FICCI IN NEWS

India Inc wishlist to FM focuses on labour reforms

The Indian Express, July 6, 2006

As expected, industry on Wednesday demanded greater flexibility in labour laws and fresh sops for
manufacturing companies in a discussion with Finance Minister P Chidambaram on taking the
manufacturing growth rate to 12 per cent.

"The government will study afresh suggestions from industry to take growth in manufacturing to 12
per cent," Chidambaram said after the one-and-a-half hour session with the chambers’ bosses. Last
year, manufacturing had grown at nine per cent.

"None of these suggestions have been accepted yet, and none rejected. Many will require more study
and consultations within government," he said.

Chidamabaram said that some of industry’s complaints, such as limited access to long-term debt and
the power situation indicate a need for change. "Power is the driver of manufacturing and it may not
be satisfactory that the government has just passed the Electricity Act. The non-availability of long-
term debt will need to be pursued with respective ministries and will go a long way in raising the rate
of growth," he said.

CII, FICCI, ASSOCHAM and PHD also told the FM that if the National Rural Employment Guarantee
Plan’s ideal is to generate 100 days of employment, labour laws for all companies should also be
made "flexible", so long as these 100 days of work in a year are guaranteed.

The chambers also wanted high-employment clusters, like in the footwear or apparel industry, to get
incentives on the basis of the employment they generate. "This was not a call for Special Economic
Zones, Chidamabaram told a press conference later. "If you incentivise industry in high-employment
clusters, it will also help affirmative action causes," he added.

Industry has also demanded a single-agency clearance at the centre for licenses to the deblocked
coal mines that steel, cement and power producers try to get.

There are also problems with last year’s skills development initiative under which private companies
took management control over 83 ITIs to create skills in tune with industry’s needs. The companies
on Wednesday demanded fiscal concessions for investments in these ITIs, of which there will be 100
this year. "Their proposal is worth examining,’ Chidambaram said today.

The trade associations have also demanded self-certification in several areas instead of repeated
examinations by inspectors, and a new fund for high-tech manufacturing acquisitions abroad.

"Another demand is that gross capital formation in infrastructure should be taken beyond the
Planning Commission’s target of 7, from 4.7 today, to at least 9 per cent," Chidambaram said.