India’s labour question is now a supply chain question

Between April 10 and 14, an estimated 40,000 to 45,000 workers across more than 80 locations in Noida’s Phase-2 industrial belt walked off the job, blocked highways and clashed with police; nearly 400 people were arrested. Within 24 hours, the Uttar Pradesh government announced an interim 21% hike in the unskilled minimum wage for Gautam Buddh Nagar and Ghaziabad — from Rs 11,313 to Rs 13,690 a month — and promised a wage board.

That speed matters. Noida’s unskilled minimum wage had been the lowest in the National Capital Region (NCR)—25% below Gurugram’s and far below Delhi’s floor of Rs 18,456. Workers also reported meagre annual increments, unpaid overtime and 12-hour shifts. None of this was unknown. It was tolerated until workers stopped traffic. What broke in Noida was not only industrial peace—it was the assumption that workers would keep absorbing rising costs.

After the West Asia energy shock, LPG prices rose again. For workers near the wage floor, that is not a macroeconomic development; it is fewer meals, delayed rent, reduced remittances and one more month of impossible arithmetic. When income is already inadequate, even a small price rise can turn simmering grievance into collective action.

This pressure lands on a fragile labour regime. According to the Annual Survey of Industries, contract workers now account for 42% of employees in organised manufacturing, up from roughly 20% two decades ago. Contracting gives firms flexibility, but often at the cost of accountability. When wages are delayed, workers typically have no effective claim against the principal employer; the contractor is the immediate interface, and contractors change. Grievance systems are weak or absent. By the time a dispute becomes visible, it has often been building for months.

Noida fits a broader pattern. In 2020, labour violations at a major electronics plant in Kolar, Karnataka, led to unrest and probation by its global client. In 2021, contaminated food at a contractor-run hostel kitchen near an iPhone plant in Sriperumbudur (Tamil Nadu) hospitalised workers, triggered protests and shut the facility for weeks; that supplier too was put on probation. These episodes revealed the same structural problem: contractor chains long enough that responsibility for wages, housing, food and working conditions was endlessly diffused.

India’s manufacturing push matters not only for exports but also because jobs created must widen economic security. If those jobs are too precarious to support household stability, that promise rings hollow.

India is no longer a marginal manufacturing story. Smartphone exports reached $30 billion in 2025, making them India’s largest export category. India is now the world’s second-largest mobile phone manufacturer by volume. Manufacturing FDI in FY25 reached $19 billion, up 18%. For firms seeking alternatives to China, the question is no longer whether India is inexpensive enough. It is whether India is dependable enough.

Dependability weakens every time a supplier is put on probation, a plant halts over worker welfare, or a grievance reaches the highway because there was no credible channel inside the factory. India’s apparel experience offers a warning: despite scale and experience, its global share fell from about 4% in 2017 to under 3% in 2024, even as Bangladesh and Vietnam expanded. Electronics has done better so far, but continued gains are not automatic.

The business case for reform is stronger than Indian industry often admits. Research from the ILO’s Better Work programme found that factories with improved working conditions were up to 8% more profitable than comparable plants. Supervisory training raised productivity by 22% on trained lines. In Vietnam, average factory profitability rose 25% after four years in the programme.

Some argue that India’s labour relations are messier than China’s and therefore a disadvantage. But China’s predictability rests on far tighter control over worker voice. India neither has nor should want that model. Its path to industrial reliability must run through enforcement instead: credible wage floors, clear responsibility across contractor chains, and grievance channels that work before anger spills onto public roads.

The legal framework exists. The deeper deficit is enforcement — and a refusal to treat the wage floor as a real floor. Uttar Pradesh’s interim hike was crisis management, not labour policy. Once the immediate shock fades, the underlying vulnerabilities will remain unless they are addressed directly: wages below subsistence, diffused responsibility in contract labour, and the absence of credible plant-level grievance systems.

India’s manufacturing opportunity is real but will not be secured by incentives alone. It will depend on whether the workers inside its supply chains can reliably expect to be paid, housed and heard. The real question is not whether India can become a factory for the world. It is whether it can do so on terms stable enough for workers to endure and credible enough for global buyers to trust.

The writer is a data and business intelligence analyst 

(Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.)