Since 1967, there is a policy of reserving selected products in the manufacturing sector for exclusive production in the SSI sector. The list of reserved items has been revised from time-to-time. The policy initiatives in India have always recognised that SSIs contribute to the material progress of the country.
Small firms are capable of producing a larger quantum of consumer goods than before to meet the possible increase in demand that would arise on account of the spurt in incomes, generated by fresh investments in heavy and basic industries. It is also taken for granted that small firms would, in the process, create additional employment opportunities.