Speaking at the CII-WEF India Economic Summit, commerce and industry minister Kamal Nath said, They (some chief ministers) have told me to leave it (labour reforms in such areas) to them. I think, it (such demands from states) is only going to snowball more.
Currently, labour laws are also applicable to designated areas like Special Economic Zones (SEZs).
According to the SEZ policy, states can delegate the power of the labour commissioner to the development commissioner of SEZ and declare the zone a public utility.
But labour is a subject under the concurrent list of the Constitution of India. Which means states have certain powers to allow some flexibility in such laws through amendments. Currently, there are around 40 laws dealing with labour issues - the main ones being Industrial Disputes Act, 1947 and Contract Labour (Regulation and Abolition) Act, 1970.
Although the government initially wanted to allow flexible labour laws in SEZs, due to stiff opposition from the Left parties, it had to take off such a provision in the final Act. On the ramifications of such labour policies, Supreme Court lawyer Prashant Bhushan said, But the government is surreptitiously trying to bring in labour reforms through the SEZ Act saying such policies will bring in more domestic and foreign investment.
This will be a reality once most of the industries shift to SEZs to gain tax advantages. Once such reforms are carried out, companies will be able to hire and fire employees easily. Besides, employees will also not be able to strike work in protest.
CPI(M) leader Nilotpal Basu said, Even under the SEZ Act, states cannot claim exemption from labour laws of the country and also cannot bring in changes according to their interests in contravention of existing labour laws.
But some states like Maharashtra, Gujarat and Madhya Pradesh are understood to have been pitching for flexible labour laws in SEZs to get big-ticket investments. One of the reasons for SEZs being a big success story in China is the countrys flexible labour laws.