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Gujarat's labour law not industry-friendly: Survey

March 12, 2014 10:14 IST

Gujarat's labour law not industry-friendly: Survey

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BS Reporter in New Delhi

The government of Gujarat has been projecting its industrial growth as a model for other states but it does not appear so industry-friendly in the number of labour laws one needs to comply with, shows a survey. 

According to a survey on the business regulatory environment in states, done by Deloitte Touche Tohmatsu for the Planning Commission, it is one of eight states — the others are Kerala, Tamil Nadu, Bihar, Uttarakhand, Assam, Goa and Jharkhand —  which do not offer adequate flexibility in this regard.

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Image: Gujarat's chief minister Narendra Modi (L) embraces Mukesh Ambani, chairman of Indian energy company Reliance Industries.
Photographs: Amit Dave/Reuters

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Deloitte conducted the survey by talking to state government officials, industry associations and about 400 manufacturing units across all 28 states.

Finance and tax-related compliance, labour laws, infrastructure and utilities, land and building-related approvals, environment clearances and other issues were the six measures.

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Image: No flexibility in labour laws.
Photographs: Amit Dave/Reuters
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“The survey was done for manufacturing industries, with a particular reference to small and medium enterprises, which provide huge job opportunities,” a senior Planning Commission official said. 

He said the assessment would enable state and central governments to pinpoint the bottlenecks in manufacturing and the poor business regulatory environment. 

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Image: A worker pushes a trolley inside a nylon yarn manufacturing factory at Palsana village on the outskirts of Surat, in Gujarat.
Photographs: Amit Dave/Reuters

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Multiplicity of laws is one of the main reasons for slowdown in manufacturing, he said.

About two-thirds of the regulations impacting businesses are within the domain of state governments; even in the others, administration of the laws is with the states, he said.

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Image: Multiplicity of laws leads to slowdown in manufacturing.
Photographs: Amit Dave/Reuters
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Arunachal Pradesh, Assam, Goa, Jammu and Kashmir, Jharkhand, Manipur, Meghalaya, Sikkim and Tripura had the worst regulatory environment. 

“The assessment would now be made periodically, to enable state governments to learn from the best practices prevalent in other states and mould their laws, rules, clearance procedures accordingly,” the official said. 

He said there were plans to prepare a compendium of regulations, rules and laws that impact businesses in India and also review central rules like export-import guidelines to make these friendlier to business.


Image: Assembly plant in the Nano factory.
Photographs: Amit Dave/Reuters

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