Indore: MP government may ease labour laws to woo investors

Madhya Pradesh government could carry out amendments in archaic labour laws in its bid to attract investments. "A few months ago, Rajasthan government announced that it will ease the labour laws and the state government is planning to follow suit," said a source.

The industry has been demanding amendments to three labour legislations — Industrial Disputes Act, Contract Labour Act and Factories Act. The move will liberate the corporate sector from the shackles of stringent requirements of the laws.

During her recent visit to Indore, state commerce and industry minister Yashodhara Raje Scindia had also said that the government was thinking about making some changes in the labour law.

However, the labour laws form part of the Concurrent List, which means that any amendment will require President's approval even if passed by the state assembly.

According to the Industrial Disputes Act, 1947, an organisation cannot retrench more than 100 employees without permission of the state government. The industry wants to increase the limit so that government's permission is not required for retrenchment of up to 300 workers.

As far as the Contract Labour Act is concerned, the industry wants to raise the applicability of the Act to companies with more than 50 workers from the current 20. In the Factories Act, currently applicable to premises of industrial units with electricity and with more than 10 workers and those without electricity having 20 workers, the industry wants to raise the numbers to 20 and 40, respectively.

The state government is holding Global Investors' Summit in October 2014 and any move to amend the archaic labour laws will boost the investment climate. At the same time, the move will not go down well with the employees' unions who are definitely going to oppose any amendments to the laws.

The labour laws govern the working and relations of employers and workers. The state's officials say that these laws will still protect employees' interests and will only come into force when a factory is being shut down. "The most obvious cost of the outdated labour laws is corruption, because they are written in such a way that it is impossible to comply with 100 per cent of the laws without violating some of them. The move will increase productivity and also save small industries from inspector raj," said an industrialist who did not wish to be named.