ECONOMIC AND SOCIAL ISSUES (ESI)

CHAPTER
INDUSTRIAL AND LABOUR POLICY

SUMMARY SHEET

FOR RBI GRADE B AND NABARD GRADE

A/B 2019

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1 Industrial Policy: Introduction:
• The industrial policy means the procedures, principles, policies, rules and regulations which
control the industrial undertaking of the country and pattern of industrialization.
• It explains the approach of Government in context to the development of industrial sector.

2 Evolution of India’s Industrial Policies:

The evolution of India's industrial policies can be seen by dividing the entire study into three phases
namely: -
✓ First, Industrial Policies of India prior to Independence;
✓ Second, Industrial Policies of India after Independence up to 1990 and;
✓ Third, Industrial Policy of 1991 and thereafter policies.

2.1 Industrial policies of India prior to Independence

2.1.1 India’s economic activity before Independence:

India was never an industrially developed country prior to independence. It was an agrarian
country where in handicrafts attained supremacy unmatched anywhere else in the world.

2.1.2 The situation of India during the colonial period:

• During the colonial period, industrial policies and economic policies were shaped by the
British Government in favour of British interests.
• The tariff policy pursued by British rulers in India was based on the principal of one-way
free trade while the Indian interest for industrialization in India remained deliberately
neglected.

2.2 Industrial Policies of India after Independence upto 1990:

2.2.1 Industrial Policy Resolution, 1948

• The first important industrial policy statement was made in the Industrial policy Resolution
(IPR), 1948.
• The main thrust of IPR, 1948 was to lay down the foundation of mixed economy whereby
the private and public sector was accepted as important components in the development
of industrial economy of India.
The policy divided the industries into four broad categories:
✓ Industries with Exclusive State Monopoly: It included industries engaged in the activity of
atomic energy, railways and arms and ammunition.
✓ Industries with Government Control: It included the industries of national importance and so
needs to be registered. 18 such industries were put under this category eg. fertilizers, heavy

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 chemical, heavy machinery etc.
✓ Industries in the Mixed Sector: It included the industries where private and public sector
were allowed to operate. Government was allowed to review the situation to acquire any
existing private undertaking.
✓ Industries under Private Sector: Industries not covered by above categories fell in this
category.

2.2.2 Industries (Development and Regulation) Act (IDRA), 1951

• IDRA, 1951 is the key legislation in the industrial regulatory framework.
• IDRA, 1951 gave powers to the government to regulate industry in a number of ways.
• The main instruments were the regulation of capacity (and hence output) and power to
control prices.
• It specified a schedule of industries that were subject to licensing.
• Even the expansion of these industries required prior permission of the government which
means the output capacity was highly regulated.
• All existing undertakings at the commencement of the Act, except those owned by the
Central Government were compulsorily required to register with the designated authority.
• No one except the central Government would be permitted to set up any new industrial
undertaking “except under and in accordance with a licence issued in that behalf by the
Central Government.”

2.2.3 Industrial Policy Resolution, 1956

IPR, 1956 is the next important policy statement. The important provisions are as follows:
• New classification of Industries: IPR, 1956 divided the industries into the following three
categories:
✓ Schedule A industries: The industries that were the monopoly of state or Government. It
included 17 industries. The private sector was allowed to operate in these industries if
national interest so required.
✓ Schedule B industries: In this category of industries state was allowed to establish new units
but the private sector was not denied to set up or expand existing units e.g. chemical
industries, fertilizer, synthetic, rubber, aluminum etc.
✓ Schedule C industries: The industries not mentioned in the above category formed part of
Schedule C. Thus, the IPR, 1956 emphasized the mutual existence of public and private sector
industries.
• Encouragement to Small-scale and Cottage Industries: In order to strengthen the small-scale
sector supportive measures were suggested in terms of cheap credit, subsidies, reservation
etc.
• Emphasized on Reduction of Regional Disparities: Fiscal concessions were granted to open
industries in backward regions. Public sector enterprises were given greater role to develop
these areas.

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2.2.4 Monopolies Commission
• In April 1964, the Government of India appointed a Monopolies Inquiry Commission “to
inquire into the existence and effect of concentration of economic power in private hands.”
• The Commission looked at concentration of economic power in the area of industry.
• On the basis of recommendation of the commission, Monopolistic and Restrictive Trade
Practices Act (MRTP Act), 1969 was enacted.
• The act sought to control the establishment and expansion of all industrial units that have
asset size over a particular limit.

2.2.5 Industrial Policy Statement, 1977:

The main elements of the new policy were:

✓ Development of Small-Scale Sector:

• The small sector was classified into 3 categories viz. Cottage and household industries
which provide self-employment; tiny sector and small-scale industries.
• The purpose of the classification was to specifically design policy measures for each
category.

✓ Restrictive Approach towards Large Business Houses:

• The large-scale sector was allowed in basic, capital goods and high-tech industries.
• The policy emphasized that the funds from financial institutions should be made available
largely for the development of small sector.

✓ Expanding Role of Public sector:

2.2.6 Industrial Policy, 1980:

The industrial policy 1980 emphasized that the public sector is the pillar of economic infrastructure
for reasons of its greater reliability, for the large investments required and the longer gestation
periods of the projects crucial for economic development.

The important features of the policy were:

✓ Effective Management of Public Sector:

✓ Liberalization of Industrial licensing:

The policy statement provided liberalized measures in the licensing in terms of automatic
approval to increase capacity of existing units under MRTP and FERA.

✓ Redefining Small-Scale Industries:

• The investment limit to define SSI was increased to boost the development of this sector.

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 • In case of tiny sector, the investment limit was raised to Rs.1 lakh; for small scale unit the
investment limit was raised from Rs.10 lakh to Rs.20 lakh and for ancillaries from Rs.15 lakh
to Rs.25 lakh.

2.2.7 Era of Liberalization after 80’s:

After 1980, an era of liberalization started, and the trend was gradually to dilute the strict licensing
system and allow more freedom to the entrepreneurs.

2.3 New Industrial Policy of 1991:

The new government by Shri Narasimha Rao, which took office in June 1991, announced a package
of liberalization measures under its Industrial Policy on July 24, 1991.

2.3.1 Objectives of the New Industrial Policy:

✓ Liberalizing the industry from the regulatory devices such as licenses and controls.
✓ Enhancing support to the small-scale sector.
✓ Increasing competitiveness of industries for the benefit of the common man.
✓ Ensuring running of public enterprises on business lines and thus cutting their losses.
✓ Providing more incentives for industrialization of the backward areas, and
✓ Ensuring rapid industrial development in a competitive environment.

2.3.2 The major provisions of this Act are:

✓ Abolition of Industrial Licensing:
• Under this policy no licenses are required for setting up new industrial units or for substantial
expansion in the capacity of the existing units, except for a short list of industries relating to
country’s security and strategic concerns, hazardous industries and industries causing
environmental degradation.
• To begin with, 18 industries were placed in this list of industries that require licenses.
• Through later amendment to the policy, this list was reduced.
• It now covers only five industries relating to health security and strategic concerns that
require compulsory licensing.

✓ De-reservation of Industries for Public Sector:

With this view, the following changes were made in the policy regarding public sector industries:

➢ Reduced reservation for public sector:

• Out of the 17 industries reserved for the public sector under the 1956 industrial policy, the
new policy de-reserved 9 industries and thus limited the scope of public sector to only 8
industries.
• Later, a few more industries were de-reserved and now the exclusive area of the public
sector remains confined to only 4 industrial sectors which are: (i) defence production, (ii)
atomic energy, (iii) railways and (iv) minerals used in generation of atomic energy.

➢ Efforts to revive loss making enterprise:

➢ Greater autonomy to public enterprises:

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 ➢ Liberalized Policy Towards Foreign Capital and Technology:

2.3.3 Changes in the MRTP Act:

• According to the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, all big
companies and large business houses (which had assets of Rs. 100 crores or more, according
to the 1985 amendment to the Act) were required to obtain clearance from the MRTP
Commission for setting up any new industrial unit, because such companies (called MRTP
companies) were allowed to invest only in some selected industries.
• Thus, besides obtaining a licence they were also required to get MRTP clearance.
• This was a big impediment for industrial development as the big business firms which had
the resources for development could not grow and diversify their activities.
• The Industrial Policy, 1991 has put these industries on par with others by abolishing those
provisions of the MRTP Act which mediate mandatory for the large industrial houses to seek
prior clearance from MRTP Commission for their new projects.
• Under the amended Act, the MRTP Commission will concern itself only with the control of
Monopolies and Restrictive Trade Practices that are unfair and restrict competition to the
detriment of consumer’s interests.
✓ Greater Support to Small-Scale Industries:

3 Special Economic Zones (SEZ)

Government of India first introduced the concept of SEZ in the export import policy 2000 with a
view to provide an internationally competitive and hassle-free environment for exports.

3.1 The Special Economic Zone Act 2005:

The Act provides the umbrella legal framework, covering all important legal and regulatory aspects
for setting up of SEZ’s as well units operating in SEZ.

3.2 Who can set up a SEZ?

• Private
• Public
• Private/Public
• State Government
• State Government Agencies

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3.3 Minimum area requirements for setting up a SEZ are as follows:

3.4 Salient Features

• A SEZ is a designated duty-free enclave to be treated as foreign territory for the purpose of
trade operations and duties and tariffs.
• A SEZ does not require a license for imports.
• The units must become net foreign exchange earners within 3 years.
• SEZ are allowed manufacturing, trading and service activities.
• Full freedom for subcontracting.
• The domestic sales from the SEZ are subject to full custom duties and import policy is in
force, when they sell their produce to domestic markets.
• There was no routine examination by the custom authorities.
• The corporation in SEZs will not have to pay any income tax on their profits for the first five
years and only 50% of the tax for 2 more years thereafter.
• If half of the profit is reinvested in the corporation, the concession of 50% tax is extendable
for next 3 years.
• For SEZ developers, the raw material from cement to steel to electrical parts are subject to
zero tax and duty.
• For the SEZ, the Government acquires vast land tracts and gives to the developers. The basic
condition involves that 25% of the area of the SEZ must be used only for export related
activities. Rest 75% area can be used for economical and social infrastructure. However, all
SEZ benefits are applicable over the entire SEZ area.
• There were provisions for sector specific SEZs and Multiproduct SEZs.

4 NIMZ (National Investment and Manufacturing Zones)

• National Investment and Manufacturing Zones (NIMZs) will be developed as integrated
industrial townships with state-of-the art infrastructure and land use on the basis of zoning;
clean and energy efficient technology; necessary social infrastructure; skill development
facilities, etc., to provide a productive environment to persons transitioning from the primary
sector to the secondary and tertiary sectors.
• These NIMZs would be managed by SPVs (Special Purpose Vehicles).
• To enable the NIMZ to function as a self-governing and autonomous body, it will be declared
by the State Government as an Industrial Township under Article 243 Q(c) of the Constitution.

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What is major difference from SEZ? NIMZ would be different from SEZs in terms of size, level of
infrastructure planning, and governance structures related to regulatory procedures and exit
policies.

5 National Manufacturing Policy

5.1 Important provisions:

This policy has been brought out in the year 2011:

• Manufacturing’s share in India’s GDP has been stuck at 16% since the 1980s.
• The policy aims to increase the share of manufacturing in the country’s GDP from the
current 16% to 25% by 2022.
• It aims to create 100 million additional jobs in the next decade.
• It envisages establishment of National Investment and Manufacturing Zones (NIMZ)
equipped with world-class infrastructure that would be autonomous and self-regulated
developed in partnership with the private sector.
• Each National Investment and Manufacturing Zones to have 5,000 hectares.
• Land will be selected by State Governments. Preference would be given to uncultivable land.
• Both state and central Government would fund trunk infrastructure.
• The policy embodies an easy exit policy and single window clearance in zones
• The NIMZ would be managed by special entity
• The policy has envisaged fiscal sops to boost manufacturing.
• Small & medium enterprises to be reimbursed for technology purchase.
• Industrial training and skills development programmes
• Flexible labor laws and simplified & expeditious exit mechanism for sick units
• Relaxation in environmental regulations
• Financial and tax incentives to small and medium enterprises
• Incentives to states for infrastructure development
• Incentives for Green Manufacturing
• Rationalization of business regulations to reduce burden of procedural and regulatory
compliance on businesses
• Increased focus on employment intensive industries, capital goods industry, industries with
strategic significance and those in which India enjoys a competitive edge and the SME sector.
• Make industrial land (land acquisition) available through creation of land banks by states.

Update:

5.2 Formulation of a New Industrial Policy:

• The Department of Industrial Policy and Promotion, Ministry of Commerce and Industry
initiated the process of formulation of a new Industrial Policy in May 2017.

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 • Since the last Industrial Policy announced in 1991, India has transformed into one of the
fastest growing economies in the world.
• With strong macro-economic fundamentals and several path breaking reforms in the last
three years, India is equipped to deploy a different set of ideas and strategies to build a
globally competitive Indian industry.
• The new Industrial Policy will subsume the National Manufacturing Policy.

5.3 What are the areas that would be covered in this policy?
The six thematic areas include
✓ Manufacturing and MSME;
✓ Technology and Innovation;
✓ Ease of Doing Business;
✓ Infrastructure, Investment,
✓ Trade and Fiscal policy; and
✓ Skills and employability for the future

Let us have a look at an initiative of the Government of India to promote the manufacturing sector
of India, thus forming a major part of its efforts towards a new Industrial Policy, ‘Make in India’
initiative.

Make In India Scheme:

• In order to make India a manufacturing hub, PM Narendra Modi launched the Make In India
Campaign at Vigyan Bhawan in New Delhi on September 26, 2014.
• The promotion is intended to appeal foreign companies to set up their manufacturing units in
India and to obtain larger foreign investment.
• P.M. Narendra Modi on his Independence Day speech had declared the Make in India policy.

Sectors for job creation: The ‘Make In India’ places stress on 25 sectors with emphasis on job
creation and skill development. These include: automobiles, chemicals, IT, pharmaceuticals, textiles,
ports, aviation, leather, tourism and hospitality, wellness, railways, auto components, design
manufacturing, renewable energy, mining, bio-technology, pharmaceuticals and electronics, etc.

6 Industrial Corridors:

6.1 What is an Industrial Corridor?

An industrial corridor is a package of infrastructure spending allocated to a specific geographical
area, with the intent to stimulate industrial development. It aims to create an area with a cluster of
manufacturing or other industry.

6.2 The five industrial/economic corridors are:

✓ Delhi Mumbai Industrial Corridor (DMIC)

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 ✓ Chennai-Bengaluru Industrial Corridor (CBIC)

✓ Bengaluru-Mumbai Economic Corridor (BMEC)

✓ Vizag-Chennai Industrial Corridor (VCIC)

VCIC forms a part of the East Coast Economic Corridor.

Let us understand more about this with the help of the recent developments:

• Multilateral funding agency Asian Development Bank (ADB) has approved $631 million loan
for building India’s first coastal industrial corridor between Visakhapatnam (Vizag) and
Chennai.
• The fund will help develop the first key 800-km section of the planned 2,500-km East Coast
Economic Corridor.

6.3 Important points:

• The coastal industrial corridor is expected to boost development on eastern coast of India
and enable seamless trade links with other parts of Southeast and South Asia.
• The total cost of the project is 846 million dollars and work on it is expected to be over by
2031. The remaining 215 million dollars will be funded by Andhra Pradesh government.
• The loan fund from ADB will help to build state-of-art industrial clusters, roads, efficient
transport, reliable water and power supplies with skilled workforce and good business
policies.
• The new infrastructure will be built in the four main centres — Visakhapatnam, Amaravati,
Kakinada and Yerpedu-Srikalahasti — along the corridor.
• It will include 138 km of state highways and roads, 10 power substations, 488 km of drinking
water pipeline, 47 km of storm drains, water treatment plants and 281 km of power
transmission and distribution lines.
✓ Amritsar-Kolkata Industrial Corridor (AKIC)

6.4 National Industrial Corridor Development And Implementation Trust (NICDIT)

• Government of India has accorded approval for expanding the mandate and scope of Delhi
Mumbai Industrial Corridor Project Implementation Trust Fund (DMIC-PITF) and re-
designated it as National Industrial Corridor Development and Implementation Trust
(NICDIT) for integrated development of industrial corridors in the country.
• NICDIT will function under the administrative control of the Department of Industrial Policy
and Promotion.
• NICDIT will take up new Industrial Corridors, Nodes, Early Bird Projects and Standalone
Projects on the recommendation of State Governments.

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7 Golden Quadrilateral Project:
(This project was envisioned in the year 1999)

8 What are Dedicated Freight Corridors (DFC)?

• To develop the freight traffic infrastructure, the Government has designed an expansion
drive in the form of Dedicated Freight Corridors (DFC).
• In the first phase, two corridors-the Western DFC (1504 route km) and Eastern DFC
(Estimated 1856 route km)- with a total length of about 3360 route km were launched.
• Construction responsibility of DFCs is with Dedicated Freight Corridor Corporation of India
Limited.

9 Now let us see what the Diamond Quadrilateral Project is:

• The Diamond Quadrilateral is a project of the Indian railways to establish high speed rail
network in India.
• This quadrilateral will connect the four metro cities in India, i.e. Mumbai, Delhi, Kolkata
and Chennai.
• This project is similar to Golden Quadrilateral which is a roadway project which connects the
four metros by roads.
• To improve country's rail infrastructure there is a need to implement High-speed trains /
Bullet trains. So, to fulfill this demand the Diamond Quadrilateral project was planned in
2014.

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10 Doing Business Report:
The World Bank releases the Doing Business report every year. As part of this report, The Ease of
Doing Business Index and the Distance to Frontier scores are released.

10.1 What does it measure?

10.2 The Ease of Doing Business Index:

• The Ease of Doing Index was introduced in the year 2004.

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 • Higher ranking (low numerical value) indicates better & simpler regulations for business and
stronger protection of property rights.
• It signifies that the regulatory environment in a country is more conducive for starting and
operating a firm.

10.3 Distance to Frontier scores:

• The Distance to Frontier measure shows the distance of each economy from the frontier,
which represents the best performance observed on each of the indicators across all
economies in the Doing Business sample since 2005.
• The score is out of 100 with 0 representing the lowest performance and 100 being the
frontier.

10.4 What is the difference between the Ease of Doing Business Index and DTF score?
• Distance to Frontier’ scores, are an absolute measure of progress by a country.
• The rankings, on the other hand, are relative, and hence subject to reform actions taken by
other countries.

10.5 Ease of Doing Business Rankings in India:

• In India, the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce
and Industry in collaboration with the World Bank has conducted an annual reform exercise
for all States and UTs under the Business Reform Action Plan (BRAP).
• The aim of this exercise is to improve delivery of various Central Government regulatory
functions and services in an efficient, effective and transparent manner.
• States and UTs have conducted reforms to ease their regulations and systems in areas such
as labour, environmental clearances, single window system, construction permits, contract
enforcement, registering property and inspections.
• States and UTs have also enacted Public Service Delivery Guarantee Act to enforce the
timelines on registrations and approvals.

11 Improvement of Business Environment: e-Biz Project

• eBiz project is one of Mission mode Projects (MMPs) under the Digital India program of
Government of India.
• The project envisages setting up a G2B (Government to Business) portal to serve as a one-
stop shop for delivery of services to the investors and addresses the need of business and
industry from inception through the entire life-cycle.
• The eBiz project is being implemented on a Public Private Partnership (PPP) model, with
M/s Infosys Technologies Ltd selected as the concessionaire for designing, developing,
maintaining and expanding the eBiz solution & services for 10 years.

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12 Foreign Direct Investment in India:
• FDI is an investment made by a company or individual in one country in another country, in
the form of either establishing business operations or acquiring business assets in the other
country, such as ownership or controlling interest in a foreign company.
• In India, the Department of Industrial Policy and Promotion (DIPP), is the nodal department
for the formulation of the policy of the Government on Foreign Direct Investment (FDI).
• It is also responsible for maintenance and management of data on inward FDI into India,
based upon the remittances reported by the Reserve Bank of India.
• FDI in India can be done through two routes: Automatic Route and Government Route.
• Automatic route: In this, prior approval by the Government of India or Reserve Bank of
India is not required.
• Government route: In this, prior approval by government is required.

12.1 FDI Policy in India:

Let us have a look at some of the important developments in the FDI Policy:

12.2 Important developments in the FDI Policy:

• On August 28th, 2017, the Department of Industrial Policy and Promotion (DIPP) had issued
the updated and revised Foreign Direct Investment Policy, 2017 – 2018 (FDI Policy 2017).
• The FDI Policy 2017 incorporated various notifications issued by the Government of India
over the past year.

The major features of the new streamlined procedure for Government approval are:

✓ Abolition of the Foreign Investment Promotion Board (FIPB)

✓ Introduction of ‘Competent Authorities’

The FDI Policy 2017 defines and lists sector-specific administrative ministry / department as
‘Competent Authorities’ empowered to grant government approval for FDI.

✓ Introduction of ‘Standard Operating Procedure’ (SOP) to process FDI proposals

Consultation with the DIPP has been made strictly need based, leading to a more streamlined
procedure and expeditious timeline (maximum time of 10 weeks) for approval.

12.3 Further amendments:

There were further amendments that were made to the FDI Policy 2017. The government came out
with the amendments on 23rd January 2018.

12.4 The following are the changes that were made as per the approved amendments:

✓ 100% FDI under automatic route for Single Brand Retail Trading;
✓ 100% FDI under automatic route in Construction Development;
✓ Foreign airlines allowed to invest up to 49% under approval route in Air India;
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 ✓ FIIs/FPIs allowed to invest in Power Exchanges through primary market;
✓ Definition of ‘medical devices’ amended in the FDI Policy;

The following is the list that gives the limits of FDI in various sectors:

12.5 Limits of FDI in various sectors:

Sector Limit Entry Route
Agriculture and Animal Husbandry 100% Automatic
Plantation Sector (Tea, Coffee, Rubber, 100% Automatic
Cardamom, Palm Oil and Olive Oil)
Mining 100% Automatic
Petroleum and Natural Gas (Petroleum refining 49% Automatic
by the Public Sector Understandings (PSUs))
Petroleum and Natural Gas (All other activity) 100% Automatic
Defence 100% Upto 49% - automatic;
Beyond 49% through
government approval
Private Security Agencies 74% Upto 49% under automatic
route and upto 74% with
Government approval
Broadcasting Sector 74% to 100% in
Teleports, DTH,
Cable Networks
(Digital), Mobile
TV, HITS;
26% to 49% for
FM Radio, up-
linking of news
and current
affairs;
49% to 100% for
Cable Networks
(not undertaking
digitization)
Print Media (Publishing of newspaper and 26% Government
periodicals dealing with news and current
affairs, publication of Indian edition of foreign
magazines dealing with news and current
affairs)
Print Media (Publishing/Printing of scientific 100% Government
and technical magazines/specialty
journals/Periodical, Publication of facsimile
edition of foreign newspapers)

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Civil Aviation 100% Automatic
Airports (Greenfield projects) 100% Automatic
Airports (Existing projects) 100% Automatic upto 74% and
approval beyond 74%
Construction Development 100% Automatic
Industrial Parks 100% Automatic
Satellites – establishments and operation 100% Automatic
Telecom services 100% Automatic upto 49%;
Government route beyond
49%
Trading 100% Automatic
e-commerce activities 100% Automatic (Under the
Marketplace model of e-
commerce)
Single Brand Product Retail Trading 100% Automatic
Multi Brand Retail Trading 51% Government
Processed Food Products 100% Automatic
Duty Free Shops 100% Automatic
Railway Infrastructure 100% Automatic
Asset Reconstruction Companies 100% Automatic
Banking – Public Sector 20% Government
Banking – Private Sector 74% Upto 49% government
approval and upto 74%
automatic
Credit Information Companies (CIC) 100% Automatic
Infrastructure Company in the Security Market 49% Automatic
(in compliance with SEBI Regulations)
Insurance 49% Automatic
Pension sector 49% Automatic
Power Exchanges 49% Automatic
White Label ATM Operations 100% Automatic
Non-Banking Finance Companies 100% Automatic
Pharmaceuticals (Greenfield) 100% Automatic
Pharmaceuticals (Brownfield) 100% Upto 74% automatic, upto
100% government approval
Railway Infrastructure 100% Automatic
Regulated Financial Services 100% Automatic

In the next part, we shall have a look at the Labour Policy.

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13 Labour Policy:

13.1 Background:
"Labour" is a subject in the "Concurrent List" under the Constitution of India where both the
Central and State Governments are competent to enact legislations subject, however, to reservation
of certain matters for the Central Government.

13.2 What are the thrust areas of the government concerning the labour laws?

✓ Labour policy and legislation;

✓ Safety, health and welfare of labour;
✓ Social security of labour;
✓ Policy relating to special target groups such as women and child labour;
✓ Industrial relations and enforcement of labour laws in the central sphere;
✓ Adjudication of industrial disputes through Central Government Industrial Tribunals-cum-
Labour Courts and National Industrial Tribunals;
✓ Workers' education;
✓ Labour and employment statistics;
✓ Emigration of labour for employment abroad;
✓ Employment services and vocational training;
✓ Administration of central labour and employment services; and
✓ International cooperation in labour and employment matters.

14 Labour Legislations:

The various labour legislations enacted by the Central Government can be classified into the
following different broad categories:

14.1 Laws relating to Industrial Relations

✓ Industrial Disputes Act, 1947

✓ Trade Unions Act, 1926

14.2 Laws relating to Wages

✓ Minimum Wages Act, 1948

✓ Payment of Wages Act, 1936
✓ Payment of Bonus Act, 1965

14.3 Laws relating to Social Security

✓ Employees' Provident Funds and Miscellaneous Provisions Act, 1952

✓ Employees' State Insurance Act, 1948
✓ Labour Welfare Fund Act (of respective States)

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 ✓ Payment of Gratuity Act, 1972
✓ Employee's Compensation Act, 1923

14.4 Laws relating to Working Hours, Conditions of Services and Employment

✓ Factories Act, 1948

✓ Contract Labour (Regulation and Abolition) Act, 1970
✓ The Plantation Labour Act, 1951
✓ The Mines Act, 1952

14.5 Laws relating to Equality and Empowerment of Women

✓ Equal Remuneration Act, 1976

✓ Maternity Benefits Act, 1961 (the current one is the one amended in 2017)

14.6 Prohibitive Labour Laws

✓ Bonded Labour System (Abolition), Act, 1976

✓ Child Labour (Prohibition & Regulation) Act, 1986 (the current one is the amended one in
2016)
✓ The Beedi and Cigar Workers (Conditions of Employment) Act, 1966
✓ The Sexual Harassment at the Workplace (Prevention, Prohibition and Redressal) Act, 2013

14.7 Laws relating to Employment and Training

✓ Apprentices Act, 1961

✓ Employment Exchanges (Compulsory Notification of Vacancies) Act, 1959

15 Institutions
Ministry of Labor is there at Centre with 4 attached offices, 10 subordinate offices, 4 autonomous
organizations and adjudication bodies and Arbitration body.

✓ Office of Chief Labor Commissioner

✓ Labor Bureau – attached office
✓ Employee State Insurance Corporation
✓ Employee Provident Fund Organization

16 International Labor Organization

• Founded in 1919 as a result of Treaty of Versailles, it became first specialized agency under
United Nations in 1945.
• Its vision is to secure humane working conditions for workers and to attain social justice for
them universally.

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 • It gave 4 core standards on labor which are part of general human rights as per UN
declarations.

These are:
✓ Freedom of Association, Right to Organize and Right to Collective Bargaining
✓ Abolition of forced labor
✓ Minimum age of employment and abolition of child labor
✓ Prohibition on workplace discrimination and Equal pay for men and women for work of
equal value

There is an urgent need for Labour Reforms in India.

17 Let us study why are reforms needed?

✓ Low employment
✓ Benefits limited to Organised Sector only
✓ Multiplicity, Complexity and Rigidities
✓ Ease of Doing Business is affected
✓ Jobless Growth
✓ Skill Development
✓ Global Competitiveness

18 What are the reforms needed?

✓ Labor to be shifted to ‘State List’
✓ Simplification of archaic laws
✓ Separate independent judicial system
✓ Improving Enforcement of Labor Laws
✓ Dispute resolution
✓ Digitization of the Employment Exchanges, digital sharing of data on registered job seekers
should be made mandatory for all Employment Exchanges.
✓ Insurance mechanism: An insurance scheme should be started for the retrenched workers
from the time the industry commenced operations, so that workers are not put to hardship
later.

19 We shall have a look at the recent steps taken by the Government:

✓ Dedicated Shram Suvidha Portal: That would allot Labor Identification Number (LIN) to
units and allow them to file online compliance for 16 out of 44 labor laws.

✓ Random Inspection Scheme: To eliminate human discretion in selection of units for

Inspection, and uploading of Inspection Reports within 72 hours of inspection mandatory.

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 ✓ Universal Account Number: Enables 4.17 crore employees to have their Provident Fund
account portable, hassle-free and universally accessible.

✓ Apprentice Protsahan Yojana: Government will support manufacturing units mainly and
other establishments by reimbursing 50% of the stipend paid to apprentices during first two
years of their training.

✓ Revamped Rashtriya Swasthya Bima Yojana: Introducing a Smart Card for the workers in
the unorganized sector seeded with details of two more social security schemes.

✓ The National Career Service is being implemented as a mission mode project to provide
various job-related services information on skills development courses, internships etc.

The Code on Wages Bill 2017

• As part of labour law reforms, the Government has undertaken the exercise of
rationalization of the 38 Labour Acts by framing 4 labour codes viz Code on Wages, Code on
Industrial Relations, Code on Social Security and Code on occupational safety, health and
working conditions.
• The Code on Wages Bill 2017 has been introduced in Lok Sabha on 10.08.2017 and it
subsumes 4 existing Laws, viz. the Minimum Wages Act, 1948; the Payment of Wages Act,
1936; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976.
• After the enactment of the Code on Wages, all these four Acts will get repealed. The
Codification of the Labour Laws will remove the multiplicity of definitions and authorities
leading to ease of compliance without compromising wage security and social security to the
workers.

20 | P a g e W W W . E D U T A P . C O . I N QUERY? HELLO@EDUTAP.CO.IN / 8146207241