Women’s work &
FDI policy in IndiaSeventh Gender and Economic Policy Discussion
‘Politics and Economics of FDI through gender lens’9th April 2013
Anandi Venkateswaran Under Secretary (exports) Government of India
Disclaimer: The views expressed in the presentation are purely that of the author and do not represent the views of the
Government of India
Policy options for Govt to increase Output/ Employment
Improve investment
Or Exchange rate intervention- keep
rupee from appreciating –
improve exports/output
Or face buy outs by foreign cos.
Allow FDI
What is FDI World Bank• foreign direct investment is • acquisition of • “a lasting management interest (10 percent or more
of 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)
Host country perspective
Investor perspective-What attracts FDI?
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 women’s labour is highly immobile-
traditionally• Solution- Marxist approach – labour contract is a ‘contested
exchange’-Wage -relative bargaining positions of labour and capital.
• Highly mobile capital- pressure on immobile labour - seek incentives 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
FDI flows into India
Share of top 10 investing countries FDI equity inflows
Top five Indian destinations - FDI equity inflows Jan 2013
Top 10 sectors of cumulative FDI equity inflows into India Apr 2000-Jan 2013
Sectoral distribution of female workers (UPSS)
%2004-5 2009-10
primary sector 72.26 66.99mining & quarrying 0.28 0.3manufacturing 11.75 11.34utilities 0.03 0.08construction 1.89 5.11trade.hotelling 4.14 4.55tpt& communication 0.4 0.43fianancing real estate insurance 0.63 1.05community, social,personal services 8.61 10.16total 100 100
Elasticity of Employment to GDP
Sector
Estimated Elasticities
1977-78 to 1983 1983 to 1993-942/ 1993-94 to 1999-00
1. Agriculture1/
0.45 0.50 0.00
2.Mining & Quarrying
0.80 0.69 0.00
3. Manufacturing
0.67 0.33 0.26
4.Electricity
0.73 0.52 0.00
5.Construction
1.00 1.00 1.00
6.Wholesale & Retail Trade
0.78 0.63 0.55
7.Transport, Storage & Construction
1.00 0.49 0.69
8. Finance, Real Estate, Insurance & Business Services
1.00 0.92 0.73
9. Community, Social and Personal Services
0.83 0.50 0.07
All Sectors
0.53
0.41
0.15
What typifies skill levels - Indian manufacturing employment
• Highly dispersed skill levels-production lines
• Over-lap of skills-defects accumulation
Highly skilled /short
production chain
Semi-low-skilled longer production
chain ( most women
workers belong here
occupations with high women share of employment and impact of FDI
occupations 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- cable networks DTH etc
Upto – 49%- automatic beyond that Govt route
Yes, good scope in urban areas due to high employment 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 40.9FDI 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 wellPharmaceuticals 100%-
automatic/govtwomen 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 services49- 74%automatic beyond that govt route
low presence of women in transportation though high in telecom services. Specific Skill requirements must.
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 vegetable
cultivation, pisciculture under controlled
conditions And in agro& allied sectors
100% -automatic 66.99
Yes,High positive impact –cooperative farming, improves bargaining power Women 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 10
lakh 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
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 Kellogg’s) -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 constructionEmmar 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
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.
Average growth in employment in automobile sector
Growth in number of automobiles produced in India
India’s Export Growth in automobiles ( nos)
Trends in Skill requirement by 2022
•
Initiatives in skill development
• ‘Time lease’ Gujarat country’s first vocational university.
• Skill vouchers Scheme Gujarat• ‘Global Talent Track’ in partnership with ‘CISCO system INC’
and 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 Minister’s National Mission on Skill Development targets training 500 mn skilled persons by 2022-
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 supplies
20-30%)
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-competitive –FDI make industry contestable
• non-exclusive partnership-revocable –Bajaj quit Kawasaki
Share of retail in female urban employment fell from 22.85% in 1999-00 to 16.63% in 2004, smaller fall in rural. Women’s share
in total retail employment also fell from 11.25% to 9.47% (urban), smaller fall in rural – Walmart effect?
Agro-industry-women’s 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 to
benefit
Recommendations-women skill development• Build India as a hub for skilled-womanpower • Specific skill-requirements of women in sectors:-• mfg:• Add ITIs dedicated for women• The Prime Minister’s National Mission on Skill Development targets
training 500 mn skilled persons by 2022-• Reverse causality• moderate skill-dispersion- Potential solutions
» increase semi-skilled workers with primary or secondary education
• reforms in education and training policies, computer literacy • Agro-based industry:-training in quality, packaging, marketing export
promotion, brand management, finance, credit access etc• Utilise KVICs,DICs etc for skill development
Recommendations-FDI conditionalities
• job creation conditionalities - women inclusive Head-exchange programs.
• prescribe export share-case of PEPSICO• CSR conditionalities- safe and good conditions of
work – initiatives Tata Motors, IL&FS, Fiat India, BhartiWalmart
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 like
Mauritius-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
Other recommendations• Allow FDI in labour- competing sectors of women
employment to enhance mobility of labour• Brand promotion of ‘made-by- women’ products• 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.