Question

State and explain any two steps undertaken by the Government of India for the protection and promotion of Small-scale Industries between 1950–1990.

Hint:

Small-scale industries were viewed as engines of inclusive growth, and protectionist policies were intended to shield them from large-scale competition.

Answer 1

During the period between 1950–1990, the Government of India undertook several steps to protect and promote Small-scale Industries (SSIs), recognizing their potential in employment generation and equitable distribution of income. Two key steps include:
Reservation of Products for Exclusive Manufacture: The government reserved the production of certain consumer goods (like handloom textiles, leather items, toys, etc.) exclusively for small-scale industries. This meant that large-scale industries were prohibited from manufacturing these items, allowing small units to grow in a protected environment without competition from capital-intensive giants.
Financial Assistance and Subsidies: Specialized institutions such as SIDBI (Small Industries Development Bank of India) and SFCs (State Financial Corporations) were established to provide cheap credit and financial support to SSIs. Subsidies, low-interest loans, and assistance for modernization were extended to enhance competitiveness and sustainability.
These measures not only protected SSIs but also encouraged their participation in industrialization and rural development.