Is “make in india” constrained by indian labour market regulations?

Abstract

This paper examines whether “Make in India” policies are constrained by over-regulation or under-regulation in the Indian labour market. Specific labour law provisions and the scope of circumventing them as evidenced from strategy-as-practised are analysed. The paper concludes that the Indian Labour Market is undergoverned and over-controlled because: (1) the nature of implicit “quid pro quo” grant of oligopolistic protection in the product market in the license raj period against reciprocal guarantees of lifelong employment protection has been nullified without being jettisoned from the tripartite frame; (2) the weakened countervailing power of trade unions has affected social dialogue required to balance the interests of organized and unorganized workers, and (3) the failure of successive governments to put employment in mission mode has shrunk the real price of skilled labour to unprecedented lows and in some cases even below statutory minimum wages. Skill premia in wages required for quality cannot be sustained in conditions akin to chattel slavery due to underregulation and the pace of change required cannot be attained in scale economies due to overregulation.