- [Act 1] Industrial license & reserved sectors
- [Act 2] Policies and Acts
- [Act 4] Excise and Customs
- [Act 5] Stupid statistics and rankings
Economic Survey Ch.9 Industrial performance. Four subparts:
- Industries, Acts, Policies, excise and customs duty
- PSUs, Disinvestment, CPSE-ETF
- Companies Act 2013
- MSME sector
|Industrial License Required For||Areas Reserved For Public Sector|
Similarly, there are items reserved for MSME sector- bread, agarbatti etc. if large company wants to enter, they’ve to get license click me to know more.
|Methyl Isocyanate (MIC)|
Industrial policy, National Manufacturing Policy 2011, Factories Act, Apprentice Act.
|1948||Shyama Prasad Mukerjee declared India’s first industrial policy.|
|1956||policy revised- main focus on Public sector undertakings.|
|1991||LPG reforms, Narsimharao’s new industrial policy.|
Q. What’re the salient features of new Industrial policy 1991? (200 words)
- Liberated industrial licensing. Presently, only five sectors require license.
- For the industries that donot require license- they only need to submit an “industrial entrepreneur’s memorandum” to Department of Industrial Policy and Promotion (DIPP), under commerce ministry.
- Reduced the no. of areas reserved for public sector. (at present only 3)
- FDI relaxed for many sectors.
- NRIs allowed to invest upto 100% in majority of the industries.
- Software technology parks, Electronic hardware technology parks etc.
- HRD focus: gainful employment and optimal use of Human resources.
- Provided disinvestment of PSU
- Govt. signed MoU with PSUs – giving them operational flexibility. Later Maharatna, Navratna, Miniratna categories to give them further freedom depending on profit making. (more details “PSU” subpart of this chapters’ summary).
- To facilitate merger and acquisitions – Government relaxed the MRTP act (Monopolies and Restrictive trade practices Act 1969) => later Government replaced this act with Competition Act 2002 and established a statutory body “CCI” (Competition commission of India).
Q. Write a note on the salient features of the national manufacturing policy 2011. (100 words)
- Enhance share of manufacturing industries in GDP to 25%. (At present ~15%)
- Create 100 million jobs over a decade.
- Will setup manufacturing promotion board- to coordinate between union and states.
- will simplify labor and environment laws => related topic factories bill and apprentice bill. (Given in separate section in this same article).
- will create enabling infrastructure via PPP => related topic REITs, INViTs under ch13, urban infra.
- will create of national investment and manufacturing zones (NIMZ)
- 16 NIMZ announced, 8 along Delhi-Mumbai Industrial Corridor (DMIC)=> related topic industrial corridors under Ch11.
- Tax reliefs on venture capital funds to increase fund-flow to startup companies.
- Funds to polytechnics for skill development
- Focus industries
- employment intensive, produce capital goods, have strategic significance,
- sector where India enjoys a competitive advantage (e.g. IT, textiles)
- small and medium enterprises => related topic Government schemes for MSME.
- Public-sector enterprises => related topic “Various Ratna”. (in this same article)
- GS2 syllabus: Government intervention in various sectors.
- GS3 Syllabus: Changes in Industrial policy, their impact on industrial growth.
(GS3) Q. Write a note on the salient feature of the Factories Bill 2014 (200 words)
|2010||Dr. Narendra Jadhav Committee to examine factory act|
|2014||Factories amendment bill as per Jadhav recommendations|
First the definition of a “factory”
|criteria||Factories Act 1948||New Bill 2014|
|mfg unit where power used||10 workers||20|
|power not used||20 workers||40|
- Redefines factory as a manufacturing units where minimum 20 workers employed in a given year (for units using power), OR 40 workers for non-power units.
- Women workers permitted to do nightshift – with safety provisions and home transport facilities.
- Nightshift not permitted for pregnant / lactating mothers.
- Women workers can work on moving / heavy machinery. But pregnant women and disabled workers can’t.
- Paid leaves reduced to 90 days (earlier 240!)
- Each worker can do 100 hours overtime in every quarter (3 months).
- Re-defined “hazardous substances” – it’ll include any item that can cause physical or health hazards to any person, animal, plant or the environment.
- Factory can decide its own workweek. (doesn’t have to be Monday to Sunday)
- Factory must provide cool drinking water in hot weather, irrespective of number of workers employed.
- Installed Power capacity will be measured in kilowatts. (Earlier horsepower)
- Factory owner will have to maintain spittoons, washing facilities, drying lines, sitting facilities etc. But if he doesn’t => compoundable offense i.e. he can do compromise with workers (victims), no need to waste court time in lengthy trial.
- Factory owner has to open restrooms, lunchrooms if 75/more workers
- Factory owner has to run canteen if 200/more workers
- Factory expansion permitted via self-certification. Reduces the nuisance of inspections and bribes.
- Even Union Government can make rules for factories. (Earlier only State Governments could do).
Overall, the new bill
- Puts women workers on equal footing with men
- Improves safety and facilities for workers.
- Saves factory owners from getting arrested in minor issues. (Therefore, trade unions don’t like this bill. NOT ONE BIT.)
~300 words. But you may not recall all points in exam, so it’ll automatically “FIT” the 200 words limits.
- GS2 syllabus: issues relating to Development and Management of human resources.
- GS3 Syllabus: Issues relating to employment.
Q. Write a note on the salient feature of the Apprentice Bill 2014 (200 words)
- by Labor ministry
- To amend the original (And outdated) act of 1961
- Government will decide the number of apprentices in each industry
- Government will provide the syllabus and equipment for “PRACTICAL” training, for specific trades.
- However, companies free to launch new courses other than designated trades.
- Companies can accept non-engineering graduates and diplomas for apprenticeship.
- Companies free to fix work / leave period for these apprentices.
- Multiple companies can come together to give common training. Can even outsource the basic training (for teens that have received no institutional training e.g. grownup child laborers.)
- After training, the apprentice will have to give a certificate-exam by National Council for Vocational Training (NCVT).
- In case of violation – Reasonable fines and inspection. To reduce harassment and “inspection raj”.
- Web portal to file self-compliance reports.
Overall, new bill gives more flexibility to companies, and makes apprenticeship more attractive to youth, and will make them more employable in future, thus helping India to reap its demographic dividend.
- India has 44 labour acts union Government and 150+ labor acts from state governments.
- These laws have overlapping provisions= “inspection-raj”, Owner can’t comply with one act without breaking/side-stepping another law = bribery and inefficiency.
- So in a way, companies misuse apprentice act, to evade the archaic “industrial dispute act” (100 worker firing).
- Ultimately both sides suffer.
- Worker doesn’t give his 100% because, he is not “permanent”.
- Owner doesn’t invest in his training /skill upgrade because he is not “permanent” = low skill, low output, demographic dividend can’t be reaped.
|Contract Labour Act, 1970|
Labour reforms in Rajasthan (2014)
|Owner has to get Government permission before firing employees||if 100 workers||300|
|Trade union can be setup IF||15% workers join||30%|
|contract labour act applies IF workers more than||20||50|
|factories act applies to power units IF||10||20|
|factories act applies to non-power units IF||20||40|
Q. If Union Government tables all these bills/acts in parliament then how can Rajasthan reform labor laws?
Ans. because Labour laws come into CONCURRENT list under 7th Schedule.
|EXCISE DUTY||CUSTOMS DUTY|
|on goods manufactured in India|
|as per Central Excise Act, 1944||as per customs Act 1962|
|It’s an indirect tax under CBEC||same|
- we’ll setup 24/7 clearance facility on selected airports and seaports
- Indian Customs Single Window Project for traders. So they’ve to submit all documents at one site/office, and they’ll be forwarded to respective organizations, files will be cleared within given timeframe.
- Result: Our ranking will improve in World Bank’s “ease of doing business”. At present top 3= Singapore, Hong Kong, NZ. India’s rank slipped from 131 to 134 (2014).
|import of||custom duty|
|Cathode ray tubes (for TVs mfg by MSME, for poor junta)||0|
|LCD, LED panels (<19″)||0|
|Other specific inputs in mfg. of these TV||0|
Implications: cheaper TVs for poors and middleclass, boost in demand, boost in electronics sector and employment.
Already discussed in ch.11 energy but for the recap
Boost to clean energy sector
|Bauxite Export: increased to 20%||less exploitation of this mineral resource from India|
|Ship breaking: reduced (Steel)||more orders from abroad|
|Earlier each had separate tax rates.Now simplified = less litigation between traders and CBEC.|
Implications: less demand, less cancer. Atleast in theory.
|Absolute Earning||Custom Duty||Excise Duty|
|we earned this much in 2013||1.75 lakh crore||1.79 lakh crore|
|we hope (estimate) to earn this much in 2014||2.02 lakh crore||2.07 lakh crore|
|2013(Actual)||Corporation > IT > Excise > Custom > Service > Wealth|
|2014(Estimate)||Corporation > IT > Service > Excise > Custom > Wealth|
|share in GDP||services > Industry > Agro|
|share in employment||Agro > services > Industry|
|Steel||China, Japan, USA, India (4th)|
|Sponge iron||India First rank.|
|MFG share in GDP||World Export|
Negative growth because:
- inflation = input cost increased
- Low demands in Indian and world economy due to inflation and slowdown.
- Investment declined since last three years
- mega projects stalled, new projects not coming up
- land accusation, rehabilitation, environment clearance problem
- infra bottlenecks, rail road power connectivity, coal supply
- Last years’ survey contained lot of topics like Industrial gears, foundry clusters, jute mission, TUFS etc. But this year’s budget and survey silent on them, hence not dwelling. But if you want to check, click me for last year’s survey.
- Industrial corridors already covered under Chapter.11 on infra
- IIP along with ch4 on inflation
- export, import etc. under ch7 international trade
- Location factors for various industries: under Mrunal.org/GEOGRAPHY