UPA revives states SEZ laws to ease labour woes

Written by Rituparna Bhuyan | Vikas Dhoot | New Delhi | Updated: Sep 29 2009, 07:08am hrs
The Centre has decided to give the green signal to special economic zone laws proposed by four state governmentsincluding Andhra Pradesh and Maharashtrathat have been hanging fire from 2005. Formulated to compete with the Gujarat SEZ Act of 2004 that allowed significant flexibilities on labour laws to SEZ units, the approvals would clear the way for investments of about Rs 46,000 crore in the projects, as per commerce ministry data.

Two former chief ministers, late Y S Rajasekhara Reddy of Andhra Pradesh and Vilasrao Deshmukh of Maharashtra, had vigorously pursued the Centre to get the Presidents assent for these SEZ Acts.

The commerce ministry has initiated action to get these two states SEZ laws signed into acts by the President within the next two months, along with those of by Chhattisgarh and Karnataka. These four states account for 317 SEZs with formal and in-principle approvals44% of the total approved SEZs in the country, with labour laws similar to the Gujarat model.

Labour secretary Prabhat Chaturvedi confirmed to FE that the commerce ministry has begun discussions on the subject with his ministry. We are examining the amendments to labour laws proposed by the states. As long as there is a balanced approach and employee/employer interests are protected, streamlining the applicability of labour laws is fine by us.

We want to get these Acts cleared, starting with Maharashtra, in the next couple of months, so that they can become operational. This will ensure that the single window mechanism, which ensures that state-level clearances are dealt at one place, a senior commerce ministry official also told FE.

The Gujarat SEZ Act was a pioneer in introducing the concept of flexibilities in labour law within SEZs. It was cleared by the previous NDA government at the Centre. Apart from Gujarat, two other states have also simplified this sector. These are the Haryana SEZ Act that delegates powers of the labour commissioner and the inspector of factories to SEZ development commissioners, while the Uttar Pradesh SEZ policy has rationalised labour laws.

The four state Acts, apart from flexible labour laws, will also bring in single-window clearance for prospective investors.

In fact, in May this year, the SEZ Board of Approvals had asked states to ensure that single-window clearance systems for SEZs are in place by July, failing which their proposals wouldnt be considered.

Many of the labour related provisions are archaic and the SEZs are at the mercy of labour inspectors. The commerce ministry feels that the SEZ development commissioner a government officercan act as a single interface between the zones and the government machinery, the commerce ministry official explained.

While the Centres SEZ Act of 2005 provides the overarching framework for setting up such zones across the country, states were asked to work out laws of their own to create a single-window clearance system and throw in additional sops at the state-level for prospective investors. But except Gujarat, Haryana, West Bengal, Madhya Pradesh, Uttar Pradesh and Tamil Nadu, other states are yet to put in a single window mechanism for SEZ clearances.

While the Centres SEZ law requires the labour laws of the land to be followed, states can use their powers under the Constitution to regulate their applicability on SEZ investors. As per the Constitution, legislations on concurrent subjects like labour, drafted by states have to be cleared by the nodal ministry at the Centre, before they get the Presidential assent. The draft laws are tested on the basis of three parameterstheir legal and constitutional validity, repugnancy with central laws and, most importantly, deviation from central policies.

In the first innings of the UPA government, its common minimum programme, heavily influenced by the left parties, allies of the government didnt allow for labour law dilution at all. This forced the Union labour ministry to oppose the provisions that transferred the labour commissioners powers to the SEZ development commissioner and treated SEZs as public utility services so that workers couldnt go on a flash strike.