Something momentous is happening in India – and not many outsiders are noticing. Prime minster Narendra Modi’s government has recently announced significant changes to the laws governing India’s labour market. These “reforms” appear to be to aimed at stimulating economic growth and inward investment by removing “red tape” from entrepreneurs. So far, so little out of the neo-liberal ordinary.

However, removing “red tape” will mean taking away basic protections for some of the most vulnerable workers. This will include dismantling labour inspections, restricting trade unions, moving employment law violations from criminal to civil code, removing penalties for gender-based discrimination and ending the country’s absolute ban on child labour.

Indian society, in particular a new coalition the Working People’s Charter Secretariat, has begun to protest. They are fearful of a “race to the bottom” among businesses and between states to cut costs by reducing wages and terms and conditions. Civil society has also warned of increased exploitation of children, by making legal many of the forms of child labour and exploitation that have so long blighted India’s vast “informal” economy. These proposed changes are particularly depressing coming so soon after India’s compulsory education law promised a reinvigorated effort to end child labour.

India is already rife with labour rights abuses. Bonded labour, recognised as a form of slavery under both Indian and international law, affects millions, perhaps most notoriously in agriculture and brick production. Child labour and slavery remain a pernicious problem. Other forms of forced and child labour have recently emerged in export-oriented industries: the child labour found in the manufacture of sporting goods in Punjab would become legal under the proposed “reforms”; forced labour of girls and young women, notably in the spinning mills of Tamil Nadu, forms part of the supply chains that provide cheap clothes to northern hemisphere high streets.

Those affected by these slavery abuses – poor girls and young women, Dalits and people from other minority groups – are precisely the people that the lawsgoverning India’s labour market are meant to protect. If the government were to increase the capacity of the overburdened courts, and root out corruption and prejudice in the police, it would begin to transform the promises of those laws into a reality for all Indians.

Instead the path it has chosen appears quite different. The proposed reforms, taken together, are arguably unconstitutional, flouting article 23 of the Indian constitution, which prohibits trafficking and forced labour. Future generations may come to regard this as a seminal moment in Indian history, when an Indian government repudiated the ideals enshrined in the constitution by the founders of the republic – and instead substituted a legal basis for the exploitation of vulnerable citizens.

Ironically, this embrace of the excesses of 19th century “robber baron” capitalism occurs just as the growing international discourse on ethical trade runs counter. A core concept of the UN Guiding Principles on Business and Human Rights is that governments have the responsibility to protect human rights and businesses have the responsibility to respect human rights.

With the growing awareness of forced labour and trafficking as issues of international business and trade, and with legal requirements in the UK and US for companies to report on their supply chains, any business leader with a conscience must consider investing in India carefully in the aftermath of Modi’s proposed reforms. They must think whether they could ever fulfil their responsibilities to respect workers’ rights in the sort of political economy that India would become. And they must worry about how they would face their employees, customers, shareholders – and even their own families – when the truth of such Indian supply chains are exposed.

If nothing else, self-interest must be an issue: it can only be a matter of time before the citizens of Europe and the US press their leaders into excluding from their markets the products of slavery, and hold criminally liable those executives who knowingly seek profit from the enslavement of others.

Modi’s current plans could put him on the wrong side of history, ultimately overseeing India’s gradual isolation from international trade. This would be a tragedy. India can still become, as the founders of the modern state envisaged, a beacon in the struggle for human rights across the world.

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