States seek flexible labour laws for SEZs

ARUN S
Posted online: Tuesday, November 28, 2006 at 0208 hours IST

NEW DELHI, NOV 27: The government on Monday said there had been an
increasing demand from state governments to have flexible labour laws
for designated areas.
Speaking at the CII-WEF India Economic Summit, commerce and industry
minister Kamal Nath said, “They (some chief ministers) have told me to
leave it (labour reforms in such areas) to them. I think, it (such
demands from states) is only going to snowball more”.

Currently, labour laws are also applicable to designated areas like
Special Economic Zones (SEZs).

According to the SEZ policy, states can delegate the power of the labour
commissioner to the development commissioner of SEZ and declare the zone
a public utility.

But labour is a subject under the concurrent list of the Constitution of
India. Which means states have certain powers to allow some flexibility
in such laws through amendments. Currently, there are around 40 laws
dealing with labour issues - the main ones being Industrial Disputes
Act, 1947 and Contract Labour (Regulation and Abolition) Act, 1970.

Although the government initially wanted to allow flexible labour laws
in SEZs, due to stiff opposition from the Left parties, it had to take
off such a provision in the final Act. On the ramifications of such
labour policies, Supreme Court lawyer Prashant Bhushan said, “But the
government is surreptitiously trying to bring in labour reforms through
the SEZ Act saying such policies will bring in more domestic and foreign
investment.

This will be a reality once most of the industries shift to SEZs to gain
tax advantages. Once such reforms are carried out, companies will be
able to hire and fire employees easily. Besides, employees will also not
be able to strike work in protest.”

CPI(M) leader Nilotpal Basu said, “Even under the SEZ Act, states cannot
claim exemption from labour laws of the country and also cannot bring in
changes according to their interests in contravention of existing labour
laws.”

But some states like Maharashtra, Gujarat and Madhya Pradesh are
understood to have been pitching for flexible labour laws in SEZs to get
big-ticket investments. One of the reasons for SEZs being a big success
story in China is the country’s flexible labour laws.

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