A collaborative, sector-wise approach would ensure that the Labour Codes evolve into a fully developed framework
Research ecosystem needs a diferent labour code | Photo Credit: HemantPhotographer
India’s new Labour Codes aim to modernise 29 laws into four integrated frameworks, expand social security, and simplify compliance to boost manufacturing and global competitiveness. While digitisation and clearer rules improve transparency, significant gaps remain — especially for nutraceuticals and advanced manufacturing — where complex supply chains and precision-driven operations still face structural challenges.
Here are some of the issues that still need attention.
Subcontracting: Despite the Labour Codes being stricter on the obligations of the primary contracting parties in relation to contract workers, they do not provide clarity on multi-level subcontracting chains, common in businesses that involve the sourcing of ingredients, third party packaging, and supporting processes. The government’s official files provide contractor registration and licenses. However, the sub-levels within the contractor structure are largely beyond the scope of audits on minimum wage rates and social security. This ‘chain leakage’ is a real problem that no government circular or industry review currently tackles.
Absence of a distinct regulatory view for high-skilled R&D roles: Official explanations of the codes and even detailed reviews highlight fixed-term employment and parity with permanent staff, but do not recognise the unique nature of short-duration innovation cycles in scientific industries. Nutraceutical R&D often operates on six or nine-month windows with specialised experts, statisticians, and formulation scientists engaged for specific trials. Applying the same employment rules, benefits structure, and rigid entitlements to these niche roles risks discouraging collaborative innovation and could slow down India’s ambition to lead in functional foods and wellness research. A R&D-specific compliance architecture at government level is a pressing need for many industries.
Rigidity of working hour framework: Government summaries emphasise the 8-hour workday and a 48-hour weekly limit, with regulated overtime. But cleanrooms, fermentation lines, spray drying units, and certain controlled environment nutraceutical processes cannot be paused at fixed hours. These facilities rely on continuity, minimal shifts, and fatigue-sensitive rotation. The new codes may unintentionally disrupt precision manufacturing or increase contamination risk by forcing rigid shift changes.
Technical framework for data protection: While the Codes encourage unified digital returns and national worker databases, and the broader data protection law mandates compliance, there exists no labour-specific protocol governing encryption, access controls, retention, or purpose limitation of worker data. Beyond high-level Digital Personal Data Protection (DPDP) compliance references, neither Government nor industry documents provide practical standards for safeguarding sensitive personnel information. For sectors that handle health screenings, background checks, or performance trackers, this gap is consequential.
Some solutions
* A blockchain-backed subcontractor compliance grid would allow manufacturers to trace every tier of their labour supply chain. While India has explored blockchain for product traceability, no labour-related application has been proposed. A secure ledger could record contractor certifications, wage payment confirmations, and safety clearances, creating tamper-resistant visibility across all layers of production.
* A government-certified ’Innovation Project‘ employment category could provide nutraceutical and pharma companies with flexibility to engage short-term scientific experts without navigating a permanent employee framework. This category, under strict disclosure and audit mechanisms, could be limited to pre-approved R&D or technical projects with defined deliverables and duration.
* AI-guided shift risk assessment tools could reconcile the need for strict working hour caps with the operational needs of sterile or hazard-sensitive facilities. These systems, already used in some global manufacturing hubs, analyse fatigue patterns, hazard exposure, and continuity requirements to recommend optimal break schedules and worker rotations.
* A sector-agnostic worker data protection protocol, built on encrypted storage, purpose-bound access, and granular consent flows, is the missing backbone in labour digitisation. This should be integrated into the national worker database to ensure that efficiency gains do not come at the cost of employee privacy.
The Labour Code reform is progressive. However, it needs some nuance and flexibility, else the complexity of oversight might undermine the very safeguards the reform aims to enhance. A collaborative, sector-aware approach between government, regulators, and industry leaders will ensure that the Labour Codes mature into a framework that is not only modern but also complete.
The writer is the Executive Chairman and Managing Director, OmniActive Health Technologies
Published on December 10, 2025
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