India’s Labour Codes: Transformative step towards inclusive economic growth

Land and labour are foundational to Indias growth while land drives infrastructure and industrial development, labour fuels productivity and inclusion. In this context, Indias new Labour Codes mark a transformative step, consolidating 29 laws into a modern, unified framework that ensures clarity, consistency, and equity in the world of work.

For workers, the Codes promise stronger social protection, safer workplaces, and wider access to formal benefits, while businesses benefit from simplified compliance, flexibility in workforce management, and a level playing field across sectors. While the ultimate impact will depend on the quality of implementation, these Codes mark a decisive step in aligning Indias labour market with the needs of a 21st-century economy.

Across diverse sectors from delivery services in Jaipur to technical roles in Sanand, and construction work in Guwahati Indias workforce shares a common aspiration: Access to safe working conditions, fair remuneration, and social security that is portable and reliable. Whether employed in factories, on farms, or through platform-based services, workers seek three core assurances: Income stability, predictable social protection and dignity in employment. India’s four Labour Codes have been formulated with the objective of translating this aspiration into a lived reality, ensuring that the principles of equity and protection are embedded across the world of work.

At the heart of the reforms lies an expansion of social security coverage. Millions of unorganised, gig and platform workers, who form a significant share of Indias workforce, stand to gain formal recognition and entitlements under the new framework. Provisions for provident fund, health insurance and maternity benefits are no longer confined to employees in the formal sector but extend to categories that have been historically excluded. This shift not only strengthens the safety net for vulnerable workers but also encourages more enterprises to formalise employment, thereby expanding the overall base of social protection.

The Code on Social Security, 2020, formally recognises gig, platform, and unorganised workers and allows the Centre and states to set up dedicated social security funds for them. Aggregators can be required to contribute1-2 per cent of turnover, capped at 5 per cent of payouts, a practical way to finance benefits for gig and platform workers.

Aadhaar-based registration is already notified, and thee-Shram portal has enrolled over 310 million workers, giving each a universal account number (UAN) enabling portability of benefits such as health insurance, maternity support, and old age pension, regardless of where they work.

Thee-Shram registry is, in effect, Indias first national database of informal workers an essential step towards inclusive growth and disaster resilience.

Equally transformative is the Occupational Safety, Health and Working Conditions Code, which unifies safety norms and, notably, permits women to work night shifts with consent and safeguards. This progressive measure expands the opportunities for women while keeping protection non-negotiable. The OSH Code also rationalises licensing and inspection systems, moving towards risk-based, technology enabled compliance to promote a culture of prevention rather than punishment. The Code on Wages, meanwhile, universalises the framework for minimum wages and timely payments across all sectors, irrespective of the sector or skill level.

The Industrial Relations Code seeks to strengthen mechanisms for dispute resolution and promote social dialogue. By encouraging negotiation, conciliation, and arbitration before escalation, it creates a more stable industrial relations environment. In addition, simplified rules around trade union recognition and standing orders for larger enterprises are designed to improve transparency and predictability in employer-employee relations.

For enterprises, especially micro, small, and medium enterprises (MSMEs), the Labour Codes mean simpler compliance: Standardised definitions, fewer registers, digital filings and far less ambiguity. Indias foreign direct investment (FDI) inflows touched $83.6 billion in FY2021-22 and remained robust at $81 billion in FY2024-25. This period coincided with several pathbreaking reforms, including the enactment of labour reforms. The financial year2021-22 saw the highest allocation for capex of around over 13 trillion. Further, several significant reforms were made to reduce the compliance burden via institutional policy, digital reforms, promoting ease of doing business and making India an attractive investment destination. Reforms in the manufacturing sector, strengthening the semiconductor industry, coal sector energy and mineral sector in the same period further contributed to strengthening the country’s position in the globally competitive market in the same period.

Yet, passing laws is only half the journey. Labour is a Concurrent List subject, meaning both the Centre and states must frame and notify rules for implementation. While most states have prepared draft rules under the four Codes, the pace of final notifications remains uneven. For the vision of One Nation, One Labour Law Framework to materialise, it is essential that the Centre and all states move quickly towards operationalisation.

To make the transition effective, a few priorities stand out.

First, operationalise unorganised workers coverage: Notify contribution rates for aggregators, establish transparent enrolment and benefit-delivery systems, and create public dashboards to ensure accountability. International models, such as Singapore’s Central Provident Fund (CPF) for platform workers, can offer valuable lessons.

Second, turn digital infrastructure into real entitlements: Linke-Shram, EPFO, and ESIC databases so that benefits follow workers wherever they go. Aadhaar should be used for portability, not exclusion.

Third, build awareness and capacity: MSMEs needhelp-desks and simplified guides to understand the Codes; workers need multilingual helplines and onground support. Joint outreach by government, industry bodies and unions can ensure rights on paper translate into benefits in hand.

At its core, this reform is about trust that work will be safe and fairly paid; that social security will follow the worker; and that compliance will be simple enough for all to participate. The government deserves appreciation for building this architecture. If we now implement with speed, transparency and collaboration, the Codes can anchor Indias next growth chapter.

India’s Labour Codes can anchor the nations next growth chapter competitiveness for business, dignified work for workers, and predictable environment for investors. That is the essence of a Viksit Bharat growth with inclusion, and prosperity that reaches every worker.

Note: This article was first published in Business Standard