Wage Debate India Can’t Ignore

Why Blaming High Minimum Wages For India’s Informal Economy Is Flawed

By Prasanna Mohanty

What?

Close on the heels of protests by industrial workers in the NCR region, a Delhi-based think tank sought the dismantling of the statutory minimum wage regime. The Foundation for Economic Development (FED), which has Arvind Panagariya, Gurcharan Das, Jaithirth Rao and Naushad Forbes in its board of advisors, said that minimum wages “reduces employment opportunities, especially for the least-skilled workers” and that a revised national floor rate under the Wage Code of 2019 will “compound this effect”.

The FED report, “A choice between protection in name – and jobs in reality,” argued that India's current minimum wage framework acts as a barrier to formal employment and global trade. 

The FED proposed a fundamental shift in India’s labour policy. It advised that the government move away from a rigid minimum wage regime, instead allowing employers and workers to freely negotiate wages, and suggested implementing a fixed per-worker subsidy paid directly to industries. 

Why?

This approach is intended to lower the cost of business and artificially boost the demand for labour, ultimately pulling more workers into the formal economy.

The timing is important. The Centre is poised to release new rules to operationalise four new labour codes, re-notified on November 21, 2025. This would set into motion a “technical committee” to fix work standards and a “Central Advisory Board” to fix the national floor wage rate. 

The Centre last set the national floor rate at Rs 176 per day or Rs 4,576 per month in 2017; states declare “scheduled employment” wages, keeping the floor rate in mind.

Given that Haryana and Uttar Pradesh raised their minimum wages for unskilled industrial workers to Rs 13,690 and Rs 15,220 per month, respectively, after the workers’ protests, it is reasonable to expect a substantial hike in the national floor rate.

What’s The Problem? 

Firstly, none of the foreign studies the FED cites is based on an economy-wide survey/data to provide a comprehensive picture, nor do they resemble India’s abysmally low wages and extremely high informal workers (89.9% as per the PLFS 2023-24). Of the five, four studies are from the US and one from Denmark. 

Economist Pronab Sen told The Core that the studies linking wage hike with job loss “will be true if minimum wage is taken to an irrational or absurd level”, adding that “if minimum wage is fixed sensibly, it will lead to better distribution of income, higher demand and higher growth.” 

Second, Sen also dismissed the comparison of India’s minimum wage relative to “monthly” per capita GDP (1.5 times that of its major export competitors) as “absurd”. He explained that a worker may be supporting four or more family members; the more dependents, the worse the ratio. “So, wages relative to per capita GDP (GDP divided by population) are not a fair comparison.”

Economist Arun Kumar drew attention to an issue that the FED report ignored. “The main problem of the Indian economy is a lack of demand,” he said. 

GTM Atlas, by Attio

Your GTM motion is creative. The thinking behind it should be too.

GTM Atlas is the ultimate resource on AI GTM for early-stage builders, providing foundational knowledge for teams navigating growth from scratch. Curated by Attio, the AI CRM, Atlas gives you:

• Systems thinking for every stage of the customer journey

• Frameworks and templates that scale with you

• Conversations with GTM operators at Clay, Lovable, and Vercel.

Mapped by operators. Curated by Attio.

Explore now

From Parts To Platforms: Indian MSMEs Are Reshaping The Drone Supply Chain

By Neelam Mathews

What?

Earlier this year, in March, Indian defence avionics company Samtel announced that it was diversifying into space technologies and drone manufacturing and had set aside a budget of Rs 200 crore to diversify its product line over the coming years.

The timing is no coincidence. As loitering munitions and drone swarms redefine conflicts from Eastern Europe to West Asia, global defence spending is undergoing a recalibration.

Puneet Kaura, CEO of Samtel Group, called the company’s new venture “a logical extension” and said that “in defence avionics and mission-critical electronics, aligned with where modern warfare is heading”.

Signalling a decisive scale-up into unmanned systems, Samtel is targeting a Rs 1000 cr revenue in long-range loitering munitions and logistics drones in the next three to five years, Kaura told The Core exclusively.

As drones become a part of high-frequency conflicts globally, Indian firms are leveraging this and scaling up drone manufacturing even as the government comes up with schemes to back this mission. 

How Does This Work? 

India's manufacturing base is supported by a deep pool of MSME component suppliers and a rapidly scaling defence-startup ecosystem for FPV drones. 

The country already produces airframes, motors, batteries, optics, autopilots and warheads domestically, giving it vertical control of the supply chain at costs far below Western manufacturers.

A cluster of government schemes has also prompted private-sector manufacturing at scale for drones and loitering munitions. The PLI Scheme for Drones saw several airframe and component makers such as IdeaForge, Dhaksha, Asteria, Aarav, ZMotion, Absolute Composites, Sagar Defence, and Paras Aerospace become beneficiaries. 

The Make-II route, which requires companies to develop prototypes at their own expense in exchange for guaranteed orders, has drawn in major players like Adani Defence, Solar Industries, and Raphe Mphibr. Meanwhile, the government’s iDEX (Innovations for Defence Excellence) incubator has seeded the startup ecosystem, providing the initial backing for agile newcomers such as NewSpace Research, GalaxEye, and AeroArc.

These efforts were bolstered by emergency and fast-track procurement mandates, which generated immediate domestic demand for FPV drones and loitering munitions. Complementing this, a wave of strategic partnerships and joint ventures has embedded Indian firms into global supply chains. Together, these initiatives form the policy backbone enabling India’s transition into a high-volume, low-cost production hub for unmanned systems.

Despite the government push and several companies pivoting to drone manufacturing, several bottlenecks remain. 

India still imports several components from China, the major global supplier, and the environment remains politically sensitive and commercially risky. 

What are the hurdles India must overcome? 

26.11 lakh units

That is how many vehicles Indian dealers retailed in April 2026, the highest-ever monthly tally for the month, marking a 12.94% jump over the same period last year. Five of the six vehicle categories set all-time April records, according to the Federation of Automobile Dealers Associations (FADA).

Overview: Two-wheelers led the charge at 19.16 lakh units, up 13%, while passenger vehicles crossed 4.07 lakh units, growing 12.21%. Commercial vehicles posted the sharpest rise at 15.02%, clocking 99,339 units. A defining feature of the passenger vehicle surge was rural India outpacing urban markets, with rural sales growing 20.40% against urban growth of 7.11%.

Tailwinds from GST affordability gains, RBI's supportive rate stance, healthy rural cash flows, and an extended marriage season drove the performance.

Critical Moment: Dealer confidence remains steady, though heatwave forecasts, West Asia geopolitical tensions, and fuel price pressures are factors to watch in the months ahead.

"If West Asia tensions continue, supply constraints are a possibility. What concerns us more, though, is a fuel price hike as the cascading effect it triggers across the sector is significant," FADA Vice President Sai Giridhar told The Core.

Apple Eyes US Chip Shift

Apple is exploring whether more of its custom chips could be made in the United States, holding early-stage discussions with Intel and Samsung as it looks to reduce reliance on its long-time manufacturing partner, Taiwan Semiconductor Manufacturing Company (TSMC), Bloomberg reported. The talks remain preliminary, with no orders placed and no guarantee Apple will move beyond TSMC, amid concerns over the reliability and scale of alternative technologies.

Context: For over a decade, Apple has designed its own processors but depended heavily on TSMC to manufacture them, particularly using advanced nodes such as 3-nanometre technology. Most of this production is based in Taiwan, reflecting a broader supply chain that keeps the bulk of Apple’s chipmaking outside the United States.

The Shift: The shift comes amid intensifying pressure to localise production. US President Donald Trump has repeatedly pushed for domestic semiconductor manufacturing and recently suggested Apple had joined investment momentum around Intel though no formal confirmation has followed. If Apple moves ahead, it would slowly reduce its reliance on TSMC and spread its chip production to manage risks and avoid supply disruptions.

Reliance Bribery Probe

Reliance Industries has submitted documents to the CBI in a bribery probe involving its drone unit, Asteria Aerospace, as it prepares Jio Platforms for a likely Mumbai listing that could become India’s biggest-ever stock offering. Asteria Aerospace sits within Jio Platforms, Reliance Industries’ digital and emerging technology arm.

The Lead: The case centres on allegations that a company-linked executive, Bharat Mathur, conspired with a DGCA official to pay a Rs 12-13 lakh bribe to fast-track drone import approvals. A Delhi court has granted Mathur bail, while the regulator official remains in custody. Reliance has distanced itself from Mathur, calling him an external consultant. 

Backdrop: As The Core previously reported, India’s drone ecosystem remains heavily reliant on imported components, making regulatory approvals both critical and prone to delays.

Rupee Hits Record Low

The Indian rupee hit a record low of Rs 95.43 per US dollar as rising tensions between the United States and Iran pushed global oil prices above $110 a barrel. The surge in crude prices increased India’s demand for dollars, weakening the currency.

Impact: A softer rupee raises import costs, fuels inflation, and widens the current account deficit. Analysts warn the rupee could weaken further if oil prices remain elevated.

Setup: Traders say the Reserve Bank of India likely stepped in through state-run banks to sell dollars and curb volatility, though it has not confirmed any intervention. The rupee has now weakened more than 5% against the dollar so far this year.

Ceasefire Breakdown Makes Markets Nervous Again

On Episode 865 of The Core Report, financial journalist Govindraj Ethiraj talks to Dipti Deshpande, Principal Economist at Crisil as well as Sai Giridhar Raj Kumar, Vice President at the Federation of Automobile Dealers Associations (FADA).

• Ceasefire break down turns markets nervous again, backchannel negotiations appear to be holding

• Kiran Mazumdar Shaw of Biocon to transition out with niece with PhD in cancer biology set to take over

• Why auto sales had another solid April and what is driving it

• How cash transfers are helping low income households step up consumption

• Flights in UAE again face restrictions after fresh missile attacks