The Union Government has lifted the curb on making 20 items that had been exclusively meant for micro and small enterprises. The items freed for manufacture include bread, pickles and chutneys, wooden furniture fireworks, glass bangles, mustard oil, groundnut oil, exercise books and registers, wax candles, laundry soap, safety matches, fireworks, agarbattis and steel almirahs.
The definition of what is a small unit was restrictive. As a result of this, small and medium sized companies were unable to expand production and acquire technology for fear of losing out on the right to manufacture these items. Upon removing these items from the list, these MSMEs can scale up production. Big companies will also be able to take advantage of this opportunity, using their financial muscle to set up large units. This should encourage greater investment, including the existing MSME units, to incorporate better technologies, standard and branch building to enhance competition in Indian and global markets for these products.
The reservation of items discouraged small enterprises from transforming into medium or large enterprises for fear of losing out on the right to manufacture these items. This liberalization by the Government will facilitate the ease-of-doing business measures and will encourage greater investment to upgrade technology and standards towards enhancing competition.