SKP Business Alert
27 April 2015 | Volume 7 Issue 1
Opportunities for investment in the Micro and Small Enterprises sector in India: De-reservation of the 20 items manufactured by the MSE sector

The Ministry of Micro, Small and Medium Enterprises (MSMEs) recently de-reserved the 20 remaining items that were reserved for exclusive manufacture by the Micro and Small Enterprise (MSE) sector. With this move, the MSME reservation policy pursued over the last four decades came to an end.
 
The objective of the MSME reservation policy was to protect the MSE sector from large companies. Over the years, the number of items reserved for manufacture by the MSE sector had been reduced from over 800 to 20 items. Based on the recommendations of the Advisory Committee, the Ministry of MSMEs decided to de-reserve the 20 items reserved for exclusive manufacture by MSEs. The Advisory Committee noted that with import liberalisation, all remaining items were allowed for imports. Thus, there was no prima facie justification for the continuation of reservation of manufacturing in the MSE sector since it may inhibit the possibilities based on technologies, economies of scale, etc. as compared to the imported items.

The items now de-reserved are as follows:
Sr. No. Sr. No. (as per Gazette Notification) Product Code Name of the Product
  20-21 Food and Allied Industries
1 3 202501  Pickles and chutneys 
2 7 205101  Bread 
3 11 21100102  Mustard oil (except solvent extracted) 
4 13 21100104  Groundnut oil (except solvent extracted) 
  27 Wood and Wood Products
5 47 276001  Wooden furniture and fixtures 
  28 Paper Products
6 79 285002  Exercise books and registers 
    Other Chemical and Chemical Products
7 253 305301  Wax candles 
8 308 314201  Laundry soaps 
9 313 317001  Safety matches 
10 314 318401  Fire works 
11 319 319902  Agarbatties 
    Glass and Ceramics
12 335 321701  Glass bangles 
  33-35 Mechanical Engineering excluding Transport Equipment
13 364 340101  Steel almirah 
14 394 341004  Rolling shutters 
15 402 34200602  Steel chairs - All types 
16 404 34200702  Steel tables - All other types 
17 409 342099  Steel furniture - All other types 
18 428 343302  Padlocks 
19 447A 345207  Stainless steel utensils 
20 474 345202  Domestic utensils - Aluminium 
  
Foreign direct investment in MSEs beyond 24% required prior approval of the Foreign Investment Promotion Board (FIPB), which prevented the MSE sector from attracting investments and better technologies. The abovementioned policy relaxation will now provide greater investment opportunities, help incorporate better technologies, improve product quality and promote healthy competition.
 

Source: De-Reservation of remaining 20 items reserved for Micro and Small Enterprises Sector, Press Information Bureau, 13 April 2015. 

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This SKP Business Alert contains general information existing at the time of its preparation only. It is intended as a news update and is not intended to be comprehensive nor to provide specific accounting, business, financial, investment, legal, tax or other professional advice or opinion or services. This business alert is not a substitute for such professional advice or services, and it should not be acted on or relied upon or used as a basis for any decision or action that may affect you or your business. Before making any decision or taking any action that may affect you or your business, you should consult a qualified professional adviser and also refer to the source pronouncement/documents on which this business alert is based. It is also expressly clarified that this business alert is not a solicitation or an invitation of any sort whatsoever or a source of advertising from SKP Group or any of its entities to create any adviser-client relationship.

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