Newly implemented Labour Codes to catalyse growth in India's exports

New Delhi [India], November 30 : The central government's recent integration of 29 laws into four streamlined Labour Codes, enabling an environment that promotes industrial efficiency while safeguarding workers' interests, is expected to catalyse growth in India's export sector.

The Export-Oriented Industries (EOIs)- including textiles, garments, leather, electronics, gems & jewellery, pharmaceuticals, auto components and IT-enabled services- are critical contributors to India's employment and foreign exchange earnings.

Their competitiveness depends heavily on the ability to maintain a flexible, compliant, and skilled workforce while adhering to international labour standards.

The labour reform brings about a series of benefits for India's export sector, especially simplifying compliance for employers and enabling improved workforce management, according to a statement from PIB Headquarters on Sunday.

One of the most impactful reforms is the introduction of a uniform definition of "wages" across all labour codes. This provision eliminates the ambiguity created by multiple, inconsistent definitions in earlier laws.

For EOIs operating in multiple states, it simplifies payroll administration and compliance, ensuring uniformity in wage calculations for social security contributions, bonus, and gratuity, the PIB Headquarters statement has asserted.

The provision for fixing a National Floor Wage by the government establishes a benchmark below which no state can fix its minimum wage. For EOIs functioning across states, this offers predictability in labour cost structures and eliminates regional disparities.

The legal recognition of digital wage payments encourages the adoption of transparent and traceable payment systems.

According to the government, EOIs will benefit from the ability to maintain verifiable payment records, which are often required by global buyers and compliance audits.

The prohibition of gender-based discrimination in recruitment and wages also ensures equal remuneration for equal work.

For EOIs, this aligns domestic practices with international labour and human rights standards, particularly those demanded by global retail and sourcing partners.

The provision for Fixed-Term Employment (FTE) allows employers to hire workers directly for a specific duration or project, with all statutory benefits equivalent to those of permanent workers.

The government asserts that this is particularly beneficial to EOIs that experience fluctuating or seasonal demand linked to global order cycles. Industries gain flexibility to scale their workforce up or down without resorting to informal or contractual hiring, thereby remaining compliant with law and maintaining a positive image among international clients.

Raising the threshold for prior government approval for lay-off, retrenchment, or closure from 100 to 300 workers offers industries operational flexibility to adjust to changing export orders and global market conditions.

"This provision gives exporters the confidence to expand employment during peak demand periods without the fear of excessive rigidity during downturns," the government said.

The governments (State/Central, as applicable) have been given full flexibility for fixing the limit of working hours.

Earlier this limit was 75 overtime hours in a quarter which now can be fixed by the (State/Central, as applicable) Government. This flexibility in hours of work will enable industry to fix the hours of work as per the business needs including when they get peak orders.

"It will also generate growth and employment," the PIB Headquarters' statement noted.

The introduction of single registration and unified returns provisions reduces the multiplicity of licenses and inspections under different labour laws.

EOIs, which often operate multiple production units or engage numerous contractors, benefit from simplified compliance and reduced administrative costs, including when they get peak orders.

The codes promote digital maintenance of employment records, registers, and returns. EOIs, which are frequently audited by overseas clients and certification agencies, gain credibility through transparent and traceable digital documentation.

The provision of Inspector-cum-Facilitator and Randomised Digital Inspections aims to reduce the traditional "inspector raj," where inspections were often seen as intrusive and burdensome.

"Inspectors will function more as facilitators- helping employers comply with law, creating awareness among workers. This shift promotes harmonious environment and facilitates ease of doing business," the government said.

The Third-Party Audit and Certification provision has been made for third-party audit and certification of start-up establishments or class of establishments. It will help EOIs to assess and improve health and safety without intervention of Inspector-cum-Facilitator.

First-time offences that carry only a fine can now be settled by paying 50 per cent of the maximum penalty. Offences that earlier involved a fine, imprisonment, or both can be settled by paying 75 per cent of the maximum penalty, making the law less punitive and more focused on encouraging compliance.

Further, employers can avoid prolonged litigation by paying a prescribed penalty that enables quicker resolution, minimizes litigation, and lowers compliance risk for small EOIs.

Improvement Notice and Decriminalisation of Offences provision aims to replace criminal penalties (like imprisonment) with civil penalties (like monetary fines).

The employer will be given mandatory 30 days' notice for compliance before taking any legal action.

Several offences have been decriminalized replacing criminal penalties with fines making the law less punitive and more compliance-oriented which will promote voluntary compliance, reduce fear of prosecution and make enforcement facilitative for export sector.

The universalisation of social security through provisions covering all employees (including fixed-term, contract, gig workers), strengthens the protection net for workers in export industries.

Employers in export sectors benefit from clarity and consolidation of earlier fragmented schemes such as provident fund, ESI, and gratuity under one framework.

The mandatory establishment of Grievance Redressal Committees in workplaces employing 20 or more workers ensures that issues are resolved internally and promptly. Export industries, which must maintain uninterrupted production schedules, benefit from the reduction in industrial unrest and legal disputes.

Uniform and comprehensive provisions on occupational safety, health, and welfare are expected to benefit export industries by providing a single, harmonised set of standards applicable across states and sectors.

"Compliance with these standards enhances workplace safety and supports certification under international social compliance regimes, which are increasingly demanded by global buyers," the government said.

The provision permitting employment of women during night shifts, subject to their consent and adequate safety measures, greatly benefits EOIs that function on a 24-hour production cycle to meet international orders.

"Industries in sectors like apparel, electronics, and IT-enabled services can now legally employ women during late hours with proper transportation, security, and welfare arrangements. This supports continuous production and order fulfilment," the government noted.

The provision for free annual health check-ups ensures that every employee, irrespective of their employment category, has access to preventive healthcare. In export sectors like textiles, leather, electronics, and garment manufacturing, workers are frequently exposed to dust, chemicals, noise, and ergonomic strain. Regular health assessments help in early detection of occupational illnesses, enabling timely treatment and preventing chronic conditions. For women workers, periodic check-ups provide crucial preventive care and contribute to overall well-being.

The provision of annual leave with wages- made available to every employee completing 180 days of work in a calendar year (reduced from the earlier 240-day requirement) will be beneficial for workers in EOIs, who often face intense production pressures and tight export deadlines, this ensures adequate rest, recovery, and work-life balance without any loss of income. Paid annual leave will enable them to spend time with their families, attend to personal or health needs, and return to work rejuvenated, leading to better morale and efficiency.

The rationalisation of working hours, weekly rest, and leave entitlements creates a uniform and predictable framework for export units. Workers will benefit from regulated work schedules, rest periods, and welfare amenities such as canteens, crèches, and medical facilities. The combination of structured work time and welfare will improve job satisfaction for the workers.

Each provision under the Labour Codes, according to the government, strengthens India's export ecosystem in a distinct yet interconnected way.

For EOIs, the Codes offer the flexibility, simplification, and predictability needed to compete in dynamic global markets while meeting rising international compliance standards. For workers, these same reforms guarantee fair wages, social security, safety, equality, and opportunities for upskilling- enhancing both their welfare and dignity at work.

"Together, the Codes advance India toward a modern labour regime that balances ease of doing business with ease of living for workers, driving both economic growth and inclusive development across the export sector," the PIB Headquarters' statement concluded.

In a historic decision, the government of India announced that the four Labour Codes - the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020 and are being made effective immediately from November 21, 2025. The four Codes rationalised 29 existing labour laws.

While drafting the four Codes, the government argued that many of India's labour laws were framed in the pre-Independence and early post-Independence era (1930s-1950s), when the economy and the world of work were fundamentally different. While most major economies have updated and consolidated their labour regulations in recent decades, India continued to operate under fragmented, complex and in several parts outdated provisions spread across 29 Central labour laws.

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