Last checked at 
By Manoj Kumar and Douglas Busvine
GURGAON, India, May 5 (Reuters) - When Narendra Modi talksabout creating jobs in labour-intensive manufacturing, textileentrepreneur Sudhir Dhingra hopes the Indian opposition leadermeans business.
Dhingra, who employs 30,000 workers in more than 20factories around the capital New Delhi, says that politicians -for all their promises - have shown no interest in acting toavert a looming employment crisis.
"The government doesn't care," says the outspoken66-year-old, who got his first break when he sold a batch ofcheesecloth shirts to Britain in 1972.
Early on, Dhingra survived a change of fashion that saddledhim with a pile of unsold stock. Learning his lessons - to keepclose tabs on the market and control costs - he built OrientCraft into $250 million business making 200,000 garments daily.
That success has come despite, and not thanks to, India'spoliticians, who Dhingra says are obsessed by the size ofinvestments but have given "no serious thought" to how jobs areactually created.
In the 63-year-old Modi, who polls show could become thenext prime minister, Dhingra at last sees a leader who offers abetter recipe: labour reforms, cheap land, steady power suppliesand better infrastructure.
"Modi understands how to promote industry. He has a trackrecord," said Dhingra, a tall man who cut a patriarchal figureas he strode the floor of his busy factory.
MODI MODEL
Backers highlight Modi's economic success over more than adecade as chief minister of Gujarat, which boasts one of thehighest growth rates among Indian states thanks to the type ofbusiness-friendly policies that Dhingra favours.
In a recent research report, U.S. investment bank GoldmanSachs estimated that if other Indian states boostedmanufacturing employment to levels achieved in Gujarat, Indiacould create 40 million industrial jobs in the next decade.
Yet sceptics counter that Modi's vaunted 'Gujarat model'favours capital-intensive industries and has failed to generatebetter jobs, while his Bharatiya Janata Party (BJP) had littlesuccess on labour reforms when it last ruled in 1998-2004.
Asia's third-largest economy needs 12 million new jobs everyyear to absorb a growing workforce and urban migrants - a taskmade harder by the longest spell of growth below 5 percent sincethe 1980s.
The stakes are high: either India gets its youth working -more than half of its 1.2 billion people are under 25 - or itwill fall further behind Asian leaders like China or South Koreathat long ago embraced jobs-driven growth.
That is where firms like Dhingra's come in: the 4,000workers at its factory in Gurgaon, a satellite city of Delhi,each make around $150 a month supplying retailers like GAP Inc and Marks & Spencer.
The pay, just above the minimum wage, is low. But there isno shortage of takers - many cloth cutters or sewing machineoperators working at the crowded but orderly plant are migrantsfrom hard-up northern states like Bihar.
"Before, I wasn't earning, but now I can save enough moneyto support my family," Anita, a sewing machine operator, toldReuters. Her son is with her family, but she has been able to gohome on leave to visit.
Orient Craft could expand further, but rigid hire-and-firelaws mean Dhingra cannot employ seasonal workers to meet peaksummer demand for cottonwear. Overtime is tightly controlled.
"It slows you down - it's too much bureaucracy," saidDhingra, who still controls the business after handing 'sweatequity' to two longtime partners.
WORKFORCE VS WORKFARE
The signature jobs initiative of the present Congress-ledgovernment, a guarantee of 100 days' paid work a year for therural poor, has been faulted for choking the supply of labour tomore productive urban jobs like those in Gurgaon.
With Congress heading for a drubbing at the polls, employershope that the BJP, if elected, can make good on its manifestopledges to fix India's complex and rigid labour laws.
Subramanian Swamy, a party strategist, said that a BJP-ledgovernment would review the Industrial Disputes Act of 1947,which requires the state to approve layoffs in firms with morethan 100 workers.
But how far Modi could go would depend on possibleparliamentary alliances and whether he can win over sceptics inhis own party.
"Labour reform is a sensitive subject," said BJP spokeswomanNirmala Sitharaman. "Steps would be taken in consultation withall stakeholders."
Even if Modi wins a strong mandate, India's constitutionalsetup may rule out radical change, as responsibility for labourpolicy is shared between the central government and the states.
"Modi's likely instinct would be to amend labour laws tofacilitate greater competition among the states," said MilanVaishnav, at the South Asia programme of the Carnegie Endowmentfor International Peace in Washington.
"However, this would require contentious legislative changeand, thus, may not be an early priority."
One prominent commentator, Omkar Goswami, argues thatIndia's labour laws "are politically impossible to repeal", andModi should focus instead on growth-promoting investment.
"That - and not the case for frictionless firing - is thebasis of labour market reforms," Goswami writes in "GettingIndia Back on Track", a book due to be published by Carnegie inJune.
Indira Hirway, of the Gujarat-based Centre for DevelopmentAlternatives, disagrees. She said Modi's system had deprivedworkers of the benefits of gains in their productivity, makingit the wrong model for India.
For textile boss Dhingra, a smart - if self-interested -solution would be for the state to subsidies his full-time staffrather than pay the rural poor to do 100 days work a year.
"Why don't you consider connecting these 100 days tolabour-intensive industries?" he told Reuters, volunteering topay the wage bill for the other 265 days of the year.
"Our labour costs come down and we provide permanent workfor the people. It's a win-win situation."
(Writing by Douglas Busvine; Editing by Tomasz Janowski)
