Introduction

Despite the enactment of The Bonded Labour System (Abolition) Act, 1976 almost fifty years ago, debt bondage in India is a scourge in many of its industries. Bonded Labour is a system of inducing workers into arrangements wherein they are forced to work to pay off a debt. The terms of these debts are vague and exploitative and are framed to ensure their perpetuity. Victims of this system are subjected to abuse, violence, sexual assault and other human rights abuses. In 2016, the Indian government committed to liberate 18.4 million victims of bonded labour by 2030, a goal that is unlikely to be met. Government inaction is not the only cause of this exploitative practice, other major culprits include Multinational Corporations (MNCs) whose role in perpetuating debt bondage has not been widely recognised in other academic literature. This post aims to highlight the legal framework surrounding bonded labour, examine the problem’s prevalence in India, identify those perpetuating its continuance, and how international legal frameworks can offer some hope for victims.

International and Indian Legal Framework for the Prohibition of Bonded Labour

India is compelled by various international conventions, treaties and declarations to expel the problem of debt bondage from its industries and society. India is a signatory to the UN supplementary Convention on the Abolition of Slavery, the Slave Trade and Institutions and Practices Similar to Slavery (1956) which prohibits debt bondage. India has also ratified Convention 29 of the International Labour Organisation (ILO) which prohibits debt bondage as well as other ILO conventions that address related issues, such as Convention No. 105 concerning the Abolition of Forced Labour. Additionally, India is a party to the International Covenant on Civil and Political Rights which also prohibits forced labor and servitude in its Article 8.

In line with international law, the Indian domestic framework similarly includes various prohibitions against bonded labour. India’s Constitution expressly prohibits forced labour in Article 23 and child labour in Article 24. It also guarantees the right to life with dignity, encompassing freedom from exploitation. The Bonded Labour System (Abolition) Act, 1976 abolishes bonded labour, extinguishes debts and criminalises the practice. Rehabilitation measures, like the Central Sector Scheme for Rehabilitation of Bonded Labourers, promise rescued victims compensation, housing and employment support. Yet, the India National Human Rights Commission (NHRC) and the UN Special Rapporteur on Contemporary Forms of Slavery repeatedly highlight failures in implementation. Vigilance committees under the Act are largely inactive, convictions are rare, and compensation often arrives years after liberation, if at all. Thus, while robust on paper, the framework falters in practice due to a lack of vigilance and enforcement.

The Ground Reality of Debt Bondage in India

Notwithstanding the extensive framework prohibiting debt bondage in India, the practice is still pervasive in various industries. It disproportionately impacts historically marginalised communities. A  study revealed that a whopping 80-98% of bonded labourers were Dalits (lower castes) or from indigenous communities. This represents a stark failure of the framework to protect them. Another testament to this failure is the unfulfilled commitment that the Indian government undertook in 2016 to liberate 18.4 million people from bonded labour by the year 2030 in line with United Nations Sustainable Development Goal (SDG) Target 8.7. To meet this goal they would have to liberate and rehabilitate 1.3 million bonded labourers every year. However, a right to information request made to the government revealed that over the past three years, the annual average of those rehabilitated was only 900 and from 2024 to 2025 only 246 bonded workers were liberated. These issues arise due to delayed/incomplete rehabilitation and inefficient enforcement mechanisms.

The widespread issue of bonded labour causes major human rights abuses like gang rapes, child labour, killings and forced hysterectomies being inflicted upon these victims of involuntary servitude. There are frequent cases of women in bonded labour industries like brick kilns and sugar mills facing sexual abuse and rape. Moreover, in order to increase the working efficiency of women in bonded labour, thousands of women are compelled to be sterilised. Children victimised by child labour make up a significant part of the 2.1 million Indian child labourers. And for many trapped in the system, speaking out against such injustices results in killings, looting and cases of widespread arson.  These issues are not solely the responsibility of the government or the physical perpetrators of such actions, but also of international corporations.

The Role of Global Corporations and How Due diligence Laws Could Make a Change

Corporations are entangled in systems designed to perpetrate the practice of debt bondage and are far from being passive complicit actors. Multinational corporations including Zara, H&M, Amazon, Gap and confectionary giants like Coca-Cola, Mondelez and Pepsi source from Indian suppliers implicated in debt bondage, child labour and coercive practices. Other fashion giants like American Eagle, Adidas and Gap have also been found to be complicit in these abuses. While many brands rely on audits and certification schemes, evidence shows these often fail. Without binding obligations on MNCs such complicity will remain invisible and unaccountable

Internationally, the UN Guiding Principles on Business and Human Rights (UNGPs, 2011) establish that businesses must identify, prevent and mitigate human rights abuses, including bonded labour.  Specifically, principle 13 requires businesses to avoid causing or contributing to human rights abuses, while principle 17 mandates HRDD to assess, address, and communicate how such risks are managed.The OECD Guidelines for Multinational Enterprises similarly require companies to undertake due diligence.

Europe is translating these soft standards into binding obligations. In 2024, the EU adopted the Corporate Sustainability Due Diligence Directive (CSDDD), mandating large firms—including non-EU companies active in the EU—to assess and prevent human rights abuses, including forced labour across their supply chains. Noncompliance can result in fines or civil suits (Business & Human Rights Resource Centre).

Several countries already lead the way, France’s Duty of Vigilance Law (2017) allows victims to sue MNCs failing to prevent human rights abuses by subsidiaries and subcontractors. Germany’s Supply Chain Due Diligence Act (2021) obliges companies to establish risk management systems to identify, prevent and remedy human rights abuses. Furthermore, in the UK, courts in Okpabi v. Shell allowed claims against parent companies for abuses committed abroad. Particularly pertinent for the present discussion is a recent case where forced labour claims against Dyson’s Malaysian suppliers were permitted to proceed in England .

Together, these developments signal a paradigm shift, both laws and courts increasingly treats corporate responsibility for bonded labour as a legal obligation not voluntary ethics. This raises hope that brands profiting from Indian bonded labour may soon be held accountable for their complicity.

The Way forward

To eradicate bonded labour in India, a multi-pronged approach must be urgently adopted. Domestically, the government should revitalise and properly fund vigilance committees established under the Bonded Labour System (Abolition) Act, 1976. Establishing fast-track courts to handle bonded labour cases can also help to deliver justice swiftly.

At the international and European level, the enforcement of binding obligations on corporations is crucial. The EU Corporate Sustainability Due Diligence Directive (CSDDD) and national laws such as those in  France and Germany can contribute to more responsible business conduct, including in the area of bonded labour. These laws should impose real sanctions and allow victims in countries like India to bring civil claims against such MNCs in European courts. Only through robust enforcement will companies be held truly accountable for abuses hidden in their supply chains.

Equally important is a shift in corporate culture. Companies must go beyond superficial audits and tick-box compliance. In line with the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines for Multinational Enterprises, businesses should conduct genuine human rights due diligence. This includes mapping full supply chains, banning recruitment debts, guaranteeing fair wages, and immediately severing ties with suppliers engaged in bonded labour or child labour.

Global bodies like the ILO and United Nations should regularly monitor corporate practices in this regard. Civil society organisations and journalists must continue their work documenting abuses, raising public awareness, and supporting litigation against perpetrators. On the ground legal aid clinics and NGOs ought to make victims aware of their ability to seek justice internationally. Publicity, avid reporting , and consistent documentation of such human rights abuses is an part of the journey to reduce and eliminate bonded labour.

Bonded labour in India is not an accidental byproduct of poverty or poor enforcement, it is a legacy of colonial-era labour systems that have adapted to global capitalism. Today’s supply chains mirror yesterday’s empire, extracting cheap labour from the east to fuel consumption out west. As the world continues to legislate on corporate accountability, this moment must mark more than regulatory progress it must be a commitment to dismantling the conditions that still bind millions in invisible servitude.