Labour laws change in India
Labour laws change in India

The time is propitious for India to make it big on the international stage in attracting foreign investment. This is the result of growing disillusionment with China in the wake of an impression fuelled by US and German statements that Beijing either deliberately leaked the toxic coronavirus from its laboratory in Wuhan or it kept countries in the dark inordinately long after an inadvertent leak from the lab, with ulterior motives.

With China brazenly taking advantage of worldwide distress on account of the coronavirus pandemic in putting into shape its neo-colonial strategy to force its sovereignty claim over disputed islands in the South China Sea which are in dispute with Vietnam, the Philippines, Taiwan, Indonesia, Malaysia and Brunei and in East China seas with Japan, the animosity towards and suspicion of China has grown in recent days.

Amid the tension in the South China Sea, the Narendra Modi government in India is seeking to divert the investment traffic away from China towards this country and there is hope in New Delhi that if India plays its cards well, it could attract investment worth a whopping Rs 25 lakh crore, much of it that would otherwise have gone to China. Any botch-up at this stage by the Modi dispensation would be a big blow.

Taking a cue from Modi and conscious of how a new investment flow could turn the economic stakes in India’s favour, states like Madhya Pradesh, Uttar Pradesh and Gujarat have already pitched in for quick changes in labour laws to meet the long-standing clamour of investors for more liberal labour laws and other institutional changes to ease investment. These governments anticipate that after the coronavirus pandemic eases out, many investors would be looking at pulling out of or reducing their stakes in China. The expectation is that many of them would make a beeline for India.

In fact, developed countries like US, Japan and Australia have advised their companies to stay away from China. Japan has even proposed a fund of $2.2 billion to encourage its companies to leave China so that they do not suffer economically if they decide to relocate back to Japan and/or even some other countries.

Over the years, flush with success as an economic power, China has turned manifestly arrogant and high-handed. This is illustrated by the fact that when the Australian Prime Minister recently blamed China for the virus outbreak and said that China should pay them compensation, Beijing rebuked Australia saying its (Australia’s) worth is not more than a chewing-gum stuck to the sole of its shoes.

In line with this attitude, China’s stance towards South-East Asia in the South China Sea has angered these countries considerably. That Beijing would woo these countries again when it comes to the crunch and lay out the red carpet for the estranged big investors is quite on the cards. But that is where India’s propensity to win them over would be on test despite India’s lack of aggressiveness in taking on Beijing.

Indeed, India has by and large desisted from challenging China on the South China Sea disputes but there was a mild incident when in July 2011, the INS Airavat, an Indian amphibious assault vessel on a friendly visit to Vietnam, was reportedly contacted 45 nautical miles from the Vietnamese coast in the disputed South China Sea by the Chinese Navy stating that the ship was entering Chinese waters. The Indian Navy clarified that India supported freedom of navigation in international waters, including in the South China Sea, and the right of passage in accordance with accepted principles of international law. These principles should be respected by all, it emphasised.

Prime Minister Modi has maintained a workable relationship with Xi Jinping but India’s growing close links with the Americans have irritated the Chinese.

In the past, Madhya Pradesh has been a typically rigid state with a plethora of labour laws to comply with for any investor. By contrast, as per the changes introduced in the labour laws by a recent ordinance, companies will require to spend less than 24 hours in obtaining labour-related registration which took months earlier. Not only this, now licences for factories will not be renewed every year, they will be renewed for ten years. Companies will not be made to run around offices for getting renewal licence and all these things will be done online now. In case of start-ups, renewal will not be required after the registration. This is on paper. How it translates into action remains to be seen.

Earlier, factories had to maintain 61 registers related to labour laws and had to file many types of returns. But now this has been done away with and only one register will be needed. Self-attestation will be sufficient for the return. Factory inspector will not be allowed to inspect factories time and again and the system of third party inspection has been made easy. Industrialists will not have to visit labour courts frequently and the management will be allowed free hand to recruit workers and labours as per their needs. The government’s interference has been completely done away with on paper.

Women will be allowed to work in the night shifts in IT companies. The aim of all these reforms in labour laws is to attract maximum foreign investments in the next 1,000 days by giving concessions to industries.

In traditionally investor-friendly Gujarat, Chief Minister Rupani has announced that companies from Japan, Korea and US, that are planning to exit China, may be relocated to the Special Economic Zones in Sanand and Dahej and in the industrial parks of Gujarat Industrial Development Corporation where the Gujarat government is ready to provide them 33,000 hectare land.

Dholera, which is being developed keeping in mind the foreign investment, is being upgraded with infrastructural facilities at a fast pace so that companies from abroad can be attracted.

Uttar Pradesh, too, is preparing to spread out the red carpet for foreign investors, cutting out red tape and excessive bureaucratic meddling if Chief Minister Yogi Adityanath’s intent is acted upon.

All in all, a competitive environment is fast building up. It now remains to be seen whether all this yields the desired results in terms of foreign investment.

American and Japanese companies are particularly hawkish about moving out of China and re-locating to India. That could give India truly a shot in the arm.

The writer is a political commentator and columnist. He has authored four books.

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Free Press Journal