With a view to boost Indian industrial production, the government is planning to exempt the National Investment and Manufacturing Zones (NIMZs) from certain restrictive labour laws. India's labour market is over regulated and some provisions are not well suited with the modernized business.
The proposal to exempt NIMZs came after the commerce and industry ministry has expressed the need to resolve issues related to the few provisions of the labour laws which have been impacting the growth of manufacturing sector. Over the past two fiscal years, manufacturing sector has been struggling with slowdown and high borrowing cost and weak investment due to policy uncertainty were the leading factors responsible for low industry output growth.
The industrial, having around 25% share in the economy, grew by 0.35% to Rs.15 lakh crore in FY14 as compared to 1% growth in previous year. Within industrial sector, manufacturing contracted by 0.7% in the reported fiscal year as against a marginal growth of 1.1% in FY13. Mining continued to witness contraction at 1.4% in FY 14 as against 2.2% de-growth in the FY13.
Meanwhile to boost India’s manufacturing sector, the government has set the National Manufacturing Policy (NMP), which aimed at raising the share of manufacturing to 25 percent of GDP by 2022 from the current 16 percent. The NMP envisages setting up of NIMZs, which are industrial townships, benchmarked to the best manufacturing hubs in the world.
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