Between tradition and modernity: Why so few Indian women are employed and what this means for your company – Part 1

India’s untapped potential: Why so few Indian women participate in the labor market

Successful, well trained, a valuable member of your Indian team. And suddenly she quits her job. A bitter loss. The reason for quitting? Marriage.

1. employment rate of Indian women

India is one of the fastest growing economies in the world. Dynamic, innovative and progressive are the adjectives that characterize the national self-image. But while the country is catching up economically, a large part of its potential remains untapped: the female workforce.

Every year, millions of Indian women give up their careers due to marriage and childbirth. While the proportion of women in India’s formal and informal workforce was around 27% in 2005, it fell to just 23% in 2021, according to the World Bank. Even if this trend has come to a halt according to the World Bank’s latest figures for 2023, the employment rate of Indian women remains significantly below the global average of 51% at 32.68%. This puts India in last place among the G20 countries. By comparison, the labor force participation rate of Indian men is consistently around 75 percent.

Economists emphasize that greater integration of women into the labour market could significantly increase economic growth. The World Bank estimates that India’s national growth could increase by up to 9 percent if half of the female population were employed.

But why is the employment rate so low? There are many reasons and we will explain them in more detail in an upcoming blog post. Stay informed – subscribe to our newsletter now.

2 Why is the topic relevant for you as a European company?

• Larger talent pool and access to qualified specialists

• India trains millions of female academics every year, including many female engineers, IT specialists and scientists.

• By including women, you can draw from a significantly larger talent pool – a decisive advantage in the competition for the best employees.

• Greater innovative strength through diverse teams

• Mixed teams make better decisions, are more creative and more productive.

• Companies with a higher proportion of women in management positions show demonstrably better economic performance.

• Competitive advantage with local and international customers

• In many industries – especially consumer goods, healthcare, education and services – female perspectives are essential for product development and customer understanding.

• Companies that integrate female employees demonstrate social responsibility – an image factor for international stakeholders and investors.

• Compliance and CSR expectations

• Many large clients – particularly in Europe – demand gender equality, diversity and inclusion in their supply chains.

• Indian CSR regulations and international standards (e.g. SDGs, UN Global Compact) require the active advancement of women as a success factor.

• Employer attractiveness for top talent

• Indian young professionals – especially in urban centers – pay attention to values such as equality and equal opportunities when choosing an employer.

• Those who credibly promote women position themselves as a modern and future-oriented organization.

• Risk management and cultural sensitivity

• A lack of knowledge about gender-specific differences in India can lead to misjudgments in leadership, communication and personnel development.

• Unreflected measures can create internal tensions or be perceived as culturally insensitive.

• Increased efficiency through lower fluctuation

• In many cases – especially in India – women show greater loyalty to employers and less willingness to change jobs if they find suitable conditions and support.

• This saves you costs for recruiting, onboarding and training.

• Use of government funding programs

• The Indian government actively promotes programs to increase the female employment rate and female participation in companies (e.g. PMKVY 4.0).

• Subsidies, tax breaks or preferential tenders can be used through targeted participation.

• Promotion of internal corporate culture and leadership development

• Employing and promoting female employees has a positive impact on the company’s management culture, communication and social skills.

• This can offer a learning effect and development advantage, especially for European managers in intercultural contexts.

• Contribution to sustainable location development

• Higher female labor force participation leads to greater prosperity, education and stability in the local environment.

• As a company, you benefit indirectly through better developed communities, a more stable environment and long-term reputation gains.

Conclusion

The low employment rate of Indian women is not only a socio-economic problem in India, but also a strategic opportunity for you as an international company.
India trains millions of highly qualified women every year – but without targeted measures for integration and promotion, this talent remains untapped. Companies that start here secure a decisive competitive advantage: they expand their talent pool, promote diversity, meet international CRS requirements and increase their attractiveness as an employer. They also make an active contribution to more equal opportunities and sustainable development – both economically and socially.

Take advantage of our more than 20 years of experience as a strategic partner for European companies in India. The special challenges in human resources, the special requirements in recruiting or intercultural training are our daily business. Please feel free to contact us. We look forward to seeing you.