2018-CGS-29: Mains Revision-17: Secondary Sector of Economy

  • No notice of termination of employment shall be necessary in case of temporary and badli workmen.
  • A temporary workmen who has completed three months of continuous service, shall be given two weeks’ notice of the intention to terminate his employment if such termination is not in accordance with the terms of the contract.
  • In case he has not completed three months of continuous service, he shall be informed for the reasons for termination in writing.
  • The fixedworker would be entitled to all benefits like wages, hours of work, allowances and others statutory benefits, not less than permanent workmen.

This facility will aid industry to employ worker in sector which are of seasonal nature and witness fluctuation of demand and hence requires flexibility in employing worker. It is good step towards labour reforms. [Business Standard]

Draft Defence Production Policy

The Draft Defence Production Policy 2018 aims to create an environment that encourages a dynamic, robust and competitive defence industry, as an important part of the Make in India initiative.

Features of the policy

It also aims to facilitate faster absorption of technology and create a tiered defence industrial ecosystem in the country, besides reducing the dependence on imports to achieve self-reliance.

The features of the policy are

  • It proposes to increase the foreign direct investment (FDI) cap in niche technology areas to 74% under the automatic route in a bid to boost local manufacturing and catapult India into the league of countries housing top defence and aerospace industries. At present, the FDI cap for the defence sector is 49% under the automatic route for all categories.
  • India hopes to achieve a turnover of Rs1.7 trillion in defence goods and services by 2025.
  • It has a goal of becoming an arms exporter to the tune of Rs35,000 crore in defence goods and services by 2025.
  • It also hopes to transform itself into a global leader in cyberspace and AI (artificial intelligence) technologies.
  • The government will list its requirements in terms of platforms and weapon systems for the next decade to help private sector companies understand the opportunities.
  • Simplify procedures for private firms to enter defence production, i.e., liberalize the regime by issuing licences in 30 days and pruning no-go areas to a small ‘negative list’ for licensing.
  • Doing away with capacity assessment, except for critical projects. It will introduce earnest money deposits and performance guarantees as safeguards for others.
  • Setting up an ombudsman for resolving offset claims. Offsets—investments through a local partner to set up an ecosystem of suppliers—would be investment linked.
  • Rationalisation of taxes on import of capital goods for services and inputs for defence and aims to prevent inversion of taxes.

Through the policy the government is targeting achieving self-reliance in the development and manufacture of fighter aircraft, medium-lift and utility helicopters, warships, land combat vehicles, autonomous weapon systems, missiles, guns, small arms, ammunition, explosives, surveillance, electronic warfare and communication systems and night fighting equipment. [Mint]

Logistics Costs In India

Logistics sector in India comprises 14% of gross domestic product (GDP), much higher than in the US or Europe, where it is 8-9%, according to McKinsey research. It is said that high logistics cost in India is adversely affecting the Indian industrial sector as high logistics costs hurt Indian competitiveness.

The conventional wisdom about the logistical cost is challenged

There are instances which challenge the conventional wisdom about the India’s high logistics cost

  • Contrary to popular myth it’s the indirect costs not direct costs which are responsible for the high priced logistics of India. Indirect /hidden costs include inventory carrying costs, theft, damages and losses in transit; these account for 40% of India’s total logistics costs. Indirect costs are caused by inefficiencies in the supply chain; in developed countries, they are typically less than 10% of the total.
  • The popular belief is that the use of rail can significantly reduce the cost of logistics in India. Given the prevalence of short-haul movement of goods in India, there is limited room for growth.
  • Emphasising on coal and steel for logistics cost cuts is not a viable feature in India. Streamlining of the agricultural value chain can provide useful gains. Coal and steel account for about 12-16% of India’s total logistics costs; but the figure for agriculture is about 25%.
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