In its “Ease of Doing Business” survey report, released by Law Minister Ravi Shankar Prasad and Industry and Commerce Minister Nirmala Sitharaman, the planning body said that firms in labour intensive sectors find compliance with labour-related regulations “particularly onerous”.
“This fact translates into enterprises avoiding labour-intensive sectors,” it said adding that a large number of firms covered in the survey reported that finding skilled workers, hiring contract labour and firing employees was a major obstacle.
“The fact that enterprises in labour-intensive sectors experience greater difficulty than those in capital-intensive sectors points to the need for further reform in this area,” said the report.
“In addition, more flexible labour laws will also allow enterprises to grow larger and reap economies of scale, generating productivity improvements, job creation and higher growth,” it said.
The survey covers more than 3,000 enterprises across India and makes an effort to assess ease of doing business from their perspective as opposed to the perspective of policy makers.