In a major push to industrial growth in Uttar Pradesh, the Yogi Adityanath government has rolled out a Third-Party Audit Scheme, which is aimed at easing the burden of compliance on businesses and making the compliance procedure more transparent. The scheme was welcomed by the national federation for Indian MSMEs, Federation of Indian Micro and Small & Medium Enterprises (FISME). The FISME have been highlighting the need for reform with the central and state governments, as reported by the Knowledge and News Network (KNN).
Under the scheme, industrial establishments will not face immediate action for non-compliance. They will receive notices, allowing them an opportunity to rectify the issues. Initially, a notice will be issued, which will be followed by a second notice if the issue is not rectified. No prosecution will be started against an industrial establishment without the approval of a senior authority. The requirement of notices and rectification opportunities before prosecution under the scheme will help reduce regulatory pressure and concerns over arbitrary action.
The scheme has made the selection of third-party auditors, both labour and technical, fully online to maintain transparency. It allows the appointment of compliance auditors through a formal government order to assist employers. Till now, 13 institutions have been empanelled under the scheme.
The scheme lays down a risk-based inspection framework, under which industrial units have been classified into three categories. Low-risk industrial units with 10 to 50 workers are subject to self-certification-based inspections once every five years under key labour laws such as the Motor Vehicles Act, Contract Labour Act, Beedi and Cigar Act, Inter-State Migrant Workers Act, and the Factories Act.
Medium-risk units employing 50 to 100 workers will be subjected to third-party audits every three years. And, high-risk industrial units, including those with more than 100 workers or operating in hazardous industries, will have to undergo annual or need-based inspections by the department.
The Labour Department said that the scheme will diminish the apprehensions of arbitrary inspections, improve the ease of doing business, and enhance investor confidence while maintaining regulatory oversight.
The frequency of inspections for low-risk micro, small and medium enterprises (MSMEs) has been significantly reduced under the scheme by allowing self-certification with inspections only once every five years. This results in lower compliance costs and disruptions.
