The ministry of labour and employment may have given a green signal to the broad contours of the National Manufacturing Policy (NMP), but the policy has yet again run into trouble. The ministry has refused to relax labour laws inside the national manufacturing zones (NMZs).
On February 16, the Department of Industrial Policy and Promotion (Dipp), the nodal agency for NMP, wrote to the labour ministry, requesting it to reconsider labour laws related to employability and retrenchment of workforce inside the NMZs.
The letter specifically sought to transfer the responsibility of the industrial establishments to insurance companies, in case of closure and layoffs.
In its reply, the labour ministry has conveyed the law cannot be changed as it could possibly jeopardise the social security of workers. “We are not in favour of such a change as it could put the fate of the labourers in doldrums,” said an official in the labour ministry on the condition of anonymity.
The official, who is directly involved with the matter, said such a change could be time consuming as it would require amendment to the Industrial Dispute Act, 1947. The reply of the Dipp is expected next week.
Labour laws relating to closure and retrenchment are governed by the Industrial Disputes Act, 1947, according to which industrial establishments are required to provide compensation and alternative employment to workers if they are laid off or the establishment shuts down.
Indian labour laws have often been criticised for being too harsh on the employer. More recently, Prime Minister Manmohan Singh, speaking at the Indian Labour Conference, had also questioned the merit of some of these laws.
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The manufacturing policy, which seeks to increase the share of the manufacturing sector in the gross domestic product from the present 15-16 per cent to 25 per cent over the next decade, was criticised by Tata Sons’ Chairman Ratan Tata yesterday. He pointed out there may be several roadblocks on the way to make that (NMP) actually implementable.
The ministry and the Dipp had for long disagreed over the agency that would enforce the labour laws in the NMZs. Earlier, the ministry maintained “under no circumstances” would it “outsource” labour inspection powers to any other agency, much to the displeasure of the Dipp.
A final agreement was reached after the ministry was allowed to handle the enforcement mechanism of labour laws. Dipp was happy after its proposal that an NMZ chief executive officer be the head of the labour machinery was cleared.