Labour Code Reforms and MSMEs: Opportunities and Compliance Issues

India’s labour law consolidation into four labour codes—covering wages, industrial relations, social security, and occupational safety—has been positioned as a structural reform to simplify compliance and improve labour-market outcomes. For Micro, Small and Medium Enterprises (MSMEs), the reforms promise reduced regulatory fragmentation, more predictable inspections, digitised processes, and clearer national standards. At the same time, MSMEs face practical compliance challenges: upgrading payroll structures to new wage definitions, expanding social security coverage, meeting workplace safety norms, maintaining digitised records, and interpreting rule-level variability across states. This paper analyses the opportunities and compliance issues created by labour code reforms for MSMEs through a policy and implementation lens, and proposes an MSME-oriented compliance framework. It develops a conceptual model linking regulatory simplification, compliance capacity, labour formalisation, and firm performance. The study also offers an empirical design (survey + key-informant interviews) suitable for MSME clusters, with illustrative “SPSS-style” tables to guide analysis. The paper concludes that the reforms can improve competitiveness and worker welfare, but benefits will be uneven unless complemented by capacity building, simplified digital compliance, state–centre harmonisation, and targeted transition support for micro enterprises.