Women s work FDI policy in India Seventh

Women’s work & FDI policy in India Seventh Gender and Economic Policy Discussion ‘Politics and Economics of FDI through gender lens’ 9 th 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 A Or f ace buy outs fore by ign cos. Or Exchange rate intervention- keep rupee from appreciating – improve exports/output Low employme nt Low investmen t llow FD I Low supply chain infrastructure Exchange rate interventions to stop rupee from appreciating High wastage Improve investment Low investmen t /low exports/hi gh imports/d eficits High cost Monetary policy-high interest rates High inflation Low savings

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? Market size-per-capita income like retail telecme Good governance Resourcescapital/labour/infrast ructure FDI attractiveness Efficiency -Productivitywage differentials Mfg, trade, transport Mining, gas, power

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 immobiletraditionally • 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 50000 Total FDI Flows in USD Mn 45000 40000 35000 30000 25000 20000 Total FDI Flows in USD Mn 15000 10000 5000 0 2000 -1 2001 -2 2002 -3 2003 -4 2004 -5 2005 -6 2006 -7 2007 -8 2008 -9 2009 -102010 -112011 -122012 -13 (up to Jan 2013)

Share of top 10 investing countries FDI equity inflows UAE Chart Title France 2% Germany 2% 3% cyprus 4% Netherlands 5% USA 7% Mauritius 45% Japan 9% UK 11% Singapore 12%

Top five Indian destinations - FDI equity inflows Jan 2013 Chart Title Mumbai NCR 7% Bangalore Chennai Ahmedabad 8% 8% 49% 28%

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

co m ity un m oc ia , s er l, p e rv se s ice ce n tio an su r in so na l at st g lin el n io ct s g iti e ica un m ot . h de tra tru ns co ut il in g r to rin ac tu ry ar qu ec ys ar uf an m co m le ea im in g& in t& tp gr in nc na fia m pr Sectoral distribution of female workers (UPSS) % 80 70 60 50 40 30 20 10 0 2004 -5 2009 -10

Elasticity of Employment to GDP

What typifies skill levels - Indian manufacturing employment • Highly dispersed skill levels-production lines Highly skilled /short production chain Semi-lowskilled longer production chain ( most women workers belong here • Over-lap of skills-defects accumulation

occupations with high women share of employment and impact of FDI

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

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. Share of female workers in agri, • forestry, horticulture 1993 -94 2004 -5 Urban 24. 7 18. 1 Rural 86. 2 83. 3 • • Automobile industry-Audi, BMW Chevrolet Daimler. Chrysler (Mercedes) Fiat Ford General Motors, Hero Honda, Yamaha Motors, Hyundai Motors • Construction industry: Emmar Properties, of Dubai UK-based construction

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 14 12 10 8 employment in mfr of automobiles except 2/3 wheelers 6 employment in mfr of auto components 4 2 0 2001 -2 to 2003 -4 -2 -4 2003 -4 to 2004 -5 total emoluments Rs. Cr

Growth in number of automobiles produced in India 18, 000 16, 000 14, 000 12, 000 Passenger Vehicles 10, 000 Commercial Vehicles Three Wheelers 8, 000 Two Wheelers 6, 000 4, 000 2, 000 0 2008 -09 2009 -10 2010 -11 2011 -12

India’s Export Growth in automobiles ( nos) 2, 500, 000 2, 000 1, 500, 000 Passenger Vehicles Commercial Vehicles Three Wheelers 1, 000 Two Wheelers 500, 000 0 2005 -06 2006 -07 2007 -08 2008 -09 2009 -10 2010 -11 2011 -12

po m co ct tru to au ns Co an d a Co uto ns co tru m Te ctio pon xt n en ile in ts an du or d c stry Re ga lot al nis hin es ed g ta te ret Bu se ail sin rv es Le Ge s, at m IT ices fin he s & & an r & J IT ce l ew ES fu se eat ell rn rv he er itu ice r g y re s, I oo an ns ds d ura fu rn nce ish in gs n io • 40 Au to xt Te ne n in ts ile d an us t d clo ry or Re gan thin is al g es ed r ta et te a se il rv Bu ice G sin es Lea em IT & s s t s, fin her & J ITES ew an & el ce lea le r fu ser the vic r g y rn itu oo es , I re d an nsu s ra d n fu rn ce ish in gs Au to Trends in Skill requirement by 2022 employment 2008 CAGR 2008 -22 % incremental HR reqts till 2022 40 35 30 25 20 15 5 0 CAGR 2008 -22 % 35 30 25 20 15 10 10 5 0

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 Total retail value (Share in GDP) Total employment Nos Organised retail Value $ bn 2011 -12 2015 $225 bn(11%) $470 bn $660 bn 200 mn 8 225 mn 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 selfemployment • 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 agrobased industry • impact women agricultural laborers more than farmers-study on sugar industry, Maharashtra (Shejal 2013) • 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, Bharti. Walmart

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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