New Labour Codes Will Help Build More Compliant Textile Value Chain

The domestic textiles and apparel industry has lauded the long-awaited labour reforms and implementation of the new Labour Codes. The implementation of four Labour Codes, which consolidates 29 central labour laws into a cohesive and simplified framework, marks a landmark moment in India’s employment law landscape, ensuring greater uniformity in labour regulation and a more balanced framework for industrial relations that supports ease of doing business while safeguarding workers’ rights.

Effective from 21 November 2025, the Union government has officially notified the enforcement of all four Labour Codes — the Industrial Relations Code, 2020; Code on Social Security, 2020; Occupational Safety, Health, and Working Conditions (OSHWC) Code, 2020 and Code of Wages, 2019. The unified labour code regime is aimed at simplifying and streamlining the existing, decades-old labour laws in the country. The four labour codes mark a major reform by modernizing labour laws, ensuring decent working conditions, fair wages and long-term protection for workers across all sectors.

Ashwin Chandran, Chairman, CITI

Welcoming the move, the Confederation of Indian Textile Industry (CITI) has stated that the new Labour Codes align well with India’s initiatives towards becoming a responsible business hub and adherence to the various reporting frameworks. “We also hope that the rules would address the heterogeneity in the state laws which, so far, has made it difficult for companies with divisions in multiple states to comply with different state laws. The scale of growth visualised through PM Mitra parks and some of the other policy reforms need liberal employment rules. States with more industry-friendly provisions will attract more investment and jobs,” says  Ashwin Chandran, Chairman, CITI.

“However, the industry looks forward to addressing of overtime rates, which have been significantly higher than the ILO norms so far. Further simplification, reduction in compliance costs and more alignment with international labour norms and wage costs will augur well for the overall growth of both industry and organised employment and would result in reduced informalization of the sector,” adds Chandran.

“The implementation of the labour codes marks a forward-looking, industry-friendly reform, aiming to streamline India’s workforce regulations. By simplifying compliance and creating a unified framework, these codes offer companies greater flexibility while ensuring strong protections for workers. The new framework brings greater clarity in rules, reduces overlapping compliances, and makes it easier for businesses to operate across states. Overall, it’s a positive step in line with the changing business and economic environment,” opines Divya Baweja, Partner, Deloitte India.

Durai Palanisamy, Chairman, SIMA

Durai Palanisamy, Chairman, SIMA, has appreciated the Prime Minister for the bold and path-breaking initiative to simplify the labour laws, protecting the interests of employers and employees, ensuring the country to march towards Viksit Bharat. He believes that the implementation of these Labour Codes is yet another historic achievement of the Union government, marking the next milestone in the series of transformational changes introduced in the taxation regime.

“The new Labour Codes would facilitate compliance with various social accountability norms prescribed by leading countries like European Union and the US. The EU has decided that any exporting country must comply with the Corporate Sustainability Due Diligence Directive (CSDDD) requirements to access the European market. The new policy initiatives would facilitate the industry to take advantage of FTA to be concluded with EU and US in the short run,” adds Palanisamy.

Experts are of the opinion that the new Labour Codes will strengthen compliance with due diligence norms and enhance global competitiveness. It will help the Indian textile players clinch more export orders as it will comply with global due diligence norms. It will also give India a competitive edge over countries like Bangladesh in the global market. With the new Labour Codes coming into effect, textile workers now receive stronger protection and improved welfare benefits.

The reforms assure that all migrant workers receive equal wages and welfare support. Workers can now raise claims for up to three years for pending dues, making dispute resolution easier. Besides, a decision to allow women to work night shifts would help factories operate more efficiently and increase production. The historic reform streamlines compliance, modernizes outdated provisions and creates a simplified, efficient framework that promotes ease of doing business while safeguarding workers’ rights and welfare.

With the implementation of the Codes, the new regime is expected to have a wide-ranging impact on how organisations manage their workforce, compliance obligations and employee relations. For one, the Labour Codes introduce greater uniformity and clarity by redefining the concept of wages, expanding social security coverage, streamlining compliance and reporting mechanisms across sectors.  At the same time, the Codes seek to provide greater procedural flexibility to employers in areas such as fixed-term employment, contract labour engagement and industrial dispute resolution, while continuing to strengthen worker protections and social security entitlements, says a report by Nishith Desai Associates.

Labour is a key driver of economic growth and development. In order to simplify and strengthen the framework governing workers’ rights, the government has consolidated 29 labour laws into four comprehensive Labour Codes. This historic reform ensures that workers gain easier access to security, dignity, health and welfare measures, reinforcing India’s commitment to a fair and future-ready labour ecosystem.

Mithileshwar Thakur, Secretary General, Apparel Export Promotion Council (AEPC)

Mithileshwar Thakur, Secretary General of the Apparel Export Promotion Council (AEPC), says, “The implementation of the new Labour Codes is a major step towards simplifying and streamlining India’s complex web of labour laws. The reforms would unshackle Indian industry by enhancing productivity while ensuring transparency, job security and social and financial protection for workers.” Thakur strongly believes that permitting women to work night shifts across all establishments would greatly benefit the sector by immediately easing capacity constraints and helping India strengthen its position as a global clothing sourcing hub.

In fact, the implementation of the four Labour Codes marks a defining milestone in India’s journey toward modernising and harmonising its labour and employment law framework. For employers, expert believe, this transition will require a careful recalibration of existing policies, HR processes and compliance mechanisms. While the Codes promise significant simplification and uniformity, their full impact will unfold gradually as the Central and state governments finalise and notify the accompanying rules. Until then, the existing labour laws and corresponding rules will continue to govern employment relationships, providing a buffer period for employers to prepare for the transition. It is also important to note that the consolidation under the Labour Codes does not replace all existing state-specific employment laws. Local statutes, such as the Shops and Establishments Acts, will continue to operate and regulate essential aspects like working hours, holidays and service conditions for commercial establishments.

“As India moves toward a more formalised and inclusive labour ecosystem, employers should take this period as an opportunity to assess their compliance readiness, review workforce structures and align internal frameworks with the spirit of the new Codes,” avers the Nishith Desai Associates report.