Repeal labour laws to boost manufacturing, create jobs: NMCC

Says existing labour laws are dated and are acting as a disincentive to SMEs growth

Blaming rigid labour laws for declining manufacturing output and poor job creation, the National Manufacturing Competitiveness Council has asked the government to replace the dated laws with new ones to suit the needs of modern business.

In a letter to Labour and Employment Minister Oscar Fernandes, NMCC Chairman V Krishnamurthy has said that the existing labour laws are "dated" and are acting as a disincentive to SMEs growth.

"We have 44 laws relating to labour. Repealing the existing labour laws and replacing them with new labour laws suited to the 21st century and in consonance with our International Labour Organization obligations is an essential pre-requisite for success in large scale employment generation in manufacturing," the letter said.

He has suggested to make a single comprehensive law or a maximum of three laws related with labour's safety, welfare and rights.

NMCC Member Secretary Ajay Shankar said that there is an urgent need for labour reforms.

"Every labour law today puts lot of regulatory burden on companies. Big firms can comply with that but SMEs can not. To reduce these hurdles, there is need to repeal the existing laws. But the move requires political will," Shankar told PTI.

He said that about 100 million labour intensive jobs in the next five years can be moved to India from China which is facing challenges like rising wages and declining youth population.

"India has the full potential to grab this opportunity. It is an historic opportunity. We should not duck this issue (labour law reforms)," he added.

The manufacturing sector, which constitutes over 75% of the Index of Industrial Production (IIP), declined by 1.6% in December last year, as against a contraction of 0.8% in the year-ago period.

During April-December this fiscal, the sector's output contracted 0.6% compared to a growth of 0.6% in same period in 2012.

According to a report of industry body Assocham, job creation in India has declined in 2013 by about 0.4%.