Announcing this at the 23rd National Employee Relations Conference, organised by the Standing Conference of Public Enterprises, the minister said the exemption would be subject to the condition that the units developed their own social security measures.
The exemption will mean that people employed for a fixed term in special economic zones will be outside the purview of the Employees Provident Fund Act. Verma said the move would help domestic industry in a big way by increasing production and creating jobs.
Industry associations have appreciated the move. In a release, the Federation of Indian Chambers of Commerce and Industry (Ficci) said this was a step in the right direction, which would boost foreign direct investment and exports.
It added that China, Pakistan and Bangladesh had also decided not to apply labour laws to special economic zones, which improved their export performance and increased employment opportunities.
Verma said the government had also decided in principle to allow fixed-term labour contracts in other areas of the economy. The contracts would come into effect from January 1, 2004.
Adding that a couple of meetings were to be held to firm up the decision. Under the terms of these contracts, employers will be allowed to hire workers for a fixed period on mutually agreed terms, with the possibility of renewal.
This will provide flexibility to the labour market because employers will not be saddled with the burden of employing a person indefinitely. Verma also favoured granting tax exemptions to units that undertook training of labour.
