Anandi Venkateswaran

8/14/2019 Anandi Venkateswaran

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Policy options for Govt. to increase Output/

Employment

Lowinvestment

Low supplychain

infrastructure

Highwastage

High cost

Highinflation

Lowsavings

Monetarypolicy-high

interest rates

Low investment/low

exports/highimports/deficits

Exchange rateinterventions tostop rupee from

appreciating

Lowemployment

Improve

investment

Or Exchange rate

intervention- keeprupee from

appreciating

improve

exports/output


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What is FDI

World Bank foreign direct investment is

acquisition of

a lasting management interest (10 percent or moreof the voting stock)

in an enterprise operating in an economy other than

that of the investor.

Includes foreign equity inflows. Re-invested

earnings,other forms of capital(NRI investment)


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Host country perspective


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Investor perspective-What attracts FDI?

FDIattractiveness

Market size-per-capitaincome like retailtelecme

Resources-

capital/labour/infrastructure

Mining,gas,power

Efficiency -Productivity-wage differentials

Mfg, trade,transport

Good governance


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FDI- A caution

Is mobile capital chasing immobile labour?

FDI- neo-classical oppression of capitalists on bourgeois Ground rules- WTO rules on services restrict movement of

labour but supports foreign capital flows for members

Indian scenario womens labour is highly immobile-

traditionally Solution- Marxist approachlabour contract is a contested

exchange-Wage -relative bargaining positions of labour and

capital.

Highly mobile capital- pressure on immobile labour - seekincentives subsidies, tax exemptions etc

Solution lies in policies for FDI to compete fairly with

benefits both for consumers and workers-cheaper goods and

greater mobility


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FDI flows into India

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

Total FDI Flows in USD Mn

Total FDI Flows in USD Mn


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Share of top 10 investing countries FDI equity inflows

Mauritius

45%

Singapore

12%

UK

11%

Japan

9%

USA

7%

Netherlands

5%

cyprus

4%

Germany

3%

France

2%

UAE

2%

April 2000-Jan 2013


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Top five Indian destinations - FDI equity inflows

Jan 2013

49%

28%

8%

8%

7%

cumulative inflows US$ mn

Mumbai NCR Bangalore Chennai Ahmedabad


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Top 10 sectors of cumulative FDI equity inflows into India Apr 2000-Jan 2013

0

5000

10000

15000

20000

25000

30000

35000

40000

FDI equity $

FDI equity $


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Sectoral distribution of female

workers (UPSS)%

0

10

20

30

40

50

60

70

80

2004-5

2009-10

2004-5 2009-10

primary sector 72.26 66.99

mining & quarrying 0.28 0.3

manufacturing 11.75 11.34

utilities 0.03 0.08

construction 1.89 5.11

trade.hotelling 4.14 4.55

tpt& communication 0.4 0.43

fianancing real

estate insurance 0.63 1.05

community,

social,personal

services 8.61 10.16

total 100 100


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What typifies skill levels - Indian manufacturing

employment

Highly dispersed skill levels-production lines

Over-lap of skills-defects accumulation

Highly skilled

/shortproduction chain

Semi-low-

skilled longer

production

chain ( mostwomen

workers belong

here


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occupations with high women share of employment and

impact of FDIoccupations with high women share of employment and impact of FDI

occupation % share of

women in

occupation

(2009-10)

FDI policy route and caps scope for women's work and policy needed to

suit women's work

Professional 26.4 Broadcasting- cablenetworks DTH etc

Upto 49%-

automatic

beyond that

Govt route

Yes, good scope in urban areas due to highemployment in professional and technical

occupations. Skill-sets to be added for rural

women to benefit.

technical 21.1

FM radio and up-

linkin g of news

channels

Upto 26%-

Government

route

same as above

Up-linking of Non-

news channels 100%-Govt route

same as above

Publication and

printing

26-100%-Govt

route

same as above

Airport Ground

handling &

maintenance

49-

100%/automatic

/govt route

Training /Flying

schools

100% automatic specialised training required. Scope for urban

elite educated women

Services 33.5 Air transport

services, including

passengers

49-

74%automatic

beyond that

govt route

high presence of women airhostesses and

stewardess. However highly competitive sector -

training in soft skills and supplementary skills to

switch job beyond retirement age needed

Production 40.9

FDI allowed for

MSE

s.t regulations

and caps

highest presence of women.branding of MSE

products,CSR,skill development needed

Non-MSEs allowed -

in MSE products-

Also require

industrial licence

beyond 24%

Govt route

Women in micro small enterprises would benefit

with export turnover which is mandated women

should seek ESOP to share profits

50% export

obligations as well

Pharmaceuticals 100%-

automatic/govt

women working in chemical industries

possessed low levels of education as per 2004-5

study. Need to improve both education and skill

sets to derive benefits.Govt to play facilitative

role

transport &

communication

6.3 Telecom services

74%automatic

beyond that

govt route

low presence of women in transportation though

high in telecom services. Specific Skill

requirements must.


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FDI policy where Sectoral share of female workers (UPSS) in 2009 is high

Industry Specific sectors where FDI allowed and limits Sectoral share

of female

workers(2009-

10) UPSS%

Has FDI impacted women employment

positively in other countries and policy

support required

Agriculture,

hunting,forestry &

fishing

Floriculture, Horticulture,

apiculture vegetablecultivation, pisciculture

under controlled

conditions

And in agro& allied sectors

100% -automatic 66.99 Yes,High positive impact cooperative

farming, improves bargaining powerWomen Co-operatives to seek better

prices, credit, sponsored contract

farming for women producers,

upskilling to support. Market extension

services. Pepsico for tomato puree.

Construction Existing projects Beyond 74%- govt

route

5.11 Lot of scope for women workers as it is a

low-skilled area. Decent work for

women to be ensured through

improvements skill development as

more prefabricated constructions. Scope

for urban women architects as well.

Construction-

development-

townships,housing except

FDI in real estate business-

100% NRIs

100%automatic

Trade, hotels &

restaurants

Cash and carry including

Whole sale from MSMEs

100% automatic 4.55 In multi-brand retail condition is that at

least 30% of the value of procurement of

manufactured/ processed

products shall be sourced from Indian

'small industries'

again cooperatives would help Move to

benefit rural and urban as retail outlets

to be set up in areas with minimum 10lakh population.

States have leverage.

No e-commerce for multi-brand retailing

is also helpful.

e-commerce -do-

Single-brand 100% Govt route

Multi-brand retail 51%-Govt

Finance,

insurance, real

estate & busi

Private banking Upto 49%

automatic

49-74% govt route

1.05 Both rural and urban women in banking

services can benefit. ESOP participation

to be bargained.

Public sector banking Upto 20% with Govt


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Foreign companies presence in women-oriented

sectors Agro-based industry- India produces 50% of World's Mango, 19% of

Banana, 36% of Cashewnut , 38% of World's Cauliflower, 28% of Green

Peas (Coca-Cola, Pepsi,Britannia, Danone, Nestle, Cadbury, Lever's

Kelloggs) -high rural presence can be capitalised by FDI.

Automobile industry-Audi, BMW Chevrolet DaimlerChrysler (Mercedes)

Fiat Ford General Motors, Hero Honda, Yamaha Motors, Hyundai Motors

Construction industry:Emmar Properties, of Dubai UK-based construction

Share of female workers in agri,

forestry, horticulture

1993-94 2004-5

Urban 24.7

18.1

Rural 86.2 83.3


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FDI in automobile industry-implications

73% of manufacturing employment

Employs 17 mn people- direct and indirect(2012)

auto-component more labour-intensive than the auto -

assembly segment.

High imports auto-components from EU, Thailand, South

Korea, China

W.e.f Jan 2013 import duties - components for ASEAN halved

to 5% from 10% -phased out by Dec 2013.

50% of components to be imported

benefit consumers at the cost of domestic industry/workers..

growth in emoluments lower than growth in labour

productivity. Need for skill-development.


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Average growth in employment in automobile

sector

-4

-2

0

2

4

6

8

10

12

14

2001-2 to 2003-4 2003-4 to 2004-5 total emoluments Rs.Cr

employment in mfr of automobiles except 2/3

wheelers

employment in mfr of auto components


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Growth in number of automobiles produced in

India

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

2008-09 2009-10 2010-11 2011-12

Passenger Vehicles

Commercial Vehicles

Three Wheelers

Two Wheelers


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Indias Export Growth in automobiles ( nos)

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Passenger Vehicles

Commercial Vehicles

Three Wheelers

Two Wheelers


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Trends in Skill requirement by 2022

0

5

10

15

20

25

30

35

40

employment 2008

incremental HR reqts till

2022

0

5

10

15

20

25

30

35

40

CAGR 2008-22 %CAGR 2008-22 %


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Initiatives in skill development

Time lease Gujarat countrys first vocational

university.

Skill vouchers Scheme Gujarat

Global Talent Track in partnership with CISCO system INCand some 900 colleges across 15 states, tied up with the

University of Kashmir to train degree students with the job

skills that employers are looking for.

The Prime Ministers National Mission on Skill Developmenttargets training 500 mn skilled persons by 2022-


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FDI in retail

2005 2011-12 2015

Total retail value (Share in

GDP)

$225 bn(11%) $470bn $660 bn

Total

employment

Nos 200 mn 225 mn

Organised

retail

Value $ bn 8 27 (31%

clothing &

apparel and

home supplies20-30%)


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Implications on employment-

Bharti-Walmart

Loss of unorganised low-skill jobs in short run and loss of self-

employment

Women fruit and vegetable vendors most vulnerable-set to

suffer organised retail improves farm prices

Low consumer prices compensate job loss -low inflation,

increased output,semi-skilled employment, tax collection for

economy Bharti-Walmart forcing farmers to be cost-competitiveFDI

make industry contestable

non-exclusive partnership-revocableBajaj quit Kawasaki


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Share of retail in female urban employment fell from 22.85% in

1999-00 to 16.63% in 2004, smaller fall in rural. Womens share

in total retail employment also fell from 11.25% to 9.47%

(urban), smaller fall in ruralWalmart effect?


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Agro-industry-womens domain

Set to curtail post-harvest losses

Quality exports- SPS measures lower Scope for cheaper consumer prices through consolidation of

ghanis, chakkis, puffing units, mills,solvent-extraction plants

supporting finance, infrastructure, credit facilities for agro-

based industry impact women agricultural laborers more than farmers-study

on sugar industry, Maharashtra (Shejal2013)

Boom in tertiary sectors in rural areas

Women in fish processing, plantations,fruits, vegetables tobenefit


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Recommendations-FDI conditionalities

job creation conditionalities - women inclusiveHead-exchange programs.

prescribe export share-case of PEPSICO

CSR conditionalities- safe and good conditions ofworkinitiatives Tata Motors, IL&FS, Fiat India,

BhartiWalmart


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Recommendations-legal issues

Insist on movement of un-skilled workers under mode 4 of

GATS agreement Competition laws to rule out predatory pricing policies of

Foreign companies

Labour laws

Fiscal policies to tax profits, Taxation laws for tax havens likeMauritius-improve revenue for social sectors

Fiscal benefits to Foreign companies employing a stipulated %

of women

Maintain FDI in muti-brand retail upto 50% only until review . Allow states to decide on caps and entry of FDI beyond the

minimum level depending upon local conditions and cultural

preferences


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Other recommendations

Allow FDI in labour- competing sectors of women

employment to enhance mobility of labour Brand promotion of made-by- womenproducts

Seek waiver fee for Importer-Exporter Code numbers for

women

Seek greater assistance under EXIM policy-focus schemes Lower threshold for status holders for women

Women banks to fund agro-based industries

Vulnerable unorganised women workers such as vendors to

be supported during transition to multi-brand retail Under the wings of demographic dividend Skilled worker

supply especially those of women, should be the business of

future for India.


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Documents

Anandi Venkateswaran