New Labour Codes Set to Boost India’s Export Competitiveness

India’s newly implemented Labour Codes are poised to significantly enhance the competitiveness of the country’s export sector by streamlining regulations and creating a more flexible, compliant workforce environment.

Major Reforms for Export Industries

The four Labour Codes—covering wages, industrial relations, social security, and occupational safety—replace 29 outdated laws dating back to the 1930s-1950s. This consolidation addresses long-standing industry demands for simplified compliance.

Export-oriented industries including textiles, garments, leather, electronics, gems & jewellery, pharmaceuticals, auto components and IT services stand to benefit significantly from these reforms.

Key Benefits for Exporters

Uniform Wage Definition: A single definition of “wages” across all codes eliminates ambiguity and simplifies payroll administration for companies operating across multiple states.

National Floor Wage: Establishes a benchmark minimum wage, providing predictability in labour costs and eliminating regional disparities.

Fixed-Term Employment: Allows direct hiring for specific projects with full statutory benefits, helping industries manage seasonal demand fluctuations linked to global order cycles.

Enhanced Operational Flexibility: The threshold for government approval for lay-offs increased from 100 to 300 workers, giving exporters confidence to expand during peak periods.

Digital Transformation and Compliance

The codes mandate digital maintenance of employment records and introduce single registration with unified returns, reducing administrative burdens and costs.

“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 stated.

Third-party audit provisions allow export units to assess and improve health and safety standards without inspector intervention, supporting international compliance certification.

Worker Protection and Welfare

The reforms strengthen social security coverage for all employees, including fixed-term, contract, and gig workers, while consolidating provident fund, ESI, and gratuity under one framework.

Key worker benefits include:

• Prohibition of gender-based discrimination in recruitment and wages
• Women permitted night shifts with safety measures for 24-hour production cycles
• Free annual health check-ups for early detection of occupational illnesses
• Reduced eligibility for paid leave from 240 to 180 days
• Mandatory grievance redressal committees in workplaces with 20+ employees

Implementation Timeline

The four Labour Codes—the Code on Wages (2019), Industrial Relations Code (2020), Social Security Code (2020), and Occupational Safety, Health and Working Conditions Code (2020)—will take effect from November 21, 2025.

According to the PIB statement, “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.”