New Labour Codes come as booster shot for India’s export sector

New Delhi, Nov 30 (IANS) The new Labour Codes notified by the government 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, according to an official statement issued on Sunday. 

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. In order to catalyse the growth momentum of the sector, the government’s recent integration of 29 laws into four streamlined Codes, enables an environment that promotes industrial efficiency while safeguarding workers’ interests, the statement explained.

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 export industries operating in multiple states, it simplifies payroll administration and compliance, ensuring uniformity in wage calculations for social security contributions, bonus, and gratuity.

The provision for fixing a National Floor Wage by the government establishes a benchmark below which no state can fix its minimum wage. For export-oriented industries 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. Exporters 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 ensures equal remuneration for equal work. For export-oriented industries (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 allows employers to hire workers directly for a specific duration or project, with all statutory benefits equivalent to those of permanent workers. 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 authorities have been given full flexibility for fixing the limit of working hours. This 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 new labour codes also simplify compliance and facilitate the ease of doing business. 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.

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 for 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.

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 & safety without intervention of Inspector-cum-Facilitator.

The provision for compounding of offences will also held in the ease of doing business. 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, minimises litigation, and lowers compliance risk for small EOIs.

--IANS

sps/na