No. Z-13017/13/92-Cord

MINISTER OF SATE FOR LABOUR(INDEPENDENT CHAGE),
SHARAM SHAKTI BHAVAN,
NEW DELHI-110 001, INDIA.
Dt. 25-09-92

The small scale sector plays a key role in industrial development. It accounts for about 35% of the total production of the manufacturing sector and about 42% of the country'' exports. It is also employed about 12 million employees.

In August 1991 Government of India placed in the Parliament a set of policy measures for promoting and strengthening small and tiny enterprises. In pursuance thereof investment limits for small and ancillary industrial undertakings have been raised from Rs. 35 lakhs to Rs. 60 lakhs/Rs. 75 lakhs respectively. The limit of investment of tiny units has also been raised from Rs. 2 lakhs to Rs. 5 lakhs. The earlier restriction on location of tiny units has also been removed and all units with investment in plant and machinery upto Rs. 5 lakhs were eligible for registration as tiny units irrespective of their location.

The small scale and tiny units operate with low capital base. Often they are proprietary concerns and do not employ managers and trained staff on a large scale. They are, therefore, not in a position to submit to the authorities the elaborate reports and returns prescribed under the statutes. The aspect of the functioning of the small scale and tiny sector was brought before the Small-scale Industries Board in its meeting held on August, 24th 1992 under the Chairmanship of Prime Minister. Considering the fact that those laws have been enacted to ensure safety of workers and provide them with certain minimum standards of social security, the consensus of opinion was that there should be no blanket exemption for small and tiny units from the operation of labour laws, per se. It was however, decided that the problems faced by the units in the small scale and tiny sectors as a result of frequent inspections and cumbersome procedures needed to be eliminated.

Based on the recommendations made during the 42nd meeting of the small scale Industries Board, the State Governments are advised as follows: -

1. Under most of the Labour Laws, there is provision for appointment of inspectors for enforcement. In effect, however, the inspections do cause problems especially to the owners of SSI and tiny units. The number of inspections should, therefore, be minimized. In the case of units, which are not engaged in the production of dangerous and hazardous goods, only an annual inspection of a few units selected at random may be made.

2. There was also a general consensus that, on their part, the small scale units could undertake to abide by the various labour laws and also submit regularly the prescribed returns. Inspection of units by inspectors would be undertaken only where there are complaints of violation of labour laws. The respective organisations/associations of small-scale industries should also assume the responsibility for overseeing implementation of labour laws by member units. For making a success of this new approach, the State Governments, will have a dialogue with the organisations/ associations of small scale industries and be in close touch with them.

   In order to over see and monitor the transformation from the regime of regulations to an era of self-discipline in the matter of application of labour laws, a Committee at the Sate level under the Chairmanship of the Sate Labour Commissioner and/ or Labour Secretary may be set up. Representatives of Chief Inspector of Factories, Regional Provident Fund Commissioner, Regional Director, ESI, Regional Labour Commissioner, (Central), Director of Industry and three representatives of local industry associations could be the other members of the Committee. This Committee may meet periodically and look into the grievances of SSI units and suggest remedial measures.

   In the light of the above recommendations, State Governments are requested to issued necessary instructions to their enforcement authorities. A copy of the instructions issued may kindly be endorsed to this Ministry.

With regards,

Yours sincerely,

Sd/-
(Pumo A. Sangma)