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Modi unveils reforms to boost manufacturing

NEW DELHI: Indian Prime Minister Narendra Modi has unveiled a string of labor reforms, seeking to fullfil a pledge to boost the country’s manufacturing sector.
Modi, whose Bharatiya Janata Party swept to power in May on a mandate to revive India’s flagging economy, said he wanted to simplify the byzantine rules and regulations that manufacturing businesses face.
“We have replaced 16 forms (for factory owners) with one form, which will be available online,” Modi said in a speech in New Delhi.
“Fifty types of departments chase them, 50 types of forms have to be filled in. The world has changed,” Modi said, adding that companies would now only need to fill a single form online.
The change would benefit chiefly firms that employ just a few people, he said. In 2009, 84 percent of India’s manufacturing workers were employed by firms with fewer than 50 staff, research by the Asian Development Bank shows.
Just 8 percent of Indian workers have formal jobs with any security and benefits, such as the Provident Fund, while the vast majority work in the informal sector, experts say.
Even though the World Bank says India has one of the world’s most rigid labor markets, fears of a trade union backlash and partisan politics have deterred governments from reform.
He also announced plans to streamline labor laws and make scrutiny of factories less cumbersome.
Modi called for greater respect for manual laborers in India.
“We must change the way we look at manual laborers. We must respect them if we are to surge ahead as a country,” he said.
Businesses argue that conforming to India’s 44 national and more than 150 state labor laws is not only costly and time-consuming but has deterred foreign investors.
Business leaders welcomed Thursday’s announcements, which followed an Independence Day speech in August in which Modi invited the world’s industries to set up shop in the country.
“Simplification of procedures has been a longstanding concern for industry,” said Chandrajit Banerjee, director general of the Confederation of Indian Industry, in a statement.
“This initiative... will considerably ease the burden of compliances.”
Business leaders have high hopes for Modi, an advocate of smaller government and private enterprise, to change that.
Industry groups said the new measures would warm business sentiment and help boost the slowing economy.

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