Why do so few women work in India?

India’s female labour force participation rate (LFPR) stands at 35%, which is well below that of peers like Bangladesh (42%) and the Philippines (50%). Though it has risen substantially from 21% in 2017–18, a closer examination reveals that over 70% of the increase came from the agriculture and subsistence sectors, with significant levels of disguised employment.

Closing the female LFPR gap with the developed world is critical not only for advancing gender equality, but also for unlocking a substantial growth dividend. India could add between $700 billion and $1.4 trillion to its GDP.

But why do fewer women work in India to begin with? Much of the literature on this question has focused on supply-side constraints, particularly societal norms, including the unequal distribution of unpaid care work, restrictions on mobility and education, weak legal protections, and practices such as child marriage.

The available evidence corroborates this. According to a UN Women technical brief, Indian women spent about 22% of their day on unpaid care work, compared to 6.4% of the day for men. Consequently, much of the policy response has focused on increasing women’s share of existing jobs. But this approach risks missing the mark, because even as several major constraints have eased in recent decades, women’s share of the nonfarm labour force has remained largely unchanged.

Education is also a commonly cited factor in Indian women’s low LFPR. But female enrollment rates now match or exceed male enrollment at every level. Similarly, child marriages have fallen by nearly half since 2005–06, and there has been a marked increase in women’s political participation. Female voter turnout was around nine percentage points lower than male turnout in 1996, but by 2024, it had marginally surpassed male turnout. If norms alone were the binding constraint, there would have been a clearer shift by women into productive employment. That has not happened. The ratio of female to male nonfarm employment has increased by a meager 5% in the last two decades.

This disconnect suggests that the problem of low female LFPR also owes something to the lack of overall labour demand in the Indian economy. One way to illustrate this is through labour intensity: the amount of labour employed relative to the output produced. India is considerably less labour-intensive than several of its peer economies. For example, Bangladesh, the Philippines, and Vietnam each employ roughly 40–50 workers to produce $1 million of GDP, compared to only 35 workers in India. If India had Bangladesh’s labour intensity, its female LFPR (holding other variables constant) would be close to 50%.

India’s weak labour demand also shows up in the wage and unemployment data. Unemployment among young graduates aged 15–25 is around 40%, which suggests that the demand for labour is not high enough to offer young graduates sufficient wages to induce them to work.

The experience of Bangladesh’s ready-made garment (RMG) industry illustrates how labour demand can affect female LFPR. In 1983, the industry accounted for only 4% of Bangladesh’s total exports; by 2021, the share had increased to 81%, amounting to $41 billion. This labour-intensive export sector’s rapid expansion created millions of employment opportunities for women, who now account for over 60% of its employees. Without the expansion of the RMG industry, Bangladesh’s female LFPR would be close to 36%, similar to India’s.

So, what is keeping India’s labour demand so low? One important factor is the cost and complexity associated with employing labour. Around 15% of Indian firms identify labour regulations as a major constraint, compared with 3.4% in Bangladesh and 6.4% in the Philippines. It is well known that cumbersome compliance requirements and restrictions on hiring and firing can increase the relative cost of employing workers, encouraging firms to substitute capital for labour.

India has also underperformed in precisely those sectors that have historically absorbed large numbers of lower-skilled workers. The value-added share of low-skilled, labour-intensive industries in India is around 16% of GDP, compared with approximately 20–26% in Vietnam, Indonesia, Bangladesh, and the Philippines.

India’s female LFPR could rise through two mutually reinforcing channels: faster GDP growth and higher employment growth. Faster GDP growth would boost overall demand for both capital and labour, and a more labour-intensive growth model would ensure that a larger share of that increased demand translates into jobs, thus creating more opportunities for men and women alike.

Three major reforms would help. First, India needs more flexible labour regulations. Recent reforms are a promising step forward, but further simplification of the labour code would reduce compliance burdens and lower the perceived risk associated with hiring workers.

Second, India must deliberately promote labour-intensive industries by alleviating constraints to their growth. That means addressing policy distortions, like input tariffs on man-made fibers, that make Indian labour-intensive manufacturing less competitive. It also requires deeper access to global markets through more free-trade agreements, including the signing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Finally, India should substantially increase public investment in health and education, as these are large labour-intensive sectors that traditionally rely more on female labour. Expanding the availability and quality of public services would create direct employment opportunities for women and improve the workforce’s long-term productivity and employability.

These reforms would lead to higher labour demand, which would increase India’s female LFPR. With more women in the workforce, social norms would evolve gradually, further boosting the female LFPR and creating a virtuous cycle. Improving the female LFPR is not only a social imperative but also an economic necessity if India is serious about becoming viksit (developed) by the centennial of independence in 2047.

Shishir Gupta is a senior fellow at the Centre for Social and Economic Progress in New Delhi. Aalhya Sabharwal is a former research analyst at the Centre for Social and Economic Progress.