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Policy of Reservation |
Removal of Quantitative Restrictions
And Reservation Policy
Price And Purchase Preference Policy for Marketing MSME Products
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Reservation for Manufacturing: |
The erstwhile Policy of Reservation for exclusive manufacture in SSI (now-MSE) sector has been done away with the dereservation of remaining 20 items reserved for exclusive manufacture in SSI (now-MSE) sector vide Notification no.S.O.998 (E) dated 10.04.2015. The Advisory Committee on Reservation, in its 31st meeting held on 20.10.2014, had recommended for dereservation of remaining 20 items reserved for exclusive manufacture in SSI(now-MSE) sector. |
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As a result of improved balance of payment situation, India was under
obligation to remove quantitative restrictions by 1st April 2001. Quantitative
restrictions have been removed by 1st April, 2001. Out of 812 items which
were on the reserved list at the time QRs had been removed on 643 items by 1st April
2000. These items have already been put on OGL as under: - |
Year |
Items Reserved
For MSME |
Items On OGL |
Remaining Items Under
Reserved List |
1998-99 |
821 |
478 |
343 |
1999-2000 |
812 |
576 |
236 |
2000-2001 |
812 |
643 |
169 |
2001-2002 |
799 |
799 |
NIL |
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WTO conditions provide for removal of quantitative restrictions and
linking of tariff upto bounded rates. A new global scenario is emerging.
MSMEs will have to be competitive. Government is aware of these challenges
and has been trying to improve the competitiveness through various measures.
These consist of - |
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To strengthen existing technological
facilities, Government is formulating a scheme of
assistance for Technology Upgradation
To improve access to latest information, automation of the Ministry of
MSME Office of DC (MSME), Directorate of Industries and District
Industries Centres have been taken up. SIDO knowledge portal takes this process further. In order to facilitate adequate flow of credit, a scheme of Credit Guarantee has been launched. Measures have also been taken to improve infrastructure facilities and
promote marketing of products
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The marketing assistance to the small scale units through
preferential purchase by the Central and State Purchase
Organisations was emphasised in the comprehensive programme
for the development of MSME sector drawn in early 50's
in pursuance of Industrial Policy Resolution of 1984.
The emphasis was reiterated in the Government Policy in
1991. |
I. Purchase Preference Policy
The policy of reservation of items for exclusive purchase has been
in vogue since late 60's as a measure of market support to the MSME sector.
The Stores Purchase Policy of the Government prior to 1989 was in the form
of categorisation of items in six major groups as detailed below:-
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Group-I |
Items which are of no interest to small scale units and can be solely
procured only from large scale units (128 items) |
Group-II |
Items which can be purchased solely from large scale units
but where it is possible for the large scale units to
job contract accessories and components to MSME units
(159 items). |
Group-III |
Items which can be purchased both from small scale and large scale
industrial units. |
Group-IV |
Items which are reserved for exclusive purchase from small scale units
(409 items). |
Group-V |
Items which are to be purchased from MSME to the extent of 75% of the
requirement (13 items). |
Group-VI |
Items which are to be procured exclusively from the MSME units to the
extent of 50% of the requirement (28 items) |
However, with effect from July 28, 1989, the Purchase Policy of the
Government was modified in a major way and the categorisation of the items
was reduced to the following two major groups, viz. |
| (i) |
Items of stores reserved for exclusive purchase from KVIC/Women's Development Corporations/Small Scale units and |
(ii) |
Others not so reserved. |
The first group comprised of 409 items earlier reserved for exclusive
purchase from the small scale sector. The list of 409 items reserved for
purchase from the MSME sector was reviewed and after deleting items having
common nomenclature and making the entries more generic as well as addition
of new items, a revised list of 358 items was approved by the Committee
(set up to consider the question of inclusion of additional items) which
also includes 8 handicraft items reserved for purchase from the Handicraft
Sector. |
II. Price Preference Policy
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Assistance under Government Stores Purchase Programme in
the form of reservation of products for exclusive purchase
from small scale sector and price preference is one of
the major instruments for providing marketing support
to the small scale industries. The Director General of
Supplies and Disposals, the Central Purchasing Organisation
of Government of India provide a number of facilities
to small scale industries under its Government Stores
Purchase Programmes. These include reservation of certain
products for exclusive purchase from the small scale sector
and price preference upto 15% in case of selected items
which are produced in both large scale as well as small
scale units. The Single Point Registration Scheme of NSIC
was launched as a market support measure for the MSME
Sector. Under the Scheme, the following benefits are given
to MSME units which get themselves registered with the
NSIC:- |
i) |
Availability of Tender Sets free of cost; |
ii) |
Exemption from payment of Earnest Money Deposit; |
iii) |
Exemption from payment of Security Deposit; |
iv) |
Price preference upto 15% over the lowest quotation of the
large scale units (on merits) |
The NSIC while registering a unit under this scheme is required to
undertake capacity assessment of the applicant through the institutional
set up of the SISIs in the country. They are also required to obtain confidential
report from the bankers of the manufacturers about the credit worthiness/financial
standing of the same. The units registered with NSIC under this scheme
are given a registration certificate indicating items for which registered
and monetary limit upto which registered. The Policy of the Price Preference
of 15% is a critical benefit available to the MSME sector. The benefit is
available to compensate them on account of non-availability of economies
of scale, poor resource base, poor access to raw-material etc. as compared
to the large scale sector. The policy of the Price Preference of 15% is
an independent policy and is in no way linked with the price preference
of 10% to the PSUs and other purchasers. |
Related Links:
List of Reserved Items
List
of Items for Exclusive MSME Purchase
MSME
In India
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