The much-awaited Maternity Benefit (Amendment) Act, 2017 finally received the assent of President Pranab Mukherjee on March 27, 2017. With this India comes at par with countries like Israel and Poland that allow 26 weeks of maternity leave.

The new law also makes it mandatory for establishments with 30 women or 50 employees to provide crèche facilities, directly or indirectly. And all of this has to be tabled in writing before the employees.

No doubt the increase in paid maternity leave for women is a welcome move. But only women that are a part of the formal economy are eligible for the benefits. Ironically, the new law has poured confusion over India’s MSME community. The reason is simple. MSMEs in India cannot afford the cost of hiring a human resource who can go on a paid leave of six months. As simple as that! Well, that’s what the surveys indicate. According to a recent survey conducted amongst 4,300 startups and MSMEs by LocalCircles, a Noida-based citizen engagement platform, 26% of the respondents were of the opinion that they would now prefer hiring male employees. Another 40% said that they would continue hiring female employees, but would certainly consider if the cost incurred is worth the candidate. This means the very hiring approach of a majority of MSMEs will change drastically going forward.

The new law is likely to have a bearing on the hiring process of not just MSMEs but also the well-established private players that have been very receptive to hiring women so far. Their argument: The new law will negatively impact their business ecosystem, both in terms of cost and profitability. May be that’s the reason why United States of America guarantees women no paid leave at all. The Family and Medical Leave Act of 1993 (FMLA) only ensures that female employees don’t lose their jobs if they go on leave for up to 12 weeks after giving birth and does not guarantee paid leaves to new mothers.

Further, a lot of countries across the globe split the cost of maternity leave amongst various stakeholders, which includes the government, insurance companies, social security programmes, etc. While in UK and Germany, maternity benefits are financed by a combination of funds from the employer and the government, in countries like Norway and Australia, maternity benefits are provided to pregnant women through national social security programmes. In India, however, it’s the employer that bears the entire cost. Hence, an increase in paid maternity benefits will give MSMEs yet another reason to not hire female employees as it would result in a higher obligation on their part.

With working capital in short supply, exports slowing down across the globe, ‘ease of doing business’ still a distant dream, and a severe lack of infrastructure and government support, most MSMEs are already finding it tough to even keep their factories’ conveyor belts operational. And the new law will only add to their woes, particularly MSMEs that employ a higher proportion of women workers.

If policymakers really want to create equal job opportunities for women while ensuring that the absence of adequate maternity leave and income security do not lead to female employees dropping out of the labour force, they also need to ensure that a mechanism is in place that makes sure that the incidence of mandated maternity benefits does not entirely fall on the employers’ shoulders, particularly in the case of MSMEs. What’s the science behind the minimum count of 50 employees? Or what’s the formula that makes 30 women in your workforce a cut-off? A clear answer to these two questions will make MSMEs understand why the new law, one that has made their life a bit tougher, and especially in case of those who have in recent years relied heavily on the rather not-so-exciting global trade environment. Till then, it all appears a “force-em’-down-their-throats” law for India’s MSMEs.

It’s time to create a win-win situation for both women workforce and the employers.

Am sure there is a reason why more than 200 countries around the world, including the likes of USA, Germany, UK, etc. (most of which boast of one the world’s most conducive work environments for their workforce) have a more balanced law – one that protects mothers and companies alike!