Industry upbeat

Print edition : November 14, 2014

THE Federation of Indian Chambers of Commerce and Industry (FICCI) has welcomed the National Democratic Alliance (NDA) government’s initiatives on labour reforms and also demanded more such measures to enhance private investment inflows into India. FICCI is also hoping for more substantive changes in labour laws in addition to these procedural changes. Speaking to Frontline, a senior FICCI representative said: “At the very outset, I must say that we welcome most of the labour reforms. However, FICCI feels that these are mostly reforms in the realm of processes, and more substantive labour reforms need to follow. The attempt to do away with ‘inspector raj’ and instead streamline processes such as filing of [tax] returns and maintaining registers is welcome.” Speaking more specifically about the reforms, he said that FICCI welcomed the strengthening of the health and safety provisions under the Factories Act. He said: “The government has done away with punishments for small offences committed under the Factories Act. The provision of punishments would earlier send a chill down the spine of investors who were willing to invest in India.” FICCI is pleased with the increase in the limit of overtime hours from 50 to 100 in a quarter. The representative said: “In India, the payment for overtime work is probably the highest in the world; it’s twice the normal wages, whereas in most countries it’s the same as or about 1.5 times the normal wages.”

“Further, the reforms have put on State governments the onus to ensure that there are enough safeguards in place for women working in night shifts in factories. This is an issue on which the High Courts have given conflicting judgments and hence there was a lot of confusion. This confusion has now been resolved.” FICCI has welcomed the reforms with respect to the threshold limit of employees for which small and medium enterprises had to carry out the formalities of filing returns and maintaining registers. It has been enhanced from 19 workers to 40 workers. The representative said: “While FICCI welcomes this, our demands are that the limit be raised to 50 workers. The bureaucratic hassles of maintaining records is an unnecessary bother for small and medium enterprises, which are often run by owner managers.”

Speaking about the reforms to the Apprenticeship Act, he said: “We also welcome the strengthening of the Apprentices Act, 1961. It has only been applied in a rudimentary fashion. There are about 40 million enterprises in the country, while only 2.8 lakh apprentices are trained every year. Enterprises should be encouraged to train apprentices by giving them concessions such as subsidised electricity, development rebate and tax breaks. These organisations are producing appreciating assets. Therefore, they need to be encouraged. Every workplace should be a training place. At present, in a number of enterprises, apprentices are often not involved in the production process. Trade unions oppose any move to involve apprentices as they consider them a source of cheap labour [for the company]. This is not correct as hands-on experience is really useful for the apprentice. The government can follow the Switzerland model, which is successful. We have no reservations about increasing the wages of apprentices and bringing them on a par with minimum wages in some States.”

On being asked whether the proposed changes in labour inspection would help industries bypass labour laws, he said: “I do not think that this is meant to take away the rights and benefits of labourers as such. Our only apprehension is that establishments in rural areas may not have Internet connections or trained manpower to carry this out. So it will be a challenge for the state to ensure that they follow the norms.”

FICCI welcomed the proposal to extend the health insurance scheme Rashtriya Swasthya Bima Yojana to workers in the unorganised sector, provided the loopholes in the scheme were plugged.

Speaking about the proposal to introduce a labour identification number, the FICCI representative said: “There is about Rs.27,000 crore lying in Provident Fund accounts as unclaimed funds. This is because a number of employees move from one organisation to another without seeking a transfer of funds. A unique labour identification number will benefit thousands of workers. At present, the whole process is cumbersome and involves a number of staff working on refunding PF, etc.”


FICCI has also welcomed the Rajasthan government’s recent steps to introduce reforms in labour laws. The senior representative highlighted FICCI’s position on the issue: “The Rajasthan State government’s move to amend the Industrial Disputes Act to enable enterprises to retrench up to 300 employees without the permission of the government is a change that was long overdue. In 1976, a cap of 100 employees was imposed by the government after which it became extremely difficult for enterprises to carry out any kind of restructuring without the State government’s permission. As it is a politically sensitive permission, the State government has often refused to give it. We [FICCI] had raised this demand for a revision of this threshold limit to 300 employees. This is a step in the right direction.”

Sagnik Dutta