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How Labor laws are affecting implementation of Make in India

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By Abhik Ghosh

What’s the one assurance investors want before setting up a manufacturing base in India? The ease of making workforce adjustments in line with changing market conditions. In this area, Indian labor laws are among the most restrictive.

The Industrial Disputes Act of 1947 has two provisions in the way of workforce adjustments. Chapter VB of the Act requires prior approval of the appropriate government before resorting to any layoff, retrenchment, or closure in establishments employing 100 or more workers.

The draft Labor Code on Industrial Relations currently in circulation seeks to raise the threshold to establishments employing 300 or more workers, but it is still work in progress.

Another major contentious provision is Section 9A of the Act, which mandates 21 days’ notice before affecting any change in established conditions of service of any employee, including any change necessitated by “rationalization, standardization, or improvement of plant or technique”. This is anathema for investors, particularly in this age of fast changing technologies and manufacturing processes.

Contract labor is yet another major area of concern. Investors would surely want to know if engaging workers on temporary contracts would run afoul of the law. The Contract Labour (Regulation and Abolition) Act, 1970, as the name suggests, is enforced to regulate the practice and abolish it in certain cases.

In other words, the practice is not prohibited. Engaging contract workers for temporary, intermittent or seasonal work is allowed, but using them for work of perennial nature violates the letter and spirit of the law.

Why would investors want to engage workers on temporary contracts in the first place? To meet surges in demand for goods and services requiring urgent workforce adjustments. The Immediate deployment of regular workers is not always feasible and pruning them alongside falling demand often meets legal obstacles. Moreover, regular workers are increasingly becoming less productive and more expensive.

The central government has yet to initiate any action in this area. Rajasthan has taken the early lead, raising the threshold for applicability of the law to cover industries or contractors engaging 40 or more contract workers, up from the original 20. Other state governments are expected to follow suit. The move has been welcomed by employers and criticized as anti-worker by trade unions.

But changing the applicability clause is like nibbling at the edges. Plunging into the core, the status of temporary workers must be redefined and extended beyond the present limit of 240 days in a year. That should take care of the persistent demands by the traditional trade union movement for regularization of all contract workers.

On this aspect, the experiment by India’s largest carmaker is innovative and instructive. In 2012, Maruti introduced a new category of directly recruited temporary workers, substantially reducing the role of intermediaries. It has appreciably narrowed the gap in emoluments and allowances between regular and contract workers, which is the main bone of contention.

Temporary workers get on-the-job training as apprentices and become eligible for regular appointment in due course. Maruti pays such workers a stipend for the period they must wait out for regular appointment. This also promotes a sense of belonging and solidarity with the company. It is the habit of institutions to give birth to loyalties. The policy has worked well and has brought industrial peace to what was a volatile workplace.

The big question is: How soon can the central government bring about meaningful changes in the existing laws to facilitate quick workforce adjustments?

For investors, this is the major sticking point. Can the government drive the labor reforms agenda through the legislative route and achieve desirable outcomes?

Given the present party alignments in the Rajya Sabha, this is like building castles in the air. Alternatively, can executive orders be employed to achieve the desired results? Some quick thinking is needed in this direction, followed by swift action.

As the reforms package unfolds, pragmatic solutions will have to be discovered to assure investors that their business interests would not suffer by mindless application of the law, while taking care to ensure that workers’ interests are not compromised.

Labor reforms are critical to the “Make in India” campaign. Investors have been waiting with anticipation. Brand India cannot afford to disappoint.

Abhik Ghosh, IAS (retd), was with the International Labor Organization (ILO) as a senior specialist in industrial relations and labor administration. (IANS)

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Submarine INS Kalvari Commissioned by PM Modi : Best Example of Make in India

INS Kalvari is the first of the six Scorpene-class submarines handed over by shipbuilder Mazagon Dock Limited, real boost to Make in India project

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INS Kalvari, Indian Army
INS Kalvari, Indian Navy (Photo: Twitter/Indian Navy)
  • “INS Kalvari is a great example of ‘ Make in India ‘. I would like to congratulate everyone associated with this submarine,” PM Modi said. PM Modi also thanked France for its co-operation

    In Mumbai PM Modi has commissioned scorpene-class submarine INS Kalvari into the Indian Navy. INS Kalvari has been named after the maritime force’s first-ever underwater craft.

The commissioning ceremony was attended by Prime Minster Narendra Modi, Defence Minister Nirmala Sitharaman, Chief of Naval Staff Admiral Sunil Lanba, Maharasahtra Governor Ch Vidyasagar Rao, Maharashtra Chief Minister Devendra Fadnavis, other senior Indian Navy officers, and delegates from France.

The Scorpenes are being built by the Mazagaon Dockyard Ltd under Project 75 with transfer of technology from a foreign collaborator — DCNS of France.

INS Kalvari
INS Kalvari is named after the dreaded tiger shark (Photos: Twitter/Indian Navy)

INS Kalvari : Proud Moment for Indian Navy and Entire Country

It is a proud moment for the the entire country as the submarine is a prime example of flagship program of PM Modi government’s ‘ Make in India ‘ project. The special combat features of the Scorpenes include superior stealth and ability to launch crippling attacks with precision-guided weapons. The attacks can easily be carried out with torpedoes while submerged or on the surface, making it a deadly weapon.

Facts about INS Kalvari

  • The submarine has a length of 67.5 metre and a height of about 12.3 metres. The hull form, fin and hydroplanes are specifically designed to produce minimum underwater resistance.
  • The boat has 360 battery cells, each weighing 750 kg, to power the extremely silent Permanently Magnetised Propulsion Motor. The stealth of the boat is further enhanced through the mounting of equipment inside the pressure hull on shock absorbing cradles.
  • This is first of the six Scorpene-class submarines to handed over by MDL. The six submarines are being built as part of the Rs 23,652 crore “Project-75” of the Indian Navy.

“The technology utilised in the Scorpene has ensured superior stealth features such as advanced acoustic silencing techniques, low radiated noise levels, hydro-dynamically optimised shape and the ability to launch a crippling attack on the enemy using precision-guided weapons,” an official of the MDL said.

It is really very positive to see Make in India boosting the defence sector. INS Kalvari will surely add more strength to mighty Indian Navy.

– by Shaurya Ritwik, Shaurya is Sub-Editor at NewsGram and writes on Geo-politcs, Culture, Indology and Business. Twitter Handle – @shauryaritwik