NEW DELHI: To give its ambitious ‘Make In India’ programme the much needed atmosphere to succeed, the government is expected to come up with a separate set of labour laws governing the Micro, Small and Medium Enterprise (MSME) sector which forms the backbone of the manufacturing sector.
The proposed new labour laws for the MSME sector will be applicable to industrial units that employ 40 or less in their workforce and will specifically address the needs of those who are employed in the small factories or manufacturing units.
MSME contribute nearly 8 per cent of the country’s GDP, 45 per cent of the manufacturing output and 40 per cent of country’s exports. They provide the largest share of employment after agriculture and employ about 40 per cent of the total work force that is employed in India’s manufacturing sector.
“The proposed labour laws for small industry will ensure that the rights of those employed in this sector are protected and separation from the overarching labour laws will help provide a better employment environment,” sources said.
Once implemented, the new labour laws will provide the ease to do business in India and will also help effectively manage labour unrest and industrial strife and lead to new entrepreneurs entering the manufacturing sector.
The government aims to significantly enhance India’s manufacturing potential which at present accounts for around 16 per cent of GDP. The manufacturing sector growth has largely remained unchanged in the last two decades and is relatively low when compared to the 20-per cent plus share in countries like Brazil, China, Indonesia, Korea and Malaysia, even after controlling for differences in per capita incomes. .
According to a FICCI-KPMG report, “The growth in the domestic Industrial output has accentuated the crucial need for skilling India’s working age population. The projected increase in labour force during the Twelfth Plan was estimated at 477.9 million in 2011 and is expected to increase to 502.4 million by the end of 2017.”
“At an annual addition of 9.25 million per year, approximately 37 million jobs are expected to be created from 2012-13 through 2016-17. Manufacturing shall roughly contribute towards half of these additional jobs. Significant proportion of the jobs in these sectors would require a sector and skill specific trained workforce,” the report added.
According to estimates of the Central Statistics Office, India’s overall GDP growth in 2013/2014 is pegged at 4.9 per cent, marginally above 4.5 per cent in 2012/2013.
But manufacturing output is seen declining 0.2 per cent in 2013/2014 compared with 1.1 per cent growth the previous year, dragging down the overall economy. It is likely to be the worst year for manufacturing since 1999/2000.
Industry feels there is a need to significantly increase the share of MSME contribution to GDP from the current 8 per cent to 15 per cent by 2020 and enhance its contribution across key public and private industry sectors fulfilling increasing domestic demand, growth in exports, indigenization and import substitution.