It wont undermine the confidence of investors

Updated: Aug 1 2005, 05:30am hrs
Unfortunate incidents like large-scale police brutality on retrenched laboureres, though reprehensible, will not gravely undermine the business environment and confidence of potential investors in the country.

A dispassionate look at the Gurgaon episode brings to the fore the fact that in itself, it is neither a reflection of the general law and order situation prevailing in Gurgaon, or Haryana, or the country as a whole. Nor is it a representative description of the labour law situation in multinationals, particularly Japanese ones.

As a first truth, the incident took place more than 20 km away from the industrial estate and, as reported, the participants were external forces/non-workers. No doubt, the violence and the use of excessive force by the administration can neither be justified, nor appreciated. But it need not be extrapolated to generalise the incident as the prevailing state of affairs. No doubt interested political parties in a dem-ocracy like India would like to make the most out of the incident and like to convert this into an opportunity to get a foothold in the Manesar belt in Haryana as also in other places where possible.

FDI, per se, comes to a place where existing MNCs are running profitable ventures and potential investors gauge the enabling environment as being favourable for their venture. Today, India is the second fastest growing economy in the world. With reforms firmly entrenched, there is no going back for the country. Procedures are being simplified, and more and more sectors are being opened up for foreign investors. It is noteworthy that the managing director of Honda Motorcycle and Scooter India (HMSI), while reacting to the incident, mentioned that FDI will continue to come, so long as India provides profitable business.

We must view the incident from the Japanese angle too. India has many Japanese companies in the manufacturing and service sector. Traditionally a prime investor in India, Japan still holds the third position, after the US and EU, in terms of FDI and related investments. The Japanese have similar interests the world over, both in the developed as well as developing countries. Such differences of opinion between the workers/ unions etc. and management is common across manufacturing units all over the world. As such, an individual incident in any unit cannot reflect on the time-tested and well-defined labour laws in India.

Even the Japanese management would not like to highlight the industrial relations problem in HMSI, for such things will defame its own management style. The problems faced by many MNCs, particularly in the auto and garment sectors, have not been unique to their plants in India. It is a well-known fact that many of them have faced far more difficult labour situations in other countries, including their home country. Therefore, what matters are not individual examples, but the overall labour policy and labour laws.

Labour laws in India and the conciliation machinery, though very well-defined, need a major overhaul in view of the global situation and to keep pace with global demands. Proactive measures like these will help India keep pace with the ever-changing dynamics of world trade. Well-defined and simplified labour laws, in the long run, can act as magnets to attract greater inflows of FDI into the country. New initiatives in this regard will also be in a position to effectively deal with industrial unrest before disputes culminate into future mayhem .

FDI will channel itself through opportunities and security. Therefore, in my opinion, the incident in Gurgaon needs to be condemned because of violence on the part of both parties. But it will not affect the normal functioning of HMSI, let alone investments from Japanese companies or FDI in general.

The writer is secretary-general, PHDCCI