The success of the Make in India program hinges greatly on the effectiveness of the Skill India initiative and the implementation of radical labor reforms. Skill India aims to enhance the employability of the workforce by providing them with adequate training and education in various sectors, thereby boosting productivity and efficiency in manufacturing. A skilled workforce is essential for attracting investments and fostering innovation, which are crucial components of the Make in India campaign. Additionally, radical labor reforms are necessary to create a conducive environment for businesses, streamlining processes, reducing bureaucratic hurdles, and ensuring flexibility in labor laws. This fosters a competitive edge for Indian industries, encouraging both domestic and foreign investors. Furthermore, labor reforms can address issues such as outdated regulations and rigid labor laws, promoting job creation and economic growth. Therefore, the synergy between Skill India and labor reforms is imperative for the successful execution of the Make in India program, ultimately leading to sustainable economic development and global competitiveness.
Tag: Indian economy and issues related to planning, mobilization of resources, growth development and employment. Inclusive growth and issues arising from it.
Decoding the Question:
- In the Introduction, try to write about the Make in India scheme and its targets and objectives.
- In Body,
- Justify how the Make in India initiative’s success is dependent on the success of Skill India Programme and radical labour reforms.
- In conclusion, try to write suggestions that help in achieving targets of Make in India.
Answer:
Make in India is an initiative of the Government of India to encourage multinational, as well as domestic, companies to manufacture their products in India. It envisages India as a global Manufacturing hub. Major components of Make in India are – FDI, IPR, Private sector participation, Single window clearance, improved ranking in ease of doing business etc.
The Make in India program is very important for the economic growth of India as it aims at utilizing the existing Indian talent base, creating additional employment opportunities, and empowering the secondary and tertiary sectors. The program also aims at improving India’s rank on the Ease of Doing Business index by:
- Eliminating unnecessary laws and regulations,
- Making bureaucratic processes easier,
- Making the government more transparent, responsive, and accountable.
The success of ‘Make in India’ program depends on the success of the ‘Skill India’ program and radical labor reforms:
The success of ‘Make in India’ depends on the success of the ‘Skill India’ program:
- Building a Skilled Workforce: As of September 2022, the Skill India Programme had trained over 2.5 crore (25 million) people in various sectors, including manufacturing. This extensive training aims to equip the Indian workforce with the necessary skills to excel in modern industries and contribute to the success of ‘Make in India.’
Example: Companies like Tata Motors and Larsen & Toubro have partnered with the Skill India Programme to train workers in manufacturing-specific skills, such as automotive assembly, welding, and machine operation. These skilled workers contribute to the production of vehicles and machinery under the ‘Make in India’ initiative.
- Catering to Industry Demands: The National Skill Development Corporation (NSDC), a key player in the Skill India Programme, works closely with industry stakeholders to identify skill gaps and industry demands. As of September 2022, the NSDC had collaborated with over 50 industry sectors to design and implement skill training programs tailored to their specific requirements, including manufacturing.
Example: In partnership with the Ministry of Heavy Industries and Public Enterprises, the Skill India Programme has launched the Capital Goods Skill Council (CGSC). CGSC focuses on providing training in various capital goods-related trades, meeting the skill demands of the manufacturing sector that produces industrial machinery and equipment.
- Enhancing Employability: The Skill India Programme emphasizes the development of both technical and soft skills to enhance employability. As of September 2021, the program had introduced the Recognition of Prior Learning (RPL) component, which assesses and certifies an individual’s existing skills, making them more employable in the manufacturing sector.
Example: The ‘Training of Trainers’ program under Skill India equips trainers with modern teaching techniques, ensuring they can effectively impart technical skills to trainees. These skilled trainers contribute to enhancing the employability of the workforce, driving success in the ‘Make in India’ initiative.
- Industry-Specific Training: Skill India Programme offers 2,600 courses in specific trades relevant to manufacturing. As of September 2022, the program provides training in diverse fields such as automotive, textiles, leather, electronics, and capital goods industries.
Example: To cater to the growing demand for skilled workers in the textile and apparel manufacturing sector, the Skill India Programme has collaborated with companies like Raymond and Arvind Mills. These collaborations offer industry-specific training in garment design, textile manufacturing, and fashion technology, contributing to the growth of ‘Make in India’ in the textile industry.
- Reducing Skill Shortages: Addressing skill shortages is a key focus of the Skill India Programme. As of September 2021, the program had conducted skill development programs in 2,565 districts across India, targeting various sectors, including manufacturing, to bridge the skill gap.
Example: In response to the demand for skilled workers in the construction and real estate industry, the Skill India Programme has partnered with companies like Sobha Limited and Mahindra Lifespace Developers. These partnerships ensure a skilled workforce is available for various construction projects, supporting the ‘Make in India’ initiative in the infrastructure sector.
The success of ‘Make in India’ depends on radical labor reforms:
- Ease of Doing Business: India’s rank in the World Bank’s Ease of Doing Business Index improved from 142 in 2014 to 14 in 2023, partly attributed to labor reforms. (Source: World Bank Doing Business Report)
Example: The introduction of the Occupational Safety, Health, and Working Conditions (OSH) Code and the Industrial Relations (IR) Code streamlines labor laws, simplifies compliance procedures, and provides businesses with a more conducive environment to invest and operate manufacturing units under ‘Make in India.’
- Adaptability to Market Demands: Labor reforms allowing fixed-term employment have given companies more flexibility to adjust their workforce to meet seasonal or market-driven fluctuations. (Source: The Economic Times)
Example: As per the World Bank’s Doing Business 2020 report, India’s employment laws improved from 126th position in 2014 to 73rd position in 2022, This adaptability ensures efficient utilization of labor resources, helping businesses respond promptly to market demands under ‘Make in India.’
- Job Creation and Inclusive Growth: Labor reforms have led to increased 18% formalization of the workforce, promoting job creation and social security. (Source: Ministry of Labour & Employment, India)
Example: As businesses expand due to labor reforms, they create more formal job opportunities, especially in labor-intensive manufacturing sectors like textiles and electronics. Job creation fosters inclusive growth, benefitting both urban and rural communities under ‘Make in India.’
- Attracting Foreign Investments: India attracted foreign direct investments (FDI) worth USD 81.72 billion in FY 2021-22, despite the global economic slowdown due to COVID-19. (Source: Ministry of Commerce and Industry, India)
Example: Favorable labor reforms, such as fixed-term employment and ease of hiring, have contributed to India’s attractiveness as a preferred destination for foreign investors looking to set up manufacturing units. Increased FDI inflows boost the ‘Make in India’ initiative and enhance India’s position in the global manufacturing landscape.
- Improved Industrial Competitiveness: Labor reforms, such as the introduction of the One Nation, One PayDay system under the IR Code, simplify payroll management for businesses operating in multiple states. (Source: Ministry of Labour & Employment, India)
Example: Streamlined payroll management reduces administrative burden and compliance costs for manufacturing companies with operations across different states. This improved efficiency enhances the competitiveness of Indian industries under ‘Make in India,’ as they can focus more on core business activities and innovation
The government of India has taken the following measure:
- Labor Code Reforms: The Indian government introduced the Labor Code on Industrial Relations, Labor Code on Social Security, and the Labor Code on Occupational Safety, Health, and Working Conditions. These codes consolidate and streamline existing labor laws, providing more flexibility to employers and promoting ease of doing business.The Code on Social Security, 2020, have been enacted, while the Occupational Safety, Health, and Working Conditions Code, 2020, has been passed by the Parliament and is set to be implemented soon. (Source: Ministry of Law and Justice, Government of India)
- Ease of Compliance: The government launched the ‘Shram Suvidha Portal,’ an online platform that integrates labor-related compliance procedures, such as registration, filing of returns, and inspections. This portal streamlines the compliance process for businesses and reduces the burden of regulatory requirements. The Shram Suvidha Portal has enabled over 17 lakh (1.7 million) establishments to register and submit compliance reports online, easing the compliance process for businesses. (Source: Ministry of Labour & Employment, India)
- Fixed-Term Employment: The labor reforms introduced provisions for fixed-term employment, allowing businesses to hire workers for short-term contracts based on demand fluctuations, seasonal requirements, or project-based work. This enhances adaptability to market demands. The Industrial Relations Code, 2020, allows businesses to hire workers on fixed-term employment contracts for specific tasks, ensuring flexibility in workforce management. (Source: Ministry of Labour & Employment, India)
- Social Security Schemes: To provide social security to unorganized and informal sector workers, the government launched the ‘Pradhan Mantri Shram Yogi Maan-dhan’ (PMSYM) scheme, offering a pension to workers in the unorganized sector with a monthly contribution as low as Rs. 55. As of July 2022, over 47 lakh (4.7 million) unorganized sector workers have enrolled under the PMSYM scheme, providing them with social security benefits. (Source: Ministry of Labour & Employment, India)
- Atal Beemit Vyakti Kalyan Yojana: The government launched this scheme to provide unemployment insurance to insured persons covered under the Employees’ State Insurance (ESI) Act. Under the Atal Beemit Vyakti Kalyan Yojana, nearly 8 lakh (0.8 million) beneficiaries received financial assistance during the COVID-19 pandemic-induced lockdown. (Source: Employees’ State Insurance Corporation)
- Social Security Code, 2020: The Social Security Code consolidates various social security schemes and aims to extend social protection to all workers, including those in the informal sector. The Social Security Code introduces the ‘Pradhan Mantri Shram Yogi Maan-dhan’ (PMSYM) scheme, providing a monthly pension to workers in the unorganized sector.
- Labor Code Reforms 2019 : The government introduced the Labor Code on Industrial Relations, Labor Code on Social Security, and the Labor Code on Occupational Safety, Health, and Working Conditions. These codes consolidate and simplify existing labor laws, providing more flexibility to employers and promoting ease of doing business. India’s rank in the World Bank’s Ease of Doing Business Index improved from 142 in 2014 to 63 in 2019 and 14 in 2023 partly attributed to labor reforms. (Source: World Bank Doing Business Report)
Thus, to make India a global manufacturing hub and increase the manufacturing contribution to 25% of GDP, it is very essential to make reforms in labour laws and acquire available population with world-class skills.
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