The BGA India team, led by Managing Director Anuj Gupta, wrote an update to clients on the Indian government’s draft National Labor and Employment Policy.

Context

  • India’s Ministry of Labor and Employment has unveiled the draft National Labor and Employment Policy — Shram Shakti Niti 2025, marking a strategic shift toward “a fair, inclusive and future-ready labor ecosystem.” Anchored in the ethos of śrama dharma — the dignity and moral value of work — the policy aligns with the national development vision of Viksit Bharat, aiming to enhance worker protection, productivity and participation.
  • The policy signals a transition from a regulatory to a facilitative approach, repositioning the ministry as an employment facilitator. It promotes convergence between employers, workers and traininginstitutions, supported by integrating digital systems like National Career Service (NCS), Employees’ Provident Fund Organization and forming a unified “labor stack” on digital public infrastructure. Key reforms include simplified compliance, universal social security and workforce formalization, transitioning to a more predictable and transparent operating environment.
  • After the Pradhan Mantri Viksit Bharat Rojgar Yojana, a government-backed employment incentive scheme, aimed at incentivizing formal job creation with a budget of $11.3 billion, the Shram Shakti Niti 2025 aims to create a future-ready work system that upholds dignity, safeguards workers and expands opportunity, ensuring India’s growth remains centered on people. Together, these policy shifts offer companies a structured, tech-enabled and incentive-driven labor landscape, supporting expansion, compliance and talent acquisition in India’s growing manufacturing and services economy.

Significance

  • The draft policy introduces a unified institutional and digital architecture, with a plan to have a One Nation Integrated Workforce Ecosystem, anchored in a three-tier governance model: national (National Labor and Employment Policy Implementation Council), state (labor missions) and district (District Labor Resource Centers). The Ministry of Labor and Employment will act as a strategic enabler of employment, leveraging artificial intelligence (AI)-driven platforms to bridge the gap between workers, employers and training institutions.
  • The draft policy mandates a universal, portable social security framework covering health, pensions, maternity, accident and life insurance. It is enabled through integrating digital systems that ensure continuity of benefits across jobs, sectors — including the gig and informal sectors — and geographies. Upon implementation, businesses must prepare for integration of the Employees’ Provident Fund Organization, Employees’ State Insurance Corporation, e-Shram and NCS into a single digital framework, to improve transparency and support worker entitlements. However, this might demand real-time data sharing and compliance updates.
  • The draft policy advances a pro-business labor framework by promoting simplified, trust-based compliance and workforce formalization. Central to this is a single-window digital system for registration, reporting and risk-based self-certification especially for micro, small and medium-sized enterprises. Enterprises that generate formal employment may benefit from targeted incentives, reinforcing the link between job creation and policy support.
  • The policy outlines a phased implementation road map, starting with institutional setup and AI-driven employment pilots (2025-27), scaling to nationwide social security and skills-development systems (2027-30) and culminating in predictive, paperless governance post-2030. It will be monitored via real-time dashboards, a labor policy evaluation index, and independent reviews to ensure transparency and accountability.

Implications

  • At present, the draft policy faces some implementation risks, including underfunded social security expansion without a clear cost-sharing model, risking aspirational outcomes. Moreover, rapid digitization may exclude unbanked or low-literacy workers and raise data privacy concerns.
  • Overall, the draft policy reflects broad stakeholder engagement and reinforces cooperative federalism, evidence-based governance and digital transparency. However, companies should engage and participate in the consultation process to ensure compliance and structural issues are addressed prior to implementation.
  • The draft policy is open for public feedback until October 27, presenting an opportunity for stakeholders to shape India’s future labor architecture.

If you have questions or comments, please contact BGA India Managing Director Anuj Gupta at agupta@bowergroupasia.com.

Best regards,

BGA India Team

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Managing Director

Anuj is a distinguished policy leader and strategist who has played a catalytic role across India’s government and private sector, guiding stakeholders through the country’s complex and evolving policy and investment landscape. As BGA’s India practice leader, he helps clients leverage the country’s rapid economic growth to advance their goals and strategies.  Anuj previously led public policy efforts for the Tata Group, India’s largest business conglomerate, where he advised more than 30 group companies on policy affairs strategy. His interventions directly influenced high-stakes outcomes across diverse sectors, including technology, finance and manufacturing.   Anuj spent a decade in the Indian and Abu Dhabi governments, where he ... Read More