Studying ‘Make in India’ from the Lens of Labour Reforms

Abstract

The contribution of the manufacturing sector in gross domestic product (GDP) has been a cause of concern, as India contributes only 16 per cent to the GDP in comparison to other rapidly developing economies, for example, the manufacturing sector of Thailand contributes 34 per cent to the GDP, China 32 per cent and South Korea 31 per cent. Currently, India stands at 134th position out of 189 economies under Doing Business Index. Its rank has also declined in the Global Manufacturing Index in comparison to the previous year. The Government of India in the year 2014 initiated a campaign titled Make in India to foster the growth of the manufacturing sector. In the initial phase of the campaign, the primary focus was on three key tactics namely reviving domestic investment, ensuring the ease of doing business and attracting foreign investors to invest in the manufacturing sector. The government later on realized that first there is a need to bring reforms in the decades old labour laws. This has urged the government to consider reforms in labour laws which will make Indian labour market more competitive in international market. The government has initiated these reforms by proposing certain amendments in the Factories Act 1948 and by including few provisions in the Labour Laws Amendment Act, 2011, and the Apprenticeship (Amendment) Act, 2014. The article attempts to analyze the impact of these reforms on success of Make in India campaign by studying the overall impact of these labour law reforms from employees and employers’ perspective and contribution of labour reforms in Make in India campaign by using the theory of structural change, fundamentals and growth given by Rodrik (2013b, Harvard Business Review). It also analyzes the impact of these reforms on two key aspects of the campaign, that is, focusing on job creation and skill enhancement.