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The government is considering to exempt the proposed mega manufacturing zones from certain restrictive labour laws with a view to boost industrial output which has stagnated for the past two years.
The proposal to exempt National Investment and Manufacturing Zones (NIMZ) was raised by the officials of commerce and industry ministry with their counterparts in the labour ministry, sources told PTI.
"Few provisions of the labour laws are impacting the growth of manufacturing sector. The issue of exempting NIMZs from certain provisions of the Contract Labour Act was discussed at a secretary level meeting," they said.
Possibility of setting up a "sinking fund" to help displaced workers also came up for deliberations but no final view was taken.
Indian industry for long has been expressing concerns over the rigid labour laws.
Blaming rigid labour laws for declining manufacturing output and poor job creation, the National Manufacturing Competitiveness Council, too, has asked the government to replace the dated laws with new ones to suit the needs of modern business.
Manufacturing, which constitutes over 75% of the index, declined 1.2% in March against growth of 4.3% a year earlier.
During the April-March period of 2013-14, the sector's output contracted 0.8% compared with 1.3% growth previously.
The previous government has formulated the National Manufacturing Policy (NMP), which aimed at raising the share of manufacturing to 25% of GDP by 2022 from the current 16%. The NMP envisages setting up of NIMZs, which are industrial townships, benchmarked to the best manufacturing hubs in the world.
NIMZs are conceptualised as integrated industrial townships of at least 50 sq km (5,000 hectares) with state-of- the-art infrastructure.
The government had notified several NIMZs, including one each in Haryana, Uttar Pradesh, Gujarat and Madhya Pradesh; two in Rajasthan and three in Maharashtra.
