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LATEST NEWS UPDATES | Job hubs to exclude labour reform

Job hubs to exclude labour reform

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published Published on Aug 25, 2011   modified Modified on Aug 25, 2011

-The Telegraph

 

Labour laws will not be eased for the proposed national manufacturing investment zones (NMIZs), and there will be administrative arrangements for quick relief to workers in case a unit is closed. The government plans to generate 100 million jobs within a decade in these proposed zones.

Proposals of flexible labour laws in these zones, which may have allowed hire-and-fire policies, had come under criticism from trade unions and as a consequence, had been dropped.

The NMIZ policy, which is expected to come up before the cabinet next week, aims to emulate China's success in emerging as a global manufacturing hub and hopes to cut down bureaucratic interference in industry.

The draft policy had earlier stated that the Contract Labour Abolition Act would not be applicable in these zones. There were also moves to confine the right to join unions to workers earning below a certain limit. However, this has been dropped.

The proposed policy had even said that the asset stripping of sick units would not have to wait until the payment had been made to workers.

“This could help to ease the pressure on the manufacturing entity considerably,” the discussion paper said.

The proposed manufacturing zones will be giant industrial enclaves with world-class infrastructure. Through the zones, the government aims to increase the share of manufacturing to 25 per cent of GDP by 2025 from 16 per cent.

Tax sops

Sources said the only major tax concession that could make it to the final policy would be exemption from capital gains tax on equity investment in the zone. However, there would be riders to ensure that the concession was not misused.

The tax benefit will incentivise people selling assets to invest in small and medium enterprises in the manufacturing sector.

The tax sops would help small and medium enterprises to raise equity. At present, capital gains tax exemption is available only if proceeds from the sale of assets are reinvested into residential property. Sources said sops provided to the zones would be compliant with the proposed direct taxes code.

The policy had proposed the easing of environment laws.

The manufacturing zones would be spread across 5,000 hectares, or 12,500 acres, on an average and cater to the domestic market. Some of these will subsume special economic zones (SEZs), the existing dedicated export oriented duty free enclaves.

The first NMIZ being considered will be spread over three states along the western railway corridor — Haryana, Rajasthan and Gujarat.

The government plans to earmark Rs 3,500 crore every year for the next five years to set up the first of the seven industrial cities, or NMIZs, that will come up on the proposed Delhi- Mumbai industrial corridor.

The Telegraph, 25 August, 2011, http://www.telegraphindia.com/1110825/jsp/business/story_14421582.jsp


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