Uttar Pradesh Government Prepares Draft Rules for New Labour Codes Implementation
The Uttar Pradesh government has completed its draft rules for implementing the four new labour codes that were introduced by the Union government in November 2025. According to principal secretary of the state labour department, MKS Sundaram, the draft has been prepared by the state labour department and is currently being examined by the state law department for final approval.
State-Level Implementation with Local Considerations
The Union government delegated the responsibility of developing implementation draft rules to individual states, allowing them to tailor regulations according to local needs and requirements. This decentralized approach enables states like Uttar Pradesh to create frameworks that address specific regional economic conditions and industrial landscapes.
If the review process proceeds smoothly, the state is expected to release its draft rules within approximately one week to ten days, marking a significant step toward operationalizing the new labour framework across Uttar Pradesh's diverse economic sectors.
Comprehensive Labour Law Consolidation
The Labour Codes, which officially came into force on November 21, 2025, represent a major overhaul of India's labour regulatory framework. These codes consolidate and replace 29 separate central legislations, creating a more streamlined system with several key objectives:
- Simplifying compliance procedures for businesses
- Consolidating multiple licences into unified documentation
- Liberalizing standards while maintaining worker protections
- Formalizing worker rights through structured frameworks
Enhanced State Flexibility and Economic Implications
The new codes grant states unprecedented flexibility to frame rules on critical labour matters that were previously more rigidly controlled. This includes authority over:
- Exemptions for specific industries or regions
- Thresholds for employee retrenchment
- Limits on overtime hours
- Procedures for licensing and registration
Manoj Kumar Singh, chief executive officer of the UP-State Transformation Commission (UPSTC), emphasized the economic significance of this flexibility during a consultative workshop organized by UPSTC in association with the Indian Institute of Management, Lucknow. "States that adopt flexible, predictable, and globally competitive labour regimes are likely to attract more investment, jobs, and growth," he stated.
Singh further noted that the immediate priority for states is to draft and notify rules aligned with global competitiveness standards to boost employment and economic expansion. This strategic approach aims to position Uttar Pradesh as an attractive destination for both domestic and international investors.
Addressing Structural Economic Challenges
The workshop discussions highlighted Uttar Pradesh's unique economic position and challenges. The state contributes approximately 9.2% to India's GDP while accounting for 17% of the country's population, creating a productivity gap that needs addressing.
Singh explained that "Uttar Pradesh needs to shift workers from low-yield sectors like agriculture to higher-productivity manufacturing and services" to achieve its ambitious economic targets. The state aims to become a 1 trillion-dollar economy by 2029, which requires:
- Scaling up industrial capacity
- Generating skilled employment opportunities
- Positioning UP as a global manufacturing hub
Combating Industrial Dwarfism Through Progressive Regulations
The consultative workshop also addressed India's persistent challenge of "industrial dwarfism"—where most manufacturing units remain micro-enterprises employing fewer than 10 workers. Participants examined international examples from countries like Vietnam, Bangladesh, and Indonesia that achieved:
- Large-scale employment generation
- Higher productivity levels
- Successful integration into global value chains
These successes were attributed to flexible labour norms including extended overtime thresholds, adaptable workforce arrangements, and scalable factory operations—elements that Uttar Pradesh's draft rules aim to incorporate.
Incorporating Stakeholder Input and Future Outlook
Sundaram confirmed that suggestions gathered from industry experts during the workshop would be incorporated into the final draft rules. This collaborative approach ensures that both industry perspectives and worker protections are balanced in the regulatory framework.
The principal secretary emphasized that the draft rules would provide much-needed clarity to both industry stakeholders and workers, creating a predictable regulatory environment that supports Uttar Pradesh's emergence as a preferred investment destination. By establishing clear guidelines and flexible frameworks, the state aims to foster economic growth while protecting worker rights through formalization and structured compliance mechanisms.
