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India recently replaced the 20-year-old Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) with the Develop India-Guarantee for Employment and Livelihoods Mission (Rural) Bill, 2025, also known as the Develop India-GRAM G Bill, 2025. Under the new law, the employment guarantee under MNREGA has been increased from 100 days to 125 days per rural household per year.
The Act will be implemented as a centrally sponsored scheme, with a cost-sharing pattern of 60:40 between the Center and the States, 90:10 for the North-Eastern and Himalayan States and 100% central funding for Union Territories without legislatures.
The new law has drawn criticism from the opposition over concerns that the change in cost-sharing from the 75:25 ratio under MNREGA could weaken the employment guarantee. In a letter to Prime Minister Narendra Modi, Tamil Nadu Chief Minister MK Stalin said the changes “change the fundamental rights-based character of MNREGA, making it a centrally controlled, budget-capped programme,” warning that the new law will impose a severe financial burden on financially constrained states.
The total non-working period of 60 days, intended to ensure availability of labor during the peak of sowing and harvesting, has also been criticized as disruptive to continued livelihood support, especially in areas with varying agricultural cycles.
However, labour-intensive industries in India see this shift as an opportunity to increase capacity, which could potentially improve cost-competitiveness for exports amid global uncertainties and US tariffs.
Despite the depreciating rupee, GST rationalization, reduction in compliance costs and access to new markets through free trade agreements, many labour-intensive sectors are still looking for ways to enhance cost competitiveness as they look to enter new markets and await the implementation of the Export Promotion Mission (EPM).
SC Ralhan, president of Federation of Indian Export Organizations (FIEO), is hopeful that domestic labor availability will improve. He said the higher financial burden on states could prompt some to reduce spending, which could encourage more workers to join the industry. Highlighting the 30-40% shortage of workers in bicycles, hand tools, apparel and hosiery in the last two years, Ralhan urged states to allow industries to contribute by training “semi-skilled or semi-educated (10th or 12th pass) workers”, thereby providing a ready supply of skilled labor to boost overall industrial and export competitiveness.
Many exporters have also noted that while the benefits of training and onboarding new workers will take time to be realized, reduced reliance on migrant workers can reduce the cost of living and improve certainty in the production cycle when migrant workers return home.