There is proposal for single labour law for the entire micro, small and medium sector ( MSME) to enhance its competitiveness and improve work culture.
The Ministry of Labour is preparing single law by merging all other existing labour laws regulating the MSME sector in consultation with the MSME Ministry. According to official sources, the MSME sector contributes 8% of the country’s GDP, 45% of the manufactured output and 40% of its exports. On the other hand, the MSME sector is labour intensive and highly disorganized. Different labour laws prevalent in different states has made the sector more scattered and difficult to regulate.
While this decision has already been taken, views have been sought from states as stakeholders.
Some of the issues under active consideration are registration of MSME, simplification of penal provisions in the labour laws for the small scale sector, clubbing of laws in groups and remove multiplicity of provisions in different laws. Another proposal is to move from a regulatory system to an incentive-based system for implementation of labour laws where compliance with the labour laws will be linked to incentives for the enterprise.
If a scheme is launched for the sector, its implementation gets affected by the different laws prevalent in the state . While the sector is quite export oriented , but the products hit many non tariff barriers in other countries due to labour law issues which is pulling down the overall export competitiveness of the country. Micro, Small and Medium Enterprises who are producing an extremely wide ranging variety of goods which are exported as well as have to reach out to the domestic consumers, withstanding the removal of protectionist measures such as reservation for small scale as well as lowering of entry barriers for imported goods due to the WTO regime in place
The challenge here is to provide grass-root and affordable technologies and ensure, at least primary processing at the village/cluster level to add value and reduce the costs of logistics, said official sources, stated an official source.
Meanwhile in accelerating its labour reforms process, the government last week introduced two Bills in the Lok Sabha seeking to revamp archaic labour laws with proposals aimed at creating millions of jobs and expanding manufacturing. The Factories (Amendment) Bill, 2014, and the Apprentices (Amendment) Bill, 2014, seek to amend laws that came into force in 1948 and 1961, respectively. Once passed, they are expected to make it easier to do business in India, with provisions to allow flexibility in both hiring and working hours.
