Decentralised reform: How India’s states are playing to win

“Reforms” in India is typically understood as a Delhi story, drafted in ministries, rolled out at pressers. But the action has been shifting to states, one that is often not called out as loudly or goes completely unnoticed.

Maharashtra wants longer shifts, Tamil Nadu is chasing green factories, Telangana’s betting on algorithms, each with its own playbook, each trying to look more business-friendly than the other.

Why does this matter? Because Delhi can announce reforms, but states play a major role in making it work.

Sounds exciting?

Before we dive in, let’s talk GSDP.

GSDP, or Gross State Domestic Product, is basically a state’s version of GDP, the total value of everything it produces in a year.

Maharashtra and Rajasthan: - Labour moves

When Maharashtra announced 12-hour factory shifts and night work for women, reactions came fast and divided. Supporters called it pragmatic, a long-overdue step to match global manufacturing norms. Critics called it risky, given India’s patchy record on safety and overtime pay.

The idea isn’t new. Industry groups, especially in automotive and electronics, had pushed for longer shifts for years, arguing that states like Tamil Nadu and Karnataka already offered exemptions. Maharashtra finally added the 12-hour work provision in April 2024, through an amendment to its Factories Act, and implemented it in September 2024.

Under the new rule, factories can run 12-hour shifts (up to 72 hours a week) with overtime and safety safeguards, while women can now work night shifts under protection guidelines. Rajasthan soon followed, tweaking its Factories Act to raise shift limits and streamline approvals. Both states see flexibility as a way to attract global manufacturers looking for reliability and scale.

Source: Economic Survey of Maharashtra 2024-25, Note: These numbers are as per constant prices (2011-12) which implies that the growth rate is adjusted for inflation.

Why now? Better late than never, we guess. That said, it can help the state maintain its pace of growth for sure. For example, India’s factory output grew by ~5.9% in 2023-24 vs the 6.7% growth delivered by Maharashtra.

That said, there is an argument to be made for productive working hours. Do longer working hours always translate into more productive output - the jury is still out.

This however did not stop Rajasthan, which followed suit with a 12 hour shift. Both states are betting that flexibility will look attractive to investors who now compare Indian states the way they once compared Asian tigers, on efficiency, not incentives.

It’s a bet on competitiveness, not comfort. And as the next few quarters of factory data will show, it’s also a test of whether policy speed can translate into real-world productivity.

Tamil Nadu and Gujarat, Two models of reform

India’s two most industrialised states aren’t chasing new laws; they’re refining the ones that already work. Both know that reform doesn’t always mean disruption, sometimes it’s about precision.

But their playbooks differ. Tamil Nadu is betting on innovation and sustainability, green corridors, EV clusters, and future-ready industries. Gujarat is doubling down on infrastructure and consistency, land reforms, power reliability, and regulatory speed.

Two styles of reform: Tamil Nadu’s innovation and Gujarat’s infrastructure play

Source: Government of Tamil Nadu Industrial Policy 2025; Business Standard, Jan 2024; Government of Gujarat Land Allotment Policy 2024; Vibrant Gujarat 2024 reports; Times of India, Aug 2025.

Together, these two states show what mature reform looks like, not about passing new laws, but fine-tuning what already works.

Both are adjusting to a world where investors want predictability and speed, not just incentives. Tamil Nadu’s reforms lean on innovation, from its semiconductor and EV policies to green industrial corridors that drew record investment commitments earlier this year. Gujarat’s strength lies in execution, reflected in its speed of project approvals, near 100% power reliability, and industrial parks that now anchor over ₹25 lakh crore in active proposals.

Odisha and Telangana: The sprint quickens

Every reform race needs a few surprises. Odisha and Telangana are sprinting.

Odisha has quietly turned reform into a system upgrade. Its digital portal, GO-SWIFT, clears projects in under three weeks and tracks every file with AI. The Make in Odisha 2025 summit drew ₹16.7 trillion in proposals, signalling a shift from mining to manufacturing.

Telangana, meanwhile, is turning technology into governance capital. From T-App Folio and MeeSeva 2.0 to AI-driven citizen dashboards, the state is using digital delivery as its reform edge. Its upcoming AI City Project and T-Hub expansion reflect a shift from policy-making to platform-building, reforms that scale through code, not committees.

Together, they show that India’s next reform story may come not from the biggest states, but the fastest learners.

Parting thought

Reform in India is no longer a Delhi monologue, it’s a state-wide conversation. From Maharashtra’s shop floors to Odisha’s dashboards, every state is scripting its own version of growth.

The map has turned into a marketplace of ideas, and the smartest ones are winning. Next up: the reformers who don’t build factories, but systems.