Perfectly timed with the rise of India’s ESDM industry and decades of delay, India’s labour reforms seem to have come at a game-changing moment. Given the expected opportunities, the true challenge now lies in its implementation.
On 21 November 2025, India crossed a long-delayed threshold in labour governance, which is more than a mere legal reform. With the formal implementation of four unified Labour Codes, the country moved from something fragmented to a consolidated framework governing wages, industrial relations, social security, and workplace conditions. It arrived at a moment when India’s electronics manufacturing ambition was scaling at historic speed and when the human foundations of that ambition demanded predictability.
Over the past decade, electronics has emerged as one of India’s fastest-growing manufacturing segments. Domestic electronics production expanded from US$29 billion in FY15 to US$101 billion in FY23, contributing roughly 3.4% of GDP. What does the most recent government data suggest?
On February 6, 2026, Jitin Prasada, the Minister of State for Electronics and IT, shared that electronics production in India has risen from approximately ₹1.9 trillion in 2014-15 to an estimated ₹11.3 trillion by 2024-25. Exports have jumped from ₹400 billion to around ₹3.3 trillion during the same period.
Moreover, India is already the world’s second-largest mobile phone manufacturer, with manufacturing units increasing from just two in 2014 to over 300 by 2025, accounting for almost 97% of domestic demand. Production alone soared from ₹200 billion in 2014-15 to about ₹5.5 trillion in 2024-25. Exports have risen by more than 100 times, growing from nearly ₹10 billion to close to ₹2 trillion.
Yet, even as factories multiplied and output surged, labour governance lagged behind industrial reality.
Why labour reform matters to electronics manufacturing
Electronics manufacturing is labour-intensive, time-sensitive and globally benchmarked. It depends on large, semi-skilled workforces operating under tight production timelines, fluctuating demand cycles and strict quality requirements. The sector’s labour ecosystem spans electronics manufacturing services (EMS), component suppliers, semiconductor assembly units, and nationwide repair and service networks. Women predominate on assembly lines due to the precision and consistency required, whereas migrant workers form the backbone of many large clusters.
Before reform, this ecosystem operated under structural strain. Employers navigated more than 40 central labour laws and over 100 state-level statutes, each with different definitions, registers, thresholds and inspection regimes. Workers faced uneven wage protection, limited social security coverage, particularly in contract roles, and weak mechanisms for grievance redressal. For firms operating across multiple states, compliance complexity became a deterrent to scale.
Labour reform, therefore, was not a peripheral demand. It was a prerequisite for sustaining growth in electronics manufacturing.
How India reached the 2025 reform
India’s labour framework evolved over a century, beginning with colonial-era factory legislation in 1881 and expanding after Independence. Landmark laws in the late 1940s and 1950s focused on worker protection: factories, minimum wages, industrial disputes and social insurance, suited to a different industrial era.
Then came the economic liberalisation in 1991. It transformed the industry, but labour law largely remained static. As new sectors, such as electronics, emerged, the regulatory architecture became more and more misaligned. Multiple committees, including the Second National Commission on Labour in 2002, repeatedly recommended consolidation.
Glimpse of labour reforms post 2014, after a major shift in India’s central power:
- IT-Enabled System for Inspection: To ensure transparency and accountability, the use of IT-enabled systems for inspections was made mandatory.
- Increase in Gratuity Ceiling: The ceiling limit of gratuity was increased from ₹1 million to ₹2 million on 29th March 2018.
- Payment of Wages Act (2017): On 16th February 2017, the Act enabled the payment of wages to employees via cheque or direct bank transfers.
- Maternity Benefit Amendment Act (2017): Enacted on 1st April 2017, the Act increased the paid maternity leave from 12 weeks to 26 weeks.
Between 2019 and 2020, Parliament enacted four Labour Codes, subsuming 29 central laws. However, because labour sits on the Concurrent List, implementation depended on state-level rulemaking. That process took years. The final notification in November 2025, thus, marked the culmination of decades of debate.
The four Labour Codes and why electronics care
The first code is the Code on Wages, 2019, which establishes a national floor wage and uniform wage definitions, replacing fragmented state-specific wage regimes. For electronics manufacturers with multi-state operations and layered supply chains, this introduces predictability and reduces wage disputes. For workers, especially women, it reinforces equal pay principles in a sector where gender participation is high but bargaining power is uneven.
Major highlights:
- Statutory minimum wages: Establishes a right to minimum wages for all employees, replacing limited previous coverage
- Floor wage: Introduces a floor wage based on living standards, ensuring no state sets wages below this level
- Wage fixation: Takes into account skill levels, location, and job conditions
- Timely wage payments: Mandates timely payment and prevents unauthorised deductions
- Overtime compensation: Requires overtime pay at double the normal rate.
- Extended provisions: Extends protections beyond the ₹24,000/month limit
- Employer responsibility: Employers are responsible for wage payments
- Penalties for offences: Offences can be compounded with monetary penalties
The Industrial Relations Code, 2020, formalises fixed-term employment, clarifies union recognition and streamlines dispute resolution. Electronics manufacturing operates in cycles, festive demand, export orders, and technology refreshes. The code provides flexibility within defined legal boundaries, reducing reliance on informal contracts while preserving workers’ entitlements, such as gratuity after one year.
Major highlights:
- Fixed-term employment (FTE): Time-bound contracts with equal wages, benefits, and gratuity after one year.
- Re-skilling fund: A fund for retraining retrenched workers, offering 15 days’ wages.
- Union recognition: Unions with 51% membership recognised; others form Negotiating Councils.
- Worker definition: Includes sales promotion staff, journalists, and supervisory employees earning up to ₹18,000/month.
- Lay-off threshold: Raised from 100 to 300 workers.
- Women’s representation: Ensures women’s participation in grievance committees.
- Work-from-home: Permits in service sectors.
- Industrial tribunals: For faster dispute resolution.
- Digital processes: Enhances transparency with electronic systems.
The third being, the Social Security Code, 2020, expands coverage beyond permanent employees to include contract, gig and platform workers. In electronics, where apprentices, agency-hired labour, and vendor-linked employment are common, this marks a shift towards portability and continuity of benefits, such as the Employees’ Provident Fund (EPF), the Employees’ State Insurance Corporation (ESIC), and insurance.
Major highlights:
- Expanded ESIC coverage: Nationwide applicability; gig and platform workers included
- Time-bound EPF inquiries: Five-year initiation limit, two years for resolution
- Gratuity for fixed-term employees: Eligibility after one year of continuous service
- Social security: Extended to maternal grandparents and dependent parents-in-law
- Commuting accidents: Accidents between home and workplace are now employment-related
- Inspector-cum-facilitator: Randomised, web-based inspections for transparency
- Fines for offences: Replaces imprisonment; reduces litigation
- Digitisation of compliance: Electronic records and returns
- Vacancy reporting: Employers must report vacancies to career centres
Finally, the Occupational Safety, Health and Working Conditions (OSH) Code, 2020, consolidates safety norms, mandates health checks and strengthens welfare provisions. Its relevance to electronics lies in ergonomics, ESD (electrostatic discharge)-sensitive environments, repetitive work conditions and 24×7 operations. Crucially, it enables women to work night shifts with safeguards, thereby aligning Indian factories with global manufacturing norms.
Major highlights:
- Unified registration: One registration for establishments with 10+ employees, reducing redundancies and promoting ease of business
- Extension to hazardous work: Government can extend Code to any hazardous workplace
- Simplified compliance: One license, registration, and return framework to reduce compliance burden
- Wider migrant worker definition: Benefits include travel allowances and social security portability across states
- Health and formalisation: Free annual health check-ups and appointment letters for transparency
- Women’s employment: Women can work at night with consent and safety measures
- Expanded media worker definition: Includes electronic media and all forms of audiovisual production workers
- National database for unorganised workers: Helps migrant workers access jobs and benefits
- Victim compensation: 50% of fines to be paid as compensation to victims
- Contract labour reform: Threshold raised to 50 workers; all-India license introduced
- Safety committees: Required in establishments with 500+ workers
- National OSH Advisory Board: Replaces six boards, setting uniform national standards
- Decriminalisation and compounding: First-time offences compounded with monetary fines, promoting compliance
- Revised factory thresholds: Increased thresholds for applicability, easing compliance for small units
- Social security fund: For unorganised workers, funded by penalties and compounding fees
- Welfare and wages for contract workers: Principal employers are responsible for the welfare and unpaid wages of contract workers
- Working hours and overtime: 8 hours/day, 48 hours/week; overtime at double rate with consent
- Inspector-cum-facilitator system: Inspectors act as facilitators to help employers comply with laws
The telling case of Tamil Nadu
Nowhere is the relevance of labour reform clearer than in Tamil Nadu’s electronics clusters around Chennai, Sriperumbudur and Oragadam. Before 2017, independent studies by Cividep and Electronics Watch revealed widespread instability. In a major Nokia SEZ, only 20-54% of workers were permanent; the rest cycled through short-term contracts and trainee schemes despite performing identical tasks.
At a large electronics components manufacturer employing 3500 workers, 80% of whom are women, reports highlighted limited breaks, wage deductions during approved leave, and fear of unionisation. While companies provided transport and subsidised meals, these welfare measures often substituted for formal representation and grievance mechanisms. Written appointment letters were inconsistent, and awareness of statutory rights was low.
These conditions were not deviations; they reflected structural gaps in enforcement and coverage. Now the question remains, after almost eight to nine years, can the new Labour Codes directly address such vulnerabilities?
What the reforms aim to fix
At their core, the Labour Codes aim to address four long-standing problems: regulatory fragmentation, uneven wage protection, informal employment, and weak dispute resolution. For electronics manufacturing, these problems translated into high attrition, compliance anxiety and reputational risk, especially as global original equipment manufacturers (OEMs) increasingly scrutinise labour standards.
By uniting laws, simplifying registers, and moving towards digitised compliance, the codes, in theory, lower administrative friction. By formalising employment categories and expanding benefits, they aim to convert flexibility from informality into regulation-backed certainty.
Opportunities and limits
Now, for industry, the reforms promise easier scaling, improved investor confidence and better workforce retention. Allowing women on night shifts expands the talent pool. Predictable industrial relations reduce production disruptions. For workers, wage stability, social security portability and safety standards anchor dignity in enforceable rights.
However, concerns remain. Flexibility in hiring and separation could be misused in smaller supplier units. State-level delays or diluted rules could weaken outcomes. Enforcement capacity, like inspectors, digital systems, and grievance redressal, will determine whether reform is experienced on the shopfloor or remains on paper.
The skill gap is another genuine hurdle in India. Although the Labour Codes address this by setting aside a skilling fund, the sheer scale of the semi-skilled workforce means it will take time to close the gap.
What success will look like
What do the experts say? Industry body India Electronics and Semiconductor Association (IESA) noted, “By modernising the labour framework, these reforms align India with global standards, marking a shift towards a more inclusive, transparent, and productivity-driven environment. In the electronics and semiconductor sectors, this will accelerate investment, scale manufacturing, and support workforce development.”
Ashok Chandak, President, IESA & SEMI India, said: “The Four Labour Codes reforms will strengthen blue-collar jobs in electronics manufacturing through better wages, greater participation of women, improved safety, and stronger social protection. A more formal and future-ready workforce will reduce attrition and boost productivity across factories. This is a major step toward building globally competitive ESDM and semiconductor ecosystems in India.”
Globally, India’s electronics labour framework now resembles hybrid models seen in China and Vietnam. Unlike purely centralised systems, India retains federal adaptability, allowing states to tailor implementation while adhering to national standards. Over the next three to five years, success will be measured not by notification dates but by outcomes: higher formal employment, increased women’s participation, wider social security coverage, fewer industrial disputes and stronger correlation between labour stability and output growth across electronics hubs.
India’s electronics ambition cannot rest on factories alone, but on the security, dignity and predictability experienced by the millions who power them. The real test now lies in execution.
