India liberalizes foreign direct investment to boost economy

Indian state expands work scheme to tackle exploitation

NEW DELHI, Aug 29, (AP): India decided Wednesday to liberalize foreign direct investment in domestic manufacturing, coal mining and digital media, and also allow single-brand retailers to start online sales to infuse capital into the country and boost its economy.

Commerce and Industry Minister Piyush Goyal said the Cabinet approved 100% foreign direct investment in coal mining and associated infrastructure. He said it also approved 100% foreign investment in contract manufacturing and up to 26% investment in digital media.

The government made the decision as it grappled with a slowing of economic growth to a five-year low of 5.8% in the January-March quarter, with consumer spending and corporate investment faltering. Declining industrial output and automobile sales also raised fears of a deeper slowdown.

The government also relaxed the 30% local sourcing requirement in single-brand retailing and permitted online sales without the prior opening of brick-and-mortar stores.

“Online sales will lead to the creation of jobs in logistics, digital payments, customer care, training and product skilling,” Goyal said.

The decision may come as a relief for multinational companies like Apple which are facing tough times in the Indian smartphone market because of stiff competition from Chinese makers.

“The changes in foreign direct investment policy will result in making India a more attractive FDI destination, leading to the benefits of increased investment, employment and growth,” Goyal said.

Last week, the government rolled back a surcharge on foreign portfolio investment and announced steps to lower interest rates on home and auto loans to shore up the economy.

Rajiv Kumar, chairman of the government-run Policy Commission, called for immediate steps by the government to tackle poor liquidity and weak private investment. He warned that India has not faced this kind of a situation for 70 years.

Also

CHENNAI: An Indian state with some of the country’s highest levels of migration driven by poverty is doubling the amount of paid work it gives some of its poorest citizens, in a bid to curb debt bondage, a common form of slavery. Authorities in the eastern state of

Odisha said hundreds of thousands of people were estimated to be leaving to find work every year, with many trafficked into exploitative jobs in the brick kilns fuelling the country’s construction boom.

To address this, they are expanding a national scheme that provides statefunded employment to the neediest, doubling the annual number of paid work days to 200 per household and increasing the daily rate from 180 Indian rupees ($2.50) to 286.

“As per our records, 140,000 people migrate for work after registering with the labour department,” said

Niranjan Sahu, Odisha’s labour commissioner. “But there are studies that suggest that three times that number migrate, many duped by illegal agents. We want to give them work near their homes.”

The project will provide extra paid work in two of the worst hit districts in the drought-prone west of the state, from where tens of thousands of families leave their villages each autumn to seek work across India.

Odisha has one of India’s highest migration rates, fuelled by drought and a lack of jobs. An estimated 500,000 people migrate from this part of the state every year, more than half to work in brick kilns.

Most are duped into offering themselves for work as security against a loan they have taken or debt inherited from a relative, labour rights activists say.

Trapped in debt bondage, the most common form of slavery in India, they then spend the next six months or more working to pay it back.

India’s rural jobs guarantee scheme was set up in 2006 and provides unskilled work to about 70 million rural people building everything from dams to school toilets.

Wages can take up to two weeks to be paid – a delay labour rights campaigners have argued pushes poor families into exploitation – but the Odisha government has pledged to ensure the are paid within 24 hours.

Migration expert Umi Daniel said the Odisha government had in the past provided only 34 days of work – not the 100 days the scheme is supposed to guarantee.

“People need work and are vulnerable to exploitation. But we will have to wait and watch to see if this new initiative protects them,” said Daniel, regional head of Swiss-based charity Aide et Action International.