Monday, February 5, 2007

Automotive Mission Plan in nutshell

Ministries of heavy industries and public enterprise of the government of India has released a policy named “Automotive Mission Plan” (AMP) 2006-16.

Let us quote some "recommended interventions” from the plan:

Investment Support
In order to spur further growth, the Industry has requested that the automotive industry may be brought under the purview of existing incentive structure (which exist for other sectors of the economy or which are available in some of the competing countries). Some of the specific policies, that Industry has requested for consideration includes:

Tax holiday for Automotive Industry for investment exceeding Rs.500 crore (as given to power projects, firms engaged in exports, EOUs, infrastructure projects, etc.)
• One-stop clearance for FDI proposals in automotive sector including the local clearances required for setting up manufacturing facilities.
Tax deductions of 100 per cent of export profits.
Deduction of 30 per cent of net (total) income for 10 years for new industrial undertakings.
• Concession of Import duty on machinery for setting up of new plant or capacity expansion
Deduction of 50 per cent on foreign exchange earnings by automotive companies (like Construction companies, hotels, etc.)

• State Government to be urged to offer the following:

Preferential allotment of land
to automotive plants as is given to IT sector by different State governments
Ensuring Continuous uninterrupted power supply as is done by many states to some sectors
Captive Generation in the sector could be promoted, for instance, by exemption of Electricity Duty for five years as is done for biotech industry in some states.

On the issue of Labour Law Reforms Industry has submitted that :
(i) Labour laws adversely impact competitiveness despite being a low labour cost economy.
(ii) There are 45 Central Acts and 16 associated rules that deal directly with labour. There are others Acts that indirectly deal with labour, like the Boilers Act (1923), the Collection of Statistics Act (1953), the Dangerous Machines (Regulations) Act (1983) and Emigration Act (1983). There are total 154 labour laws.
(iii) Some of the recommendations made by the Industry are as follows:

(a) Factories Act, 1948: The State Government using its powers under Section 65(2) of the Factories Act may grant exemption to all EOUs/ SEZs from all provisions of Section 51, 52, 54 and 56 of the Act. Thus, the working hours should be increased from 48 to 60 per week (Section 51), from 9 to 11 per day (Section 54) and spread over from 10.5 to 13.0 hours per day (Section 56). Such exemptions will be a progressive step in enhancing the competitiveness of the industry.

(b) The Contract Labour (Regulation and abolition) Act, 1970: Fixed term contractual employment may be permitted in relation to the business needs. Contract labour will be allowed in core areas for temporary periods to meet the market demand. Fixed term employment of contracts could eventually be allowed in core activities.

(c) The provision 9-A in the Industrial Disputes Act requires a stringent process for Item number 10 and 11. Some flexibility will be required to recruit workforce as per the demand fluctuation in the market.

(d) The Second National Labour Commission recommendation that prior permission should not be required in respect of lay-off and retrenchment in an establishment of any employment size would be examined for its implementation in auto sector. The prior permission required in case of a unit employing more than 100 employees for closure of the establishment may be examined to raise it to 300.”

This plan is the road map from the government of India for development of the automobile industry.
So, what does this road map essentially mean?

Huge tax deductions, ‘preferential land allocations’ and other facilities such as
Exemption of electricity duty for five years.

Obviously this is to satisfy the thirst of multinational companies and comprador capitalists who are dieing to secure maximum profit.

And what would be for us who will work there?

Labours will work 11 hours a day.
Labours will be recruited on contractual basis as much as possible.

But, this is not enough.

Finally, the companies will have the authority to lay-off and retrenchment of any employment size whenever they wish.

Does the government have any role other than securing the plunder and exploitation at the highest level?

What do you think?

No comments: