What is the purpose of reserving certain products for small-scale industries?

To protect small-scale industries from competition with large firms.

Small-scale industries are believed to have a higher labor-intensive nature compared to large-scale industries, meaning they employ a larger workforce. Consequently, they contribute significantly to employment generation. However, these industries face challenges in competing with larger industrial firms. It is evident that the growth of small-scale industries necessitates protection from the dominance of larger firms. To address this, certain products were exclusively designated for production by small-scale industries. The criteria for reservation were based on the capacity of these units to manufacture the goods. Additionally, they were granted benefits such as reduced excise duty and access to bank loans at lower interest rates.