Indian rupee investments
Indian rupee investmentsReuters File

The labour ministry has apparently put a hold on the proposal to increase minimum wages for all by up to 25 percent, citing reasons that any increase in wages would further raise the input cost for manufacturers and make them less competitive. 

When India is projecting itself as a lower labour cost hub to compete with China and at a time when there is a fall in global and domestic demand, according to a labour ministry official, the time is not ripe to increase wages any further, the Economic Times reported. 

"We are holding back the increase in minimum wages for a while now and may reconsider this at a later stage when demand picks up so that the additional burden incurred by a manufacturer through higher wages is compensated by increase order inflow," the official said. 

An industry expert, quoted by the Economic Times, said the substantial increase in labour wages would go against the central government's approach of "Make in India" and would impact investment decisions.

Last year, the labour ministry proposed an idea on the basis of which all Indian states were grouped into three different categories in terms of per-capita income and minimum wages for the unskilled, semi-skilled and skilled workers in each province.

Category of states Names of states Proposed minimum wage for unskilled
High per capita income states Goa, Delhi, Sikkim, Pondicherry, Maharashtra Rs. 8,000-9,000/month
Low per capita income states Bihar, Uttar Pradesh, Manipur, Assam, Jharkhand Rs. 6,000/month

Speaking about the importance of wage hike, DL Sachdeva of All India Trade Union Congress said: "Naturally, employers side will be hurt by increase in wage cost, but this is essential as wages in India are the lowest and unless the worker is compensated well he would not be motivated to deliver his best ability." 

[1 lakh = 100,000 | 1 crore = 10 million | 100 crore = 1 billion]