FISME terms Small Factories Bill Regressive; Seeks Amendment and RIA
Updated: May 12, 2015 01:40:51pm
New Delhi, May 12 (KNN) The umbrella legislation proposed by the Government to replace several existing labour legislation has not found favours by Micro, Small and Medium Enterprises (MSMEs).
The Small Factories (Regulation of Employment and Conditions of Services) Bill currently under consideration by the Cabinet, proposes to merge over a dozen labour Acts such as ESI, Factories Act and of PF and proposes a liberalized regime for ‘Factories’ employing up to 40 workers. The caveat: it is applicable on Factories employing even one worker.
“This single clause will result in inspector raj of gigantic propositions”, says Dr. Sangam Kurade who has recently taken over as President of Federation of the Indian Micro and Small & Medium Enterprises (FISME)- the largest MSME body in the country.
“Imagine a start-up with a one worker having made to comply with provisions of ESI, PF etc from day one! It is a hugely regressive proposition”, he says.
Three legislation that of ESI, Factories Act and of PF, which are supposed to subsume by the new proposed legislation, had specific threshold of number of workers below which these Acts were not applicable (generally 10 workers). The proposed bill brings down the threshold to one.
President FISME opined that the Bill bundled several legislation into one thus creating an illusion that the provisions in older Acts became simplified but actually the cost of compliance would increase substantially under the new Bill.
Industry experts have also warned that the Bill has many impractical clauses. The ‘Factory’ is very loosely defined and the ‘manufacturing process’ can be interpreted to cover activities such as making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up etc. making it overarching and vague.
Similarly, making payment of wages only through Banks is also found to be impractical in case of MSMEs half of which are in rural areas with limited bank outreach.
In a representation to the authorities FISME has asked that the bill be re-analysed and amended suitably for MSMEs to derive maximum efficiency in manufacturing and production thereby making" Make in India" a reality. FISME has also suggested that a rigorous Regulatory Impact Analysis (RIA) should be done on the Bill before it introduction in the Parliament. (KNN Bureau)
The Small Factories (Regulation of Employment and Conditions of Services) Bill currently under consideration by the Cabinet, proposes to merge over a dozen labour Acts such as ESI, Factories Act and of PF and proposes a liberalized regime for ‘Factories’ employing up to 40 workers. The caveat: it is applicable on Factories employing even one worker.
“This single clause will result in inspector raj of gigantic propositions”, says Dr. Sangam Kurade who has recently taken over as President of Federation of the Indian Micro and Small & Medium Enterprises (FISME)- the largest MSME body in the country.
“Imagine a start-up with a one worker having made to comply with provisions of ESI, PF etc from day one! It is a hugely regressive proposition”, he says.
Three legislation that of ESI, Factories Act and of PF, which are supposed to subsume by the new proposed legislation, had specific threshold of number of workers below which these Acts were not applicable (generally 10 workers). The proposed bill brings down the threshold to one.
President FISME opined that the Bill bundled several legislation into one thus creating an illusion that the provisions in older Acts became simplified but actually the cost of compliance would increase substantially under the new Bill.
Industry experts have also warned that the Bill has many impractical clauses. The ‘Factory’ is very loosely defined and the ‘manufacturing process’ can be interpreted to cover activities such as making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up etc. making it overarching and vague.
Similarly, making payment of wages only through Banks is also found to be impractical in case of MSMEs half of which are in rural areas with limited bank outreach.
In a representation to the authorities FISME has asked that the bill be re-analysed and amended suitably for MSMEs to derive maximum efficiency in manufacturing and production thereby making" Make in India" a reality. FISME has also suggested that a rigorous Regulatory Impact Analysis (RIA) should be done on the Bill before it introduction in the Parliament. (KNN Bureau)
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