Executive summary

The informal sector in India accounts for approximately 85% of the nation’s employment. Within this, most women are employed in what is characterised as ‘home-based work’, second just to agriculture. Without legal recognition and protection and isolated from the market, these women are subject to immense exploitation at the hands of contractors. This brief addresses the lack of discourse about the matter within the government, and aims to provide possible routes to tackle this issue with immediate effect.

Pointed Summary

• 85% of India’s workforce is employed in the informal sector, contributing over 50% of GDP.
• 17.19 million women in India are engaged in home-based work, with 12.48 million involved in non-agricultural activities.
• Pay disparity: Women earn Rs. 24 per hour, while men earn Rs. 48 per hour—half of the recommended minimum wage (Rs. 46.88).
• Home-based workers are often paid on a piece-rate basis, leading to very low earnings. For example, women peeling almonds are paid Rs. 50 for cleaning 23 kg of almonds, taking 12-16 hours of work.
• No national census on home-based workers since 2011.

Relevance

The case of home-based workers, especially women in India, is critical as they contribute a great deal to the economy, but lack any legal recognition and fair wages. These workers face severe economic vulnerability, poor working conditions, and gender-based wage disparities. Lack of protective legislation leaves them vulnerable to exploitation; thus, the bargaining capacity for better pay, benefits, and working conditions goes low. Addressing this issue is vital in order to reach the desirable and inclusive economic growth, improving the welfare of a large, marginalised workforce.

History

In 1993, the informal sector within economies was defined as a collection of unincorporated household-owned businesses. This included informal self-employed ventures as well as small, often unregistered enterprises operated by informal employers, and operating outside formal regulatory frameworks. By 2003, however, the concept of informality had evolved. Informal employment was redefined to encompass any paid work—whether in self-employment or wage employment—lacking legal registration, regulation, or protection. This also extended to unpaid work within income-generating enterprises. Such jobs are marked by a lack of secure contracts, benefits, social protections, and formal representation, exposing informal workers to high levels of economic vulnerability and insecurity.

India exemplifies this phenomenon, with approximately 85% of the workforce employed in the informal sector. This vast segment of labour contributes to over half of the country’s GDP, underscoring its importance to the national economy. Informal work encompasses diverse fields, from small-scale retail and construction to agriculture and manufacturing, with women being disproportionately represented in these roles. At the intersection of gender and informality lies the unique and often invisible industry of home-based work. For many women, home-based work—engaged within their own households—has become the second-largest source of employment after agriculture. 

India’s Ministry of Statistics and Programme Implementation classifies home-based workers as “own-account” workers or “contributing family workers”. Notably, this definition encompasses all forms of paid home-based production, regardless of who supplies the resources—equipment, materials, or other necessities.

Home-based workers contribute to a range of industries, including garments, footwear, electronics, and other consumer goods. They also support local markets by working in sectors such as weaving, incense stick rolling, kite making, football manufacturing, bidi production, and packaging for agro-processing industries. Despite their economic contributions, home-based workers face a challenging pay structure, often compensated on a piece-rate basis. This means they are paid based on output rather than hours worked, leaving them vulnerable to very low pay. For instance, women engaged in almond peeling are paid only Rs. 50 for cleaning a 23-kilogram bag of almonds, a task that can take between twelve and sixteen hours of labour (Dixit, 2024). On average, home-based workers earn only one-fifth of Delhi’s legal minimum wage, despite frequently working extended hours to maximise their earnings. The pay disparity between male and female home-based workers is also stark, with men earning an average of Rs. 48 per hour while women earn only Rs. 24 per hour—less than half of India’s recommended minimum wage of Rs. 46.88 per hour.

An estimated 17.19 million women in India are engaged in home-based work, with 12.48 million involved in non-agricultural activities such as manufacturing, packaging, and assembling. This number has continued to rise, especially in urban areas, as economic pressures drive more women to seek flexible income sources compatible with their household responsibilities. However, obtaining a comprehensive view of this workforce remains challenging due to the absence of an official national census since 2011. Consequently, the available data relies heavily on research by non-governmental organisations (NGOs), who often conduct surveys and compile reports on home-based work.

The work of these women is often undervalued and categorised as unskilled labour, despite the specialised tasks they perform. Scholar and activist Neethi observes that when labour takes place within the home environment—such as in a living room, kitchen, or other domestic space—the boundary between work and household duties becomes blurred. This is particularly true for women, who often juggle household responsibilities alongside income-generating work. The blending of personal and professional spaces further complicates any clear division between working hours and non-working hours, limiting these workers’ ability to demand higher wages or formalise their employment.

Without legal protections, formal recognition, or bargaining power, home-based workers are left vulnerable to economic exploitation. With few alternative employment options, many find themselves forced to accept extremely low pay, lacking both the security and benefits afforded to workers in the formal sector. According to a 2020 report, the disparities in hourly wages illustrate the depth of this inequality, with men typically earning double what their female counterparts make for similar work.

The invisibility of home-based work poses further social and economic challenges. For many of these workers, the lack of formalised roles means that they are often excluded from labour policies, social security benefits, and other state protections. The absence of an accurate national census amplifies these challenges, making it difficult to implement effective policies or interventions. NGOs, therefore, play a crucial role in advocating for the rights of home-based workers, conducting research, and lobbying for greater government recognition of their contributions to the economy. However, without robust legislative support and an inclusive approach to labour rights, these efforts remain limited.

Addressing this issue required a comprehensive approach, including updated data collection, legal reform to recognize and protect informal work, and measures to ensure fair wages and working conditions for home-based workers. Developing better policy solutions to this crucial issue thus becomes the need of the hour. 

Policy Problem

1. Current Stances and Tried Policy

There’s a significant lack in the legal recognition of home-based workers within India. While multiple international conventions have defined and redefined their definition of constitutes home-based work and home-based workers over the years, it is yet to make it into the Indian legal system. The ILO Convention No. 177 on Home Work gives us the first comprehensive definition in this regard, as well as promoting recommendations and measures for the field. The convention sets out some basic guidelines and minimum standards for the wages and working conditions for sub-contracted piece-rate workers. However, this is yet to be ratified by India. 

Similarly, the 8th Sustainable Development Goal (SDG) from the 2030 Agenda, which India has committed to achieving, advocates for “sustained, inclusive, and sustainable economic growth” alongside “decent work for all.” Further, the Indian state is signatories to multiple conventions regarding labour rights, including the Convention on Elimination of All Forms of Discrimination Against Women (CEDAW), the Beijing Platform for Action, and forty-seven ILO Conventions (of which 38 are in force) and one Protocol.

Domestically however, in the legal framework, multiple provisions form possible precedents for defining home based work. The Directive Principles of State Policy calls for creation of social order for the promotion of welfare of the people. Further, some articles in the Indian Constitution outline the State's commitment to fostering an equitable and humane socio-economic environment. Article 39 seeks to ensure that the economic system operates in a manner that prevents the concentration of wealth and means of production in society. It also emphasises safeguarding the health and strength of workers, both men and women, and protecting children from exploitation or work unsuitable for their age and strength. 

Next, Article 41 obligates the State to create conditions that uphold the right to work, education, and public assistance in specific circumstances. Article 42 reinforces this principle and mandates the provision of just and humane working conditions and maternity relief, underscoring the importance of dignity and welfare in the workplace. Most notably, Article 43 calls for the State securing (via legislation, economic organisation or any other way) to all workers, a living wage and work conditions conducive to a decent standard of life.

In 1988, Ela Bhatt, a member of Rajya Sabha (Upper House of the Parliament), proposed a private bill, the Home Based Worker’s (Protection) Bill, which was not passed. After India adopted Kathmandu Declaration of 2000, a draft National Policy on Home-Based Workers by the Ministry of Labour in 1999-2000 was written, but nothing came of it, even almost 25 years later. HomeNet South Asia, an organisation working towards the cause developed a ‘National Policy for Home-Based Workers in India’ draft which they presented to the Ministry of Labour and Employment. The draft called for legal recognition, safer working conditions, among other things. Again, this bill wasn’t passed.

Policy Problem

A. Risks of Indifference and Non Partisan Reasoning

Because of lack of legislation, awareness about their own rights and subsequent exploitation at the hands of their employers, women in the work sector are disproportionately affected. These workers are isolated, marginalised, and denied their rights as workers. Further, issues of casteism, class and religion also severely amplify this scenario, as with every other facet of Indian society; women from lower castes and minority religions are more prone to this exploitation. They receive irregular and poor wages, and this further complicates matters when we factor in how in many cases, women are the sole breadwinners for their families (Dixit, 2024). 

The majority of female home-based workers do not have access to social security benefits such as health insurance and pensions. Their low wages, especially in urban areas, make it challenging for them to afford proper housing or dedicated workspaces. Consequently, many are forced to live in overcrowded or substandard housing, which adversely affects both their work productivity and overall well-being. Further, they do not have access to formal credit, which widens economic inequalities. The ‘factories’ the women work in are extremely hazardous, with unsanitary and dangerous working conditions. In some cases, when they get injured due to such conditions, they cannot take a day off work since they can’t afford losing even a day’s wage (Dixit, 2024). 

The economic progress of a nation cannot only be understood in terms of its GDP. Healthy working conditions, living wages and legal protection as workers is something each citizen of the country is entitled to, and the government is responsible to ensure measures for.

Ultimately, sidelining this issue legislatively means sidelining a significant chunk of the Indian workforce and making them vulnerable to exploitation. Indifference also means that these women continue working under such conditions, solely because of lack of even the bare minimum legislation. 

Policy Options

1. Comprehensive & detailed collection of data at the National level

India’s last official census was conducted in 2011, meaning that the last official records we have are extremely outdated, making effective policy-making and implementation more difficult. Having accurate data that represents the demographics of the nation today becomes key in identifying the changes in worker populations. The limited nature of data makes mapping the scope of implementation extremely difficult. The national survey should incorporate questions about the 'place of work' and 'source of work (contractor, firm, or self-employment)' to clearly distinguish between self-employed, own-account home-based workers and subcontracted home workers. Ensuring that the long overdue national-level census is conducted that identifies home-based workers is extremely crucial.

2. Legal recognition as ‘workers’ and ratifying ILO Convention No. 177 on Home Work

The first step to combat the lack of legislation is defining home-based work within the legal framework and ratifying ILO Convention No. 177 on Home Work, which will grant them coverage under all labour laws and regulations in effect in the country at any given time, including unionisation. In order to implement this, identified home-based workers will be issued an identification card (similar to ration cards, Aadhar cards, etc.) on the state level, with booths for registration being set up at the zila (urban district) or gram (village) level. 

3. Housing and safe working conditions

The homes of women engaged in the sector are often small, cramped, and lack ventilation, increasing the chances of injuries. Upgrading housing for them to ensure basic civic amenities like electricity, water supply, sanitation and waste management should be undertaken at the district level. This must be done in consultation with the workers and various NGOs that have been working towards this sector for years to ensure meaningful and appropriate changes are implemented. In-site relocation is preferred over eviction and relocation since the latter often leads to loss of livelihood. Cluster housing for home-based workers can be developed as part of ongoing measures to build affordable housing in the country, in collaboration with the semi-public sector. Government to also plan childcare facilities (by expansion of anganwadis), since the nature of home-based work is often hazardous to children. The decisions to be made by a joint committee of NGOs and the Ministry of Housing and Urban Affairs.

4. Developing a fair Price per Piece Rate 

A lot of the economic exploitation in the form of unfair and low wages can be attributed to the lack of standard price-per-piece rates within the subcontracted work sector. Thus, a committee comprising of representatives of NGOs, corporate stakeholders, Ministry of Labour and Employment, Ministry of Commerce and Industry, Ministry of Micro, Small & Medium Enterprises and Ministry of Women and Child Development would work on standardised rates of items that are made via home-based work to ensure favourable interests of all stakeholders involved. This should be done in a meticulous manner and include computation of invisible costs, cost of raw materials, cost of equipment that the worker themself funds. If required, adjustments should be made for the urban/rural level or state level. These rates should also be in accordance with the statutory living wage, different for both the urban and rural area. Post the development of the rates, effective information dissemination about the rates to ensure the knowledge gap is covered and each worker is aware about their rights and correct rates to curtail exploitation stemming from this issue. 

5. Provisions for Organising Home-Based Workers

Due to the nature of home-based work, workers lack the bargaining power that other forms of labour have within India. To empower them, government aided provisions must be made so that they are able to organise themselves. In collaboration with NGOs, something akin to Self Help groups can be organised. In India, SHGs have shown immense success in regards to collective action for women in rural areas to ensure community access to credit. A similar model can be replicated quite easily for home-based workers. This would enable collectivisation of workers, enabling them to negotiate for better wages and working conditions. Further, traditional trade unions must register home-based workers under a separate list locally; this would enable easier communication of workers listed on the same list at the district level.

6. Setting up Helplines

India has several helplines addressing critical issues like domestic violence, mental health, and child protection. Building on this model, a dedicated helpline could be established within the existing framework to address workers' urgent grievances and complaints. This helpline could cater to issues such as harassment, unsafe working conditions, wage disputes, and exploitation by contractors or employers. It would serve as a secure platform for workers to report incidents and receive immediate assistance, including referrals to authorities or legal support. To ensure accessibility, the helpline should be multilingual, operational 24/7, and available via phone, text, or online. Awareness campaigns could inform workers about this resource, especially in remote or underprivileged areas. Such a helpline would provide immediate aid, ensure safer work environments, and contribute to addressing systemic issues affecting vulnerable workers.

7. Financial Inclusion

Financial inclusion is particularly crucial for low-income groups like home-based workers, helping them plan expenses, cope with financial shocks, and secure livelihoods. However, many remain excluded from formal financial systems, necessitating targeted interventions. Promoting financial literacy is vital to ensure home-based workers can understand and use financial services effectively. Banks should view investments in literacy and counselling as long-term strategies. Affordable credit, designed as sustainable business models, is essential, along with customised delivery mechanisms and cost-effective mobile banking solutions. Supporting microfinance institutions and regulating cooperatives can meet the demand for small loans. Encouraging digital payments and expanding the Banking Correspondent Model will further safeguard workers’ earnings and enhance transparency.

8. Formal, Transparent Contracts and development of Record Books

Specifically for the case of subcontracted workers, laws ensuring formal, regulated, standardised, clear and transparent contracts becomes key for mitigating exploitation and misinformation. Contracts should be written in languages the workers understand, and in the case of illiteracy, proper means should be undertaken (via collaboration with NGOs) to communicate terms and nature of contract with the workers. These contracts should also be registered at the local level, ensuring accountability and regulation on both parties’ behalf. 

Further, development of a record book must be undertaken at individual levels. These record books will track all activity between the parties. It will document details of raw materials and work provided by contractors/employers to home workers, as well as finished products returned, payments made, and payment dates, again to ensure accountability and clarity.

9. Mapping and Tracking Global Supply Chains

Significant exploitation and difficulty in tracking these systems are a byproduct of incomplete information about production supply chains on the global level. At the global level, a comprehensive policy would mandate businesses, particularly multinational corporations and their subcontractors, to disclose comprehensive data about their supply chains, including the roles and working conditions of home-based workers. It would mandate firms to report information about how many home-based workers are part of their supply chain as well as information connected to the contracts and wages they are being paid along with the conditions of their employment. There could also be constant monitoring by third-party agencies to determine the level of compliance at the national level. This would, in turn, also encourage fair trade practices, sustainable business operations, and further efforts towards achieving SDGs at the international level.

10. Corporate Accountability 

Contractors hired by corporations should be responsible for ethical practices and fair treatment by the entire supply chain, especially to home-based workers who often have to work in precarious conditions. The presence of many intermediaries is a big facilitator of hidden exploitation, enabling companies to avoid responsibilities related to labour exploitation. This would demand full chain mapping and disclosure by firms so that all the roles, conditions, and compensation of all workers engaged with a firm can be entirely opaque. Such systems can introduce digital traceability systems for tracing materials, payments, and processes of work. Due diligence frameworks should ensure mandatory scrutiny against unhealthy work settings, untimely payments, and unreasonably low remunerations if penalties are to have a meaning. Such grievance mechanisms would open up complaints for home-based workers and liberate them from the threat of retaliation. Governments can further enact joint liability, wherein firms are held accountable for labour violations among contractors and subcontractors. This would encourage more responsible sourcing and labour practices; it would diminish more exploitation and generally create a fairer supply chain system that respects and protects informal workers.

11. Localised Dispute Settlement Mechanism 

In order to address and remedy disputes related to wages, materials, etc. quickly, district level cells can be set up within chowkis (local police stations). This would ensure easy access for workers seeking grievance redressal. For something as localised as home-based work, local measures to resolve disputes would be highly efficient, as opposed to a centralised system, which becomes inaccessible and unapproachable for disadvantaged workers. These cells would include government, employer, and employee representatives to settle conflicts.These local cells must ensure that all communication happens free of legal and corporate jargon, ensuring accurate communication and effective resolution of matters. These cells will also see to the varying cases of verbal and physical abuse informal workers have to face, and resolve those matters in accordance with the law.

12. Effective Implementation

In the first year after adopting this policy, designated committees, at the national and regional levels will formulate more specific short-term, medium-term, and long-term action plans up to 2 years, 5 years, and 10 years respectively, with details on targets, indicators, financial resources, responsible organisations, and expected outcomes. Based on these, the committees will then prepare annual action plans to guide the phased implementation of the policy each year. Sub-committees can be formed by the Inter-sectoral Committees to deal with various issues cut across : housing, social security, data collection, and wages. An annual review of progress on the action plans will be conducted by relevant authorities, supported by the Inter-sectoral Committees at national and regional level.

13. Push for Formalisation of Economy

Ultimately, the biggest policy change this brief advocates for is the complete formalisation of the currently home-based work sector. The aforementioned recommendations can act as a starting point. The nature of misinformation, obscurity, opaque supply chains, labour exploitation can be remedied only to a certain extent if the fields continue to be informal. The full resolution of the issue at hand is possible with a push towards the formalisation of the sector. This would mean redefining what formal work means, and transitioning towards widening legislation pertaining to the matter at hand. The starkest difference between formal and informal work in terms of worker treatment is the nature of regulation that the formal is subject to, but the informal one isn’t. The Central Government must ensure a successful, comprehensive transition of the informal sector into a regulated, registered and overseen formal one in order to mitigate the exploitation this policy brief aims to resolve. 

Conclusion

Home-based work represents an essential lifeline for millions of women, particularly those from economically and socially disadvantaged backgrounds. However, without formal recognition, fair compensation, and legislative protections, these workers will remain marginalised, their contributions undervalued, and their potential untapped. Recognising and addressing the challenges of home-based work is imperative for building a more equitable and inclusive economy. Finally, as discussed, this brief details explicitly why the need for formalisation of this sector of economy is needed urgently within India. Being one of the world’s fastest growing economies, the liability of citizen welfare and equitable economic upliftment is the government’s responsibility. And as such, it must take necessary steps to combat this sensitive issue of exploitation that affects such a significant chunk of the workforce of the nation itself.

Acknowledgment

The Institute for Youth in Policy wishes to acknowledge Gwen Singer, Mason Carlisle, Lilly Kurtz, Paul Kramer. and other contributors for developing and maintaining the Fellowship Program within the Institute.

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