This article discusses the various labour law compliances that foreign investors in India have to undertake in order to run their business. Labour laws are undergoing an overhaul across the country and this article discusses the changes along with certain suggestions to enhance ease of doing business in India.
Fri Jul 01 2022 | Employment, Criminal and Labour | Comments (0)
Indian Prime Minister Narendra Modi has been quite instrumental in the introduction of the Made in India , Visa on Arrival Scheme and Digital India the campaigns for bringing India at par with the other highly developed countries. During the launch of Make in India Campaign itself, there was sufficient emphasis laid on the manufacturing sector of the India, which needs to be carefully studied and understood by a foreign investor who intends to step in the Indian pastures for profitable opportunities. The labour force in India is quite heterogeneous in nature. Roughly, the strength of labour community in India is over 650 million. Contrary to this, the workforce of India is approximately 470 million out of which the majority belongs to the unorganized sector.
The budget introduced by the Finance Minister Arun Jaitley in 2015 has covered various incentives (besides proposing amendments to the labour laws) to certain segments such as manufacturing, tourism, MSMEs and Shipping, so as to increase employment opportunities. Initiatives have been discussed for revamping the labour laws to bridge the gap between the rules and the actual social scenario. Understanding labour laws dominating the Indian employment sector is imperative for any foreign investor to establish a business in India.
Following are some key employment laws in India:
A foreign investor needs to have a thorough knowledge of the planning and execution of all the aforementioned labour laws to be able to conduct a business approvable in the eyes of the Indian laws. In case of any disputes arising in the industrial scenario, judicial and quasi-judicial methods for dispute resolution are generally used. Judicial recourse through courts & tribunals, jurisdiction (territorial or local jurisdiction, pecuniary jurisdiction, jurisdiction as to subject matter, original and appellate jurisdiction) and Interim relief (Prima Facie Case, Irreparable jury, Balance of Convenience) are the known methods for resolving industrial labour issues.
The State Government of Gujarat and Rajasthan have already proposed a fresh change to the labour laws for a sensible and improved industrialization process. However, as a foreign investor, one will have to understand the labour compliances governed by various labour laws. Few of the very common labour issues that keep cropping up are:
Modifications in labour law sector proposed by the Indian Cabinet include:
The introduction of the labour reforms of the labour inspection scheme, unified labour, and industrial portal by the Indian Prime Minister to offer relief to the industrial sector. Mainly, these laws are governed by the Ministry of Labour & Employment, Government of India. India works like a federal government and hence, there is involvement of both the state and the central government in enacting laws on labour relations as well as employment matters.
Conclusively, for a foreign investor to understand the laws governing the employment sector of India, analyzing the legal compliance of every type and running a business successfully can be anything but simple . In such a case, it is highly recommended that every foreign investor intending to set up a company in the Indian region does not directly participate in the labour laws, legal issues and compliances. He should rather seek assistance from local people who have necessary expertise, experience and knowledge about the labour laws to take timely measures for a successful establishment.
Nominating an Indian entrepreneur to act on the behalf of the foreign investor will work in the best interests of the investor. While he would be continuously involved in the core functions of the business, the Indian partner will give relief in terms of labour laws. The translation of the laws from the idea stage to execution will be swift if it is coming from a local identity towards the labour community.. Nevertheless, as an entrepreneur himself (while acting as a partner), the foreign investor must certainly have the theoretical clarity on the legal issues so as to be able to act in an indirect mode for the betterment of the establishment.
In India, the business owner or the Director of the company is personally & criminally liable. Thus, the need of Labor Law Compliances cannot be undermined. Indian businesses are subjected to a plethora of Labor compliances Acts.
The professionals at Helplinelaw can effectively implement the Labor Law Compliances for you. Please fill out the form below to discuss your business needs with the professionals of this domain.
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