FDI shift from China? A joke

Context: Relaxation in Labour laws by MP and UP in light of FDI leaving China and coming to India, needs a rethinking as it does not strike a balance between predicted increase in FDI and interests of labours.

Post Covid factors influencing FDI increase in India

• FDI leaving China: FDI exit decisions are not impulsive and not event driven, companies went to China for massive supply chain efficiencies , labour productivity and world class infrastructure.

• India unattractive to foreigners: due red tape, extortion, retrospective amendments, capricious changes in rules, tax terrorism, poor labour productivity, delays at the ports, sovereign risk and not only lack of land availability or stringent labour laws

• India unattractive to locals: due to weak demand, overcapacity and low public investments 

Impact of labour law changes:

• Detrimental effect to worker rights: it replaced routine inspection to third party certifications and curtailed the applicability of Factory Act 1948 and Industrial Disputes Act, 1947.
• Workers may be denied basic working facilities such as cleanliness, drinking water, 12 hour shift etc.
• Will also create a differentiated regulatory regime between the new and existing firms.
• With no industrial dispute mechanism at place, balance of power will be titled in favour of companies.

Way forward:

• India needs changes in labour laws, which are well thought and that follow proper legislation method for its implementation.