Draft Concept Note * Workshop

Draft Concept Note – Workshop
Promoting the Manufacturing Sector as a Driver
of Inclusive Growth and Job Creation in India
25 November 2013
The Lalit Hotel, New Delhi
1. Background
Until recently, India had been able to record growth rates of over 10 per cent, which created
considerable expectations of continued rapid economic development. Apart from the current
downturn, the main disappointment has been the failure for economic growth to translate into
stronger employment generation, especially in the formal segment of the economy. In India, around
92 per cent of workers are in informal employment; more disconcerting is the fact that, although the
share of workers in the unorganized sector is falling, the proportion of informal workers in the
organized sector is rising (for example, due to contract labour). Thus, despite decades of higher
growth, only a small proportion of Indian workers have regular, full-time formal jobs with social
protection. This has further exacerbated the dualism and inequality that exists in the Indian labour
The Indian growth story is in contrast with most of East and South-East Asia, which have shown that
high rates of economic growth and increasing openness were associated with an expansion in
employment in the formal sector (i.e. large-scale factories). Improved labour outcomes in these
countries were linked to the growth of labour-intensive and relatively low-tech production segments
of the manufacturing sector, such as garments, leather products, and electronics. At the same time,
there was an increase in agricultural productivity in these countries, which led to a rise in both the
well-being of the self-employed in agriculture, and the minimum wage at which labour would
migrate to the urban manufacturing or services sectors.
Arguably, many of these economies passed through the Lewis turning point—in other words, they
passed the point where they could rely on an elastic labour supply from agriculture for industrial
development, thereby increasing the pressure for a rise in wages.1 The success of several East and
South-East Asian countries in creating better quality, formal sector jobs is usually attributed to a
number of factors and policies: high levels of education and skills, good infrastructure, market-led
strategies, and encouragement to foreign capital and investment.
In comparison, almost half of workers still earn a living in the agricultural sector in India. At the same
time, around just 11 per cent of Indian workers are located in the manufacturing sector (a similar
Fang, Cai, 2008, “Approaching a Triumphal Span: How Far Is China Towards its Lewisian Turning Point?”,
Research Paper No. 2008/09, Helsinki, UNU-WIDER. Also see Islam, Rizwanul, 2009, “Has Development and
Employment through Labour-intensive Industrialization Become History?” in Kaushik Basu and Ravi Kanbur
(eds.), Arguments for A Better World: Essays in Honour of Amartya Sen, Vol. 2, Society, Institutions and
Development, Oxford University Press, Oxford.
share is found in the construction sector). Overall, India has yet to witness a significant transition of
(low-skilled) workers from agriculture/urban informal service sectors to a labour-intensive
manufacturing sector.
Though it is generally believed that the manufacturing sector must play an integral role in promoting
a more inclusive growth path in India, the future trajectory for this sector remains uncertain. In
particular, questions remain surrounding the ability for large-scale, labour-intensive manufacturing
to take off and assume the position as the driver of growth and job creation in the formal sector.
Many commentators focus on the role labour laws play in hampering the growth of Indian
enterprises (notably in the context of the Industrial Disputes Act, Chapter Vb). However,
manufacturing in India is impacted by a range of factors and constraints, including land acquisition,
infrastructure, supply of skilled workers, and the myriad of laws that exist, including labour laws.
Former Chief Economist of the World Bank, Justin Lim estimated that 85 million manufacturing jobs
will be shed in China in the coming years as its economy moves up the value chain.2 The challenge
for India is whether it is in a position to take advantage of this once-in-a-generation structural
Through research and project activities, the ILO in India has addressed in recent years a number of
crucial dimensions relevant to the situation facing the Indian manufacturing sector. These include
the SCORE Project, which aims to improve productivity and competitiveness of SMEs, and the Way
of Informality Project. Furthermore, ILO has also been active in supporting skills development and
employment policies in the country.
2. Objectives
Through the presentation of recent ILO studies on the manufacturing sector and bringing together
leading experts, the main objective of the workshop is to broaden the debate and discourse on the
challenges facing manufacturing enterprises in India. This will involve highlighting the importance of
a range of factors, not only limited to the narrow purview of labour laws and informality, but also
the broader issues of productivity and competitiveness, employment and skills development. As a
result, the meeting will also identify policy and research recommendations.
3. Participants
The workshop will consist of participants (expected 100) from the Government of India (Ministry of
Labour and Employment, Ministry of Commerce, Ministry of MSME, Ministry of Finance, Planning
Commission), industry representatives, employer organizations and trade unions, academics and
other international organizations.
2 http://blogs.worldbank.org/developmenttalk/how-to-seize-the-85-million-jobs-bonanza
4. Draft programme (some speakers to be confirmed)
9:00 – 9:30
9:30 – 10:00
10:00 – 11:00
Welcome by Ms. Tine Staermose, Director, ILO Country Office for India and Decent Work
Team for South Asia
Opening remarks by Ms. Gauri Kumar, Secretary, Ministry of Labour and Employment,
Government of India (requested)
Remarks by Mr. N.M. Adyanthaya, Worker Member ILO Governing Body and Mr. Y.K. Modi,
Employer Member ILO Governing Body
Chief guest: Mr. Arun Maira, Member, Planning Commission, Government of India
Vote of thanks
Session 1: The state of the Indian manufacturing sector: setting the scene
Chairperson: Mr. Arun Maira, Member, Planning Commission, Government of India
Dr. Duncan Campell, Director, ILO, Geneva
Prof. T.S. Papola, Institute for Studies on Industrial Development (ISID)
Prof. K.P. Kannan, Former Director, Centre for Development Studies (CDS), Trivandrum
Open discussion
11:00 – 11:15
11:15 – 1:00
Session 2: Challenges facing the Indian manufacturing sector
Chairperson: Mr. Rajeev Dubey, President, Employers Federation of India (requested)
Prof. Dev Nathan, Institute for Human Development (IHD) and Prof. Sandip Sarkar, Institute for
Human Development (IHD)
Dr. Rana Hasan, Principal Economist, Asian Development Bank (ADB)
Dr. Rajen Mehrotra, President, Industrial Relations Institute of India and former ILO official
Mr. Thampan Thomas, Vice President, Hind Mazdoor Sabha
Mr. Sunder Rajan, President, Sona Koyo Steering Systems Ltd and Member, CII National
Industrial Relations Committee
Open discussion
1:00 – 1:45
1:45 – 3:30
Session 3: Productivity constraints & solutions for MSMEs: growing bigger and more competitive
Chairperson: Mr. Madhav Lal, Secretary, Ministry of MSME
 Mr. Sunil Chaturvedi, CEO, Automotive Skills Development Council (requested)
 Ms. Reshmi Dey
 Mr. Shashank Kulkarni, Director, Ahmednagar Auto and Engineering Association
 Mr. V. Krishnamurthy, Chairman, National Manufacturing Competitiveness Council (requested)
 Ms. Sudipta Bhadra, ILO
Open discussion
3:30 – 4:00
4:00 – 5:30
Session 4: Closing and way forward
Chairperson: Dr. Duncan Campbell, Director, ILO, Geneva
Mr. J.P. Rai, Director-General, National Skills Development Agency
Mr. Saurabh Chandra, Secretary, Department of Industrial Policy Promotion (requested)
Dr. Santosh Mehrotra, Director-General, Institute of Applied Manpower Research (requested)