1. Women’s work & FDI policy in India
Seventh 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

2. Policy options for Govt to increase Output/ Employment
Allow FDI
Low investment
Low supply chain infrastructure
High wastage
High cost
High inflation
Low savings
Monetary policy-high interest rates
Low investment /low exports/high imports/deficits
Exchange rate interventions to stop rupee from appreciating
Low employment
Or face buy outs by foreign cos.
Improve investment
Or Exchange rate intervention- keep rupee from appreciating –improve exports/output
Monetary policy to curtail Current account deficits- monetary policy keeps rupee from appreciating below a threshold say Rs 52 to 1 $.
thrust on exports, output increases and absorption of labour force.
China adopts this method to realise current account surplus.
On the other hand if currency is allowed to depreciate beyond say Rs.59-Rs.60 to a $ domestic consumers would suffer from inflation.
Also expansionary monetary policy interventions can decelerate interest rates and improve domestic investment and output
if not interest rates get high, then foreign companies would buy-out Indian companies. Eg Birla earth-moving company bought out by Caterpillar.
Honda bought-out Sriram ‘s stake
Ford bought Mahindra stake. Indian companies too have acquired foreign stakes, like TVS Suzuki, Kinetic Motors and Honda,

3. 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)

4. Host country perspective

5. Investor perspective-What attracts FDI?
FDI attractiveness
Market size-per-capita income like retail telecme
Resources-capital/labour/infrastructure
Mining,gas,power
Efficiency -Productivity-wage differentials
Mfg, trade,transport
Good governance

6. 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
FOREIGN DIRECT INVESTMENT AND WAGES:
A BARGAINING POWER APPROACH- (2002)

7. FDI flows into India
Chinese FDI inflows nearly 10 times that of India

8. Share of top 10 investing countries FDI equity inflows

9. Top five Indian destinations - FDI equity inflows Jan 2013
Urban employment generate

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

11. Sectoral distribution of female workers (UPSS)%
With the FDI opening up further what we need to do given the low employment elasticity of our industries scene until 2009
GROWTH AND STRUCTURE
OF EMPLOYMENT IN INDIA
Long-Term and Post-Reform Performance
and the Emerging Challenge –T.S Tapola &partha March 2012
Strong Need for government support to set up skill development institutes for women in manufacturing

12. Elasticity of Employment to GDP
Old scene. Employment is inelastic
Source: Report of Task Force On Employment Opportunities, Planning Commission, p-46
EMPLOYMENT AND GROWTH
C. RANGARAJAN

13. What typifies skill levels - Indian manufacturing employment
Highly dispersed skill levels-production lines
Over-lap of skills-defects accumulation
Semi-low-skilled longer production chain ( most women workers belong here
Highly skilled /short production chain
Added to that is these features that typify Indian manufacturing. Pattern of industry exports influence skill distribution & induce
Pattern of industry exports influence skill distribution & induces workers to attain higher education

14. occupations with high women share of employment and impact of FDI

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

16. 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 construction
Share of female workers in agri, forestry, horticulture
2004-5
Urban
24.7
18.1
Rural
86.2
83.3
wide-agro-climatic conditions

17. 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.
Constitutes 73% of total employment in mfg
ICRIER(2005) next slide would show that

18. Average growth in employment in automobile sector

19. Growth in number of automobiles produced in India

20. India’s Export Growth in automobiles ( nos)

21. Trends in Skill requirement by 2022
Forbes-most critical job skills in 2013 critical thinking, .complex problem solving, judgment and decision making active listening computers and electronics mathematics ,operation and systems analysis ,monitoring programming and sales and marketing
Earnst and Young FICCI skill Report Scope for doing further research

22. 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-

23. 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 %)
Total retail both organised and unorganised is valued at $660 bn
$ 660 bn Investment Commission of India
Organised retail projections AT Kearney
Employment –organised retail to increase at p.a

24. 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
FDI in India’s Retail Sector: Some Issues IIM Bangalore,Murali Patibandha((2012)
As per expeirence of US with Walmart
Kirana stores procuring from Reliance
Domestic supermarkets like Pantaloons, Spencer’s not passing on low prices to consumers

25. Share of retail in female urban employment fell from 22
Share of retail in female urban employment fell from % in 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?

26. Loss of revenue though high unorganised labour

27. 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

28. 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
China has 500,000 vocational training centres compared with India’s 10,000 ITI’s and outdated.
Asuyama(2011)
Pattern of industry exports influence skill distribution and induces workers to attain higher skill/education levels
INDIA AIMS AT BECOMI
NG GLOBAL HUB
OF SUPPLY OF SKILLED
MANPOWER
M.M.K. Sardana *
General Agreement on Trade in Services

29. 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
as done in US while offering incentives for Japanese automotive firms at least in labour-intensive sectors
in Punjab-contract farming to export tomato puree, potatoes, provision of crop-insurance, credit facilities
women’shealth, education, maternity clinics, skill centers, SHGs, credit
spur competition with retail FDI brands
Hongkong, China to support initially- move suits women in retail

30. 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
FDI retail is high on profits so allow only upto 50% cap so that profits and taxes help India out of budgetary deficits.

31. 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.
e.g Airline, auto industry-once skilled-women employment can have better bargaining power with increased opportunities

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