What is the Indian Employment Sector

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Unlike in Germany, the normal employment relationship in India is “informal”: Around 90% of all employees work largely without any protection under labor and social law in informal employment. The considerable economic growth of India comes to the poor majority of the population - depending on the reading, it makes up 27-68% of the total population - not automatically too good. The Indian government is therefore formulating an “inclusive growth” policy with the aim of allowing the fruits of economic growth to also benefit the poor and the informally employed. The social market economy in Germany is a highly regarded reference model in India, it is understood as the German model of “inclusive growth”. India is interested in German experience in various areas - and in German expertise.

Vocational training cooperation

India is a very young country and there is an enormous need for solid professional qualifications. The Indian vocational training institutions have not yet been able to come close to covering this in terms of either quantity or quality. India is therefore running a large-scale vocational training offensive and is very interested in the German dual vocational training system. After decades of development cooperation in the field of vocational training, a German-Indian working group on vocational training was set up in 2008. On the German side, it is managed by the BMBF in close coordination with BMZ; on the Indian side, it was formerly managed by the Ministry of Labor & Employment, today by the Ministry of Skill Development and Enterpreneurship. The cooperation includes policy advice and specific cooperation projects, which are largely financed by the Indian side. Since 2014, vocational training has again been the subject of development cooperation. The main aim of all efforts is to support India in setting up dual training structures. In view of the rapidly growing economic connections, this is not only in the Indian but also in the German interest.

As with the German-Indian government consultations in Delhi in June 2011 and in Berlin in 2013 as well as India's participation in the Hanover Fair in April 2015, vocational training will again be an important topic at the government consultations in Delhi in October 2015.

Responsible corporate governance - corporate social responsibility

In Germany, the debate on responsible corporate governance (CSR) is conducted at a high level of binding social and ecological standards. After the Federal Government implemented the main individual measures of the CSR Action Plan from 2010, the national CSR strategy is currently being further developed and made more international.

The responsible Federal Ministry of Labor and Social Affairs (BMAS) supports the CSR process with a number of initiatives and measures. A central topic is corporate responsibility in production and supply chains, which was intensified both in the context of the German G7 presidency, in the development of a national action plan to implement the UN guiding principles for business and human rights, and in the Federal Government's CSR forum is discussed.

In India A new “Companies Act” has been in force since May 2014, according to which companies of a certain size should spend an amount of 2% of the average net profit of the last 3 years in favor of “socially responsible projects / programs”. In this way, around 16,000 large companies across the country are supposed to promote social development and to mobilize their management skills. In 2011, the Indian Ministry for Corporate Affairs issued voluntary guidelines for socially, ecologically and economically sustainable corporate governance - German support was provided for the development by GIZ as part of an intensive collaboration between 2008 and 2014. German expertise is also needed when it comes to boosting consumer demand for ecologically and socially harmless goods and services.

Health insurance and retirement provision

In Germany, old-age provision and health insurance are fundamentally linked to the employment relationship - in India this only applies to the small part of the formal employment sector. Nevertheless, Germany is in demand as a partner in the development of social security systems for the informal sector in India. GIZ supported the Ministry of Labor and Employment in the development and introduction of the first health and old-age provision systems for the informal sector.

The RSBY - Smart Card: health insurance for 300 million people

Occupational health and safety

In 2009 India introduced its "National Policy on Safety, Health and Environment at Workplace". This stipulated the close involvement of the social partners and defined topics for an action program. Building on this, new safety regulations were gradually created, the supervisory and inspection authorities reformed, and occasional information and awareness-raising events were started. In May 2015 PM Modi started new accident and life insurance initiatives, which are intended to protect the large number of people working in the informal sector.

Against this background, the cooperation between the Central Association of German Accident Insurance (DGUV) and Indian partners, which has existed for several years, is of particular importance. The great expertise of the DGUV in the field of occupational health and safety can be a good support for India to improve skills, safety awareness, safety standards and implementation strategies. Very successful examples of this were large conferences in New Delhi and Mumbai with the participation of employers, employees, officials from the responsible ministries and inspectors, at which practical hazards on construction sites were dealt with very pragmatically and simple preventive measures were presented. There is consensus among all those involved that great progress can be made in the containment of serious accidents with little effort.

Social security agreement

On October 1st, 2009 the first social security agreement between Germany and India came into force. It regulates the social security obligation especially for employees who are posted by their company from Germany to India or vice versa for a certain period of time.

The principle of territoriality, which regulates which law is applicable to which person in which place, also means that social security regulations only apply in one's own country. If Indian citizens work in Germany or German citizens in India, this principle can lead to double insurance because every state can provide for compulsory social insurance for its employees. In order to avoid this at least partially, the Federal Republic of Germany concludes social security agreements with states outside the EU.

Since Germany and India are important trading partners, easing the social security regulations for Indian and German companies operating in the other country is of great interest. The same applies to employees who want to work as skilled workers in the other country.

The Indo-German Social Insurance Agreement, which came into force on October 1, 2009, regulates the compulsory pension insurance for citizens of the two countries who work in the other country. According to this, there is basically a pension insurance obligation according to the rules of the state in which the professional activity is carried out.

However, if a German employee only works temporarily for a German company for a maximum of 48 months (an application for an extension is possible in special cases) in India (posting), he / she will remain in the German pension insurance. In addition, for German employees, the social security obligation extends to the German unemployment insurance.

Full text: Agreement on social security

Full text: Final Protocol to the Agreement on Social Insurance

More information