New ‘Labour Codes’ bring mixed bag for small garment makers, says Rahul Mehta
25 November 2025, Mumbai
The implementation of India's consolidated Labour Codes is poised to fundamentally restructure the nation's $115 billion apparel market, currently dominated by fragmented Micro and Small Enterprises (MSEs). While the reforms; aimed at improving worker security, mandatory appointment letters, and increased gratuity eligibility after one year, are a major win for labour formalization, they present an existential compliance burden for the vast unorganized segment.
As Rahul Mehta, Chief Mentor of the Clothing Manufacturers Association of India (CMAI), noted, “On one hand, it will be beneficial to these units typically employing less than 300 workers, as they will not need prior Government permission for lay-offs and retrenchments. On the other hand, restriction of using contract labour for ‘core’ activities will affect these units as most employ labour on contract or piece rate basis especially for stitching, checking, and finishing. For labour, this is a positive move as it will increase formalization and safety net.”
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