The Department of Industrial Policy and Promotion of the commerce ministry has proposed that rules pertaining to termination of services of workers under the Industrial Disputes Act and Contract Labour Act, be eased.
The proposal to ease the rules to terminate factory workers and contract employees, is part of the new government's bid to revive the manufacturing sector.
At a meeting called by the labour and employment secretary on Tuesday last week, the DIPP proposed the setting up of a pool of funds to compensate retrenched workers at the rate of 20 days' wages for every completed year over six months.
"The DIPP has pushed for certain relaxations in the labour laws specifically for national investment and manufacturing zones (NIMZs), which will give flexibility to employers and facilitate bolstering of manufacturing activity. The emphasis has been to address labour unrest, which impacts manufacturing activity heavily. It is definitely the need of the hour," reports quoted official sources as saying.
The industry department has proposed that the special purpose vehicle set up for the NIMZ concerned may oversee the labour-related laws.
NIMZs are industrial townships that were announced as a part of the National Manufacturing Policy in 2011, which aims to increase the share of manufacturing in GDP to 25 per cent by 2022 from 15 per cent at present and create 100 million jobs.
The move comes at a time when India's manufacturing growth has slumped to -0.7 per cent in 2013-14, the first contraction since 1991-92, pulling down the overall economic growth to a sub-5 per cent for the second consecutive year.
The new BJP-led government at the centre is laying much emphasis on job creation and manufacturing and the labour laws are seen as a hurdle to implementation of the national manufacturing policy, which aims at making India a competitive manufacturing base.