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How Labor laws are affecting implementation of Make in India

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Image source: digitalindiainsight.com

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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Northeast is Fast Emerging as the new Start-up Destination, Says Minister Jitendra Singh

Due to improvement in connectivity and transport facility in the last two years, coupled with concentrated administrative focus, more and more youngsters are now heading towards the northeastern states to venture into entrepreneurship

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Union Minister of State for Development of the North Eastern Region Jitendra Singh. Wikimedia

New Delhi, October 16, 2017 : Union Minister of State for Development of the North Eastern Region (DoNER) Jitendra Singh claimed that the area was fast emerging as the new start-up destination for youngsters from all over India, an official statement on Monday.

Due to improvement in connectivity and transport facility in the last two years, coupled with concentrated administrative focus, more and more youngsters are now heading towards the northeastern states to venture into entrepreneurship and take advantage of its unexplored potential, he said, according to a DoNER Ministry statement.

Citing an example, he said in certain areas of Northeast, including states like Arunachal Pradesh, “while almost 40 per cent of the fruit goes waste on account of lack of adequate storage and transport facilities, the same can be used to produce and manufacture fresh and pure fruit juice at a much more cost-effective price”.

ALSO READ Over 4,000 km of roads, highways to be constructed in northeast

During an interaction with youngsters, Jitendra Singh also pointed out that many new airports coming up at Pakyong (Sikkim), Itanagar and Shillong, which along with a time-bound plan to lay broad-gauge rail track, would bring in further ease of doing business.

“Another sector of entrepreneurship which is fast emerging in Northeast is the medical and healthcare sector.

“For years, there has been a trend for patients to shift outside the region, mostly to Kolkata or Vellore, but the encouragement given to the private corporate sector has now resulted in the opening of new hospitals within the region itself and young entrepreneurs are taking the lead,” he said. (IANS)

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Challenges to the Narendra Modi government before the Upcoming 2019 Elections

Modi needs to come up with an efficacious plan to tackle this fast approaching apocalypse

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Challenges to Modi Government
Prime Minister Narendra Modi. Wikimedia

By Gaurav Tyagi

August 12, 2017: India would be celebrating 70 years of independence from the British rule on 15th August. The current state of affairs, in the country despite tall claims by Indian establishment is bleak. There are enormous challenges that face the Modi government in India before the 2019 elections.

‘Make in India’ scheme was launched with much fanfare in September 2014 to overhaul the out-dated policies and processes thereby, making India a global manufacturing hub.

An NDTV report reveals the ground realities.

An entrepreneur, Saurabh Ahuja tried to import a $ 600 3D printer for manufacturing drones at his workshop in Delhi. He had to shell out another extra $900 in taxes and bribes for the customs department to release his consignment and that too after a period of three months.

The aforementioned case of Mr. Ahuja discloses that ‘red tapism’ is still highly prevalent in India. Big companies donate large funds to all major political parties therefore, they have easy access to the ‘corridors of power’ but a small budding entrepreneur is made to ‘run from pillar to post’ for getting various permissions from several government departments.

India’s bureaucracy is based on the British colonial model. British officers used to be in charge of administrative affairs when India was a British Colony. To ease their workload, they used to hire Indians at the clerical level. These Indians who served the British Empire thought very highly of themselves and regarded their fellow Indians with contempt.

Indian bureaucracy thus inherited a pretentious, rigid hierarchical functioning style from its colonial masters. These bureaucrats don’t have much accountability and continue in their plum posts till retirement. Their attitude towards ruling party politicians is servile while with general public they are disdainful.

They remain contented in their comfort zone of out-dated ideas and models.
Dealing with Indian authorities is a nightmare for every common citizen. These officials create hurdles and blocks at each step and expect gratification in form of bribes.

The situation is best summarized by Rajiv Bajaj, head of Bajaj Auto, a big industrial house of India. This is what he said in a recent speech this year, “If your innovation in the country depends on government approval or the judicial process, it will not be a case of ‘made in India’ but ‘mad’ in India.”

World Bank’s recent rankings for countries regarding ‘ease of doing business’ ranks India as 130th out of 190 nations.

Jobs in the Indian Information technology (IT) sector were highly sought after.  The rapid strides made by automation coupled with a strict visa regime in the United States have now turned Indian IT upside down.

There are estimates of heavy retrenchments in the IT field.

Kris Lakshmikanth, the Chairman and CEO of ‘The Head Hunters India’ say that the year 2017-18 will serve as a ‘wakeup’ year for the IT/BPO industry. He states that there would be a ‘Tsunami’ of IT layoffs in India with approximately 200,000 IT/BPO personnel losing their jobs per year during the next 3-4 years.

Also Read: We need to take Action Against the ‘Communal Violence in the name of Cow’ : PM Narendra Modi

Therefore, Indian Prime Minister; Modi’s recent statement, wherein he said that Information Technology plus Indian Talent=India Tomorrow (IT+IT=India Tomorrow) is way ‘off the mark’.

India is poised to overtake China as the world’s most populous country by 2024 according to a UN report.

Modi can talk all he wants and come up with fancy slogans but the harsh truth is that a corrupt, lethargic bureaucracy, swift population growth and cutting down of jobs in the IT sector are immense challenges and cannot be tackled by mere ‘catchy phrases’.

Lack of jobs to absorb a large number of fresh graduates passing out from Indian universities every year. The predatory attitude of bureaucracy, which discourages entrepreneurship in the country, sharply point towards looming mass unemployment in India.

This would turn India’s so called demographic dividend into a huge demographic liability in the very near future. Modi needs to come up with an efficacious plan to tackle this fast approaching apocalypse.

The author is a Master Degree holder in International Tourism & Leisure Studies from Netherlands and is based in China.

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Most Indian firms see Employee experience as a critical aspect of achieving their Business Objectives: Study

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Employees in an office (representational image), Pixabay

New Delhi, April 27, 2017: Almost 43 percent of business and IT leaders in India — higher than the average 38 percent for Asia-Pacific and Japan — see employee experience as a critical aspect of achieving their business objectives, a new study said on Thursday.

According to the study, conducted by Forrester Consulting on behalf of Dell, Indian firms realise the value of technology and innovation and the importance of constantly improving customer experience better than other developing countries in the region.

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This puts India in a unique position in Asia-Pacific and Japan (APJ), where collectively only six in 10 (61 per cent) business leaders felt that existing technology in their organisation is sufficient to meet their business goals.

“To establish a balance, IT and business leaders need to embark upon a workforce transformation strategy and provide employees, appropriate end user technology — the requisite devices and software — in order to attain the two-fold objective of increasing employee efficiency, as well as retaining talent,” Indrajit Belgundi, Director and General Manager, Client Solutions Group, Dell India, said in a statement.

The study also found that most security breaches that have occurred in the past 12 months are because of vulnerabilities at the device level.

Nearly 43 per cent of breaches in India occurred due to lost/stolen assets by an employee, while 39 per cent occurred due to a security breach of an employee device. (IANS)