Takshashila Discussion Document - On Labour Law Reforms in India

Executive Summary

This report proposes how we could think about a workable approach to labour market reform, different from the polarised debates we have seen so far. It recommends that such an approach could be started by making small tweaks to social security administration, increasing federal freedom and competition, and engaging meaningfully with trade unions. One of the primary messages is to move the reform narrative to the informal sector.

Analysts and policymakers have long been pushing the cause of flexible labour markets in India. On the other hand, such proposals have been met with staunch resistance from those whose interests are vested in an inflexible labour market, including employees, trade unions, and the labour ministry. After almost six decades of impasse on this issue, it is time to find a workable approach that could be acceptable to both parties – as marginal progress is better than a stalemate. This report shows how this is within the realm of the possible.

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