Reform of textile labour laws on the cards

Despite opposition from Left Parties on labour laws, the Union textiles ministry will talk to state governments to relax labour laws to make the sector internationally competitive.

The ministry has already initiated talks with governments of Andhra Pradesh, Tamil Nadu, Uttar Pradesh, Maharastra and Gujarat on this.

"The UPA government stands with support from Left parties, so labour laws is a sensitive issue. However, reforms in labour laws is necessery for the industry." Shankarsinh Vaghela, Union textile minister told Business Standard on Monday.

The effeciency level of Indian textile companies is around 40 per cent as compared to 65 per cent of Chinese companies.

Only improved labour laws can increase Indian effeciency levels to those of China.

"The Centre is in talks with various state governments to relax labour laws in respective states to make the sector internationally competitive and has received positive response in that most state governments are willing to relax labour laws," said Atul Chaturvedi, joint secretary in the central ministry of textiles.

The McKinsey report on 'Freeing India's textile industry' had pointed out that Indian manufacturers often set up multiple small plants instead of a single big one to take advantage of easier labour laws and a tax regime that tends to favor small factories.

As a result, Indian clothing plants typically have 10 to 20 per cent of the capacity of Chinese plants.

"In India, formalities delay decision-making and implementation, unlike in China. The Communist Party of China does the decision-making without a manifesto. We have a menifesto and have to provide employment in the textile sector but under relaxed labour laws," Vaghela admitted.

Restrictions on hiring and firing, including a law compelling companies with more than 100 workers to obtain government approval before reducing their work force, should be removed, the McKinsey report had said.

"The textile ministry is coordinating with other the inter ministerial groups to address issues like power cost, labour reforms and port infrastructure," said Vaghela.