New labour codes: In a major overhaul of India’s labour framework, the Government of India has announced four new labour codes – the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020. India’s new labour codes, which take effect from November 21, 2025, mark a significant shift from the old rules, expanding worker protections and modernising employment practices.
According to stock market experts, this will impact labour-intensive segments such as chemicals and paints, oil, auto, auto ancillaries, and pharmaceuticals. They stated that a better work environment and job security are expected to enhance employee performance, which will have a positive impact on the company’s long-term financial balance.
Manufacturing sector in focus
Speaking on the impact of four new labour codes in the Indian stock market, Sandeep Pandey, Co-founder of Basav Capital, said, “The new four labour codes would have a sizeable impact on the Indian stock market. It will directly impact the manufacturing segment where stocks from the chemical and paints, pharma, oil, auto and auto ancillary may show some reaction when the Indian stock market opens on Monday.”
Echoing Sandeep Pandey’s views, Avinash Gorakshkar, a SEBI-registered fundamental equity analyst, said, “These four new labour codes are aimed at enhancing the work environment and job security of employees. This is expected to reflect in the enhanced performance of these employees, which would strengthen the balance sheet of the company in the long term.”
On labour codes expected to fuel the input cost of the manufacturing segment, Avinash Gorakshkar said, “This will have a mutual impact. On one side, input costs are expected to rise, but not to alarming levels. On the other hand, improved performance of the employees is expected to boost the production volume, which is expected to set this input cost challenge off.”
Stocks in focus
On stocks that will be in focus on Monday after the announcement of these four labour codes, Sandeep Pandey of Basav Capital said, “Asian Paints in the chemical and paints segment, Hero MotoCorp and Bajaj Auto in the automobile segment, Larson & Tubro (LT) in the infrastructure segment, Cipla, Dr. Reddy’s Laboratories, and Autobindo Pharmaceuticals in pharma segment, Tata Steel and JSW Steel in metal segment, and Reliance Industries in the oil and petrochemical segment. These 10 stocks are expected to give a sharp reaction on Monday when the Indian stock market opens after the weekend gap.”
Both experts stated that any dip in these 10 stocks should be viewed as a long-term buying opportunity.
Old vs new labour law: What has changed?
The new labour ecosystem is set to bring significant changes across India’s employment, wages, workers’ safety and compliance. The Union government described the new labour codes as a “historic” decision, stating that the new additions will rationalise 29 existing labour laws, modernise regulations, and improve workers’ welfare, thereby creating a future-ready workforce and stronger, more resilient industries under Aatmanirbhar Bharat.
Why was a new labour code needed?
Many of India’s labour laws were framed between the 1930s and 1950s – a pre-Independence and early post-Independence era – a period when the concepts of the digital economy or gig economy were not yet known.
According to the government, India has continued to operate under this fragmented framework, with overlapping compliances, outdated processes, and limited protection for workers, especially those outside the formal sector, for decades.
“The Four Labour Codes are a move toward replacing this patchwork with a uniform, modern legal framework that the government says will create a workforce that is ‘protected, productive and aligned with the evolving world of work,’ paving the way for a more resilient, competitive and self-reliant nation,” it said.