Suspending labour laws unlikely to prompt non-Chinese companies to rush into India

The Government’s old habit of making lofty claims and grand visions is letting it and the people down. What we need is a realistic vision and implementable plans

Photo courtesy- social media
Photo courtesy- social media
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Uttam Sengupta

Media reports, quoting anonymous sources in the government and sometimes political leaders including chief ministers, have claimed that hundreds of non-Chinese companies operating in China are rushing to India as their next manufacturing hub.

These reports have also quoted officials as saying that a land pool twice the size of Luxembourg is being readied for them in India. And several state governments have promulgated or plan to promulgate ordinances that would suspend most of the labour laws and labour rights.

What that might effectively mean is that employers and industrialists would be able to hire and fire at will; they may get away by paying less than minimum wages; they may force workers to do longer shifts and work through the night; their leave may get curtailed and the employers may not take any responsibility for their health. Maternity leave etc. could become discretionary and employers could get exempted from contributing to Provident and Pension funds.

This, in addition no doubt to tax holidays, exemptions and subsidized power, water and security, it is hoped, would make it so attractive to invest in India that investors would come rushing in. Well, that is a thought.


I am reminded of a conversation I had with the then Advisor to the RPG Group, ManishankarMulherjee. A well-known writer in Bengali, Shankar of Chowringhee fame, had accompanied R.P. Goenka to meet the then chief minister of Bihar, Lalu Prasad Goenka. The industrialist later told the media that his Group had pledged to invest a whopping Rs 20,000 Crore in the state.

I was sceptical and at a lunch I hosted for him, I asked him the inside story. At a time when the state was short of electricity and suffered from lawlessness, why would the RPG Group, now split into two after RP Goenka’s death, take the risk unless the decision was political?

Shankar told me bluntly that the question should be put to the industrialist himself. But he took pity and said that what he could tell is that investment decisions are based on various factors, not just land, minerals and electricity. Roads, transport, communication, recreation, education and schooling, the state of the judiciary, opportunities for spouses etc. were equally important considerations. Several years later a visiting World Bank team told me that the state of the media too played a key role in making projections of RoI (Return on Investment).

An impoverished and restive population, an erratic judiciary, bureaucratic red tape and a shrill but largely hysterical media besides the poor state of education, healthcare and skill, and lack of motivation and integrity, are not very appealing to investors.


The Modi Government has suffered from a grand, tunnel vision from the beginning. Union ministers during 2014-16 would strut around, making taller claims than today. I remember a visiting journalist from Europe recounting his meetings with several union ministers and secretaries to the Government of India. “All of them claimed that India will be growing at 10% for the next 30 years,” he declared, barely able to conceal his amusement, “but wouldn’t explain how”.

One of the union ministers imperiously told a visiting German delegation that they could get the contract to clean the Ganges but only if they undertook to do it in six months. Even a gentle reminder by the Germans that the Rhine had taken decades to clean, failed to drive some sense. No matter if Germans wouldn’t do it in six months, others would, he loftily said.

Another union minister asked the secretary of his department to issue a blunt warning to Korean companies. “Ask them to set up their plants this year or else we will invite others. They must give us a commitment,” the minister added. This was the time when the Government of India was unleashing one programme after another: Smart Cities, Bullet Train, Make in India, Skill India etc. with bewildering speed.

Six years later, most of them sound like good jokes. Nobody seems to be even talking about these grand schemes. But the Government doesn’t seem to have learnt its lessons. It still believes in planting stories of grand revivals.


Unless we can quickly put in place a radically different and more effective education and health infrastructure in place, and go in for major administrative and police reforms—grand visions and lofty announcements may remain just that.

Unfortunately, we have lost a lot of time and cannot afford to lose more.

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