Women’s work &

FDI policy in IndiaSeventh Gender and Economic Policy Discussion

‘Politics and Economics of FDI through gender lens’9th April 2013

Anandi Venkateswaran Under Secretary (exports) Government of India

Disclaimer: The views expressed in the presentation are purely that of the author and do not represent the views of the

Government of India

Policy options for Govt to increase Output/ Employment

Improve investment

Or Exchange rate intervention- keep

rupee from appreciating –

improve exports/output

Or face buy outs by foreign cos.

Allow FDI

What is FDI World Bank• foreign direct investment is • acquisition of • “a lasting management interest (10 percent or more

of the voting stock) • in an enterprise operating in an economy other than

that of the investor.”• Includes foreign equity inflows. Re-invested

earnings,other forms of capital(NRI investment)

Host country perspective

Investor perspective-What attracts FDI?

FDI- A caution Is mobile capital chasing immobile labour?

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

labour but supports foreign capital flows for members• Indian scenario women’s labour is highly immobile-

traditionally• Solution- Marxist approach – labour contract is a ‘contested

exchange’-Wage -relative bargaining positions of labour and capital.

• Highly mobile capital- pressure on immobile labour - seek incentives subsidies, tax exemptions etc

• Solution lies in policies for FDI to compete fairly with benefits both for consumers and workers-cheaper goods and greater mobility

FDI flows into India

Share of top 10 investing countries FDI equity inflows

Top five Indian destinations - FDI equity inflows Jan 2013

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

Sectoral distribution of female workers (UPSS)

%2004-5 2009-10

primary sector 72.26 66.99mining & quarrying 0.28 0.3manufacturing 11.75 11.34utilities 0.03 0.08construction 1.89 5.11trade.hotelling 4.14 4.55tpt& communication 0.4 0.43fianancing real estate insurance 0.63 1.05community, social,personal services 8.61 10.16total 100 100

Elasticity of Employment to GDP

Sector

Estimated Elasticities

1977-78 to 1983 1983 to 1993-942/ 1993-94 to 1999-00

1. Agriculture1/

0.45 0.50 0.00

2.Mining & Quarrying

0.80 0.69 0.00

3. Manufacturing

0.67 0.33 0.26

4.Electricity

0.73 0.52 0.00

5.Construction

1.00 1.00 1.00

6.Wholesale & Retail Trade

0.78 0.63 0.55

7.Transport, Storage & Construction

1.00 0.49 0.69

8. Finance, Real Estate, Insurance & Business Services

1.00 0.92 0.73

9. Community, Social and Personal Services

0.83 0.50 0.07

All Sectors

0.53

0.41

0.15

What typifies skill levels - Indian manufacturing employment

• Highly dispersed skill levels-production lines

• Over-lap of skills-defects accumulation

Highly skilled /short

production chain

Semi-low-skilled longer production

chain ( most women

workers belong here

occupations with high women share of employment and impact of FDI

occupations with high women share of employment and impact of FDI occupation % share of

women in occupation(2009-10)

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

Professional 26.4 Broadcasting- cable networks DTH etc

Upto – 49%- automatic beyond that Govt route

Yes, good scope in urban areas due to high employment in professional and technical occupations. Skill-sets to be added for rural women to benefit.

technical 21.1

FM radio and up-linkin g of news channels

Upto 26%-Government route

same as above

Up-linking of Non-news channels 100%-Govt route

same as above

Publication and printing

26-100%-Govt route

same as above

Airport Ground handling & maintenance

49-100%/automatic /govt route

Training /Flying schools

100% automatic specialised training required. Scope for urban elite educated women

Services 33.5 Air transport services, including passengers

49- 74%automatic beyond that govt route

high presence of women airhostesses and stewardess. However highly competitive sector -training in soft skills and supplementary skills to switch job beyond retirement age needed

Production 40.9FDI allowed for MSE

s.t regulations and caps

highest presence of women.branding of MSE products,CSR,skill development needed

Non-MSEs allowed - in MSE products- Also require industrial licence

beyond 24% Govt route

Women in micro small enterprises would benefit with export turnover which is mandated women should seek ESOP to share profits

50% export obligations as wellPharmaceuticals 100%-

automatic/govtwomen working in chemical industries possessed low levels of education as per 2004-5 study. Need to improve both education and skill sets to derive benefits.Govt to play facilitative role

transport & communication

6.3 Telecom services49- 74%automatic beyond that govt route

low presence of women in transportation though high in telecom services. Specific Skill requirements must.

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

Industry Specific sectors where FDI allowed and limits Sectoral share of female

workers(2009-10) UPSS%

Has FDI impacted women employment positively in other countries and policy

support required

Agriculture, hunting,

forestry & fishing

Floriculture, Horticulture, apiculture vegetable

cultivation, pisciculture under controlled

conditions And in agro& allied sectors

100% -automatic 66.99

Yes,High positive impact –cooperative farming, improves bargaining power Women Co-operatives to seek better

prices, credit, sponsored contract farming for women producers,

upskilling to support. Market extension services. Pepsico for tomato puree.

Construction Existing projects Beyond 74%- govt route

5.11 Lot of scope for women workers as it is a low-skilled area. Decent work for

women to be ensured through improvements skill development as

more prefabricated constructions. Scope for urban women architects as well.

Construction-development-

townships,housing except FDI in real estate business-

100% NRIs

100%automatic

Trade, hotels & restaurants

Cash and carry including Whole sale from MSMEs

100% automatic 4.55 In multi-brand retail condition is that at least 30% of the value of procurement of

manufactured/ processed products shall be sourced from Indian

'small industries' again cooperatives would help Move to benefit rural and urban as retail outlets to be set up in areas with minimum 10

lakh population. States have leverage.

No e-commerce for multi-brand retailing is also helpful.

e-commerce -do- Single-brand 100% Govt route

Multi-brand retail 51%-Govt

Finance, insurance, real

estate & busi

Private banking Upto 49% automatic

49-74% govt route

1.05 Both rural and urban women in banking services can benefit. ESOP participation

to be bargained. Public sector banking Upto 20% with Govt

Foreign companies presence in women-oriented sectors

• Agro-based industry- India produces 50% of World's Mango, 19% of Banana, 36% of Cashewnut , 38% of World's Cauliflower, 28% of Green Peas (Coca-Cola, Pepsi,Britannia, Danone, Nestle, Cadbury, Lever's Kellogg’s) -high rural presence can be capitalised by FDI.

•

•

• Automobile industry-Audi, BMW Chevrolet DaimlerChrysler (Mercedes) Fiat Ford General Motors, Hero Honda, Yamaha Motors, Hyundai Motors

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

Share of female workers in agri, forestry, horticulture

1993-94 2004-5

Urban 24.7 18.1

Rural 86.2 83.3

FDI in automobile industry-implications• 73% of manufacturing employment• Employs 17 mn people- direct and indirect(2012)• auto-component more labour-intensive than the auto -

assembly segment.• High imports auto-components from EU, Thailand, South

Korea, China • W.e.f Jan 2013 import duties - components for ASEAN halved

to 5% from 10% -phased out by Dec 2013. • 50% of components to be imported• benefit consumers at the cost of domestic industry/workers..• growth in emoluments lower than growth in labour

productivity. Need for skill-development.

Average growth in employment in automobile sector

Growth in number of automobiles produced in India

India’s Export Growth in automobiles ( nos)

Trends in Skill requirement by 2022

•

Initiatives in skill development

• ‘Time lease’ Gujarat country’s first vocational university.

• Skill vouchers Scheme Gujarat• ‘Global Talent Track’ in partnership with ‘CISCO system INC’

and some 900 colleges across 15 states, tied up with the University of Kashmir to train degree students with the job skills that employers are looking for.

• The Prime Minister’s National Mission on Skill Development targets training 500 mn skilled persons by 2022-

FDI in retail

2005 2011-12 2015

Total retail value (Share in GDP)

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

Total employment

Nos 200 mn 225 mn

Organised retail

Value $ bn 8 27 (31% clothing &

apparel and home supplies

20-30%)

Implications on employment- Bharti-Walmart

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

• Women fruit and vegetable vendors most vulnerable-set to suffer

• organised retail improves farm prices• Low consumer prices compensate job loss -low inflation,

increased output,semi-skilled employment, tax collection for economy

• Bharti-Walmart forcing farmers to be cost-competitive –FDI make industry contestable

• non-exclusive partnership-revocable –Bajaj quit Kawasaki

Share of retail in female urban employment fell from 22.85% in 1999-00 to 16.63% in 2004, smaller fall in rural. Women’s share

in total retail employment also fell from 11.25% to 9.47% (urban), smaller fall in rural – Walmart effect?

Agro-industry-women’s domain• Set to curtail post-harvest losses• Quality exports- SPS measures lower• Scope for cheaper consumer prices through consolidation of

ghanis, chakkis, puffing units, mills,solvent-extraction plants• supporting finance, infrastructure, credit facilities for agro-

based industry• impact women agricultural laborers more than farmers-study

on sugar industry, Maharashtra (Shejal2013)• Boom in tertiary sectors in rural areas• Women in fish processing, plantations,fruits, vegetables to

benefit

Recommendations-women skill development• Build India as a hub for skilled-womanpower • Specific skill-requirements of women in sectors:-• mfg:• Add ITIs dedicated for women• The Prime Minister’s National Mission on Skill Development targets

training 500 mn skilled persons by 2022-• Reverse causality• moderate skill-dispersion- Potential solutions

» increase semi-skilled workers with primary or secondary education

• reforms in education and training policies, computer literacy • Agro-based industry:-training in quality, packaging, marketing export

promotion, brand management, finance, credit access etc• Utilise KVICs,DICs etc for skill development

Recommendations-FDI conditionalities

• job creation conditionalities - women inclusive Head-exchange programs.

• prescribe export share-case of PEPSICO• CSR conditionalities- safe and good conditions of

work – initiatives Tata Motors, IL&FS, Fiat India, BhartiWalmart

Recommendations-legal issues• Insist on movement of un-skilled workers under mode 4 of

GATS agreement• Competition laws to rule out predatory pricing policies of

Foreign companies• Labour laws • Fiscal policies to tax profits, Taxation laws for tax havens like

Mauritius-improve revenue for social sectors• Fiscal benefits to Foreign companies employing a stipulated %

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

minimum level depending upon local conditions and cultural preferences

Other recommendations• Allow FDI in labour- competing sectors of women

employment to enhance mobility of labour• Brand promotion of ‘made-by- women’ products• Seek waiver fee for Importer-Exporter Code numbers for

women• Seek greater assistance under EXIM policy-focus schemes• Lower threshold for status holders for women• Women banks to fund agro-based industries• Vulnerable unorganised women workers such as vendors to

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

supply especially those of women, should be the business of future for India.

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