On 16 October 2014 Narendra Modi, the Indian Prime Minister, proposed a number of labour reforms. These aim to create a more favourable environment for industrial development by making it easier for businesses to operate in India and at the same time, to provide benefits for employees.
The proposed reforms, summarised below, form part of the Prime Minister’s “Make in India” campaign, which is designed to encourage global businesses to manufacture goods in India.
Shram Suvidha Portal
This measure will make it easier to comply with Indian labour laws. It will allow the online registration and filing of self-certified single online returns for 16 of the 44 labour laws. Where factory owners previously had to fill out 16 different forms to comply with these laws, they will now just be required to complete a single online form.
The difficulty of complying with a multitude of labour laws has always been cited as an impediment to industrial development in India. This new system is a step forward in reducing bureaucracy for businesses operating in India.
Labour Inspection Scheme
This scheme will use technology to randomly select units for inspection to eliminate individual discretion in the selection process. Inspection reports must then be uploaded within 72 hours of the inspection.
An inspection scheme is also being developed to ensure transparency, with the following features:
- Serious matters are to be covered under the mandatory inspection list
- A computerised list of inspections will be generated randomly, based on pre-determined objective criteria
- Complaints-based inspections will be determined centrally, following examination based on data and evidence
- There will be an emergency list for the inspection of serious cases in specific circumstances
Universal account number scheme
This scheme will allow approximately forty million employees to have portable, universal access to their provident fund accounts and to consolidate all their previous accounts (approximately INR 270 billion is currently held by the Employees’ Provident Fund Organisation in inoperative accounts).
Apprentice Protsahan Yojana
This proposal aims to support apprentices, manufacturing units and other businesses by increasing the minimum salary for apprentices, restructuring apprentices’ basic training component and reimbursing 50% of the salary paid by businesses to apprentices during the first two years of their apprenticeship.
Revamped Rashtriya Swasthya Bima Yojana
This measure will introduce a smart card for workers in the “unorganised sector” (i.e. unlicensed, self-employed or unregistered economic activity such as owner-manned general stores, rural traders and farmers). The card will contain details of at least two social security schemes.
What these reforms mean for employers
The reforms will make it easier for employers to do business in India. In particular, when the portal system is in force, it will ease the compliance burden on businesses and speed up the system.