Opponents demand removal of the DIPP proposal to exempt the zones from labour laws, while business chambers cheer; PMO intervention likely.
The commerce ministry’s position on the proposed National Manufacturing and Investment Zones (NMIZs) has been strongly objected by the labour ministry and trade unions.
The NMIZs were proposed early last year, as part of a policy to raise the share of manufacturing in gross domestic product from the present 15-odd per cent to about 22 per cent. They are envisaged on the lines of Special Economic Zones (SEZs).
Industry and chambers of commerce welcomed the idea and are also cheered by the position paper of the Department of Industrial Policy and Promotion (DIPP) on the issue. The paper echoes the feeling of the industry that restrictions on hiring and dismissals are a big bottleneck to expansion of the manufacturing sector.
The NMIZs are proposed to be exempted from the Factories Act, the Industrial Disputes Act, the Trade Union Act, the Gratuity Act, the Provident Fund Act and the Employees State Insurance Act. The special purpose vehicle to set up an NMIZ would be the guardian of workers and companies would be free to create their own conciliation and compensation mechanisms.
To which, the labour ministry has said it opposes such “outsourcing of of the sovereign functions of the government to a third party”.
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All labour laws, it has said, must apply to the proposed NMIZs.Labour secretary Prabhat Chaturvedi said the DIPP paper was only “a discussion paper seeking comments. And, we have given our views, the same as those given for SEZs”.
Elaborating: “We have told them three things. That labour laws will be applicable in the special zones proposed. Second, sovereign functions of the government cannot be outsourced. Third, the labour ministry is all for simplification of labour laws and reducing the procedural delays.” DIPP officials said labour issues had been adequately addressed in the draft. “We have recommended some long-term reforms on labour policies, keeping in mind today's competitiveness. However, the labour ministry has some reservations on our recommendations,” they said.
Commerce minister Anand Sharma said the questions raised were being addressed but there was no question of the policy being delayed. “We are ready with the draft policy. The Prime Minister will call a meeting on this issue soon. There will be issues when something like this takes place. But we cannot afford to defer it anymore. We have to create a National Manufacturing Policy.”
Bharatiya Mazdoor Sangh president Saji Narayanan said these proposals showed the commerce ministry wanted development of industry at the cost of labour.
“The NMP contradicts the ministry’s own declared Industrial Policy (1991) clause that no small section of society can corner the gains of growth, leaving workers to bear its pains, and that labour should be an equal partner in progress and prosperity,” he said. To which, the chambers of business say the liberalised norms envisaged are a must if the manufacturing sector is to attract investments.
“You can have jobs only with pro-investment policies. The only bottleneck for that is our labour policy,” said B P Pant, director of the labour and skill development cell of the Federation of Indian Chambers of Commerce and Industry.
“Having a liberalised labour policy is not being anti-labour. No one is saying that we won’t have social security benefits. (But) the government should intervene only in providing social safety nets and skill development,'' he added.
The Confederation of Indian Industry has been extolling the policy draft. Says Venu Srinivasan, its past president and chairman of the CII manufacturing council: “Our current labour laws have for years come in the way of creating substantial employment in the manufacturing sector. The new policy should aim to provide fairness to employees, while giving more flexibility to industries to adjust to their levels of production.”
Hastening to add, though, that he was against a dilution of workers’ security.