Four labour codes: A new social compact for a competitive India

India’s long-awaited labour reforms mark a defining moment for our economic and social trajectory. The consolidation of 29 Central labour laws into four Labour Codes represents one of the most forward-looking and inclusive transformations undertaken since Independence. Apart from decades of economic learnings, extensive dialogue with workers, industry and state governments went into these. They reflect a recognition that the world of work has changed and India’s labour framework must evolve to match the dynamism of a rapidly modernizing economy.

India is at an inflection point. To become a $5 trillion economy by 2028-29, we need a robust workforce, for which the legal framework must deliver security, opportunity and flexibility for both workers and enterprises. The four Labour Codes—on Wages, Industrial Relations, Social Security and Occupational Safety, Health and Working Conditions—aim to do that by laying a foundation for a more secure workforce and a more competitive industry.

By consolidating 29 fragmented and often overlapping laws, India has replaced complexity with clarity. The new framework streamlines compliance, digitizes processes and enables transparent, predictable industrial relations. For enterprises, particularly MSMEs that are engines of employment generation, this reform reduces administrative friction and allows businesses to scale, invest and innovate more confidently. For workers, it guarantees uniform wage floors, timely wage payment, stronger social security and defined protections that safeguard dignity and well-being. The Codes reaffirm a core principle that CII has long emphasized: that when workers thrive, productivity rises and growth becomes more sustainable for all.

The new labour architecture comes at a pivotal moment. India is emerging as a global hub for manufacturing, services, technology and digital innovation. Investors look for stability, transparency and a responsive regulatory environment. The Labour Codes deliver precisely that. A unified wage system, simpler hiring frameworks, clearer dispute resolution mechanisms and strengthened safety norms build confidence across sectors such as IT/ITeS, textiles and apparel, electronics, logistics, ports, mining and exports. The assurance of stability not only enhances competitiveness, but incentivizes long-term investments that expand employment and support value creation.

A defining strength of the Labour Codes is their deep inclusivity. For the first time, India extends social security protections to gig and platform workers, securing a fast-growing workforce that powers digital commerce, mobility and on-demand services. The Codes also advance gender equity by strengthening safeguards for women working across sectors, enabling night work with safety provisions, encoding maternity benefits and ensuring equal wages—steps that encourage greater female participation in India’s labour force. Youth entering the workforce benefit from clearer pathways to apprenticeships, training and employment in high-growth sectors. Meanwhile, MSMEs gain from simplified compliance and flexibility, enabling them to grow sustainably and formalize more jobs.

Importantly, the Labour Codes bring long-needed protections to traditional and vulnerable categories of workers, including beedi and cigar workers, plantation labour, mining and hazardous- industry workers, dock workers, textile and garment employees and professionals across audio-visual, broadcasting and digital media. The emphasis on occupational safety and health ensures that every worker, whether in a high-risk mine or a cutting-edge digital studio, receives adequate protection, welfare facilities and a safe environment. This should enhance productivity by reinforcing human dignity at work.

Collectively, these reforms initiate a virtuous cycle for India’s economy: improved worker welfare promotes motivation and productivity, which strengthens enterprise performance and competitiveness, which attracts investment, which creates more jobs and expands formalization, which in turn draws more workers under the protective umbrella of social security.

Early indicators already show this transformation taking shape. India recorded its highest-ever provident fund (PF) enrolments in 2024-25, a sign of faster formalization across sectors. Notably, 61% of new PF subscribers are aged below 29 years. Women’s economic participation is also rising, with the female worker population ratio having risen to 40.3% in 2023-24, up from 28.7% four years earlier—a powerful signal of inclusive growth. These trends affirm that India is moving steadily toward a high-trust, high-productivity workforce where protection and competitiveness reinforce each other.

In essence, the Labour Codes are far more than a legal consolidation; they represent a visionary redesign of India’s labour ecosystem. They strengthen the security of workers, agility of enterprises and confidence of investors. They empower workers and uplift them. In all, they create a new social compact, one that aligns economic growth with social justice and competitiveness with compassion. They promise growth that’s not only faster, but also fairer, more inclusive and more sustainable.

Note: This article has been jointly authored by R. Mukundan, President-Designate, CII and & CEO, Tata Chemicals and Chandrajit Banerjee, Director General, CII, and was first published in Mint On 24 November 2025.