The Hindu Business Line : Textile industry's growing labour pains

It is time that both the Centre and the State governments got their act together to ensure that the textile industry is able to deliver on the high promises and exploits its potential.

The tripartite talks among the representatives of the textile industry, the Union and State governments, and the labour unions, held under the aegis of the Ministry of Textiles on July 25 ended with not much to show for, even by way of some slight shift in the attitude of the unions. Per contra, on the day the Centre convened the meeting, the National Convention of Workers, held a rally in the Capital and deplored the move by the Ministry of Textiles to what they called "virtually usher in the jungle law of hire and fire in the... apparel and textile industry."

World trade in textiles and clothing was freed from the restrictive quota regime on January 1, 2005; the trade in the quota-free regime, however, is still in transitional mode. The textile industry has been pleading for greater policy support, and the Government is also convinced of the need to address at least in part a long charter of the industry demands. It all boils down to inflexible labour lawshigh transaction cost, and power cost .

The Indian textile industry is among the oldest and contributes about 14 per cent to the industrial production. It is the second largest provider of employment after agriculture, having on rolls close to 85 million — 35 million directly in textiles and 50 million in allied activities. Industry figures put the total size at $46 billion (2005) of which the domestic market accounts for roughly $29 billion and exports $17 billion. Import of textiles is estimated at $2.7 billion.

Huge potential

The National Textile Policy 2000 sets a target of textile and apparel

exports of $50 billion by 2010, of which the share of garments would be $25 billion. But as per the industry's vision (a 2004 study by CRISIL for the Indian Cotton Mills Federation) there is the potential to double the country's share of the global textiles and clothing market by 2010, with export receipts of $40 billion and raise domestic market volumes by another $45 billion. Even to achieve its scaled down export earnings target of $40 billion, against the Government's aim of $50 billion, by 2010, the industry estimates investment needs of a massive $140,00 crore. It also insists on the creation of a favourable climate to function in an environment that is free from inflexible labour laws, inordinate transaction and power costs.

Call for reforms

A report of the Special Study Group on Textiles set up by the Board of Trade of the Commerce Ministry under Mr A. Sakhtivel, former Chairman of the Apparel Export Promotion Council (AEPC), was candid that though political difficulties could hamper a major overhaul of labour laws, at least the garment sector could be freed from the professional unionists. It suggested that the office-bearership of the union be restricted to working employees and the notice of strike be authorised by two-third of all workmen, probably through secret ballot.

Besides, it wanted seasonal employment so that manufacturers could vary workers according to the demand. It sought contract labour in the textile sector, especially apparel sub-sector (as has been the case in China, Bangladesh and Sri Lanka) by operationalising the 1984 amendment allowing fixed-term contracts for workers in units that provide at least 200 days employment in a year.

Ministry stance

Echoing the sentiment, the Textile Ministry contends that the procedures and conditions prescribed under Chapter V(B) of the Industrial Disputes Act (IDA), 1947, are long and cumbersome, affecting economic decisions. Most exporters complain that they have to avoid seasonal orders as they find it difficult to reduce the workforce during slack period. In this context, the Textile Ministry is inclined to according some flexibility to textile exporting units, provided they assure a minimum of 100 days employment in a year. But this would call for an amendment to the IDA, exempting textile exporting units (units exporting 75 per cent of their annual production) from the provisions of Chapter V(B).

As spontaneous strikes cause supply disruption and affect the credibility of the supplier, the Textile Ministry feels that exporting activity might be treated as public utility services for the purpose of industrial disputes. This would mean that the labour in exporting units should give a longer notice period before a strike and cannot indulge in spontaneous strikes. The Ministry is also backing the industry's case to amend the Factories Act, 1948, permitting raising the weekly working hours from 48 to 60 and the daily working hours from 8 to 12 with a suggestion for suitably compensating the workers during the extra working hours.

The Centre, however, did concede the point that "provisions for flexibility exist in sub-section (2) of Section 65 of the Factories Act, 1948. They permit the State government/concerned authorities enforcing the Act to allow certain flexibilities to factory owners from the provisions of Section 51, 52, 54 and 56 in such circumstances when they are to deal with exceptional pressure of work." The reluctance to deal directly on labour issues is evident from the status of the follow-up on Prime Minister's direction and major issues raised by members of the PM Council on Trade and Industry at the meeting held on December 4, 2004.

When the members demanded that the SEZs should have liberalised laws in areas such as labour, the status report, as made on July 20, showed that "many States in which SEZs are functioning have introduced some simplification on labour laws for SEZs namely, Gujarat, Rajasthan, Madhya Pradesh, Tamil Nadu, West Bengal and Uttar Pradesh." Thus the Centre is telling the world that States are free to be flexible in their policy to woo investors and generate employment through productive manufacturing and export-related activities.

The dilemma

But the unions backed by political parties disapprove of such amendments to the labour laws. Naturally, at the end of the one-day meet the Union Minister of State for Labour and Employment, Mr Chandra Sekhar Sahu, summed up the dilemma facing the government when he said: "No consensus could be reached on the issues as we are party to ILO conventions and hence cannot increase working hours. Further, we do not think textile sector as a whole is seasonal in nature though we do understand that the export market could be termed so."

The attitude of the Labour Ministry is one of clouding even as it admits the seasonal nature of export demand for textile goods. If India is to cash in on the free trade in textiles and clothing, its ruling dispensation needs to change its mind-set on narrow notions of restrictive rules and regulations, leaving the freedom of entrepreneur to resolve the underlying causes of friction.

It is time both the Central and State governments got their act together to ensure that the domestic textile industry is able to deliver on the high promises and potentials it possesses.

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