What is an industry, anyway?

In today’s episode on 20th March 2026, we tell you why the Supreme Court is revisiting the definition of ‘industry’. Book a FREE call with Ditto https://ditto.sh/vx51ji

• 0:00Speaker 00

  Hello folks, you're tuned in different charts daily. In today's episode, we tell you why the Supreme Court is revisiting the definition of industry.

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  But before we begin, here's a quick side note. This weekend, we're hosting a free two-day insurance masterclass that helps you build real financial security by understanding health and life insurance the right way. If you'd like to register for free, then please do so by heading to the description and saving your spot. Alright, back to today's story. The late 1970s, India was different from what it is today. Fires used to travel slowly across wooden and cast iron desks. Government offices hummed with ceiling fans and paperwork. The state wasn't just a regulator back then. It ran banks, built roads, supplied water and staffed hospitals. And for many, a government job wasn't just employment. It was stability, identity and a quiet promise of security. But beneath all that, there was an invisible shift taking place.

• 0:53Speaker 00

  A worker wasn't limited to a factory or shop floor. They were showing up in classrooms and public hospitals. And as this new kind of workforce grew, so did a simple but unsettling question. If you worked for a public service, were you still part of an industry? At least, that was a question that came at doorstep of BWSSB, that's Bangalore Water Supply and Sewage Board, back in 1978. A group of employees weren't happy about the board taking fines from them for alleged misconduct. They believed that such workplace decisions were unfair. So they ended up demanding the same rights as factory workers. They wanted the right to raise disputes and not be fired without cause. But simply, they wanted to be classified as workmen under the Industrial Disputes Act of 1947.

• 1:36Speaker 00

  But before they could even be heard, they ran into a more fundamental roadblock. The board pushed back, arguing that none of this applied because it wasn't an industry to begin with. Because under 1947 Act, an industry is defined as "any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft or industrial occupation or avocation of workmen." If that seems complicated, just understand that the board first argued that it isn't a business or trade at all. But a statutory authority created under the Bangalore Water Supply and Sewerage Act to provide essential civic services, that is water and sewerage to the city. So that itself meant it shouldn't be classified as an industry.

• 2:19Speaker 00

  And second, that its activities are non-profit. Welfare-oriented public functions quite different from private sector manufacturing or commercial enterprises. Which meant that public utilities like this were never intended to be treated as industries. As you can imagine, workers were enthralled and this culminated into a court case famously known as Bangalore Water Supply and Sewerage Board versus R Rajapal. And to settle it, the court came up with what became known as the triple test. It said that to resolve such disputes, you simply had to ask three questions. First, was the activity systematic and organized, not casual, not a one-off, but continuous? Second, did it involve cooperation between an employer and employees? Third, did it produce goods or services meant to satisfy human needs?

• 3:04Speaker 00

  If the answer to all three was yes, it was an industry, profit and motive didn't matter. Whether the employer was a private company or the government didn't matter, the only thing that mattered was the nature of the work itself. So, a water board could be an industry and so could a hospital, a university, a research institute, a club, a government department, even a religious body such as a temple. So, you could say this decision single-handedly erased the boundary between welfare and commerce. Even parliament, watching from the sidelines, once tried to change it by passing an amendment in nineteen eighty-two. This amendment specifically excluded several categories of activities, including hospitals, educational institutions and sovereign government functions. But it was never really enforced and was then quietly left that way.

• 3:46Speaker 00

  So, yes, this is the definition that shaped Indian labour law for nearly five decades. Entire sectors adjusted to it, building themselves around it. Now, you're probably wondering, okay, what happens if all these establishments are included in the definition of an industry was the problem? Well, to understand that, let's look at a real-life example. In nineteen ninety-six, a three-judge bench applied the nineteen seventy-eight test to the Maharashtra State Government's Social Forest Department and held that it too was an industry. But in two thousand and one, a different two-judge bench looked at a similar question in Gujarat and reached the opposite conclusion. It felt that the state's forest department wasn't an industry but a welfare scheme. Same law, same test, but opposite answers. And this led to widespread confusion.

• 4:30Speaker 00

  Labour courts and high courts across India were reading the nineteen seventy eight judgment and reaching different conclusions, depending on which part of it they emphasized and where their instincts told them the line should be drawn. In two thousand and five, a five-judge constitution bench described the situation plainly. The nineteen seventy eight judgment, it said, had produced a docket explosion. Or just too many cases in labour courts, simply because no one was really sure what counted as an industry. And uncertainty ends up hurting those who can least afford legal patterns the most. Not just that, in cases where the broader definition of industry was upheld and organisations like hospitals or government departments were treated as industries, it simply made way for more strikes and lockouts in essential services like healthcare, education and water.

• 5:15Speaker 00

  This risked disrupting core public functions and gave unions a sort of unfair leverage. The question then moved to a five-judge bench in two thousand and five in a case called State of U P versus Jaybir Singh, where, again, they were essentially circling the same issue. The bench then asked for the case to be referred to a larger bench, and then again, a larger bench. And that's how it finally reached a nine-judge bench of the Supreme Court of India on the morning of March seventeenth, twenty twenty six, forty-eight years after the original judgment. What followed wasn't just a ruling on one dispute. The Supreme Court stepped back and asked a much larger question. What exactly counts as an industry in the first place? The bench faced questions that would have been familiar to the seven judges of nineteen seventy eight. Was a triple test still the right law?

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  Could social welfare activities run by the government count as industry? Where exactly did sovereign functions end and industrial activity begin? The arguments on first day showed both how much and how little had changed. The Attorney Journal, that is the governor's chief legal adviser, warned that a definition this broad comes with real costs and that treating almost every organised activity as an industry could discourage investment and strain non-commercial sectors. On the other side, Workers' Council argued that narrowing The definition now would take away protections from people in hospitals, universities and public bodies who have relied on them for nearly half a century.

• 6:38Speaker 00

  But that wasn't the only complication. In twenty twenty, Parliament passed a new Industrial Relations Code, which came into force in November twenty twenty five, replacing the Industrial Disputes Act. This meant that the law that the workers had relied on no longer existed. Yet, the bench made it clear that it was there to interpret the old law, not the new one. But here's another question that lingered in the background. If Parliament had already moved on, what exactly was the court being asked to settle? By now, the workers who first bought these claims are long gone. The board has changed, even the law they relied on has disappeared and still, the question they set in motion refuses to go away. That is, who counts? Back in seventy eight, the court looked at a country full of people working in hospitals, schools and government offices and in effect said, we see you.

• 7:23Speaker 00

  You are part of industry, this law is yours too. But today, judges are looking at a very different India. And whether they see things the same way or choose to draw the line elsewhere remains to be seen. Because the Supreme Court just finished hearing all the arguments yesterday and has decided to deliver its decision a little later after internal discussion. Until then, if someone asks you what an industry is, you'll have to send them back to how the courts defined it in nineteen seventy eight. All right, I'll see you in the next one. Thank you for listening to today's episode. And if you want to share your feedback or suggestions, do drop us an email to [email protected]. Until next time.