India’s new Labour Codes set to boost employment, economic growth
The Narendra Modi government rolled out a spate of Big Bang economic reforms in 2025, aimed at accelerating growth and creating more employment in the country as India retained its tag as the world’s fastest-growing economy amid the global slowdown.
The hectic winter session of Parliament saw the approval of proposals to allow 100 per cent foreign direct investment (FDI) in insurance and opening the nuclear power sector to private players. These came close on the heels of the four labour laws that were recently notified, integrating 29 complex laws into 4 streamlined Codes, to create an environment that promotes industrial efficiency while safeguarding workers’ interests.
Finance Minister Nirmala Sitharaman has announced that after the radical GST reforms, the government would undertake a similar exercise to overhaul the Customs regime in the Union Budget for 2025-26 that is likely to be presented on February 1.
Parliament approved the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill 2025, raising the Foreign Direct Investment (FDI) limit in the insurance sector from 74 per cent to 100 per cent to attract capital, boost development, improve service, and achieve "Insurance for All by 2047," with measures also reducing requirements for reinsurers and strengthening policyholder protection. This major reform aims to bring higher investment, innovation, so that more people can get insurance cover in the under-penetrated Indian market.
The approval of Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Bill, 2025 by Parliament consolidates and modernises India’s nuclear legal framework with the objective to support the country’s clean-energy transition aimed at achieving the long-term goal of 100 GW nuclear energy capacity by 2047.
The Bill permits private companies to participate in India’s nuclear sector, enabling them to undertake plant operations, power generation, equipment manufacturing, and selected activities such as the fabrication of nuclear fuel including conversion, refining and enrichment of uranium-235 up to such threshold value, or production, use, processing or disposal of other prescribed substances.
At the same time, at the core of the bill lies a strong emphasis on maintaining India’s strategic control over its nuclear ecosystem. Even as the sector opens up to private participation, the Bill ensures that critical functions remain firmly under sovereign oversight. The government retains exclusive authority over the nuclear fuel cycle, waste management, and all security-related operations.
Prime Minister Modi termed the four Labour Codes which have been notified, “as the most comprehensive and progressive labour-oriented reforms since Independence which greatly empower the country workers and significantly simplify compliance and promote Ease of Doing Business.”
With the implementation of the Labour Codes it has now become mandatory for employers to issue appointment letters to all workers which provides written proof to ensure transparency, job security, and fixed employment. Earlier no mandatory appointment letters were required.
Under Code on Social Security, 2020 all workers including gig and platform workers will get social security coverage. All workers will get PF, ESIC, insurance, and other social security benefits. Earlier there was only limited security coverage.
Under the Code on Wages, 2019, all workers will receive a statutory minimum wage, and it ensures timely payment to ensure financial security. Earlier minimum wages applied only to scheduled industries or employments; large sections of workers remained uncovered.
The Labour Codes also ensure that employers must provide all workers above the age of 40 years with a free annual health check-up and promote a timely preventive healthcare culture. Earlier there was no legal requirement for employers to provide free annual health check-ups to workers.
The new law permits women to work at night and in all types of work across all establishments, subject to their consent and required safety measures. Women will also get equal opportunities to earn higher incomes – in high paying job roles. Earlier, women’s employment in night shifts and certain occupations was restricted.
The new Labour Codes bring about a series of benefits for India’s export sector including textiles, garments, leather, electronics, gems and jewellery, pharmaceuticals, auto components and IT-enabled services, especially simplifying compliance for employers and enabling improved workforce management.
The competitiveness of these export-oriented industries depends heavily on the ability to maintain a flexible, compliant, and skilled workforce while adhering to international labour standards.
