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Small-scale reservation on US model

New Delhi, Aug. 27: The Centre is weighing a move to allow up to a 24 per cent reservation in government and public sector purchases to products from the small scale sector.

The proposal, modelled on a US law, has been put forward by minister for small-scale industries Vasundhare Raje. “The Centre has agreed to make this recommendation, but we are now trying to get the finance ministry and the Cabinet to agree to make it statutory. If the US can do it without attracting any counter-measures from the WTO, so can we,” Raje argued.

The minister also said though dereservation of the small scale sector was inevitable, the government’s policy was that dereservation would be done in a manner that suits the SSI sector. “It will happen as and when they want it; not before not after.”

However, at the same time, Raje indicated that the government was likely to open up another 30-40 SSI sectors to big industry after consultation with sector representatives. This was likely to happen around the next Union budget. The government has already dereserved some 150 product lines out of several hundreds which still stay reserved.

The new thinking on stalling on dereservation, dictated by the S. P. Gupta report, is in direct contravention of the earlier line of de-reserving quickly, which had among its prominent supporters Plan panel member N. K. Singh and former finance minister Yashwant Sinha.

The S. P. Gupta report, which overturned earlier recommendations, came after a huge brouhaha within the BJP over the issue with Sangh Parivar ideologues and BJP MPs pointing out that quick dereservation could create industrial wastelands in northern India, the BJP’s political support base.

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