Authored By: Jagashri Kumaran
School of Law, Veltech University.
Abstract:
When a Mumbai Ateliers (artisan) hand-stitches embroidery destined for a Christian Dior couture gown, international law overlooks this subject. The Maker’s existence falls beneath every threshold of audit — subcontracted, informal, invisible. This paper argues that this invisibility is not accidental; it is structural. Introducing the concept of “structural audit impossibility“, this paper distinguishes India’s human rights crisis in fashion supply chains from politically-blocked audits in Xinjiang; contending that fragmented subcontracting, caste-based informality, and home-based labour across Tiruppur, Mumbai, Surat, and Delhi NCR render tier-three workers legally unreachable, regardless of political access. It further contends that India’s voluntary National Guidelines on Responsible Business Conduct (NGRBC) creates a systemic compliance vacuum. Where audit is structurally impossible, existing “best efforts” liability shields must yield to heightened affirmative obligations — compelling brands to restructure sourcing itself, not merely report on it.
Keywords: Structural Audit Impossibility, Human Rights Due Diligence (HRDD), Fashion Supply Chain Transparency, Luxury Fashion & Human Rights, Compliance Vacuum.
Introduction:
The Audit Blind Spot
Every year, global luxury and fast fashion houses release sophisticated sustainability report that attest to their supplier chains’ adherence to human rights norms. Corporate social responsibility commitments are renewed, tier-one factories are examined, and audit certificates are acquired. However, these guarantees are largely fictional for the millions of people who labor in the lowest echelons of the unofficial subcontracting world of fashion. Because of the system’s architectural design that makes them “invisible”, the auditors are never able to approach them.[1]
This phenomenon — which this paper terms structural audit impossibility — is fundamentally different from the politically-blocked audits documented in Xinjiang, China, where the state actively denies access and suppresses worker testimony.[2] The obstacles in India are more subtle and, in many respects, more difficult to remove: a intricate web of unregistered subcontractors, caste-based labor hierarchies, home-based piecework that is not visible to any official registry, and a domestic legal framework that views human rights due diligence as optional rather than required.[3] India supplies embroidery, beadwork, leather goods, and textiles to some of the world’s most celebrated luxury houses — Christian Dior, Chanel, Hermès, Balenciaga, and Balmain among them. Yet tier-three and tier-four workers within these chains remain entirely outside the reach of existing international frameworks, including the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) and the UN Guiding Principles on Business and Human Rights (UNGPs).[4]
Research Question:
Against this backdrop, this paper asks:
Structure:
This paper proceeds in five phases. Phase I establishes the conceptual framework, introducing the distinction between political and structural audit impossibility and situating India’s informal garment sector within global fashion supply chain law. Phase II conducts a legal analysis of India’s domestic regulatory architecture & exposes the layered compliance vacuum that enables structural audit impossibility to persist within India’s fashion and luxury supply chains. Phase III examines relevant case studies and regulatory decisions where audit-based due diligence has been judicially tested. Phase IV critically analyses whether “best efforts” liability shields remain defensible where structural invisibility is a foreseeable and documented condition. Phase V concludes by proposing a heightened affirmative obligation standard — compelling brands to restructure sourcing itself rather than merely document its failures.
Phase I:
The Architecture of Audit Failure:
Contemporary human rights due diligence (HRDD) frameworks — including the UN Guiding Principles on Business and Human Rights (UNGPs)[5] and the EU Corporate Sustainability Due Diligence Directive (CSDDD)[6] are architecturally premised on a singular assumption: that supply chains are, in principle, auditable.
The regulation operates on the premise that meaningful compliance is attainable in situations where a brand can visit a factory, send auditors, interview employees, and get documentation. The most important unsolved issue in global fashion supply chain legislation is found in the concept of audit impossible, which must be understood in contrast to this pretext.
Political Audit Impossibility: The Xinjiang Paradigm
The most documented form of audit impossibility is political in character. In the Xinjiang Uyghur Autonomous Region (XUAR) of China, the state has constructed an environment where independent labour audits are rendered practically meaningless.[7] According to this perspective, political audit impossibility is externally observable, state-manufactured, and, albeit insufficiently, open to trade law intervention.
Structural Audit Impossibility: The Indian Paradigm
India presents a categorically distinct and jurisprudentially undertheorized form of audit impossibilities are not the one produced not by state suppression, but by the structural architecture of the garment sector itself. The Indian garment firms subcontract fabrication work to informal units, retaining only cutting and finishing in-house.[8] These subcontractors use piece-rate labor, including home-based employees, who work entirely in the absence of the official employment record and are consequently immune to tier-one audits. India’s domestic response: the National Guidelines on Responsible Business Conduct (NGRBC), issued by the Ministry of Corporate Affairs in 2019 — explicitly acknowledges worker wellbeing across value chains as a principle, yet remains entirely voluntary in nature, creating no binding obligation on brands or their sub-tier suppliers. Unlike Xinjiang, no political factor prevents auditors from reaching Indian factories. The workers simply do not exist within any legal or contractual framework that an auditor is directed to examine.
Phase II:
India’s NGRBC and BRSR: Aspiration Without Obligation
India’s primary domestic instrument governing corporate human rights conduct is the National Guidelines on Responsible Business Conduct (NGRBC), issued by the Ministry of Corporate Affairs in 2019. Explicitly designed to assist businesses to perform “above and beyond the requirements of regulatory compliance,”[9] The NGRBC’s nine principles, which include the obligation to promote and protect human rights throughout value chains, are not legally obligatory. They urge, rather than compel. The Business Responsibility and Sustainability Reporting (BRSR) framework of the Securities and Exchange Board of India operationalizes Only the top 1,000 listed businesses by market capitalization are required to report under NGRBC disclosures.[10] This disclosure border completely excludes the thousands of unlisted subcontractors, home-based businesses, and unofficial workshops that make up India’s real garment production ecosystem. Most importantly, the Indian Institute of Corporate Affairs’ sector-specific NGRBC Adaptation Toolkit for the Ready-Made Garments sector only targets Tier 1 and Tier 2 manufacturers; by design, it does not reach the subcontracted informal tiers where structural audit impossibility is most severe. As a result, the NGRBC gives the impression of a human rights governance structure while completely “failing” to safeguard its most vulnerable subjects.
The Four Labour Codes: Reform That Reforms Around the Problem
India’s four Labour Codes — the Code on Wages (2019), the Industrial Relations Code (2020), the Code on Social Security (2020), and the Occupational Safety, Health and Working Conditions Code (2020) — came into full effect on 21 November 2025, consolidating twenty-nine earlier statutes.[11]
Presented as the most significant overhaul of India’s labour framework since Independence, the Codes carry a structurally disqualifying flaw for informal garment workers: the OSH Code raises the coverage threshold from 10 to 20 workers in power-driven units, and the contract labour protections threshold from 20 to 50 workers. In a sector where the typical informal subcontractor employs fewer than ten workers, these thresholds operationally exclude the very establishments most implicated in fashion’s sub-tier supply chains. Moreover, the International Bar Association has documented a persistent “gap between senior management reporting and actual on-the-ground compliance” that pre-dates the Codes and which the new framework does not structurally resolve.[12] The Codes reform around the problem — rationalising coverage for formal establishments while structurally exempting the informal units that luxury houses rely upon most.
The Contract Labour Act: Complicity by Architecture
In the past, only businesses with twenty or more contract workers were subject to the Contract Labour (Regulation and Abolition) Act, 1970, which is now incorporated into the Industrial Relations Code. This level increases to fifty under the new Code. Because subcontractors below the threshold employ people without any principle employer liability attached to the luxury brand at the top of the chain, India’s garment subcontracting architecture is thus doubly opaque.
After a Worker Rights Consortium investigation revealed that Shahi Exports, India’s biggest clothing exporter, had withheld legally required Variable Dearness Allowance from 80,000 Karnataka workers, a documented wage theft estimated at USD 10 million. International brand pressure, rather than Indian law, was the enforcement mechanism that forced remediation.[13] The most accurate example of India’s compliance gap is this inversion, when foreign business partnerships offer better labor rights protection than local legislation. “The brands that can reach them are not legally obligated to do so, and the legislation that ought to protect workers structurally cannot reach them.”
Article 23 and the Constitutional Promise: Unreachable in Practice
Article 23 of the Constitution of India prohibits forced labour and begar — unpaid or underpaid compulsory work — in absolute terms.[14] The Supreme Court in People’s Union for Democratic Rights v Union of India (1982) held that payment of wages below the statutory minimum itself constitutes forced labour within the meaning of Article 23.[15] A 2022 survey found that over 90 percent of informal garment sector workers in India received wages below statutory minimums.[16] The constitutional prohibition is therefore violated at scale, in plain sight, within the supply chains of the world’s most celebrated luxury houses — and yet Article 23 has generated no consequential enforcement action against any fashion brand sourcing from India’s informal tier. The constitutional right exists; the enforcement infrastructure to make it reach home-based, unregistered, sub-contracted workers does not. This is structural audit impossibility expressed in its purest legal form: rights without remedy, obligations without reach.
Phase III:
Judicial Testing of Audit-Based Due Diligence
Three decisions collectively expose the structural inadequacy of audit-based due diligence as a legal defence. In Vedanta Resources PLC v Lungowe [2019] UKSC 20, the UK Supreme Court held that a parent company may assume a duty of care to third parties harmed by its subsidiaries where it publishes group-wide human rights policies — critically establishing that a sustainability report, once published, constitutes an assumption of responsibility in negligence, irrespective of whether it is implemented in practice.[17]
In Jabir v KiK Textilien (Landgericht Dortmund, 2019), a lawsuit brought by survivors of the 2012 Ali Enterprises factory fire in Karachi — which killed 258 workers at a factory where KiK sourced approximately 75 percent of its production — was dismissed on limitation grounds rather than the merits, leaving unresolved whether a purchasing brand owes a duty of care for supplier conditions. [18]
As one scholar observed, the Ali Enterprises factory held an Italian safety audit certificate issued weeks before the fire;[19] the audit itself was the instrument of concealment. Most recently, a January 2025 Transparentem investigation traced forced and child labour across 90 cotton farms in Madhya Pradesh, India, directly into the supply chains of sixty multinational brands including Adidas, Gap, and Amazon yet no brand faced regulatory or judicial sanction under Indian law. Together, these cases demonstrate a consistent pattern: audit certificates do not establish compliance; brands that publish HRDD commitments assume legal exposure; and Indian supply chain violations, however documented, remain judicially unremedied.[20]
Phase IV:
The “Best Efforts” Defence: Defensible or Doctrine of Evasion?
The dominant legal defence available to luxury brands sourcing from India’s informal garment sector is the “best efforts” standard — the claim that a brand conducted reasonable due diligence, obtained audit certifications, and cannot be held liable for violations it could not, despite genuine effort, detect. This paper contends that such a defence is no longer legally or morally sustainable when structural invisibility is a foreseeable, documented, and commercially exploited condition.
Foreseeability as the Breaking Point
The concept of foreseeability is central to negligence liability.
That is, Vedanta v Lungowe established that where a parent company has published sustainability policies, it assumes a duty of care regardless of implementation because the risk of harm is foreseeable and the company has chosen to represent its management thereof. When this logic is applied to India’s luxury supply chains, it becomes clear that the structural factors that allow sub-tier worker exploitation such as home-based piecework, informal subcontracting, below-minimum wages, and union suppression are there.
Amnesty International, the Business and Human Rights Resource Center, the Worker Rights Consortium, and subsequent labor surveys conducted by the Indian government have all documented them. A company that pretends to be unaware of sub-tier conditions, publishes an HRDD policy, and sources from Indian needlework ateliers like Les Atelier 2M or Chanakya is not an unknowing participant; rather, it is a foreseeing one. The KiK precedent clearly states that a brand’s autonomous duty of care to foreseeable victims is not terminated by audit certification by a third party, despite being rejected on the grounds of limitation.
Commercial Exploitation of Structural Invisibility
When brands are proven to have profited financially from the precise circumstances, they say they were unaware of, the “best efforts” defense is rendered completely untenable. Because of Indian craft traditions, luxury brands command higher prices. For example, Dior’s Gateway of India runway show, Chanel’s use of Mumbai embroidery, and Balenciaga’s sourcing from Chanakya are all marketed as examples of “authentic” artisanship. Therefore, the structural invisibility of sub-tier workers is a competitive advantage that brands take advantage of while using “best efforts” language to shield themselves from liability.
This article argues that the “best efforts” defense must surrender to a higher standard: an affirmative commitment to restructure the sourcing relationship itself; when structural audit impossibility is predictable, recorded, and financially instrumentalized.
Phase V:
In conclusion:
This paper proposes a Heightened Affirmative Obligation Standard (HAOS) as the necessary doctrinal response to structural audit impossibility. Under the HAOS, where a brand sources from a supply chain in which structural conditions foreseeably prevent audit-based due diligence from reaching all worker tiers, the brand’s legal obligation does not terminate upon obtaining tier-one certification.
Instead, it triggers three affirmative duties:
- A mapping duty— to identify and formally register all sub-tier suppliers, irrespective of whether local law requires it;
- A restructuring duty— to formalise contractual relationships with sub-tier workers, extending minimum wage guarantees and grievance mechanisms downward through the chain; and third,
- A transparency duty— to publicly disclose all India-based sub-tier contributors in annual HRDD reports, equivalent to the “Made in India” craft attribution already deployed in marketing materials.
At the international level, this paper calls on the CSDDD’s phased implementation to include an explicit provision for structurally opaque supply chains recognising that extraterritorial HRDD obligations cannot be satisfied through tier-one audits alone where structural invisibility is a documented condition. The Audit Impossibility Doctrine does not excuse brands from liability. On the contrary it heightens it. Where you cannot audit, you cannot disclaim. The law must now say so.
To complete the paper within a sentence: For the artisan whose labour adorns a €15,000 Dior gown, the problem is not the absence of audits but a legal system that allows exploitation to remain profitable while workers remain unseen.
References and Bibliography
Statutes and International Instruments
Constitution of India 1950, art 23.
Code on Wages 2019 (No 29 of 2019) (India).
Industrial Relations Code 2020 (No 35 of 2020) (India).
Code on Social Security 2020 (No 36 of 2020) (India).
Occupational Safety, Health and Working Conditions Code 2020 (No 37 of 2020) (India), implemented 21 November 2025.
Uyghur Forced Labor Prevention Act (UFLPA), Pub. L. No. 117-78, 135 Stat. 1525 (2021) (USA).
Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on Corporate Sustainability Due Diligence [2024] OJ L 1760.
Cases
People’s Union for Democratic Rights v Union of India AIR 1983 SC 1473.
Vedanta Resources PLC and another v Lungowe and others [2019] UKSC 20.
Jabir and others v KiK Textilien und Non-Food GmbH, Landgericht Dortmund (10 January 2019).
Journal Articles
Samar Kumar Mishra, Bimal Kishore Sahoo and Rasmita Nayak, ‘Beyond Survival: Assessing the Subcontracting Strategy in India’s Unorganized Manufacturing Enterprises’ (2024) 67 The Indian Journal of Labour Economics 973, DOI: 10.1007/s41027-024-00527-z.
Official Reports and Institutional Documents
UN Human Rights Council, Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework, UN Doc A/HRC/17/31 (21 March 2011).
Securities and Exchange Board of India, SEBI Circular SEBI/HO/CFD/CMD-2/P/CIR/2021/562 (10 May 2021).
Ministry of Corporate Affairs, Government of India, National Guidelines on Responsible Business Conduct (MCA, 2019).
Academic and Research Reports
Adrian Zenz, Uyghur Forced Labour in Xinjiang and Global Supply Chains (Newlines Institute, 2021).
Adrian Zenz, ‘State-Imposed Forced Labor in the Xinjiang Uyghur Autonomous Region: Current State, Latest Evidence, Impossibility of Credible Social Audits, and Ongoing Western Complicity and Audit-Washing’ (Written Testimony, US Congressional-Executive Commission on China, Hearing: ‘Factories and Fraud in the PRC: How Human Rights Violations Make Reliable Audits Impossible’, 30 April 2024).
International Bar Association, ‘Business and Human Rights Under India’s New Labour Codes’ (IBA, 2025).
European Centre for Constitutional and Human Rights, ‘KiK: Paying the Price for Clothing Production in South Asia’ (ECCHR, 2019).
KPMG, ‘Flash Alert 2026-007: India Four Labour Codes’ (KPMG, January 2026).
NGO and Industry Reports
Business & Human Rights Resource Centre, Fashion & Apparel Sector Briefing (2024).
Business and Human Rights Resource Centre, ‘India: Brands and Retailers Respond to Wage Theft Documented in Garment Industry in Karnataka’ (BHRRC, 2022).
Business and Human Rights Resource Centre, ‘German Court Dismisses Lawsuit Against KiK Over Liability for Fire at Factory in Pakistan in 2012’ (BHRRC, 10 January 2019).
Business and Human Rights Resource Centre, ‘India: NGO Transparentem Traces Cotton Farmed Under Conditions of Forced and Child Labour to Multinational Apparel Brands and Retailers’ (BHRRC, January 2025).
Clean Clothes Campaign, Tailored Wages Report (2023).
Fashion Sustainability Directory, ‘Unregulated Subcontractors’ (Fashion Sustainability Directory, 2024).
Media and Online Sources
Riya Sharma, ‘4 Indian Ateliers Weaving The Magic Of Indian Craftsmanship Into Couture Creations’ (Homegrown, 14 April 2022).
Press Information Bureau, ‘MCA Releases National Guidelines on Responsible Business Conduct’ (PIB, 13 March 2019).
‘BRSR Reporting Guide 2026’ (ESG Pulse, 2026).
Drishti IAS, ‘Workers Unrest and Labour Reforms’ (Drishti IAS, April 2026).
IDR Online, ‘Do India’s Labour Codes Address Informal Workers’ Needs?’ (IDR Online, April 2025).
Oxford Law Blogs, ‘Implications of the UK Supreme Court’s Decision in Vedanta for Human Rights Risk’ (Oxford Law Blogs, May 2019).
[1] See Business & Human Rights Resource Centre, Fashion & Apparel Sector Briefing (2024); Clean Clothes Campaign, Tailored Wages Report (2023).
[2] Adrian Zenz, Uyghur Forced Labour in Xinjiang and Global Supply Chains (Newlines Institute, 2021); UFLPA, Pub. L. No. 117-78, 135 Stat. 1525 (2021).
[3] Fashion Sustainability Directory, ‘Unregulated Subcontractors’ (Fashion → Sustainability Directory, 2024)
[4] Riya Sharma, ‘4 Indian Ateliers Weaving The Magic Of Indian Craftsmanship Into Couture Creations’ (Homegrown, 14 April 2022)
[5] UN Human Rights Council, Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework, UN Doc A/HRC/17/31 (21 March 2011).
[6] Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on Corporate Sustainability Due Diligence [2024] OJ L 1760.
[7] Adrian Zenz, ‘State-Imposed Forced Labor in the Xinjiang Uyghur Autonomous Region: Current State, Latest Evidence, Impossibility of Credible Social Audits, and Ongoing Western Complicity and Audit-Washing’ (Written Testimony submitted to the United States Congressional-Executive Commission on China, Hearing: ‘Factories and Fraud in the PRC: How Human Rights Violations Make Reliable Audits Impossible’, 30 April 2024)
[8] Samar Kumar Mishra, Bimal Kishore Sahoo and Rasmita Nayak, ‘Beyond Survival: Assessing the Subcontracting Strategy in India’s Unorganized Manufacturing Enterprises’ (2024) 67 The Indian Journal of Labour Economics 973, DOI: 10.1007/s41027-024-00527-z
[9] Ministry of Corporate Affairs, Government of India, National Guidelines on Responsible Business Conduct (MCA, 2019); Press Information Bureau, ‘MCA Releases National Guidelines on Responsible Business Conduct’ (PIB, 13 March 2019)
[10] Securities and Exchange Board of India, SEBI Circular SEBI/HO/CFD/CMD-2/P/CIR/2021/562 (10 May 2021); ‘BRSR Reporting Guide 2026’ (ESG Pulse, 2026)
[11] Government of India, Code on Wages 2019 (No 29 of 2019); Industrial Relations Code 2020 (No 35 of 2020); Code on Social Security 2020 (No 36 of 2020); Occupational Safety, Health and Working Conditions Code 2020 (No 37 of 2020), implemented 21 November 2025; KPMG, ‘Flash Alert 2026-007: India Four Labour Codes’ (KPMG, January 2026)
[12] International Bar Association, ‘Business and Human Rights Under India’s New Labour Codes’ (IBA, 2025); Drishti IAS, ‘Workers Unrest and Labour Reforms’ (Drishti IAS, April 2026)
[13] Business and Human Rights Resource Centre, ‘India: Brands and Retailers Respond to Wage Theft Documented in Garment Industry in Karnataka’ (BHRRC, 2022)
[14] Constitution of India 1950, art 23.
[15] People’s Union for Democratic Rights v Union of India AIR 1983 SC 1473.
[16] IDR Online, ‘Do India’s Labour Codes Address Informal Workers’ Needs?’ (IDR Online, April 2025)
[17] Vedanta Resources PLC and another v Lungowe and others [2019] UKSC 20, [53]–[54]; Oxford Law Blogs, ‘Implications of the UK Supreme Court’s Decision in Vedanta for Human Rights Risk’ (Oxford Law Blogs, May 2019)
[18] Jabir and others v KiK Textilien und Non-Food GmbH, Landgericht Dortmund (10 January 2019); Business and Human Rights Resource Centre, ‘German Court Dismisses Lawsuit Against KiK Over Liability for Fire at Factory in Pakistan in 2012’ (BHRRC, 10 January 2019)
[19] European Centre for Constitutional and Human Rights, ‘KiK: Paying the Price for Clothing Production in South Asia’ (ECCHR, 2019)
[20] Business and Human Rights Resource Centre, ‘India: NGO Transparentem Traces Cotton Farmed Under Conditions of Forced and Child Labour to Multinational Apparel Brands and Retailers’ (BHRRC, January 2025)
