Non-compliance with India's Factories Act: Magnitude and patterns

Abstract

While non-compliance with legislation and regulations is said to be rife in developing countries, there is limited systematic evidence of the magnitude of non-compliance. The authors quantify non-compliance with India's Factories Act in 2010 and find that the number of non-compliant firms is nearly twice that of compliant firms, and much larger than the number of firms "adjusting out" of the legislation. Thus, non-compliance with the Factories Act is a key feature of India's "missing middle". The main trends and patterns of non-compliance are explored, and a number of key issues highlighted for further analytical and policy research.