India has taken a significant step towards modernizing its labour laws with the implementation of four new labour codes, aimed at attracting investment and enhancing the manufacturing sector. Prime Minister Narendra Modi announced this reform on X, emphasizing that the overhaul will lay a solid foundation for universal social security, timely wage payments, and safe workplaces, which he believes will catalyze job creation and boost productivity across the economy.
The labour ministry highlighted that these reforms prioritize the needs of workers, especially those in vulnerable sectors such as women, youth, gig workers, and migrants. The introduction of expanded social security measures and nationwide portable entitlements is set to provide stronger protections for millions.
By consolidating 29 existing, fragmented laws into four comprehensive codes that address wages, industrial relations, social security, and occupational safety, the government aims to simplify compliance and make India a more attractive destination for investment. Many of the previous regulations were seen as outdated, dating back to the colonial era, and often criticized by businesses for being overly complex and restrictive, particularly concerning the manufacturing industry, which currently constitutes less than 20% of India’s nearly $4 trillion GDP.
The reforms, which were stalled since their parliamentary approval in 2020 due to political opposition and resistance from some states and trade unions, are expected to bring considerable changes to factory operations. Notably, the new regulations will allow women to work night shifts, increase the flexibility for companies to extend working hours, and raise the layoff approval threshold from 100 to 300 employees.
Despite these intended benefits, trade unions have voiced strong opposition, arguing that the labour codes undermine workers’ rights, including those related to fixed-term jobs and entitlements provided under previous laws. Amarjeet Kaur from the All India Trade Union Congress criticized the reform, claiming it will diminish the rights workers previously held.
As India traverses this path of labour reform, the potential long-term benefits for household incomes and working conditions present a hopeful outlook for workers and the overall economy, though challenges for small and informal businesses may arise initially. The government and economists remain optimistic that these changes will ultimately contribute to a more robust economic landscape.