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Created
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05NEWDELHI5402
2005-07-14 06:30:00
UNCLASSIFIED
Embassy New Delhi
Cable title:  

FOREIGN LABOR TRENDS REPORT: INDIA, 2004

Tags:  ELAB PHUM ECON ETRD PGOV IN 
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UNCLAS SECTION 01 OF 16 NEW DELHI 005402 

SIPDIS

E.O. 12958: N/A
TAGS: ELAB PHUM ECON ETRD PGOV IN
SUBJECT: FOREIGN LABOR TRENDS REPORT: INDIA, 2004

The following is the text of the National Foreign Labor
Trends Report for India, 2004, prepared as requested by DOL.


I. SUMMARY OF MAJOR DEVELOPMENTS

A.Government

The Government is a federal republic made up of three
branches at the federal level: (1) the Executive Branch,
consisting of the President (Chief of State),the Prime
Minister (Head of Government),and the Council of Ministers
(Cabinet); (2) the Legislative Branch, which has a bicameral
Parliament, consisting of a lower house (Lok Sabha) with 545
members and an upper house (Rajya Sabha) with no more than
250 members; and (3) the Judicial Branch, which is
independent. At the state level, each of India,s 28 states
and 7 union territories has its own state assembly, council
of ministers, and court system.

During 2004, India held national parliamentary elections that
resulted in a change of government. The National Democratic
Alliance (NDA) coalition government led by the Bharatiya
Janata Party (BJP) under Prime Minister Atal Bihari held
power at the beginning of the year, but lost in the April-May
elections. A United Progressive Alliance (UPA) government
led by the Congress party under Prime Minister Manmohan Singh
took office in May. The BJP is now the main opposition
party, with 138 seats. A broad range of regional and
communist parties does not belong formally to the UPA but
supports the UPA government from the outside. The UPA
depends on the cooperation of these outside parties to
maintain its control of Parliament, a situation that has
sometimes produced tension between Congress and its allies,
particularly over economic and labor policies.

B.Economy

India's economy encompasses traditional village farming,
modern agriculture, handicrafts, a wide range of modern
industries, and a multitude of support services. The
agricultural sector employs the largest percentage of the
workforce (approx. 60 percent),although it represents only
22.7 percent of GDP. Major crops include wheat, rice, coarse
grains, oilseeds, cotton, jute, and tea. The industrial
sector employs 17 percent of the workforce and represents
26.7 percent of GDP. Major industrial products include
textiles, processed food, steel, machinery, transportation
equipment, cement, aluminum, fertilizers, mining, petroleum,
chemicals, and computer software. The services industry
employs 23 percent of the workforce and represents 50.7
percent of GDP. India is capitalizing on its large numbers
of well-educated people skilled in the English language to
become a major exporter of software services and software
workers.

During 2004, the growth rate was 6.6 percent, with an
inflation rate of 6 to 7 percent. The impressive growth rate
is largely attributable to increased agricultural production,
robust merchandise exports, a booming stock market, and the
steady pace of reforms. The Government would like to
increase the growth rate, but most economists believe it will
not be possible without further structural reforms. Wages and
benefits kept pace with inflation. The local currency
(rupee) appreciated slightly against the dollar in 2004. The
U.S. accrued a trade deficit of nearly 9.5 billion dollars
with India during 2004, an increase from 8.1 billion dollars
in 2003. Exports of goods to the U.S. were approximately 6.1
billion dollars.

India continued its transition from a government-controlled
economy to a largely market-oriented system. The private
sector was predominant in agriculture, most non-financial
services, consumer goods manufacturing, and some heavy
industrial sectors. A 1.7 percent annual population growth
rate and a population that surpassed 1.06 billion contributed
to the country's economic challenges, but also constitute a
rich base of human capital.
C.Workforce
According to the 2001 census figures, there are approximately
403 million workers in the Indian economy, of which 311
million (77 percent) are in rural settings and 92 million (23
percent) are in urban settings. The bulk of the Indian
workforce (approximately 60 percent) is in the agricultural
sector. Projections put the labor force for the year 2004 at
approximately 482 million workers.

Seven percent of the work force is in the formal, organized
sector. Growth in this sector remained sluggish. Employer
organizations attribute this to the presence of labor laws
that restrict downsizing. To circumvent such laws, private
sector companies continued hiring workers on a contract
basis. The informal sector, where the workforce generally
does not enjoy legal protection, witnessed more growth.
Official statistics put the unemployment rate at 9.2 percent,
but unofficial estimates suggest it could be as high as 20
percent.

HIV/AIDS in the Workplace

According to the National AIDS Control Organization (NACO),a
government agency under the Ministry of Health and Family
Welfare, nearly 90 percent of the 5.13 million Indians
currently estimated to be infected with HIV/AIDS are in the
15-49 age group, the prime of their working years. HIV/AIDS
has a negative impact on individual workers and their
families as well as on the economy has a whole. NACO and the
ILO, in conjunction with industrial, workers,, and
employers, organizations, are collaborating to respond to
the problem of HIV/AIDS in the workplace, using the ILO Code
of Practice on HIV/AIDS as a guideline. The code includes
the following: recognition of HIV/AIDS as a workplace issue,
non-discrimination, gender equality, social dialogue, no
screening of HIV/AIDS at the workplace, confidentiality,
continuing the employment relationship, prevention, and care
and support.

The Steel Authority of India, the Employees State Insurance
Scheme, and Indian Railways are among the organizations and
associations that NACO has worked with to implement HIV/AIDS
programs in the workplace. In addition, the Confederation of
Indian Industries (CII) founded an &Indian business trust8
to combat HIV/AIDS in the workplace and has begun programs in
its 22 branches across India. The Lawyers, Collective, an
NGO, has successfully defended workers who lost their jobs
due to their HIV/AIDS status.

II. DESCRIPTION OF THE LABOR SCENE

A.Government
The central and state governments share jurisdiction over
labor issues. Both may enact legislation concerning the
following: trade unions, industrial and labor disputes;
social security, insurance, employment, and unemployment; and
welfare of labor including conditions of work, provident
funds, pensions, and maternity benefits. Only the central
government may enact legislation concerning regulation of
safety in mines and oil fields, industrial disputes
concerning central government employees, and central
government agencies and institutions for vocational training.

The Ministry of Labor, a Cabinet-level ministry, is the lead
central governmental agency on labor issues. The Ministry is
headquartered in New Delhi and has subsidiary offices located
throughout the country. The Main Secretariat of the Ministry
consists of eight divisions: social security, emigration,
industrial relations, child and women labor, labor welfare,
economics and statistics, international labor affairs, and
labor conference. Each state government also has a labor
ministry that may implement legislation of labor laws within
its jurisdiction.
The Labor Bureau, created in 1946 as part of the Ministry of
Labor, is responsible for the collation, collection, and
publication of statistics and related information on wages,
earnings, productivity, absenteeism, labor turn-over,
industrial relations, and working and living conditions. It
also tracks important economic indicators like the Consumer
Price Index, data concerning industrial, agricultural and
rural laborers; wage rate indices; and data on industrial
relations and socio-economic conditions in the organized and
unorganized sectors of industry.

In April 2000, USDOL signed a Memorandum of Understanding
with the Indian Ministry of Labor to provide technical
assistance in five areas: the elimination of child labor,
prevention of HIV/AIDS in the workplace, improvement in mines
safety, provision of decent employment for women, and labor
market information systems. A subsequent agreement between
the two governments resulted in the INDUS project, a joint
U.S.-India partnership to eliminate hazardous and
exploitative child labor, towards which each government has
contributed 20 million dollars. The project is focused on
removing children from ten specific industries in India: bidi
cigarettes, brassware, bricks, fireworks, footwear, bangles,
locks, matches, quarried stones and silk. Thus far, the
joint project has enrolled more than 44,000 child laborers
and at-risk youths in education and training programs. The
only area of the MoU without a technical assistance program
is labor market information systems. This was originally due
to US sanctions after India,s 1998 nuclear tests, but now
reflects a lack of resources.

B.Employers
The Council of Indian Employers (CIE) is a confederation of
three smaller employer organizations: the All India
Organisation of Employers (AIOE),the Employers, Federation
of India (EFI),and the Standing Conference of Public
Enterprises (SCOPE). The CIE is not registered under any Act
of the Government, but AIOE, EFI, and SCOPE are all
registered as individual organizations. Total membership in
AIOE and EFI consists of 80 regional associations of
employers or chambers of commerce and 322 public and private
companies. SCOPE covers 240 public sector undertakings
(PSUs).

The CIE,s primary objective is to interact with the GOI in
formulating labor, economic, and social welfare policies that
concern workers and employers. It also aims for increased
cooperation between employers, and workers, organizations
and holds regular meetings with the trade union centrals to
accomplish this. The CIE is represented on almost all
Government Advisory Boards, is affiliated with the
International Organization of Employers, and represents India
at the ILO.

C.Trade Unions
According to the latest census taken in 2001, approximately
403 million persons constitute India,s active work force.
Approximately 28 million of these workers are employed in the
formal, or organized, sector. The rest are overwhelmingly
agricultural workers, and to a lesser extent, urban
non-industrial workers. While some trade unions represent
agricultural and informal sector workers, the majority of
India,s estimated 13-15 million union members are part of
the formal sector.

Of these 13 to 15 million unionized workers, some 80 percent
are members of unions affiliated with 1 of the 5 major trade
union centrals. These include the Bharatiya Mazdoor Sangh,
Indian National Trade Union Congress, Center of Indian Trade
Unions, Hind Mazdoor Sabha, and the All India Trade Union
Congress. By U.S. standards, all of these major trade union
centrals are &politicized,8 i.e., they are either directly
linked or ideologically associated with a political party.
However, since many Indians now view party identification as
detrimental to trade union interests, all centrals stress
their independence and in some cases are attempting to reduce
or sever previously tight party control.

Total membership in unions affiliated with the national
centers has remained essentially static in the face of an
annual growth in the work force of 7-8 million. Union
members account for approximately two percent of the overall
work force. Unions remain concentrated in the public sector,
and labor leaders have not made serious efforts to organize
workers in the new Indian and foreign companies in the
private sector. Although a few significant examples exist,
independent unions are not a major factor.

All five major trade union centrals participate in ILO
activities. In addition, local unions participate in ILO
programs such as Organizing in the Informal Sector, Campaigns
on Eradication of Child Labor, Tripartite Response on
Discrimination at Workplace on HIV, and Promotion of the Core
Labor Standards in Enterprise.

III. Programs Providing Workers with a Social Safety Net

India lacks a comprehensive social security system. In the
informal sector, which employs the vast majority (93 percent)
of Indian workers, there is no social security protection for
unemployed or retired workers.

The Employees, State Insurance Corporation (ESIC) provides
social protection to workers (and their dependents) in the
organized sector in case of sickness, maternity, and death or
disablement due to an employment injury or occupational
hazard. In most states, employees in the following classes
of establishments are eligible for coverage: non-seasonal
factories using power and employing 10 or more persons;
non-seasonal and non-power using factories, shops, hotels,
restaurants, cinemas, preview theatres, motor transport
undertakings and newspaper establishments employing 20 or
more persons.

Employees covered under the scheme are entitled to medical
facilities for themselves and their dependents, as well as
cash benefits in the event of specified contingencies
resulting in loss of wages or earning capacity. Insured
women are entitled to maternity benefits to cover the period
of confinement. When an employment injury causes the death of
an insured employee, the dependents are entitled to a family
pension.

The ESI Scheme is financed by contributions from covered
employees and their employers. The State Governments bear
one-eighth of the share of expenditure on medical benefits
within the per capita ceiling of Rs.600 ($14) per year and
all additional costs beyond the ceiling. Employee
contributions are tied to a fixed percentage of the workers
wages, but benefits are provided according to individual
needs regardless of employee contributions.

IV. Major Labor Laws

India is a founding member of the International Labor
Organization and has ratified 39 total ILO Conventions. Of
the eight core ILO Conventions, India has ratified four: the
Conventions on Forced Labor (No. 29),Equal Remuneration (No.
100),Abolition of Forced Labor (No. 105),and Discrimination
(Employment and Occupation) (No. 111). India has not
ratified the remaining four core conventions on Freedom of
Association and Protection of the Right to Organize (No. 87),
Right to Organize and Collective Bargaining (No. 98),Minimum
Age Convention (No. 138),and Worst Forms of Child Labor (No.
182).

A.Industrial Disputes Act

The Industrial Disputes Act (1947) regulates reductions in
force (RIF) and plant closures. It requires state approval
90 days before large firms (more than 100 employees) lay off
employees. Likewise, no plant employing more than 100
employees can shut down without obtaining approval 90 days
before the closure date. Laws also prohibit firms from
employing contract laborers for extended periods of time
without extending permanent employment.

B.Factories Act

The Factories Act (1948) mandates a maximum 9-hour workday
and 48-hour workweek, as well as minimum working conditions.
Workers are to be paid twice their regular wage rate for
working overtime. State government laws set minimum wages,
hours of work, and safety and health standards. These
standards were generally enforced and accepted in the modern
industrial sector; but were not observed in less economically
stable industries. However, the large number of industries
covered by a small number of factory inspectors and the
inspectors' limited training and prevalence of bribery
resulted in lax enforcement.

Minimum wages varied according to the state and sector of
industry. Such wages were inadequate to provide a decent
standard of living for a worker and his/her family. Most
workers employed in units subject to the Factories Act
received more than the minimum wage, including mandated
bonuses and other benefits. The state governments set a
separate minimum wage for agricultural workers but did not
enforce it effectively. Some industries, such as the apparel
and footwear, did not have a prescribed minimum wage in any
of the states in which they operated.

C.The Right to Association

The Constitution provides for the right of association, and
the Government generally respected this right in practice.
Workers may establish and join unions of their own choosing
without prior authorization. In practice, legal protections
of worker rights were effective only for the organized
industrial sector. Outside the modern industrial sector,
laws were difficult to enforce. The authorities generally
prosecuted and punished those persons responsible for
intimidation or suppression of legitimate trade union
activities when the victims were members of nationally
organized unions. Unaffiliated unions were not able, in all
instances, to secure for themselves the protections and
rights provided by law. Union membership was rare in the
informal sector.

The Trade Union Act prohibits discrimination against union
members and organizers, and employers were penalized if they
discriminated against employees engaged in union activities.

D.The Right to Organize and Bargain Collectively

The law provides for the right to organize and bargain
collectively. Collective bargaining is the normal method
used to set wages and settle disputes in unionized plants in
the organized industrial sector. Trade unions vigorously
defended workers, interests in this process. Although a
system of specialized labor courts adjudicates labor
disputes, there were long delays and a backlog of unresolved
cases. When the parties are unable to agree on equitable
wages, the Government may establish boards of union,
management, and government representatives to determine
wages. The legislation makes a clear distinction between
civil servants and other workers. Public service employees
have very limited organizing and collective bargaining
rights.

Trade unions often exercised the right to strike, but public
sector unions were required to give at least 14 days' notice
prior to striking. Some states have laws requiring workers
in certain nonpublic sector industries to give notice of a
planned strike.

The Essential Services Maintenance Act allows the Government
to ban strikes in government-owned enterprises and requires
conciliation or arbitration in specified essential
industries; however, essential services never have been
defined in law. Legal mechanisms exist for challenging the
assertion that a given dispute falls within the scope of this
act. The act thus is subject to varying interpretations from
state to state. State and local authorities occasionally use
their power to declare strikes illegal and force
adjudication. The Industrial Disputes Act prohibits
retribution by employers against employees involved in legal
strike actions, and this prohibition was observed in
practice.

The Kerala High Court declared in 2002 that all general
strikes were illegal and that all protest organizers would be
liable for losses caused by shutdowns. The Supreme Court
upheld the verdict, drawing attention to the difference
between a complete closedown of all activities and a general
strike. While it is likely that the ruling was aimed at
limiting general strikes with purely political motives,
unions stated that it remained a potential threat to their
activities. Other court rulings also declared such strikes
illegal and made striking workers pay damages to consumers
and the public who suffered due to the strikes. In August
2003, the Supreme Court declared all strikes by government
employees illegal; however, in practice this was not
enforced.

E.Prohibition of Forced or Compulsory Labor

The Constitution prohibits forced or bonded labor, including
by children; however, such practices continued to be
prevalent in India and were found primarily among the
agricultural and rural unorganized workforce. The Bonded
Labor System (Abolition) Act prohibits all bonded labor by
adults and children. Offenders may be sentenced up to three
years in prison, but prosecutions were rare. Enforcement of
this statute, which was the responsibility of state and local
governments, varied from state to state and often was not
effective due to inadequate resources and to societal
acceptance of bonded or forced labor. On the occasions when
inspectors referred violations for prosecution, long court
backlogs and inadequate funding for legal counsel frequently
resulted in acquittals.

The GOI does not publish official statistics on bonded labor,
but it claims to have identified and rescued about 285,000
bonded laborers, and rehabilitated approximately 265,000,
since the advent of the Bonded Labor System (Abolition) Act
of 1976. Many NGOs, however, claim that these numbers do not
reflect the actual magnitude of the problem. They estimate
that there were 20 to 65 million bonded laborers in the
country, including a large number of children. According to
a Government report, more than 85 percent of bonded laborers
belonged to scheduled castes and scheduled tribes. In 2002,
the Tamil Nadu state government began planning and
implementing rehabilitation programs after press reports
indicated that the presence of 25,800 bonded laborers in the
state, while government officials worked to release bonded
laborers in many other states. Despite these efforts, NGOs
believe that the GOI,s actions have not effectively resolved
the problem of forced/bonded labor.

F.Status of Child Labor Practices and Minimum Age for
Employment

The Government prohibits forced and bonded child labor;
however, this prohibition was not effectively enforced, and
forced child labor continued to be a problem. The law
prohibits the exploitation of children in the workplace.
However, National Human Rights Commission (NHRC) officials
have admitted that implementation of existing child labor
laws was inadequate, that administrators were not vigilant,
that children were particularly vulnerable to exploitation,
and that the Commission was focusing on the adequacy of
existing legislation.
There is no overall minimum age for employment. However,
work by children under 14 years of age was barred completely
in "hazardous industries," which included passenger goods and
mail transport by railway, and in factories. The NDA
government resolved to end child labor in hazardous
industries by the year 2007, and the UPA government is
working towards that goal. In occupations and processes in
which child labor is permitted, work by children was
permissible only for 6 hours between 8 a.m. and 7 p.m., with
1 day's rest weekly and two hours of education provided by
the employer. There was reasonable basis to believe that
child labor was used to produce hand-knotted carpets,
gemstone polishing, leather goods, sporting goods, and many
hand-made products. Children are also used as domestic help
throughout the country.

Estimates of the number of child laborers varied widely. The
provisional results of the Government census of 2001 put the
number of child workers at 12.5 million. However, the ILO
estimated the number at 44 million and Global March Against
Child Labor, an NGO, claims there are 60 million. The
government does not provide free, compulsory, and universal
primary education, and most, if not all, children who did not
attend school did housework, worked on family farms, worked
alongside their parents as paid agricultural laborers, or
worked as domestic servants. Though the Government's
statistics from 2003 claim that 165 million of the 200
million children between the ages 6-14 attend school, UNICEF
reported that approximately 120 million of the primary
school-age population of approximately 203 million attended
school.

The enforcement of child labor laws was the responsibility of
the state governments; however, enforcement was inadequate
and uneven among states, especially in the informal sector in
which most children were employed. The continuing prevalence
of child labor was attributable to social acceptance of the
practice, to the failure of the state and federal governments
to make primary school education compulsory, ineffective
state and federal government enforcement of existing laws,
and economic hardships faced by families. In addition,
over-worked and ill-trained local magistrates are charged
with the competing mandate of collecting state taxes from the
businesses that employ child or bonded laborers.

Government efforts to eliminate child labor affected only a
small fraction of children in the workplace. The Government
assisted working children through the National Child Labor
Project, which was established in more than 3,700 schools. In
January 2004, the GOI increased the number of its National
Child Labor Projects from 50 to 100, and intends to add
another 100 by March 2005. The Indus project -- jointly
funded by the U.S. Department of Labor and the GOI and
implemented by the ILO -- was launched in February 2004. It
hopes to remove 80,000 children from hazardous work
situations in 20 districts of the country over a three-year
period.

The Government also cooperated with UNICEF, the United
Nations Educational, Scientific and Cultural Organization
(UNESCO),the United Nations Development Programme (UNDP),
and the ILO in their efforts to eliminate child labor. The
Government participated in the ILO's International Program on
the Elimination of Child Labor (IPEC). Approximately 145,000
children have been removed from work and received education
and stipends through IPEC programs since they began in the
country in 1992. The NHRC, continuing its own child labor
agenda, organized NGO programs to provide special schooling,
rehabilitation, and family income supplements for children in
the glass industry in Firozabad. In addition, employers in
some industries took steps to combat child labor.

A 1986 Supreme Court decision increased penalties for
employers of children in hazardous industries to $430 (Rs
20,000) per child employed, and established a welfare fund
for formerly employed children funded by using the
employers, fines. In addition, the decision requires the
Government to find employment for an adult member of the
child's family or pay it $108 (Rs 5,000). According to the
South Asian Coalition on Child Servitude, the authorities
were pursuing some 6,000 cases against employers.

G.Occupational Health and Safety Standards

Occupational Safety and Health (OSH) remains a problem area
in India. Extensive legislation covering various aspects of
OSH notwithstanding, industrial accidents continued to occur
frequently due to lack of proper enforcement. The chemical
sector is the most prone to accidents. The lack of awareness
regarding occupational health has resulted in many deaths
throughout the country. OSH in the state-controlled mining
industries is of significant concern. The USDOL has funded
an approximately 1.5 million-dollar project to improve safety
standards in selected public sector mines and to provide
training to mine inspectors. The project improved working
conditions in five selected pilot mines and drastically
reduced accident rates. In addition, the project helped the
Indian Directorate General of Mines Safety establish for the
first time a computerized mine inspection system that
significantly reduced the time needed by mine inspectors to
inspect a mine.

Industrial accidents continued to occur frequently due to
improper enforcement of existing laws. Chemical industries
were the most prone to accidents. According to the Director
General of Mines' safety rules, mining companies must seal
the entrances to abandoned underground mines, and bulldoze
and reforest opencast mines. However, these rules seldom
were obeyed. In June, flooding of a mine killed 17 miners in
Andhra Pradesh. Safety conditions generally tended to be
better in the SEZs than in the manufacturing sector.

The law does not provide workers the right to remove
themselves from work situations that endanger health and
safety without jeopardizing their continued employment.
Legal foreign workers were protected under these laws;
however, illegal foreign workers had no protection.

H.Discrimination in Employment
India has ratified ILO Conventions on Equal Remuneration (No.
100) and Discrimination (Employment and Occupation) (No.
111). The Constitution prohibits discrimination on the basis
of a person's race, sex, religion, place of birth, or social
status. During 2004, government authorities worked to
enforce these provisions with varying degrees of success.
Despite laws designed to prevent discrimination, social and
cultural practices as well as other legislation had a
profound discriminatory impact, and discrimination against
women, persons with disabilities, indigenous people,
homosexuals, and national, racial, and ethnic minorities was
a problem. The traditional caste system, as well as
differences of ethnicity, religion, and language, deeply
divided the society.
UNCLAS SECTION 01 OF 16 NEW DELHI 005402

SIPDIS

E.O. 12958: N/A
TAGS: ELAB PHUM ECON ETRD PGOV IN
SUBJECT: FOREIGN LABOR TRENDS REPORT: INDIA, 2004

The following is the text of the National Foreign Labor
Trends Report for India, 2004, prepared as requested by DOL.


I. SUMMARY OF MAJOR DEVELOPMENTS

A.Government

The Government is a federal republic made up of three
branches at the federal level: (1) the Executive Branch,
consisting of the President (Chief of State),the Prime
Minister (Head of Government),and the Council of Ministers
(Cabinet); (2) the Legislative Branch, which has a bicameral
Parliament, consisting of a lower house (Lok Sabha) with 545
members and an upper house (Rajya Sabha) with no more than
250 members; and (3) the Judicial Branch, which is
independent. At the state level, each of India,s 28 states
and 7 union territories has its own state assembly, council
of ministers, and court system.

During 2004, India held national parliamentary elections that
resulted in a change of government. The National Democratic
Alliance (NDA) coalition government led by the Bharatiya
Janata Party (BJP) under Prime Minister Atal Bihari held
power at the beginning of the year, but lost in the April-May
elections. A United Progressive Alliance (UPA) government
led by the Congress party under Prime Minister Manmohan Singh
took office in May. The BJP is now the main opposition
party, with 138 seats. A broad range of regional and
communist parties does not belong formally to the UPA but
supports the UPA government from the outside. The UPA
depends on the cooperation of these outside parties to
maintain its control of Parliament, a situation that has
sometimes produced tension between Congress and its allies,
particularly over economic and labor policies.

B.Economy

India's economy encompasses traditional village farming,
modern agriculture, handicrafts, a wide range of modern
industries, and a multitude of support services. The
agricultural sector employs the largest percentage of the
workforce (approx. 60 percent),although it represents only
22.7 percent of GDP. Major crops include wheat, rice, coarse
grains, oilseeds, cotton, jute, and tea. The industrial
sector employs 17 percent of the workforce and represents
26.7 percent of GDP. Major industrial products include

textiles, processed food, steel, machinery, transportation
equipment, cement, aluminum, fertilizers, mining, petroleum,
chemicals, and computer software. The services industry
employs 23 percent of the workforce and represents 50.7
percent of GDP. India is capitalizing on its large numbers
of well-educated people skilled in the English language to
become a major exporter of software services and software
workers.

During 2004, the growth rate was 6.6 percent, with an
inflation rate of 6 to 7 percent. The impressive growth rate
is largely attributable to increased agricultural production,
robust merchandise exports, a booming stock market, and the
steady pace of reforms. The Government would like to
increase the growth rate, but most economists believe it will
not be possible without further structural reforms. Wages and
benefits kept pace with inflation. The local currency
(rupee) appreciated slightly against the dollar in 2004. The
U.S. accrued a trade deficit of nearly 9.5 billion dollars
with India during 2004, an increase from 8.1 billion dollars
in 2003. Exports of goods to the U.S. were approximately 6.1
billion dollars.

India continued its transition from a government-controlled
economy to a largely market-oriented system. The private
sector was predominant in agriculture, most non-financial
services, consumer goods manufacturing, and some heavy
industrial sectors. A 1.7 percent annual population growth
rate and a population that surpassed 1.06 billion contributed
to the country's economic challenges, but also constitute a
rich base of human capital.
C.Workforce
According to the 2001 census figures, there are approximately
403 million workers in the Indian economy, of which 311
million (77 percent) are in rural settings and 92 million (23
percent) are in urban settings. The bulk of the Indian
workforce (approximately 60 percent) is in the agricultural
sector. Projections put the labor force for the year 2004 at
approximately 482 million workers.

Seven percent of the work force is in the formal, organized
sector. Growth in this sector remained sluggish. Employer
organizations attribute this to the presence of labor laws
that restrict downsizing. To circumvent such laws, private
sector companies continued hiring workers on a contract
basis. The informal sector, where the workforce generally
does not enjoy legal protection, witnessed more growth.
Official statistics put the unemployment rate at 9.2 percent,
but unofficial estimates suggest it could be as high as 20
percent.

HIV/AIDS in the Workplace

According to the National AIDS Control Organization (NACO),a
government agency under the Ministry of Health and Family
Welfare, nearly 90 percent of the 5.13 million Indians
currently estimated to be infected with HIV/AIDS are in the
15-49 age group, the prime of their working years. HIV/AIDS
has a negative impact on individual workers and their
families as well as on the economy has a whole. NACO and the
ILO, in conjunction with industrial, workers,, and
employers, organizations, are collaborating to respond to
the problem of HIV/AIDS in the workplace, using the ILO Code
of Practice on HIV/AIDS as a guideline. The code includes
the following: recognition of HIV/AIDS as a workplace issue,
non-discrimination, gender equality, social dialogue, no
screening of HIV/AIDS at the workplace, confidentiality,
continuing the employment relationship, prevention, and care
and support.

The Steel Authority of India, the Employees State Insurance
Scheme, and Indian Railways are among the organizations and
associations that NACO has worked with to implement HIV/AIDS
programs in the workplace. In addition, the Confederation of
Indian Industries (CII) founded an &Indian business trust8
to combat HIV/AIDS in the workplace and has begun programs in
its 22 branches across India. The Lawyers, Collective, an
NGO, has successfully defended workers who lost their jobs
due to their HIV/AIDS status.

II. DESCRIPTION OF THE LABOR SCENE

A.Government
The central and state governments share jurisdiction over
labor issues. Both may enact legislation concerning the
following: trade unions, industrial and labor disputes;
social security, insurance, employment, and unemployment; and
welfare of labor including conditions of work, provident
funds, pensions, and maternity benefits. Only the central
government may enact legislation concerning regulation of
safety in mines and oil fields, industrial disputes
concerning central government employees, and central
government agencies and institutions for vocational training.

The Ministry of Labor, a Cabinet-level ministry, is the lead
central governmental agency on labor issues. The Ministry is
headquartered in New Delhi and has subsidiary offices located
throughout the country. The Main Secretariat of the Ministry
consists of eight divisions: social security, emigration,
industrial relations, child and women labor, labor welfare,
economics and statistics, international labor affairs, and
labor conference. Each state government also has a labor
ministry that may implement legislation of labor laws within
its jurisdiction.
The Labor Bureau, created in 1946 as part of the Ministry of
Labor, is responsible for the collation, collection, and
publication of statistics and related information on wages,
earnings, productivity, absenteeism, labor turn-over,
industrial relations, and working and living conditions. It
also tracks important economic indicators like the Consumer
Price Index, data concerning industrial, agricultural and
rural laborers; wage rate indices; and data on industrial
relations and socio-economic conditions in the organized and
unorganized sectors of industry.

In April 2000, USDOL signed a Memorandum of Understanding
with the Indian Ministry of Labor to provide technical
assistance in five areas: the elimination of child labor,
prevention of HIV/AIDS in the workplace, improvement in mines
safety, provision of decent employment for women, and labor
market information systems. A subsequent agreement between
the two governments resulted in the INDUS project, a joint
U.S.-India partnership to eliminate hazardous and
exploitative child labor, towards which each government has
contributed 20 million dollars. The project is focused on
removing children from ten specific industries in India: bidi
cigarettes, brassware, bricks, fireworks, footwear, bangles,
locks, matches, quarried stones and silk. Thus far, the
joint project has enrolled more than 44,000 child laborers
and at-risk youths in education and training programs. The
only area of the MoU without a technical assistance program
is labor market information systems. This was originally due
to US sanctions after India,s 1998 nuclear tests, but now
reflects a lack of resources.

B.Employers
The Council of Indian Employers (CIE) is a confederation of
three smaller employer organizations: the All India
Organisation of Employers (AIOE),the Employers, Federation
of India (EFI),and the Standing Conference of Public
Enterprises (SCOPE). The CIE is not registered under any Act
of the Government, but AIOE, EFI, and SCOPE are all
registered as individual organizations. Total membership in
AIOE and EFI consists of 80 regional associations of
employers or chambers of commerce and 322 public and private
companies. SCOPE covers 240 public sector undertakings
(PSUs).

The CIE,s primary objective is to interact with the GOI in
formulating labor, economic, and social welfare policies that
concern workers and employers. It also aims for increased
cooperation between employers, and workers, organizations
and holds regular meetings with the trade union centrals to
accomplish this. The CIE is represented on almost all
Government Advisory Boards, is affiliated with the
International Organization of Employers, and represents India
at the ILO.

C.Trade Unions
According to the latest census taken in 2001, approximately
403 million persons constitute India,s active work force.
Approximately 28 million of these workers are employed in the
formal, or organized, sector. The rest are overwhelmingly
agricultural workers, and to a lesser extent, urban
non-industrial workers. While some trade unions represent
agricultural and informal sector workers, the majority of
India,s estimated 13-15 million union members are part of
the formal sector.

Of these 13 to 15 million unionized workers, some 80 percent
are members of unions affiliated with 1 of the 5 major trade
union centrals. These include the Bharatiya Mazdoor Sangh,
Indian National Trade Union Congress, Center of Indian Trade
Unions, Hind Mazdoor Sabha, and the All India Trade Union
Congress. By U.S. standards, all of these major trade union
centrals are &politicized,8 i.e., they are either directly
linked or ideologically associated with a political party.
However, since many Indians now view party identification as
detrimental to trade union interests, all centrals stress
their independence and in some cases are attempting to reduce
or sever previously tight party control.

Total membership in unions affiliated with the national
centers has remained essentially static in the face of an
annual growth in the work force of 7-8 million. Union
members account for approximately two percent of the overall
work force. Unions remain concentrated in the public sector,
and labor leaders have not made serious efforts to organize
workers in the new Indian and foreign companies in the
private sector. Although a few significant examples exist,
independent unions are not a major factor.

All five major trade union centrals participate in ILO
activities. In addition, local unions participate in ILO
programs such as Organizing in the Informal Sector, Campaigns
on Eradication of Child Labor, Tripartite Response on
Discrimination at Workplace on HIV, and Promotion of the Core
Labor Standards in Enterprise.

III. Programs Providing Workers with a Social Safety Net

India lacks a comprehensive social security system. In the
informal sector, which employs the vast majority (93 percent)
of Indian workers, there is no social security protection for
unemployed or retired workers.

The Employees, State Insurance Corporation (ESIC) provides
social protection to workers (and their dependents) in the
organized sector in case of sickness, maternity, and death or
disablement due to an employment injury or occupational
hazard. In most states, employees in the following classes
of establishments are eligible for coverage: non-seasonal
factories using power and employing 10 or more persons;
non-seasonal and non-power using factories, shops, hotels,
restaurants, cinemas, preview theatres, motor transport
undertakings and newspaper establishments employing 20 or
more persons.

Employees covered under the scheme are entitled to medical
facilities for themselves and their dependents, as well as
cash benefits in the event of specified contingencies
resulting in loss of wages or earning capacity. Insured
women are entitled to maternity benefits to cover the period
of confinement. When an employment injury causes the death of
an insured employee, the dependents are entitled to a family
pension.

The ESI Scheme is financed by contributions from covered
employees and their employers. The State Governments bear
one-eighth of the share of expenditure on medical benefits
within the per capita ceiling of Rs.600 ($14) per year and
all additional costs beyond the ceiling. Employee
contributions are tied to a fixed percentage of the workers
wages, but benefits are provided according to individual
needs regardless of employee contributions.

IV. Major Labor Laws

India is a founding member of the International Labor
Organization and has ratified 39 total ILO Conventions. Of
the eight core ILO Conventions, India has ratified four: the
Conventions on Forced Labor (No. 29),Equal Remuneration (No.
100),Abolition of Forced Labor (No. 105),and Discrimination
(Employment and Occupation) (No. 111). India has not
ratified the remaining four core conventions on Freedom of
Association and Protection of the Right to Organize (No. 87),
Right to Organize and Collective Bargaining (No. 98),Minimum
Age Convention (No. 138),and Worst Forms of Child Labor (No.
182).

A.Industrial Disputes Act

The Industrial Disputes Act (1947) regulates reductions in
force (RIF) and plant closures. It requires state approval
90 days before large firms (more than 100 employees) lay off
employees. Likewise, no plant employing more than 100
employees can shut down without obtaining approval 90 days
before the closure date. Laws also prohibit firms from
employing contract laborers for extended periods of time
without extending permanent employment.

B.Factories Act

The Factories Act (1948) mandates a maximum 9-hour workday
and 48-hour workweek, as well as minimum working conditions.
Workers are to be paid twice their regular wage rate for
working overtime. State government laws set minimum wages,
hours of work, and safety and health standards. These
standards were generally enforced and accepted in the modern
industrial sector; but were not observed in less economically
stable industries. However, the large number of industries
covered by a small number of factory inspectors and the
inspectors' limited training and prevalence of bribery
resulted in lax enforcement.

Minimum wages varied according to the state and sector of
industry. Such wages were inadequate to provide a decent
standard of living for a worker and his/her family. Most
workers employed in units subject to the Factories Act
received more than the minimum wage, including mandated
bonuses and other benefits. The state governments set a
separate minimum wage for agricultural workers but did not
enforce it effectively. Some industries, such as the apparel
and footwear, did not have a prescribed minimum wage in any
of the states in which they operated.

C.The Right to Association

The Constitution provides for the right of association, and
the Government generally respected this right in practice.
Workers may establish and join unions of their own choosing
without prior authorization. In practice, legal protections
of worker rights were effective only for the organized
industrial sector. Outside the modern industrial sector,
laws were difficult to enforce. The authorities generally
prosecuted and punished those persons responsible for
intimidation or suppression of legitimate trade union
activities when the victims were members of nationally
organized unions. Unaffiliated unions were not able, in all
instances, to secure for themselves the protections and
rights provided by law. Union membership was rare in the
informal sector.

The Trade Union Act prohibits discrimination against union
members and organizers, and employers were penalized if they
discriminated against employees engaged in union activities.

D.The Right to Organize and Bargain Collectively

The law provides for the right to organize and bargain
collectively. Collective bargaining is the normal method
used to set wages and settle disputes in unionized plants in
the organized industrial sector. Trade unions vigorously
defended workers, interests in this process. Although a
system of specialized labor courts adjudicates labor
disputes, there were long delays and a backlog of unresolved
cases. When the parties are unable to agree on equitable
wages, the Government may establish boards of union,
management, and government representatives to determine
wages. The legislation makes a clear distinction between
civil servants and other workers. Public service employees
have very limited organizing and collective bargaining
rights.

Trade unions often exercised the right to strike, but public
sector unions were required to give at least 14 days' notice
prior to striking. Some states have laws requiring workers
in certain nonpublic sector industries to give notice of a
planned strike.

The Essential Services Maintenance Act allows the Government
to ban strikes in government-owned enterprises and requires
conciliation or arbitration in specified essential
industries; however, essential services never have been
defined in law. Legal mechanisms exist for challenging the
assertion that a given dispute falls within the scope of this
act. The act thus is subject to varying interpretations from
state to state. State and local authorities occasionally use
their power to declare strikes illegal and force
adjudication. The Industrial Disputes Act prohibits
retribution by employers against employees involved in legal
strike actions, and this prohibition was observed in
practice.

The Kerala High Court declared in 2002 that all general
strikes were illegal and that all protest organizers would be
liable for losses caused by shutdowns. The Supreme Court
upheld the verdict, drawing attention to the difference
between a complete closedown of all activities and a general
strike. While it is likely that the ruling was aimed at
limiting general strikes with purely political motives,
unions stated that it remained a potential threat to their
activities. Other court rulings also declared such strikes
illegal and made striking workers pay damages to consumers
and the public who suffered due to the strikes. In August
2003, the Supreme Court declared all strikes by government
employees illegal; however, in practice this was not
enforced.

E.Prohibition of Forced or Compulsory Labor

The Constitution prohibits forced or bonded labor, including
by children; however, such practices continued to be
prevalent in India and were found primarily among the
agricultural and rural unorganized workforce. The Bonded
Labor System (Abolition) Act prohibits all bonded labor by
adults and children. Offenders may be sentenced up to three
years in prison, but prosecutions were rare. Enforcement of
this statute, which was the responsibility of state and local
governments, varied from state to state and often was not
effective due to inadequate resources and to societal
acceptance of bonded or forced labor. On the occasions when
inspectors referred violations for prosecution, long court
backlogs and inadequate funding for legal counsel frequently
resulted in acquittals.

The GOI does not publish official statistics on bonded labor,
but it claims to have identified and rescued about 285,000
bonded laborers, and rehabilitated approximately 265,000,
since the advent of the Bonded Labor System (Abolition) Act
of 1976. Many NGOs, however, claim that these numbers do not
reflect the actual magnitude of the problem. They estimate
that there were 20 to 65 million bonded laborers in the
country, including a large number of children. According to
a Government report, more than 85 percent of bonded laborers
belonged to scheduled castes and scheduled tribes. In 2002,
the Tamil Nadu state government began planning and
implementing rehabilitation programs after press reports
indicated that the presence of 25,800 bonded laborers in the
state, while government officials worked to release bonded
laborers in many other states. Despite these efforts, NGOs
believe that the GOI,s actions have not effectively resolved
the problem of forced/bonded labor.

F.Status of Child Labor Practices and Minimum Age for
Employment

The Government prohibits forced and bonded child labor;
however, this prohibition was not effectively enforced, and
forced child labor continued to be a problem. The law
prohibits the exploitation of children in the workplace.
However, National Human Rights Commission (NHRC) officials
have admitted that implementation of existing child labor
laws was inadequate, that administrators were not vigilant,
that children were particularly vulnerable to exploitation,
and that the Commission was focusing on the adequacy of
existing legislation.
There is no overall minimum age for employment. However,
work by children under 14 years of age was barred completely
in "hazardous industries," which included passenger goods and
mail transport by railway, and in factories. The NDA
government resolved to end child labor in hazardous
industries by the year 2007, and the UPA government is
working towards that goal. In occupations and processes in
which child labor is permitted, work by children was
permissible only for 6 hours between 8 a.m. and 7 p.m., with
1 day's rest weekly and two hours of education provided by
the employer. There was reasonable basis to believe that
child labor was used to produce hand-knotted carpets,
gemstone polishing, leather goods, sporting goods, and many
hand-made products. Children are also used as domestic help
throughout the country.

Estimates of the number of child laborers varied widely. The
provisional results of the Government census of 2001 put the
number of child workers at 12.5 million. However, the ILO
estimated the number at 44 million and Global March Against
Child Labor, an NGO, claims there are 60 million. The
government does not provide free, compulsory, and universal
primary education, and most, if not all, children who did not
attend school did housework, worked on family farms, worked
alongside their parents as paid agricultural laborers, or
worked as domestic servants. Though the Government's
statistics from 2003 claim that 165 million of the 200
million children between the ages 6-14 attend school, UNICEF
reported that approximately 120 million of the primary
school-age population of approximately 203 million attended
school.

The enforcement of child labor laws was the responsibility of
the state governments; however, enforcement was inadequate
and uneven among states, especially in the informal sector in
which most children were employed. The continuing prevalence
of child labor was attributable to social acceptance of the
practice, to the failure of the state and federal governments
to make primary school education compulsory, ineffective
state and federal government enforcement of existing laws,
and economic hardships faced by families. In addition,
over-worked and ill-trained local magistrates are charged
with the competing mandate of collecting state taxes from the
businesses that employ child or bonded laborers.

Government efforts to eliminate child labor affected only a
small fraction of children in the workplace. The Government
assisted working children through the National Child Labor
Project, which was established in more than 3,700 schools. In
January 2004, the GOI increased the number of its National
Child Labor Projects from 50 to 100, and intends to add
another 100 by March 2005. The Indus project -- jointly
funded by the U.S. Department of Labor and the GOI and
implemented by the ILO -- was launched in February 2004. It
hopes to remove 80,000 children from hazardous work
situations in 20 districts of the country over a three-year
period.

The Government also cooperated with UNICEF, the United
Nations Educational, Scientific and Cultural Organization
(UNESCO),the United Nations Development Programme (UNDP),
and the ILO in their efforts to eliminate child labor. The
Government participated in the ILO's International Program on
the Elimination of Child Labor (IPEC). Approximately 145,000
children have been removed from work and received education
and stipends through IPEC programs since they began in the
country in 1992. The NHRC, continuing its own child labor
agenda, organized NGO programs to provide special schooling,
rehabilitation, and family income supplements for children in
the glass industry in Firozabad. In addition, employers in
some industries took steps to combat child labor.

A 1986 Supreme Court decision increased penalties for
employers of children in hazardous industries to $430 (Rs
20,000) per child employed, and established a welfare fund
for formerly employed children funded by using the
employers, fines. In addition, the decision requires the
Government to find employment for an adult member of the
child's family or pay it $108 (Rs 5,000). According to the
South Asian Coalition on Child Servitude, the authorities
were pursuing some 6,000 cases against employers.

G.Occupational Health and Safety Standards

Occupational Safety and Health (OSH) remains a problem area
in India. Extensive legislation covering various aspects of
OSH notwithstanding, industrial accidents continued to occur
frequently due to lack of proper enforcement. The chemical
sector is the most prone to accidents. The lack of awareness
regarding occupational health has resulted in many deaths
throughout the country. OSH in the state-controlled mining
industries is of significant concern. The USDOL has funded
an approximately 1.5 million-dollar project to improve safety
standards in selected public sector mines and to provide
training to mine inspectors. The project improved working
conditions in five selected pilot mines and drastically
reduced accident rates. In addition, the project helped the
Indian Directorate General of Mines Safety establish for the
first time a computerized mine inspection system that
significantly reduced the time needed by mine inspectors to
inspect a mine.

Industrial accidents continued to occur frequently due to
improper enforcement of existing laws. Chemical industries
were the most prone to accidents. According to the Director
General of Mines' safety rules, mining companies must seal
the entrances to abandoned underground mines, and bulldoze
and reforest opencast mines. However, these rules seldom
were obeyed. In June, flooding of a mine killed 17 miners in
Andhra Pradesh. Safety conditions generally tended to be
better in the SEZs than in the manufacturing sector.

The law does not provide workers the right to remove
themselves from work situations that endanger health and
safety without jeopardizing their continued employment.
Legal foreign workers were protected under these laws;
however, illegal foreign workers had no protection.

H.Discrimination in Employment
India has ratified ILO Conventions on Equal Remuneration (No.
100) and Discrimination (Employment and Occupation) (No.
111). The Constitution prohibits discrimination on the basis
of a person's race, sex, religion, place of birth, or social
status. During 2004, government authorities worked to
enforce these provisions with varying degrees of success.
Despite laws designed to prevent discrimination, social and
cultural practices as well as other legislation had a
profound discriminatory impact, and discrimination against
women, persons with disabilities, indigenous people,
homosexuals, and national, racial, and ethnic minorities was
a problem. The traditional caste system, as well as
differences of ethnicity, religion, and language, deeply
divided the society.

1.Women
The participation of women in the formal labor force is much
less than that of males (33 percent vs. 67 percent). The
promotion of women to managerial positions within businesses
often was slower than that of males. The Equal Remuneration
Act of 1976 mandates that men and women performing the same
job receive the same payment; however, enforcement was often
weak, especially in rural areas where traditions encouraging
discrimination against females were deeply rooted. In both
rural and urban areas, women were paid less than men were for
the same job. Women experienced economic discrimination in
access to employment and credit, which acted as an impediment
to women owning businesses. In a positive development,
state-supported microcredit programs for women began to have
an impact in many rural districts.
Sexual harassment was common, with a vast majority of cases
unreported to authorities. In June 2004, the National
Commission for Women (NCW) and the Press Institute of India
jointly released a report that found that a majority of women
experienced gender discrimination at their workplaces.
Often, attempts by women to report harassment resulted in
further problems or dismissal. On April 27, 2004, the
Supreme Court determined that a victim of sexual harassment
could be awarded compensation based on the findings of an
internal departmental report or investigation of the case.

2.Dalits, Scheduled Castes, and Scheduled Tribes
The Constitution and the 1955 Civil Rights Act outlaws the
practice of untouchability, which discriminates against
Dalits (formerly called &untouchables8) and other people
defined as Scheduled Castes. According to the 2001 census,
scheduled castes, including Dalits, made up 16 percent (166.6
million) of the population, and scheduled tribes (members of
indigenous groups outside the caste system) were 8 percent
(84.3 million) of the country's population. Despite
longstanding efforts by the Government to eliminate the
discriminatory aspects of caste, discrimination based on the
caste system occurred throughout the country during the
reporting period.

The GOI uses a system of "reservations," similar to
affirmative action programs in the US, in an attempt to
decrease employment-based discrimination towards these
scheduled castes and scheduled tribes. The
Anti-Untouchability Act of 1955 and the Prevention of
Atrocities Act of 1989 give further protection; however,
Dalits are often relegated to the most menial of jobs.
Employment discrimination against Dalits is widespread in
rural areas; many rural Dalits worked as agricultural
laborers for caste landowners without remuneration. The
majority of bonded laborers were Dalits. Those who attempt
to change the status quo regularly faced violence. Low caste
Hindus who converted to Christianity lost their eligibility
for affirmative action programs. Some states reserved
government jobs for Muslims of low caste descent.

3.Persons with Disabilities
Although the Persons with Disabilities Act provides equal
rights to all persons with disabilities, advocacy
organizations admitted that its practical effects have so far
been minimal, in part due to a clause that makes the
implementation of programs dependent on the "economic
capacity" of the Government. Widespread discrimination
occurred against persons with physical and mental
disabilities in employment, education, and in access to
health care.

I.Special Economic Zones

In 2000, the GOI converted India,s seven government
controlled Export Processing Zones to Special Economic Zones
(SEZs),and the private sector set up an eighth SEZ. All
SEZs must follow labor laws. While SEZ workers enjoy freedom
of association and collective bargaining, trade union
activity in the zones has been negligible. Entry into the
SEZs ordinarily is limited to employees, and union organizers
claim that such restrictions make it difficult for them to
organize workers. In addition, unions have not vigorously
pursued efforts to organize private-sector employees since
SEZs were established in 2000. Women constituted the
majority of the work force in the SEZs. The International
Confederation of Free Trade Unions reported that industries
in the SEZs compelled their workers to work overtime, often
employed them on temporary contracts with fictitious
contractors, and threatened those that complained about
substandard working conditions.

In August 2003, the Government of Madhya Pradesh enacted a
law to allow companies in the Indore SEZ to hire and fire
workers and to close down units without prior government
permission. In November 2003, the Government of Maharashtra
passed a similar act, exempting SEZs from labor laws
applicable in the rest of the state. This act also prohibits
more than one union from representing workers in a single
unit to prevent inter-union rivalry.

J.Labor Law Reforms

Many observers believe that India,s labor laws are
antiquated and in need of reform. The second National Labor
Commission (NLC),established by the GOI in September 1999,
submitted its report in June 2002. It recommended reviews of
Indian labor laws and the social security system and the
strengthening of governmental programs to eradicate child
labor. Although the NLC recommendations are not binding on
the government, the Ministry of Labor has begun consulting
various social partners on their possible implementation.
Unlike the previous NDA government, the UPA has not made
labor law reform a top priority. Considering the lack of
consensus within and outside the government to reform, most
observers do not expect large-scale changes to existing labor
legislation.


V. Industrial Relations

A.Sectoral Issues

Airlines: Labor-management relations were calm in the
government-owned airlines, with pilots in both government-run
carriers -- Air India (international) and Indian Airlines
(domestic) -- receiving pay and benefit increases. The GOI
initially planned to offer low equity participation to
private partners, with restrictions on foreign investment,
which would have deterred private partners from bidding for
the national carriers. Now, the GOI has changed its policy
and is no longer planning to sell equity in the airlines.

Financial services: The banking and insurance sectors are
highly unionized and predominantly state-owned. During the
reporting year, workers in the banking sector held three
one-day strikes to demand better working conditions. Bank
employees in the public sector banks successfully negotiated
a 13 per cent wage increase with retroactive implementation
to November 2002. Insurance sector workers held two one-day
strikes to support other unions protesting government
economic policies.

B.Regional Reviews

Northern Region: Industrial and employment growth in the
northern region was sluggish, due primarily to the absence of
reforms in the agricultural sector. Infrastructure shortfalls
and concerns regarding effective governance has kept
investment low in the region, particularly in Uttar Pradesh,
India,s most populous state. There was no significant labor
unrest in the region during the reporting year. The Delhi
state government relaxed working conditions for women in the
IT sector by permitting them to work in night shifts. Punjab
and Haryana subsequently adopted the same measure.

In February 2004, the then federal labor minister announced
that Delhi would become a child labor free state by December

2005. Most observers believe this target will not be
achieved.

Eastern Region: Industrial relations in the12 states of
Eastern India remained more or less peaceful, barring a few
incidents of lockouts and violence in the tea gardens of West
Bengal and Assam. A strike planned by the Assam Cha Mazdoor
Sangh (Assam Tea Workers, Union) in July was cancelled after
the state government assured the organization of a tripartite
settlement. Workers in 18 tea gardens belonging to the
state-owned Assam Tea Corporation have not received wages for
the past year. The West Bengal State government averted a
strike by West Bengal jute mill workers in November by
brokering a tripartite wage agreement.

West Bengal industries minister Nirupam Sen indicated that
there has been a net reduction of 200,000 organized sector
jobs in West Bengal over the past five years. The Orissa
Government is working on a voluntary retirement scheme (VRS)
for its ailing public sector units. Other state governments
in the region have not initiated labor reform measures.
Barring Assam, where there is public sector investment in the
oil sector, state governments continue to be the biggest
employers throughout the northeast region.
During the period under review, the Government of West Bengal
continued its on-going process of selling government-owned
assets by privatizing 16 ailing public sector units and
offering the workers a VRS underwritten by the British
overseas development-funding agency DFID.

The West Bengal State Government estimated that children made
up 3.1 percent of the state,s total workforce, with about 11
percent or 1.2 million of the children in the 5-14 age group,
and with the help of UNICEF, developed an Action Plan to
address the problem. In West Bengal and elsewhere in the
region, children continue to be employed in brick making,
&bidi8 (tobacco) binding, and agricultural labor. In the
urban areas, they were employed as domestic workers, in shops
and offices, in the large informal service sector (tea
stalls, wayside restaurants and kiosks),or in hazardous jobs
such as scavenging and rag picking. The USG is giving
financial support to leading NGOs such as CINI (Child-in-Need
Institute),Asha, and Tiljala Shed to provide these children
with preparatory coaching and enroll child laborers and
potential child laborers in school. All states in the region
have strict laws banning the use of child labor, but
enforcement remains poor.

The Center of Indian Trade Unions (CITU) -- the trade union
wing of the Communist Party of India (Marxist) -- has been
subdued in recent years, as West Bengal Chief Minister
Buddhadeb Bhattacharjee has discouraged &aggressive
unionism8 to create an industry-friendly atmosphere.
Although CITU membership has increased in West Bengal, CITU
noted a 10 percent decline in its Calcutta membership.

Southern Region: South Indian states experienced a generally
peaceful labor situation during the reporting period, with no
major prolonged strikes in any sector. Kerala, the smallest
southern state, experienced the most significant strike
activity, while Karnataka had the least.

About 216 longshoremen of Chennai Container Terminal Limited
(CCTL) at the Chennai Port went on strike from May 23 to June
6, protesting privatization of the terminal and causing some
inconvenience to business. A seven-day truckers, strike
called by the All India Motor Transport Congress (AIMTC) was
largely unobserved and ended on August 28. Tamil Nadu
lawyers went on strike on June 30 to prevent the bifurcation
of the Madras and Madurai benches, but ended the action on
September 1 without achieving its demand. About 43,000
workers of the Singareni Collieries in Andhra Pradesh struck
on November 24, causing a production loss of 47,000-mt of
coal.

Home to leftist parties and trade unions, Kerala experienced
several general strikes during the past year. Although
courts have declared general strikes to be illegal, activists
have sometimes paralyzed economic activity by organizing work
stoppages under other names.

Regional state governments initiated some significant labor
reform measures. In May 2004 in Tamil Nadu and Karnataka and
August 2003 in Kerala, State governments implemented
provisions allowing women to work in night shifts,
particularly in the IT industry. In February 2004 in Andhra
Pradesh and June 2004 in Tamil Nadu, new provisions allowed
industries to hire contract labor even in core areas for
temporary periods to meet market demand.

Although achievement of this goal seems unrealistic, the
international community, particularly the ILO, is supporting
the efforts of the southern states to end all child labor by
2007, in hopes that this will set an example for other
states. As part of their programs to combat child labor, the
southern states are increasing education programs for working
children, particularly those in the informal sector.

The Tamil Nadu government hopes to eradicate child labor in
hazardous employment by 2005 and non-hazardous employment by

2007. It prepared an Action Plan, established a state
authority on the eradication of child labor headed by the
Chief Secretary, is reviewing proposals submitted by district
collectors, and has allotted $333,332 (Rs. 15 million) to
fund them.

Tamil Nadu created an Additional Commissioner position in its
Labor Department to head a Child Labor Monitoring Cell. It
also organized a Child Labor Monitoring System Workshop in
collaboration with the ILO in February 2004, demonstrated a
web based monitoring system, and observed &Anti Child Labor
Day8 on June 12th. The state is also considering an
incentive scheme to encourage village level administrators to
establish child labor free areas, and it introduced a state
award for the district collector who operates the best
program for the rescue and rehabilitation of child laborers.
The Women,s Development Corporation also formed about 1,000
self-help-groups for mothers of child laborers.

Western Region: There were no significant work stoppages by
industrial workers during calendar years 2003 and 2004 in
Western India (including Mumbai). On May 21, 2003, 69 unions
representing workers from aviation, hospitality, banking,
textiles, insurance, engineering, and transportation called
for a general strike, but only bank employees in Mumbai and
port workers at Mumbai and Jawaharlal Nehru Port Trusts
honored the strike call. When various trade unions again
called for a general strike on February 25, 2004, only bank
and public sector insurance workers walked out.

In July 2003, the Government of Maharashtra (GOM) announced a
new labor policy for the IT industries which permits
24-hour-a-day operations, the closure of units employing up
to 1,000 workers without prior government permission, and
self-certified reports of compliance with labor laws.

VI.Potential for Expanding Trade and Investment with the US

Tariffs and poor infrastructure present the biggest obstacles
to foreign investment and growth, but India,s infrastructure
requirements also present trade and investment opportunities
for American companies. Although the average level of Indian
tariffs has declined significantly since the early 1990s,
India,s economy remains on the most protected in the world.
India,s average non-agricultural tariff is about 22 percent,
compared to the 11 percent median for other emerging markets,
according to the World Bank. India controls foreign
investment with limits on equity and voting rights, mandatory
government approvals, and capital controls. Although the GOI
has gradually relaxed some of these constraints, foreign
direct investment is still prohibited in some sectors or
sub-sectors.

The communist and socialist parties that support the UPA
government oppose the privatization of state-owned companies
and increasing foreign direct investment, and have blocked or
slowed UPA attempts to relax restrictions in these areas.
Other factors that inhibit an otherwise &business-friendly8
environment include India,s vast and still largely
unreformed bureaucracy and various forms of social tension
(some manifested violently) in a huge and extremely diverse
population, much of which suffers from extreme poverty and
the burdens of underdevelopment.

VII. Directory of Labor Organizations

A.Government

Ministry of Labor and Employment

Shram Shakti Bhawan,
Rafi Marg, New Delhi - 110 001
Phone: 91 11 2300 1425
Fax: 91 11 2371 8730 or 2335 5679
Minister of Labor: Mr. K. Chandrasekhar Rao

Labor Bureau

Shri Balram
Director General
Phone: 91 17 7280 3584
Email: Dglb@hub.nic.in
http://labourbureau.nic.in/

Census of India

Office of the Registrar General, India
2A, Mansingh Road
New Delhi ) 110 011
http://www.censusindia.net/


B.Employers

Council of Indian Employers
Federation House
Tansen Marg
New Delhi ) 110001
Phone: 91 11 2373 8760-70 or 2331 6121
Fax: 91 11 2332 0714 or 372 1504
Email: aioe@ficci.com

All India Organisation of Employers (AIOE)
Phone: 91 11 2373 8760-70 or 2331 6121
Fax: 91 11 2332 0714
Email: bppant@mantraonline.com or secretariat@mantraonline.com
President: Mr. O.P. Lohia
Secretary: Mr. B.P. Pant

SIPDIS

Employers, Federation of India (EFI)
Phone: 91 22 2284 4093 or 2284 4232
Fax: 91 22 2284 3028
President: Mr. R. K. Somany
Email: somany.hindware@gndel.global.net.in
Secretary-General: Mr. Sharad S. Patil

SIPDIS

Standing Conference of Public Enterprises
Phone: 91 11 2436 2604
Fax: 91 11 2436 1371
Email: scope dg@yahoo.co.in
Chairman: Mr. C.P. Jain

C.Trade unions

Bharatiya Mazdoor Sangh (BMS)
Aligned with the Bharatiya Janata Party (BJP)

Ram Naresh Bhavan, Chuna Mandi, Tilak Marg
Paharanj, New Delhi ) 110055
Phone: 91 11 2363 4212
Fax: 91 11 2362 0654
President: Mr. Hasubhai Dave
General Secretary: Mr. Uday Patwardhan

Indian National Trade Union Congress (INTUC)
Aligned with Indian National Congress Party (Congress)
Affiliated to International Center of Free Trade Unions
(ICFTU)

Shramik Kendra, 4, Bhai Veer Singh Marg
New Delhi ) 110001
Phone: 91 11 2374 7768
Fax: 91 11 2336 4244
President: Mr. G. Sanjeeva Reddy
General Secretary: Mr. Rajendra Prasad Singh

Hind Mazdoor Sabha (HMS)
Aligned with the Janata Dal Party (JD)
Affiliated to ICFTU

120, Babar Road
New Delhi ) 110001
Phone: 91 11 2341 3519
Fax: 91 11 2341 1037
President: Mr. Thampan Thomas
General Secretary: Mr. Umraomal Purohit

Center of Indian Trade Unions (CITU)
Aligned with the Communist Party of India (Marxist),(CPI-M)

B.T. Ranadive Bhavan
13 A, Rouse Avenue
New Delhi ) 110002
Phone: 91 11 2322 1288
Fax: 91 11 2322 1284
President: Dr. M.K. Pandhe

All India Trade Union Congress (AITUC)
Aligned with the Communist Party of India (CPI)
Affiliated to the World Federation of Trade Unions (WFTU)

24, Canning Lane
New Delhi ) 110001
Phone: 91 11 2338 7320
Fax: 91 11 2338 6427
General Secretary: Mr. Gurudas Dasgupta


D.NONGOVERNMENTAL ORGANIZATIONS

International Labor Organization

Theatre Court, 3rd Floor,
India Habitat Centre,
Lodi Road
New Delhi - 110 003
Phone: 91 11 2460 2101
Fax: 91 11 2460 2111
E-mail: delhi@ilodel.org.in

South Asia Research and Development Initiative

CA-1-D, Munirka, Phase-2
New Delhi 110 067
Phone: 91 11 2618 0038
Fax: 91 11 2618 1578
E-mail: ashutosh@sardi.org
sardi@del6.vsnl.net.in



VIII.Key Sources

Census of India, 2001. http://www.censusindia.net

CIA World Factbook.
http://www.cia.gov/cia/publications/factbook/
International Confederation of Free Trade Unions.
http://www.ictfu.org

International Organization of Employers.
http://www.ioe-emp.org/ioe emp/worldwide/
page pays html/asie/india.htm

Indian Labour Bureau, Ministry of Labour.
http://labourbureau.nic.in/

Indian Ministry of Labour. http://labour.nic.in/

National AIDS Control Organization (India).
http://www.nacoonline.org/index.htm

U.S Department of State. Background Notes.
http://www.state.gov/r/pa/ei/bgn/3454.htm

U.S. Department of State. Trafficking in Persons Report.
June 2005. http://www.state.gov/g/tip/rls/tiprpt/2005/

U.S. Department of State. Country Reports on Human Rights
Practices 2004. February 2005.
http://www.state.gov/g/drl/rls/hrrpt/2004/ind ex.htm

U.S. Foreign Commercial Service and U.S. Department of State.
Doing Business in India: A Country Commercial Guide for U.S.
Companies. 2004.

IX.KEY LABOR INDICATORS: INDIA 2004

Indicator 2003 2004
Per capita GDP, current prices (US$) 543 602
Consumer Prices (inflation rate) (%) 4.6 4.2
GDP generated in agriculture (%) 23.6 22.1
--, in manufacturing (%) 28.4 21.7
--, in services (%) 48 56.2
Population, total (millions) 1,073 1091 E
--, by major ethnic groups (%) (2000 est)
Indo-Aryan 72 72
Dravidian 25 25
Mongoloid and others 3 3
--, in major urban areas (%) 28 28
Population beneath the poverty level (%) 25 25
Birth rate (per thousand population) 25 25
Life expectancy at birth, total (years) 63.92 65.4
--, male 62.92 63.9
--, female 64.37 66.9
Adult literacy rate (%) 59.5 64.8
Labor force, civilian, total (millions)402.5 (2001) 482.2
(2004 est)
--, male (%) 67 66
--, female (%) 33 34
--, in informal economy (%) 93 91
--, completed primary education n/a n/a
Employment, civilian, total (millions) 18.8 18.6
--, in industry (%) 12 11.7
--, in special economic zones n/a n/a
--, in agriculture(%) 7.02 7.2
--, in services (%) 80.9 81
--, in government (%) n/a n/a
Unemployment rate (%) 9.1 9.2
Underemployment rate (%) n/a n/a
Level of unionization of workforce (%) 7 n/a
Labor productivity, manufacturing (% change) 6 7.4
Number of work-related deaths n/a n/a
Number of work-related injuries/illnesses n/a n/a
Number of days lost from industrial disputes n/a n/a
Minimum hourly wage n/a n/a
Average hourly earning by major industry n/a n/a
Supplementary benefits as % of earnings in manufacturing n/a
Average hours worked per week in manufacturing n/a n/a
--, in agriculture n/a n/a
--, in services n/a n/a
n/a = not available
exchange rate: US$=46.58 rupees (2003); =45.317 rupees (2004)

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