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In a 24-hour span, three states governed by BJP have announced major changes to their labor laws. On Thursday, Madhya Pradesh and Uttar Pradesh passed an ordinance to water down their archaic laws, while Gujarat Prime Minister Vijay Rupani took the route of the ordinance the next day. These announcements become important as many companies plan to move their manufacturing facilities out of China after the coronavirus outbreak. These states are trying to attract companies to their region in an attempt to attract investment.
As several countries have blamed China for the Covid-19 pandemic, companies are now hoping to move out of the country. Feeling an advantage here, India is looking for opportunities to attract foreign investors. And New Delhi, here, has an advantage since labor in our country is cheaper compared to China.
The government led by Prime Minister Narendra Modi is of the opinion that China’s negative image in the international community can help to obtain investments worth Rs 25 lakh crore, if the cards are played well.
Under the plan, the Center, through its various departments and officials, has contacted around 1,000 companies in the past two weeks. These companies currently have manufacturing units in China and are now planning to move there. India is trying to attract them. This can also help drive the Center’s Make in India campaign.
Most nations have begun to realize that China cannot be trusted. According to them, after becoming a global manufacturing hub, China began to dictate terms to the world. But the most serious charges against China these days are that it withheld information related to the world’s coronavirus for several weeks. This belief has reduced China’s prestige in the world. For them, China is a villain who has thrown the world into the mouth of the pandemic.
Furthermore, countries have realized that they should not store all eggs in one basket. This means that they should not depend on a single country for all their needs. The truth is that China has developed as the largest manufacturing center in the world. In this case, if something happens to China, the whole world will stop in that everything essential in life depends on one country.
As a consequence, countries like the United States, Japan and Australia have advised their companies to stay away from China. Japan has even proposed a $ 2.2 billion fund to encourage its companies to leave China so they don’t suffer economically if they decide to move to Japan and even other countries.
China’s diplomatic stubbornness has made him a villain in the eyes of the world. Its relationship with the United States and Japan has gone from bad to worse, and its expansionist attitude in the South China Sea has angered its neighbors and they are not very happy with China.
China’s top leadership could be measured by the fact that when the Australian prime minister blamed China for the virus outbreak and said China should pay them compensation, Beijing rebuked Australia saying its value is nothing but gum stuck to the soles of his shoes Now, all these things go against it and this is causing the global community to end its dependence on China.
India sees an opportunity for itself when the whole world has turned against China. Even all the states in India are trying to attract these companies. In addition to a developing state like Gujarat, Madhya Pradesh and Uttar Pradesh are also trying their luck, who were not so lucky before and fell behind in the race.
Shivraj Singh Chauhan, the Chief Minister of Madhya Pradesh, has been anxiously waiting to take advantage of this situation and was the first state to announce many reforms to its labor laws. Shivraj is playing his fourth inning as the state’s prime minister. During his last term, he was successful in attracting industrial investments in many areas through investment summits. But now, at the time of the pandemic, Shivraj thinks, there is an opportunity for Madhya Pradesh and he wants to take a long leap based on the ground work he has previously done.
Shivraj knows that labor law reforms have been a major obstacle standing in the way of foreign investment in India. That’s why Thursday announced changes to the state’s labor laws.
In announcing this, he did not regret his words and invited companies to his state from China. Announcing the reform in labor laws is considered a step to boost industrial activities in the state, along with creating favorable conditions for foreign investment, so that employment opportunities are created in the time of the Covid pandemic. 19 making good use of the Opportunities available. But obviously, this is possible only when state labor laws meet international standards and become competitive. They must be so transparent that it is easier to make decisions.
According to the changes introduced in the labor laws by the ordinance, companies will have to spend less than 24 hours to obtain the record related to the work that took months before. Not only this, now the factory licenses will not be renewed every year, but will be renewed for ten years. Businesses will not be made to run through offices to obtain the renewal license and all of these things will be done online now. In case of start, renewal after registration will not be necessary.
To facilitate compliance with labor laws in factories, a new slogan of “one registration, one return” has been given. Previously, factories had to keep 61 records related to labor laws and had to file many types of returns. But now this has been removed and only one registration will be required to maintain. The self-assessment will be sufficient for the return.
The factory inspector will not be able to inspect the factories over and over again and the third party inspection system has been made easier. Industrialists will not be required to visit labor courts on the spot and management will be allowed, free of charge, to recruit workers and jobs as needed. Government interference has been completely eliminated.
Women will be allowed to work night shifts at IT companies. The objective of all these reforms in labor laws is to attract maximum foreign investment in the next thousand days by granting concessions to industries. Shivraj knows that bureaucracy is the biggest obstacle on the path of foreign investment. Previous labor laws were considered a major drawback, which is why major reforms were announced.
Madhya Pradesh is looking for investments in a labor intensive area. The state boasts of having large numbers of skilled labor and millions of jobs are expected to be available in labor-intensive industries here. Companies in the textiles, clothing, food processing and IT sector are already in Madhya Pradesh.
All of these companies are laborious. For example, in the textile and clothing industries, the labor share is around 50% in total cost, while in the IT sector it rises to 70-80%. So these industries are good for MP. The availability of cheap and skilled labor in MP will lower the cost of operating companies if they decide to come here, especially now that labor laws have been amended.
In addition to making political decisions like reforming labor laws, MP has also hosted webinars in the midst of a coronavirus pandemic to speak to a large number of companies that may be interested in coming to the state. Madhya Pradesh officials have used the United States-India Forum to network with companies like Walmart, Amazon, Pepsi and Coca Cola and told them how investing in MP will help them.
MP Chief Secretary Rajesh Rajora will contact Japanese companies. For this, the Japanese industrial forum JETRO will be used. Germany and the United Kingdom are also on MP’s radar. Companies in these countries are being contacted through Embassies and High Commissions. They are taking the help of all units of the Government of India, which are aggressively advancing the Make in India campaign in recent years.
In addition to those who invest in new machinery, there is a plan in place to provide incentives to those companies that want to move to the state from China with their old machinery. All preparations are designed not to let the opportunity slip out of your hands.
Madhya Pradesh has no shortage of water, electricity and minerals. The state is also trying to guarantee the availability of land, which is a crucial component for the establishment of factories. The state government has already identified 1.20 lakh acres of land and more than 150 industrial parks have been developed. The state administration is rapidly tracking companies’ jobs, including plug and play production.
Even Gujarat is doing the same. Rupani’s government has been preparing for this for the past few months. Anger against China due to the Covid-19 pandemic has provided them with this opportunity. And the state does not want to be left behind.
With this in mind, the state has announced a reform in labor laws and has directly invited companies wishing to move to India from China. According to Rupani’s announcement, if a company submits a 1,200-day project, they will be given the peace of mind of complying with most labor laws. They will only have to guarantee the safety of workers, minimum wages and compensation to the dependents of their family members in the event of the death of a worker.
Rupani has announced that companies from Japan, Korea and the USA. Planning to leave China, the US may be relocated to the Sanand and Dahej special economic zones and to the Gujarat Industrial Development Corporation industrial parks, where they are ready to supply them with 33,000 hectares. Earth.
Dholera, which is being developed with foreign investment in mind, is being upgraded with infrastructure facilities at a rapid pace so that foreign companies can be attracted.
The Gujarat government will appoint a nodal officer for those companies planning to move from China. MK Das, Chief Secretary of the Office of the Chief Minister and also Chief Secretary of the Department of Industry, says that Gujarat has been able to hold the highest position when it comes to FDI in recent years. He says that during the pandemic as well, Gujarat is ready to turn the crisis into an opportunity to advance industrial development and investment efforts to create great jobs in the state.
The state government is in contact with all the agencies of the Center, such as embassies and foreign trade organizations. Rupani’s government has been trying to follow the roadmap developed by Narendra Modi, the state’s prime minister for 13 years, to attract FDI.
Even the UP government is not far away either. Prime Minister Modi represents Varanasi in Parliament for the past six years. Yogi Adityanath, who was appointed Chief Minister in 2017, is treading the path shown by Modi. After this, even Yogi Adityanath announced major reforms to the state’s labor laws, the same day that another state governed by BJP, Madhya Pradesh, did so and issued an ordinance.
The UP government has said that the new labor law will provide companies that set up industries in the state with incentives for the next three years. These laws include industrial disputes, union-related matters, and contract workers. Only laws related to the timely payment of wages and compensation laws remain. The state government has already issued the ordinance in this regard.
Yogi Adityanath is clearly very eager to attract FDI to the state. The state had already lost the opportunity to profit from foreign investment in 1990 during liberalization. But CM Yogi doesn’t want the state to be left behind this time either. Due to bad law and order situations in the state, no company was ready to come to the state with the proposal for large investments. But Yogi has changed the situation and has successfully implemented the zero tolerance rule for crimes and criminals.
UP is full of potentials. Noida and Greater Noida are already established IT centers. In this situation, if Chinese companies want to relocate to UP, they can also stay in Noida, Greater Noida and Meerut. UP has the largest participation in the National Capital Region. This region is rapidly emerging as the country’s economic capital like Mumbai. A new airport in Jewar is approaching. All of this could go in UP’s favor and companies leaving China may choose to come to this state.
There was a time when many industries were in UP. Kanpur was an industrial hub, but problems of law and order, tape recording and corruption forced industries to leave UP and go to other states.
But now the Yogi government has the opportunity to once again improve the state’s industrial scenario. He has the blessings of Prime Minister Modi, who is a member of the Varanasi Parliament.
By announcing reforms in labor laws, CM Yogi has given the impression that he is ready to accept the challenge and has taken steps to attract FDI. By improving the state of law and order in the state, Yogi has already created an image for himself. In times of pandemic, you have also given the impression of being a capable administrator. UP has the advantage of having a large quantity of cheap and qualified labor available in the state, which can help establish labor intensive industries.
The only challenge Yogi is facing now is ensuring that the things necessary for the smooth running of companies are in place. These are cheap electricity and water, a better environment, a better infrastructure that includes roads, better transport facilities and a system to treat effluents leaving factories, easy availability of land at lower prices, quick follow-up of proposals for Investing and contacting potential investors and not allowing them will disappoint you.
Sunil Parikh, an industry observer, who was previously associated with CII and is a strategic advisor to many companies, says that today several Indian states are competing with each other by providing better facilities and if UP is left behind then it will not be able to reap the dividends. of this opportunity attracting FDI.
Yogi’s biggest challenge is taming the bureaucracy to stay on course for the state. It is not only the population that makes UP the largest state in India, it also has the largest number of officials and bureaucrats. These officers still have a feudal mentality and could not be considered servants of people. PM Modi has to remind you of this over and over again. It is not possible for a potential investor or a company to have this feudal attitude of officials.
Yogi will have to learn this from Prime Minister Modi, especially the path he has shown as Prime Minister of Gujarat. In 2003, when Modi started the Vibrant Gujarat investor summit to attract investments in the state, he projected himself as the CEO of the state and not the Chief Minister. He acted as the global CEO of a company that could make decisions without wasting much time.
Modi also taught his colleagues and officials to be a ‘Karmyogi. He had them attend a short-term course at IIM Ahmedabad and continued to run the special training program throughout the year to change the attitude of the officials.
He paid attention to each project, approved his investment proposals, and supervised and tracked each one from start to finish. This was visible when Ratan Tata decided to take away his Singur nano factory in West Bengal when Mamata Banerjee objected. Without wasting a minute, Modi sent him a personal “Welcome to Gujarat” message. After arriving in Gujarat, when Ratan Tata was signing the agreement with Modi in Gandhinagar, state government officials were busy repairing the road leading to where the Nano factory would be located. This was no less than a wonder even to Ratan Tata who he spoke about at the Vibrant Gujarat summit.
Yogi will also have to fine-tune his bureaucracy to achieve this goal. Simply holding meetings will get you nowhere. You will have to strengthen communication and make it more effective. If you have to understand the attitude of the bureaucracy of the three states that have announced major reforms in labor laws, then my experience will catch a glimpse of you.
It took me five to 15 minutes for the Information and Industry departments of Madhya Pradesh and Gujarat to inform me about the possibilities of companies moving out of China and FDI that these states can attract and what preparation these states have made. But officials from these two departments at UP have been unable to provide details even after 36 hours despite reading the message.
This difference is that of attitude. It must be remembered that any CEO of a company will not wait even five minutes for his response when other states are better prepared and waiting with garlands in their hands. PM Modi’s slogan of Cooperative Federalism has taken the form of Competitive Federalism with respect to attracting FDI during the times of the virus pandemic. The states governed by the BJP and non-BJP governments have all been busy preparing for this. Any state that is going to be lazy in this score, will not be able to forget this nightmare of the opportunity lost in the next 30 years for an opportunity that has come after three decades. And history is witness to it.
The largest state in the country is making a lot of noise under the leadership of Yogi Adityanath to stay ahead of the race. But you will have to constantly act to change basic reality and of course you are famous for that. One should learn from history too. TSR Subramaniyan, who was UP’s chief secretary and retired as India’s cabinet secretary, has mentioned why UP slipped into the forefront of industrialization in his book “Travels through Babudom and Netaland”. He has written that after the leaders, the officers have contributed a lot to this. This story is not expected to repeat itself and at least Yogi would like to, but nothing can be said about his bus.
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