Rigid labour laws are counter productive

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laws goes much beyond the unviable exit policy. To cite some other examples, there is a stipulation that a worker cannot be deployed for more than 48 hours a week, even if the unit is prepared to pay higher wages and the employee is therefore eager to work for longer hours. Outsourcing and vendorisation are the current global trends that help in handling peripheral activities through contractors and allow the resources and energies of the unit to be spent on its core activities. But our Contract Labour (Regulation & Abolition) Act 1970 does not permit this. Fixed time employment for seasonal jobs is practically impossible and such jobs are in effect being driven out of the country. The Factories Act stipulates that women workers cannot be employed between 7 pm and 6 am. Thousands of women have been working in night shifts in service and hospitality industries, which are not covered by the Factories Act.

Meanwhile, capital from manufacturing industries of developed countries has been flowing, along with their technologies, into countries where such operations are cost effective. FDI in India is one of the lowest among emerging economies and negligible in labour intensive industries.