upper closed

97

293202

Fancy leather goods and other novelty items

Plastic Products (Product Code 303)

127

30310101

Blow moulded plastic - HDPE-PVC containers upto 5 litres capacity excluding strethch blow moulded plastic container

131

303402

HD Polyethylene mono-filament (except for captive use for rope manufacture)

132

303403

Polypropylene mono-filament (except for captive use for rope manufacture).

133

30350101

Polyethylene films with with tickness less than 0-10 mm except co-extruded film cross linked plymer films and high density molecular films

134

30350102

Products of polythene films as coloured printed films and bags

135

303601

Spectacle frames by fabrication or by injection moulding

136

303702

Polypropylene tubular films (exceptbi-axilly oriented)

Injection Moulding Thermoplastic Products

140-M

303835

hair brushes

140-N

303836

Umbrella frames

141

30390101

Flexible polyurethane foam

142

30390102
     &

Flexible polyurethane foam products

30390201

Polyurethane shoe soles

144

303903

Plastic buttons

145

30390404

Plastic toys

1451

303925

Plastic bottle caps

154

30392810

Industrial pckings for calculators, Micro foams etc.

155

30392910

Contact lenses except those manufactured in integrated plant from monomer

Organic Chemicals, Drugs & Drug Intermediates

230

310627

Dimethyl sulphate based on methylalcohol

Glass & Ceremics

328

321901

Roofing tile glass

328

326113

Roofing tile granite (excluding tile fittings - less than 10 mm)

329

326137

Flooring tiles - granite (excluding tiles of fittings - less than 10 mm)

Mechanical Engg. Excluding Transport Equipments
(Product Code 33-35)

364

340101

Steel Almirah

377

340403

Cocks and valves - water pipe fittings

401

34200601

Wheel chairs for invalids

410

343101

Hacksaw frames

411

343102

Pliers

412

343103

Screw drivers

413

343104

Spinners

414

343106

Hammers

415

343108

Anvils

416

343109

Wood working saws

417

343111

Wrenches

418

343112

Knives and shaving blades (all types including those of metal, paper bamboo and wood for manual operations)

419

343113

Nail pullers

420

343114

Chisels

421

343115

pincerps

422

343116

Wire cutters

423

343199

Other hand-tools for blacksmithing, carpentry, hand forging, foundry

439

343507

Plough shears/iron ploughs

411

343509

Disc harrows

444

343512

Forks

445

343514

Hoses

446

343515

Levellers

447

343516

Mowers

450

343522

Seed treaters

456

34359901

Other agricultural implements

468

345101

Spoons-cutlery

469

345102

Forks cutlery

470

345103

Table knives/household knives

471

345104

Bread culteries

472

345199

Other cutlery items

483

345407

Gas lighters- mechanical

499

349946

Lamp holders

507

350109

Seed drills upto 5 HP motive power

508

350110

Other agricultural machinery upto 5 HP motive power

513-C

354803

Three knives trimmer and envelope cutters

513 G

354807

Knives and shearing blades (all types including those for metal, paper, bamboo and wood for hand operated machines)

513 H

354808

Doctor blades

528

35781101

Carbide - Tipped tools - Single point Brazed carbide bits purchased from manufacturers.

533

350601

Absolute filters for biological and air conditioning application.

548

359953

All poultry equipments.

Electrical machines, appliances and apparatus including electronics Electrical Appliances.

554

360403

F.H.P. motor - A. C. - Excluding special types.

559

36340201

Miniature vacuum bulbs - excluding auto lamps.

565

36070201

Electric stoves upto 3 KW.

566

36370301

Hot plate boiler plate upto 3 hos/upto 4 KW.

571

363708

Hair driers - All types.

577

36371801

Espresso coffee makers upto 1.7 litres capacity.

578

36371901

coffee procreators upto 1.7 bite capacity

579

36362101

Immersion water heaters upto 3 KW.

581

363723

Electric Auto tandoors

583

36372501

Ice cream makers capacity 1 litre for use with domestic refrigerators.

594

369802

Black adhesive insulating tape electrical use.

595

369202

Emergency Lamps

Auto Parts Components and Ancillaries Garage Equipments

630

374721

Hose pipes and radiator hoses - Auto.

631

374722

Horn buttons.

637

37474902

Automobile radiators - Except for expansion of existing units on merits and induction of new units based on new improved technology and excluding Aluminum radiators.

649

374812

Battery cell tester

650

374869

Electrical fuse boxes - Auto

652

374874

Exhaust mufflers - Auto other than double coil exhaust mufflers.

81

37499404

Wiper blade components.

37499405

Windscreen beedings

37499406

Door channels

37499407

Rubber beedings

Other Category

82

389301

Mechanical toys

87

389911

Cigarette lighters

Items recommended for change in nomenclature/modifications

Sl. No.(of the Reservation List)

Product Code

Name of the product

Name of the product as recommended

Food & Allied Industries (Product Code 20-21)

1

201801

201801

Ice-cream (excluding frozen dessert)

Textile products including hosiery (Product Code 26)

17

260101

Cotton cloth knitted

18

260102

Cotton Vests knitted

19

260103

Cotton Socks knitted

20

260104

Cotton undergarment knitted

21

260106

Shawls knitted

22

260199

Cotton knitted wears

Wood and Wood products (Product Code 27)

47

276001

Wooden Furniture and Wooden furniture and fixtures excluding furniture made mainly of solid wood substitutes like MDF, chip boards and other alternative materials where solid wood does not exceed 30% by weight. (As recommended by Advisory Committee)

Paper Products (Product Code 28)

77

283916

Sanitary towels

Sanitary towels based exclusively on cotton materials. (The item may be shifted from head ‘Paper products’ to head ‘Miscellaneous- Others’ after S. No. 807). (As recommended by the Advisory Committee.)

Rubber Products (Product Code 300-302)

107-A

301102009

Moulded rubber soles and heels For footwear (except for captive consumption).

Moulded rubber (excluding TPR) soles and heels.

124-A

31060102

Ortho amino phenol

This item may be shifted from the head ‘rubber products’ to ‘Organic chemicals, drgus and drug intermediates’ after S. No. 227.

Plastic Products (Product Code 303)

128

303201

Acrylic sheets

Acrylic sheets excepting cast sheets.

137

30370301

Industrial items from engineering plastic materials by fabrication process only.

Industrial items from engineering plastic materials by fabrication process only excluding Those manufactured in the integrated oplant.

139

303705

Polypropylene box strapping

Polypropylene except biaxilly oriented.

140

30370601

Polyethylene and PVC flexible loses (except wire braided hoses).

Polyethylene plastic flexible hoses (except wire braided hoses)

Injection Moulding Thermoplastic Products.

143

303902

Polystyrene foam products (except plants for exacted .

Polystyrene foam products excepting extruded plants for exacted polyester foam

Other Chemicals and Chemical Products.

257

310112

Barium Sulphate

Barium Sulphate excluding commercial grade Barium Sulphate Produced in a Caustic soda manufacturing unit as a by-product.

324

319921

Potassium Silicate

Potassium Silicate excepting electronic grade.

Glass and Ceramics
Ceramic Table wares and Allied items in stone wares semi vireous wares and earthern wares, namely :

330

323101

Dinner sets

Ceramic (stone) table wares and allied items.

323102

Tea sets

323103

Cups and saucers

323104

Jars and other containers

331 A

321202

Simple glass mirrors excluding specialised glass mirrors such as those meant for optical instruments etc.

Glass mirrors excepting those manufactured using automatic spray or vacuum coating process.

333

321408

Scientific laboratory glass-ware (excluding boro silicate type)

Scientific laboratory glass ware/apparatus from soda lime glass and neutral glass tube/rod.

336

321908

Glass hollow-ware by mouth blown and/or semi automatic process.

Class hollow-ware by mouth blown and/or manufactured by semi-Automatic process other than boro silicate and Lead crystals glass Containing Lead Oxide 20% or more.

337

32190901

Sodalime silica pressed glass tumbler

Sodalime silicate pressed glass wares by semi-automatic machines and process.

32190902

Sodalime silica process pressed glass plates

32190903

Sodalime silica pressed glass bowls

32190904

Sodalime silica pressed glass ashtrays

32190905

Sodalime silica pressed glass Vases

Mechanical Engineering excluding transport equipment.

386

340904

Umbrella ribs and fittings

Umbrella ribs and Fittings excepting.

397

34200301

Adjustable beds Hospitals.

Hospital beds excluding hydraulically or pneumatically Operated beds.

428

343302

Pad locks

Pad locks excepting impression mechanism pad lock.

429

343303

Safe/cabinet locks

Safe/cabinet locks excepting night latches and hand lever type.

430

343305

Door locks

Door locks other than ultra safety system.

432

343399

Drawer locks and suitcase locks

Drawer locks and suitcase locks excepting combination locks.

464

343627

Builders hardware

Entry to be changed as:

1. Hinges
2. Door handles and knobs
3. Sliding door bolts/aldrops
4. Hasps and staples
5. Door springs
6. Latches
7. Door stopers
8. Pivots for fan
9. Mortise locks
10. Ventilators chains
11. Flush bolts
12. Door closers
13. Closet hardwares
14. Lamp brackets
15. Curtain hangers and
16. Rail system
17. Hold fast
18. Hat racks and pages
19. Floor spring for doors
20. Window stays and fasteners
21. Ventilator poles
22. Handles for drawers
23. Hooks

486

349906

Watch straps-metallic

Watch straps metallic excluding plasma coating type.

488

349907022

Postal weighing scales

Postal weighing scales mechanical type only.

493

349940

Hair pins

Hair pins excluding clip type.

529

358601

Weighing machines/weigh bridges - Ordinary

Weighing machines/weigh bridges other than electronics type

531

35910102

Sewing Machine - Domestic, hand operated, Conventional type And components except Arms, beds and needles.

Sewing Machine - Domestic, hand operated,

Electrical machines, appliances & apparatus including electronics, Electrical Appliances.

552

360205

Voltage stabilizers - Domestic type.

Voltage stabilizers upto 2 KVA with regulation Exceeding 5%.

553

36040201

Electric motor 1 H.P. to 10 H.P. - A.C. except special type.

Electric motor 1 H.P. to 5 H.P. - A.C. except special type.

570

36370701

Mixers/Grinders

Grinders other than electronic such as meat mincer, juice extractor capacity of jar 1 litre maximum upto 500 watts 30 minutes rating.

582

36372401

Bread toasters Ordinary/upto/semi-auto/upto capacity six slices.

Bread toasters (other than domestic types).

588

363911

Electrical light fitting chokes

Electrical light fitting chokes other than electronic and CFL tubes.

592

36620201

Air break offload isolators/upto 11 KW.

Air break offload isolators upto 11 KW (other than electronic type).

Electronic Equipments and Components.

604

364903

Amplifiers for entertainment and public address system.

Amplifiers for entertainment and public address system (other than wireless receiver type).

Auto Parts Components and Ancillaries and Garage Equipment.

640

374759

Seat cushion

Seat cushion excluding moulding type.

670

374914

toe-in-gauges

Toe-in-gauges other than electronic type.

676

374920

Camber testing equipment.

Camber testing equipment. Other than electronic type.

Bicycle parts, Tricycles and Perambulators (Product Code 376).

694

37681401

Chain wheels and Adjusters-bicycles Except chain wheels, And adjusters for Light weight bicycles.

Chain wheels and adjusters bicycles other than multi-speed bicycles.

Stationery Items.

769

387101

Ball point pens

Ball point pens costing upto Rs.50/-.

770

387103

Fountain pens

Fountain pens costing upto Rs.100/-.

Clocks and Watches.

781

38210101

Clocks, will clocks, pendulum type both with mechanical torised movement except lever type

Clocks/wall clocks including movements except electronic type).

783

38280201

Watch dials except ornamental high priced dials simple dials.

Watch dials except ornamental high priced dials those for captive use.

Others Category.

787

380225

Microscope-student and medical use.

Microscope-student and medical use other than electronic type.

788

380401

Water meters

Water meter excepting magnetic and electronic type.

792

38060601

Thermometers-upto 150 ⁰C

Thermometers upto
150 ⁰C (other than electronic type).

The Hon’ble Industry Minister had advised that the list of the items reserved for exclusive production in the small scale sector should be reviewed by the Advisory Committee on Reservation and appropriate recommendation put to him. The Advisory Committee in its meeting held on the 28th of August, 1995 has appointed a Committee of officials to review the reservation list and submit recommendations to the Advisory Committee from time to time. The Committee will comprise the following officials :-

1. Sh. T.S. Vijayaraghavan
   Additional Secretary,
   Ministry of Commerce
   

2. Shri B.D. Jethra, Adviser,
   Planning Commission

3. Shri B. Bhanot, DDC,
   Department of ID

4. Dr. Ahmed Masood,
   Member (Technical),
   BICP

5. Dr. C.S. Prasad,
   Economic Adviser,
   Deptt. Of IP&P

6. Ms. Adity Ray,
   Dy. Economic Adviser,
   Deptt. Of IP&P

7. Shri M.C. Singhi,
   Dy. Economic Adviser,
   Ministry of Industry

8. Shri Brahm Dutt, JS,
   Deptt. Of SSI & ARI

While examining the list of items reserved for exclusive production in the small scale sector the Committee of officials will keep in mind the following actors:-

1. The interests of small industries


2. The minimum economic scale of production


3. The need for technological upgradation


4. National and international competitiveness


5. Productivity


6. Serving consumer interests


7. The import and export policies particularly export-orientation of small enterprises


8. Labour intensity


9. Other related considerations as deemed appropriate.

While the final report of the Committee of officials may be submitted within a period of three months the Committee may submit interim reports from time to time covering various industry groups mentioned in the reservation list.

Steeps are being taken by the Chairman and Member-Convenor of the Committee to convene the first meeting of the Committee shortyly. I would appriciate very much if you could advise working in your organisation to attend the meetings of the Committee and participate in its deliberations from time to time.

RATIONALE FOR CHANGES IN RESERVED ITEMS RECOMMENDED BY THE COMMITTEE

FOOD & ALLIED INDUSTRIES :

Sl. No. 1      Product Code : 201801      Ice Cream

There is no need to dereserve the manufacture of ice cream. Howerver, it was felt that it was necessary to clarify that the ice cream reserved for exclusive manufacture for small scale sector did not include frozen desert containing only non-dairy products and manufactured under condition which ensured freezing and storing at temperatures below-11 0C. It was also mentioned that most of the ice cream manufactures in the SSI sector were not frozen upto and below 11 11 0C, the temperature below which shelf life of the ice cream is longer and the bacteria injurious to health, are inactive.

Sl. No. 5      Product Code : 204200      Rice Milling

The Committee decided to recommend dereservation of this item from the list. This recommendation was made taking into consideration the following:-

Sl. No. 8      Product Code : 20530101      Biscuit

The Committee decided to delete this items from the list of reserved items on the following grounds:

1. The existing situation with only 5-6 oligopolisticmanufactures in the upper market segment was against the interests of consumers.


2. Two distinct market segments one for high quality biscuit and the other depending on the SSI sector could harmoniously co-exist without detriment to the SSI sector could harmoniously co-exist without detriment to the SSI sector.


3. Dereservation would promote competition in the large sector in the biscuit industry with attendant upgradation of technology and quality. It would also facilitate vertical linkages between the large and the small sector and hence usher in over all modernisation.


4. Ingress of the large sector would expand the market and thereby benefit the industry besides subserving the interest of the wheat growers.

Sl. No. 15      Product Code : 216201      Poultry

It was noted by the Committee that this item had already been recommended for deletion from the list of reserved items by the Advisory Committee on Reservation.

Sl. No. 16C      Product Code : 224302       Synthetic Syrup

The Committee decided to recommend deletion of this item from the list of reserved items on the following ground:

Synthetic colouring and essence material are used in the manufacturing of synthetic syrups. Consideration of health, safety and hygiene urge the entry to restrict large scale organised, scientific production.

CLASS & CERAMICS

Sl. No. 328      Product Code : 321901      Roofing Tiles (Glass)

The Committee recommended the deletion of the item from the reserved list on the following grounds:-

1. This was not being manufactured presently in the country because there was virtually no domestic demand for the item. It was stated that this item was used in cold countries having limited hours of sun shine.


2. It was felt that India has potential for export of this items.

Sl. No. 328      Product Code : 326113      Roofing tiles granite (exclding tiles of thickness less than 10mm)

The Committee recommended to delete this item from the reservedlist, as it was a high value item having considerable scope of export. It also requires integrated process from the stage of processing of rough blocks to finishing of tiles. Need for avoiding wastage by making maximum use of granite for manufacturing of tiles so as to exploit export potential fully, also needs to be stressed.

Sl. No. 329      Product Code : 326137      Flooring tiles - granite tiles (excluding tiles of thickness less tiles of thickness less than 10 mm)

The Committee recommended deletion of this item from the reserved list for the same reason as given above against the Roofing Tiles - Granite.

Sl. No. 330      Product Code : 323101-104      Ceramic table ware and allied items in stone wares semi-vitreous wares and earthen wares namely dinner sets, tea sets, cups and saucers, jars and other containers

It was recommended to change the nomenclature to “Ceramic table ware classified in stoneware”. This change in nomenclature is being suggested to reflect the existing situation more accurately under which reserved items did not include China wares which are commercially vetrified translucent presently manufactured in the large sector, as manufacturing process for them required technology involving investment beyond SSI limits.

Sl. No. 331-A      Product Code : 321202      Simple glass mirrors exclusing speialised glass mirrors such as those meant for potical instruments tec.

It was recommended to change the nomenclature to “Glass mirrors excepting manufactured using automatic spray or vacuum coating process” on the ground that simple glass mirror reserved for the SSI sector did not use automatic spray or vacuum coating process requiring investment beyond the limit of SSI.

Sl. No. 333      Product Code : 321408      Scientific laboratory glass-ware (exclusing boro-silicate type)

The Committee recommended to change the nomenclature of the product to “Scientific laboratory glass-ware/apparatus from soda lime glass and neutral glass tube/rod’. This change in nomenclature has been suggested to reflect the existing situation more accurately as the items being manufactured in the SSI sector even presently were using soda lime glass and neutral glass tube/rod.

Sl. No. 336       Product Code : 321908      Glass holloware by mouth blown and/or semiautomatic process

The Committee recommended to change the nomenclature to “Glass hollow aremouth blow and/or manufactured by semiautomatic process other then borosilicate and lead crystal glass containing lead oxide 20% or more”. Change in description has been suggested due to requirement of technology using automatic processing for manufacturing glass holloware made of borosilicate and lead crystal glass. Such a processing was possible only in large units requiring investment beyond the SSI units. The changed nomenclature also reflects the existing situation more accurately, as the items excluded in changed nomenclature are not being manufactured even now in the small scale sector.

II. TEXTILE PRODUCTS INCLUDING HOSIERY

The Committee noted the recommendation of the Advisory Committee at its meeting held on 28.8.95 regarding dereservation of nitted fabrics when done in an integrated textile mill. This Committee did not consider any change in the Textile Products including Hosiery and Art Silk/Man-made Fiber Hosiery necessary.

23. WOOD AND WOODEN PRODUCTS

     Product Code : 273002      Seasoned Wood

The Committee decided to recommend dereservation of this item from the list. This recommendation was made taking into consideration the following:

1. Quality of seasoned wood is very critical for production of high quality furniture and other items using wood.


2. Wood is a precious commodity and, therefore, highest level of technology should encouraged in seasoning of wood for ensuring optimum utilisation of wood and highest value addition in manufacturing of items using wood.

     Sl. No. 47, 48 & 49        Wooden Furniture

The Advisory Committee on Reservation has already made recommendation to allow manufacturing of these items in large sector on certain conditions. The Committee noted the recommendation of the Advisory Committee.

28 PAPER PRODUCTS

The Committee did not recommend this item for dereservation/change in nomenclature.

82. LEATHER PRODUCTS

The Committee discussed in detail the question of dereservation of leather items in the light of the representations received for and against and in the context of the potential for increase in the export of leather products from India. Note received from the project Coordinator, UNDP assisted National Programme was discussed in detail by the Committee. Representative of the commerce Ministry strongly pleaded for de-reservation of all the leather items. It was stressed that while derevervation would give strong fillip to the export of leather items from India, it would not affect either the employment in the country or the existing small scale units manufacturing reserved products. On the other hand, introduction of state-of-art technology in the leather industry in India would lead to improved availability of high quality components for artisans, manufacturing such leather shoes. This would, in the long run reduce the cost of the final product and would lead to improve quality and standardisation. Wastage would also be considerablly reduced with modernisation of the leather industry. Director, Leather in the Office of the DCSSI did not agree to the above views. He strongly felt that dereservation of the leather items would lead to large scale of unemployment. According to him, the exports in the past so far leads one to believe that largescale units which have come up as 100% EOU for manufacture of reserved items are mostly interested for exploiting the domestic market for maximisation of their profits rather than exporting their products. Consequent to the meeting, a Note prepared by him has been received by the Committee and the same is appended to this report containing his views.

While the Committee did not fully agree with the views of the Director, Leather, O/o DCSSI it was felt that a few items, especially components, needed to be deresrved not only in the interest of promoting export of leather products from India but also in the interest of improving the quality of leather shoes produced by the artisans. In the view of the Comittee, leather is a scarce commodity and all possible policy measures should take to promote the optimum use of leather and avoid any wastage. Taking this facts into consideration, the Committee felt that the following items may be dereserved:

Sl. No. 82, 83, 84, 92, 97 - to be deleted

Sl. No. 86 - Vegetable tanned hides and skins - seminifinished may be amended to read as ‘Veg. Tanned hides and skins - accepting production for captive use.’

In respect of the remaining items, the Committee does not feel it necessary either to dereserve them or change in the nomenclature. Though representative of the Commerce Ministry and the Department of IPP very strongly argued in favour of dereseving leather shoes, the Committee felt that the time was not yet ripe to dereserve these items. Dereservation of shoe components would also be justifyed taking into consideration the fact that their import was even now on OGL and therefore, excluding large sector from manufacturing in India would be inequitfus. Secondly, small scale sector would be able to produce leather shoes of international quality and achieve the economy of the scale once they have access to high quality components of shoes at competitive price after large sector start manufacturing these components as a consequence to their dereservation being recommended by the Committee.

107 Rubber Products

In respect of items 107-A, it was felt that the existing nomenclature was a free generic in nature and would covers even Thermo Plastic Rubber (TPR). In consistent with the Committee’s recommendation to dereserve all shoe components it sould be logical to exclude the TPR soles from Sl. No. 107-A. Accordingly, the item No. 107-A 301102009 - Moulded rubber soles and heels for Footwear (except for captive consumption) should be amended to ‘Moulded Rubber (excluding TPR) soles and heels’. This change in nomenclature excluding the TPR soles was considered essential, as TPR soles manufacturing of which require use of advanced technology not feasibile within the SSI limits are mistakenly clubbed with moulded rubber soles. In respect of the remaining items in the category of rubber products no dereservation or change in the nomenclature was considered necessary.

303 PLASTIC PRODUCTS:

Plastic products have emerged to be very important from the angle of improving packaging and for replacing wood. Technology for manufacturing of plastic products has also undergone changes in the recent past and as a result manufacturing of some of the items included in the list is not feasible within the limit of the SSI sector on competitive lines. Manufacturing of plastic products in India, therefore, needs to be competitive both in terms of the quality and price especially in case of those items which have direct bearing being used as raw material and inputs which are now allowed to be imported freely. Similarly, in case of sophisticated plastic items, dereservation would not lead to any unemployment of sickness in the SSI sector, as these items are either not in manufacture in India at all or there are different market sector for different qualities of same items.

Taking the above factors into consideration, there is a strong case for dereservation/change in nomenclature of the following items included in the Plastic Products Group:

127 To be deleted

128 ‘Acrylic sheets’ to ‘Acrylic accepting cast sheets.’

137 ‘Industrial items from engg. Plastic material by fabrication process only’ to “ Industrial items from engineering plastic material by fabrication process only exclusing those manufactured in the integrated plant.’

139. ‘Polypropylene box strapping’ to ‘Polypropylene except biaxially oriented.

140 Entry to be amended to ‘Polythylene Plastic flexibile hoses (except wire braided hoses)"

303 INJECTION MOULDING THERMO PLASTIC PRODUCTS

140M and 140N - To be deleted

No. 141, 142 To be deleted

143 Changed to ‘Polystyrene from products excepting extruded polyster foams’.

143 Plastic bottons - Deleted

143 30390404 - Plastic toys - To be deleted

151 Deleted

154 10. 30392810 Industrial packaging for calculators, Microphones etc. - To be deleted

154 Deleted

157 to 254A - No change

257 - It was noted by the Committee that Advisory Committee on Reservation has already recommended dereservation at its meeting held on 28th August 1995.

230 - Recommended for deletion on grounds of safety and environment angle involved in the manufacturing process which requires investment beyond SSI limits.

324 - ‘Pottasium silicate’ - This entry to be amended to read as ‘Accepting of electronic grade’.

33-35: MECHANICAL ENGINEERING EXCLUDING TRANSPORT EQUIPMENT

Excepting the items given below all other items would continue to be reserved. Reasons for recommendation regarding dereservation/change in nomenclature are given against each of these items.

No. 377- Cocks and valves - water pipe fittings - Cocks and values including various kinds of water pipe fittings are safety and leakage preventive products in construction activities both in houses and industrial plants. On account of poor quality of the products significant wastage of water takes place. Present investments are not able to take care of machining tolerances of critical parts. This ultimately results in leakage in the product. In order to improve the quality of services it is essential to enhance the technology along with additional capital investment.

IA(Mod) in the Office of the DC(SSI) did not favour

IA(Modernisation) in the Office of the DC(SSI) did not favour de-reservation. In his view SSI sector was fully capable of producing high quality cocks and vaives. A note given by him is also annexed. The Committee, however, did not find the arguments of the IA convinsing and accordingly, taking into consideration the large infrastructure requirements coming up in the construction industry and in the interest of the quality service being provided and this items playing a crucial role recommended for dereservation.

No. 386 - “Umbrella ribs and fittings” - The entry may be amended from umbrellas ribs and fittings to “Umbrellas ribs and fittings excepting those for folding type”. This was considered necessary in order to exploit potential for export of these items from India and also to check large scale unauthorised imports which are otherwise taking place for folding type umbrellas.

No. 397 - ‘Adjustable beds - hospital” - At present, ordinary beds are being manufactured in the SSI Sector. However, taking into consideration the need for modernisation of health care services to be provided to the people and the stress of privatisation in the health care industry, it needs pneumatically or hydraulically operated beds. Committee recommended to change to entry from “Adjustable beds - Hospitals” to “Hospital beds excluding hydraulically or pneumatically operated beds”.

No. 401 - Wheel chair for invalids - In order to provide wheel chairs of best possible quality, it was necessary to dereserve these item. At present only very simple wheel chairs are being manufactured in the SSI sector and because of the reservation of this item, sopnisticated type of wheel chairs using mdoern technology are not being manufactured. This is a handicap in improving the facility for invalids.

410-423 - Recommended for dereservation on grounds of poor quality including limited range of tools being manufactured in the SSI sector. Use of advanced technology requiring investment beyond SSI limit will not only improve the quality but substantially enhance productivity resulting in international competitiveness for the industry as a whole. This will also increase our exports with availability of better tools for improving overall efficiency in running and maintenance of industrial machinery. De-reservation is not likely to affect the existing SSI units adversely as they cater for a specific lower and of the market. On the other hand de-reservation would result in technology upgradation of the SSI units and productivity in the service sector. Manufacture of high quality will also result in overall standardisation of industrial products. It is also felt that the reservation at present, is resulting in the monopoly of existing 3-4 large manufactures (registered prior to reservation) who are not able to provide entire of tools. This is not desirable in the intrest of the users of tools. Imports are also being resorted to. However, industrial Adviser, DC(SSI) opposed the move on the ground that SSI sector has been providing quality items using advance technology and have also been exporting the products.

424 - Entry to be changed to “excepting imrpession mechanism and pad lock”.

424 - Entry to be changed to “Safe/Cabinet locks excepting night latches and inland level type.

430 - To be changed to “Door locks other than ultra safety system hand lever type “on the ground of bringing rationalisation and clarity.

423 - Changed to “Drawers locks and suitcase locks excepting combination locks.”

439, 441, 444, 445, 446 and 450.

456 - To be deleted.

459 - To be changed to “Screws made of mild steel and brass” on the ground of bringing rationalisation and clarity.

465 - Existing entry to be replaced with specific items from Sl. No.1 to 23 as given below:-

1. Tower Bolts


2. Hinges


3. Door handles and knobs


4. Sliding door bolts/aldrops


5. Hasps and staples


6. Door springs


7. Latches


8. Door stoppers


9. Pivots for fan


10. Mortise locks


11. Ventilators chains


12. Flush bolts


13. Door closers


14. Closet hardwares


15. Lamp brackets


16. Curtain hangers and Rail System


17. Hold fast


18. Hat racks and pages


19. Floor spring for doors


20. Window stays and fastners


21. Ventilator poles


22. Handles for drawers


23. Hooks

468-472 To be deleted on ground of improved availability of high quality cutlery items for fuse in star hotes in the interest of promotion of tourism. Dereservation will encourage introduction of good desgins and production of high value added items which have good export potential. This requires use of advanced technology for production of items of the same size on mass scale. This is not possible within the SSI limits. Like any other consumer goods, there is market for different quality products and SSI units will continue to enjoy their market share on cost consideration alone even without linkages with the large units.

483 Gas lighters - Deleted as limited capability exist and item has become obsolete with the invention of electronic gas lighters.

486 Change description to :- Watch straps metallic excluding plasma coating type” on the ground of bringing rationalisation and clarity.

488 Changed to mechanical types only.

493 Hair pins - “ excluding clip type”

499 Delete for safety consideration.

507 To 508 (not 508 A) - Advisory Committee has already recommended deletion of these items at the meeting on 28th August, 1995.

513c and 513g To be deleted on quality ground. It has a direct bearing in quality and productivity of finished products.

513H - To be deleted on the same ground as in the case of item No.418

528 - To be deleted on the ground of quality

529 - Nomenclature to be changed to weighing machines/weight bridges other than electronics type.

531 - Sewing Sewing machines (mechanical type) - domestic hand operated.

533 - To be deleted as has not been manufactured in the SSI Sector so far and are being imported.

548 - To be deleted.

551 - To be deleted.

551, 552 - To be changed to voltage stabilizers upto 2 kva with voltage regulation exceeding 5%.

553 - Description to be amended to

“Electrical motors 1 HP to 5 HP - A.C. type except special type” - on technology ground.

554 - Delete on account of technology, our motors are energy insufficient, noisy, use more copper. Need for mass production technology.

559 - Delete on account of quality constraint being a safety and control related items.

565 - To be deleted on safety, poor workmanship grounds. Children frequently come in contact with it.

566 - Deleted on consideration of safety and need for upgradation of quality.

570 - To be changed to grinders other than using electronic controls in order to bring harmonisation.

571, 577, 578, 579, 581 - To be deleted on the grounds of safety and consumer protection. There is a need for upgradation in quality.

582 - To be changed to Bread Toasters, ordinary type (other than semiautomatic/automatic) to bring harmony.

583 - To be deleted as has not been manufactured in the SSI sector till date.

588 - To be changed to other than electronic and those to be used with CFL tubes.

592 - Changed to “Air break load isolators/upto 11 KW (other than electronic type)” on ground of safety and quality consideration.

594. 595 - Deleted on safety and quality consideration.

604 - To be changed to “Amplifiers for entertainment and public address system (other than wireless receiver type).

630, 631 - Deleted on ground of safety and quality consideration.

632 - Deleted Highly critical safety auto component which has to withstand frequent loads fluctuation upto 6750 kg. very tight manufacturing controls are to be observed.

637. This is a safety critical item in automobile industry. Manufacturing technology have significantly changed. World’s leading manufacturers are making huge investments in India and also looking towards servicing components. Local industry has to comply with not only ISO 9000 but QS 9000 US standards. Keeping in view larger interests of self-reliance and export potential in changed auto scenario in the country, item is recommended for deletion.

640. Description to be changed to Seat Cushions excluding mculded type as the item is safety critical and requires higher investments beyond the limit of SSI. Ergonomically designed seats are produced in automatic plants.

649. Deleted. as the item is not manufactured and the entry is otherwise on OGL.

649. For a direct bearing on safety need significant technological upgradation. Auto industry uses moulded type fuses now a days and investments are beyond SSI limits.

649. Description may be changed to “Exhaust Mufflers for two/three wheelers”. With the stress on catalytic converter lot of design and system engineering changes are needed. Automoted welding lines are required needing investment beyond the limit of SSI.

670. Description may be changed, “Toe-in ages other than electronic type.”

676. Description may be changed to “Camber- testing equipment other than electronic type.”

681. (S. Nos. 4, 5, 6 and 7)

Quality of indigenously manufactured rubber components in the SSI Sector is not upto the mark and lack in weather & leakage proof. Advanced technology used for manufacturing of these items requires automatic plants using tight process and material control. Such plants are not feasible within the SSI limits. Items have a direct bearing on safety.

694. Description may be changed - other than those for Multi Speed Bicycles, requiring higher technology and investments.

781. Description is quite vague and may be changed to “clocks/wall clocks including movements thereof.”

783. Description may be changed excepting for captive use for integrated plants.

787. Description may be changed. Micro-scope (other, than electronic type) for school education purposes. We are producing simple type micro-scopes only.

787. Description may be changed “Water Meter excepting magnetic and electronic type.” Presently only mechanical types are being produced.

792. Thermometer upto 150 centigrade (other than electronic type). Only mechanical thermometers are being produced though technology has undergone electronification.

802. To be deleted. as this item requires improvement in design and mass production would be necessary for promoting export. Children are denied innovative and scientific skills as could be imparted by modern toys. Other Asean countries are taking advantage of our weakness in producing high quality toys.