Post on 04-Jun-2018
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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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