Mr. Modi eyes to create jobs

Prime Minister Narendra Modi has set in motion the first major revamp in decades of country's archaic labour laws, part of a plan to revive the flagging economy, boost manufacturing and create millions of jobs.

Successive governments have agreed labour reform is critical to absorb 200 million Indians reaching working age over the next two decades, but fears of an ugly union-led backlash and partisan politics have prevented changes to free up labour markets. Officials at the labour ministry say this is a top priority in the government's first 100 days in office.

Country has a forest of labour laws, including anachronisms such as providing spittoons in the work place, and are so complex that most firms choose to stay small. In 2009, 84 per cent of Country's manufacturers employed fewer than 50 workers, compared to 25 per cent in China, according to a study this year by consultancy firm McKinsey & Co.

The World Bank said in a 2014 report that India has one of the most rigid labour markets in the world and "although the regulations are meant to enhance the welfare of workers, they often have the opposite effect by encouraging firms to stay small and thus circumvent labour laws".

Business leaders hope Modi, who advocates smaller government and private enterprise, will be a liberaliser in the mould of Margaret Thatcher or Ronald Reagan. Perhaps the most important change, they say, is to rules making it hard to dismiss workers.