Another factor Indian exporters need to take care of is that the recent trend in garments is for 'smart clothes', which require better equipment and skills as otherwise the Indian exporter will lose out on competitiveness.

The need of the hour is therefore to enact labour reforms that will enable the exporter to compete in a level playing field.

India's share of the global garment business is 2.75 per cent and under the new trade regime it has the capability to capture 6 per cent of the business by the year 2010. To achieve that, additional capacities need to be built up. The money for additional capacities can come from the Indian public through the IPO route or through FDIs.

The catch however, is that neither the Indian entrepreneurs nor the foreign ones are particularly keen to set up plant and machinery in India owing to the archaic labour laws existing here.

To be sure, some reforms have been initiated in the past five years but the Industrial Disputes (ID) Act, 1947, which is the major bone of contention, has been left untouched.

The ID Act, inter alia, makes provisions for the investigation and settlement of industrial disputes. When any employer discharges, dismisses, retrenches or otherwise terminates the services of a workman without complying with the conditions of retrenchment provided in the ID Act, the dispute or difference that can arise as a result between the workman and the employer is deemed to be an industrial dispute.

Further, the ID act has - hold your breath - the following number of adjudicating authorities:

• Conciliation officers,
  
• Board of conciliation,
  
• Courts of inquiry,
  
• Labour courts,
  
• Industrial tribunals and
  
• A national industrial tribunal.

The act states that if a company employs more than 100 workers, the company cannot close shop without the permission of the government. Further appointment of contract labour, which is crucial to the garment industry, is not permitted.

Therefore the trials and tribulations which entrepreneurs have to go through if they set up shop in India are more than evident.

A commission, called the Second National Commission on Labour (SNCL) was set up to look into the various aspects of labour laws and also the impact of globalisation on labour.

SNCL's recommendations were submitted about a year ago. The report accepted globalisation and liberalisation processes as something that couldn't be wished away. It recommended the unification of all existing legislation, including the Industrial Disputes Act and the Trade Unions Act.

SNCL has recommended that the management's demand on closure, lay-off, etc. whittling the number to 300, as an unfettered option. On contract labour, the tenor of the report is ambiguous, seeking to create distinction between core and non-core activities. The report recommends disallowing of contract labour in core activities except to meet sporadic demands. However, neither core nor non - core activities have been defined.

The SNCL further recommended that if employees make an application for closure, permission will be deemed to be granted if that approval has not been granted within 60 days.

The previous NDA government had set up the commission. Today, we have the UPA government with the ideologically pro-labour Left Front as a major ally. It is therefore anybody's guess as to when, or if, the recommendations will see the light of the day.

An analysis of India's labour laws such as the ID Act has indicated that such legislation, enacted to protect worker interests, actually leaves them worse off. Over the years, the statutory protections of the ID Act neither protected employment in the organised sector, which employs more than 100 workers, nor did it adequately address their compensation issues in establishments that turn sick.

This is evidenced in the cases of textile mills of Mumbai and Ahmedabad where workers have been denied their terminal benefits as the companies continue to languish as sick units.

Hence, though the changes recommended by SNCL are welcome, they are at the margins. India's garment exports business, which is currently growing at an annual rate of about six per cent and with such marginal changes, the industry can at best grow by about eight per cent. If the ID Act and other labour acts are completely revamped to align with the reforms era, the annual growth is expected to be more than 15 per cent.

And that will create many more jobs.