2025: India’s Compliance Reset Year ➖ From Criminalisation to Credible Governance

2025 marks a turning point in India’s regulatory and compliance landscape. As long-pending reforms move from intent to implementation, the year reflects a broader shift in how compliance is designed, enforced and experienced by organisations.

Rishi Agrawal, Co-Founder and CEO of TeamLease RegTech, has consistently emphasised that India’s current phase of reform can be best understood through three structural vectors- deregulation, decriminalisation, and digitisation. Together, these vectors signal a reset in the compliance landscape, away from fragmented rules, criminal penalties and manual processes and toward clearer obligations, proportional accountability and digital-first governance.

This compliance reset is being shaped most visibly through three landmark reforms coming into force in 2025:

• Jan Vishwas 2.0, advancing the decriminalisation of minor and technical business offences

• The Digital Personal Data Protection Rules, 2025, operationalising India’s data governance framework

• The Labour Codes, consolidating and simplifying India’s labour compliance architecture

The sections that follow examine each of these reforms in detail, outlining what they cover, who they apply to, and how they are redefining compliance expectations for organisations operating in India.

1. Jan Vishwas 2.0: Replacing Criminalisation with Proportional Accountability :-  The Jan Vishwas (Amendment of Provisions) Bill, 2025, also known as Jan Vishwas 2.0, was tabled (introduced) in the Indian Lok Sabha on August 18, 2025, by the Minister for Commerce and Industry, Shri Piyush Goyal, during the Monsoon Session, with aims to further decriminalise minor offenses and ease business compliance. The Bill proposes changes to 355 provisions across 16 Central Acts managed by 10 Ministries. Out of these, 288 provisions are being decriminalised to improve Ease of compliance, while 67 provisions focus on Ease of Living. For 76 first-time violations across 10 Acts, businesses will receive advisories or warnings instead of penalties. Jail terms for small technical defaults are replaced with monetary penalties. Repeat offences attract higher penalties through a graduated system. The legislation introduces provisions for appointing “adjudicating officers” who are empowered to conduct inquiries and impose monetary penalties through an administrative process, rather than requiring formal court prosecution. Penalties will automatically increase by 10 % every three years to maintain deterrence. This builds on the Jan Vishwas Act of 2023 and is supported by similar reforms at the state level, including Tripura, Karnataka, Madhya Pradesh, Gujarat, and Kerala.

2. Digital Personal Data Protection Rules, 2025: Clear Rules for Data Handling:-  The Digital Personal Data Protection Rules, 2025 convert India’s data protection law into a clear, enforceable compliance framework. For organisations, data protection is no longer a policy exercise but an ongoing, auditable compliance obligation embedded across business operations and technology systems. The Rules require organisations to issue clear notices and obtain verifiable, purpose-specific consent before processing personal data. Consent records must be demonstrable, with additional safeguards for children and persons with disabilities through parental or guardian consent. This necessitates redesigning consent workflows and maintaining auditable records. Data breach reporting becomes a formal compliance requirement, with mandatory notifications to the Data Protection Board and affected individuals within prescribed timelines. Organisations must therefore establish documented breach detection, escalation, and response mechanisms. The Rules clearly define responsibilities between Data Fiduciaries and Data Processors through mandatory contracts, extending compliance obligations to vendors and service providers. Record-keeping around data processing, retention, deletion, and grievance redressal is also mandated, requiring organisations to demonstrate compliance on demand. Entities classified as Significant Data Fiduciaries face additional governance, audit, and transparency requirements, reflecting a risk-based compliance approach. Cross-border data transfers are permitted subject to notified conditions, requiring visibility over data flows. Overall, the DPDP Rules embed data protection as a horizontal compliance function, cutting across legal, IT, HR, and risk teams, supported by a phased rollout that gives organisations time to build systems, controls, and governance in a structured manner.
   

3. Labour Codes, 2025: One System Instead of Many :-  Codifying 29 central labour laws into four cohesive Labour Codes is a textbook case of deregulation through simplification rather than abolition.  It collapses hundreds of fragmented provisions into a single, digital, “one registration–one licence–one return” framework that cuts forms, returns and overlapping definitions by half or more.

By replacing inspector raj with web-based, risk-based inspections and standardised definitions of “worker”, “wages” and “establishment”, the Codes reduce discretion and transaction costs while still preserving core protections.  This is deregulation in the classic sense: fewer, clearer rules; less procedural clutter; more predictable compliance

For over seven decades after Independence, India’s labour regulation evolved in silos. By 2019, employers were navigating 29 central labour laws and more than 1,400 rules, each with its own definitions of wages, worker, employee, and establishment. The same salary could be treated differently for PF, ESI, bonus, or gratuity. Compliance meant maintaining nearly 48 separate registers, filing multiple returns across portals and securing state-wise licences, creating high compliance costs, interpretational disputes, and litigation risks that disproportionately affected growing businesses.

Between 2019 and 2020, Parliament undertook a once-in-a-generation consolidation by enacting four Labour Codes administered by the Ministry of Labour and Employment:

• Code on Wages, 2019

• Industrial Relations Code, 2020

• Social Security Code, 2020

• Occupational Safety, Health and Working Conditions Code, 2020

On November 21, 2025, rules for these codes were notified, replacing the legacy framework with a common legal language and a digital-first compliance architecture. For the first time, uniform definitions of wages, workers, employees and establishments apply across labour laws, reducing ambiguity at the root. The 50% wage rule, introduced under the Code on Wages, standardises salary structures by ensuring that basic pay and dearness allowance form a meaningful base for calculating social security.

The codes aim to bring simplification and scale. Dozens of statutory registers have been consolidated into one common digital register. Multiple periodic filings are replaced by a Unified Annual Return. A single Labour Identification Number and pan-India licences under the OSH Code allow businesses to operate seamlessly across states without duplicative approvals. Applicability thresholds are rationalised to ensure that firms are not penalised for crossing employment milestones, addressing a long-standing disincentive to formal growth.

Importantly, the reform is not limited to traditional employer-employee relationships. The Social Security Code formally recognises gig workers, platform workers, and home-based workers, bringing them within the policy lens for social protection for the first time. Fixed-term employment is normalised across sectors, with full wage parity and statutory benefits, including eligibility for gratuity after one year, balancing flexibility for employers with security for workers.

While the Codes require state-level rules to be fully operational, their significance lies in the structural reset they represent. The Labour Codes mark India’s transition from a paper-heavy, inspector-driven regime to a rules-based, digitised and nationally consistent labour compliance syste, one designed not just to regulate employment, but to support formalisation, scale, and workforce mobility in a modern economy.

The reforms coming together in 2025 show a clear change in India’s compliance approach. As multiple reforms converge in 2025, India’s compliance framework appears to be moving toward a more rational design. If implemented well, these changes could reduce the criminal treatment of minor errors, simplify regulatory requirements, and allow digital systems to play a more enabling role in compliance. With decriminalisation, data protection clarity, simplified labour laws, and digital infrastructure, compliance is becoming more predictable and business-friendly. This makes 2025 not just another reform year, but a true reset in how compliance works in India.