| NEW DELHI, July 20
NEW DELHI, July 20 A flagship policy to beef up
India's manufacturing sector with world-class investment zones
has stuttered with objections from the labour ministry on
freeing up employment laws, a top bureaucrat said on Wednesday.
Industry Secretary R.P. Singh told a business lobby meeting
he expected a draft policy on manufacturing zones to be ready
within two months as his department sought to build consensus. A
discussion paper was released in 2010, but struggled to bridge
differences with other ministries.
With an eye to its emerging market rival China, India is
pushing the creation of such zones to ramp up its goods exports
and revamp a manufacturing sector that has struggled to be
competitive since before economic liberalisation in 1991.
To entice investors, the zones promised to provide
world-class infrastructure such as ports and airports, slash
regulation in a notoriously bureaucratic country and free up
labour laws -- including making it easier to fire workers and
easing regulations on wage payouts after a company closes down.
"I didn't expect the labour department's response to be so
lukewarm," Singh said. "We are coming round with some kind of a
consensus, but I am not fully satisfied."
The labour ministry had raised objections that the
manufacturing policy did not meet India's obligations under the
International Labour Organization (ILO), Singh said.
"I hope in the course of the next one-and-a-half to two
months, we should be able to come out with a reasonable draft
which will give some kind of confidence to industry," he said.
Heavily reliant on services, India must shift economic gears
towards manufacturing if it is to maintain near-double
digit growth and absorb the more than 10 million people set to
join the workforce annually in the coming years.
New Delhi wants to lift manufacturing's share of the economy
to 25 percent over the next decade from about 16 percent now.
A separate policy to create special manufacturing zones for
exporters, which was rolled out six years ago, was thrown into
doubt in this year's budget amid differences between the finance
ministry and the trade ministry over how such zones should be
"What about creating jobs for the millions of people who are
going to join the workforce? That should be their (labour
ministry's) concern now," Singh said.
(Editing by Malini Menon)