Insurance Illusion: India’s Factory Workers Are Left Uncovered, Unsafe, Despite ESIC Coverage

As machines run hot and fast in the factories, workers continue to be at a greater risk of injury as the support system fails them, consistently. The Crushed 2025 report by the Safe in India Foundation (SII) once again reveals the scale of industrial neglect, especially in India’s automotive supply chains. The report highlights that despite seven years of consistent documentation, very little has changed where it matters most: basic, guaranteed insurance coverage for the workers who keep the factories running.

The Missing Safety Net

At the heart of the problem lies the Employees' State Insurance Corporation (ESIC), a social security scheme meant to provide healthcare and income protection to India’s low-wage industrial workforce. The scheme promises much compensation for injuries, free hospitalisation, disability pensions, and maternity benefits.

However, the lived experience of thousands of workers, as per the Crushed 2025 report, shows that access to these benefits is often delayed, denied, or deceitfully manipulated.

Over 64 per cent of injured workers supported by SII received their ESIC identity card only after the accident, a blatant violation of ESIC norms that require registration on the first day of employment. In Maharashtra, this post-accident registration figure stands at 77 per cent.

The implication of such a delay is serious: until the card is issued, no claim can be processed. It is a delay that can push injured workers, and their families, into years of avoidable financial distress.

Post-Accident Registration: A Legal Loophole, Exploited Routinely

The report finds that 15 to 17 per cent of workers in both Haryana and Maharashtra were illegally registered with ESIC after their injuries, a practice known as Post-Accident Registration (PAR). It is a way for factories to avoid paying insurance premiums while the worker is healthy, only to “register” them after an injury to meet legal formalities.

This not only delays care but also often results in weaker claims. Employers sometimes falsify records or push injured workers to say they were hurt off-site, even in road accidents, to avoid accountability.

In the words of 29-year-old Ranjay Kumar, who lost three fingers in a factory in Pune:

“They told me my file was lost, too old. I stopped going to ESIC. If they had filled the form earlier, my pension would have started eight years ago.”

It wasn’t until a year ago that new efforts were made by SII to help Ranjay. After significant follow-up, he returned to Pune and on June 3, 2025, approximately eight years after his injury, his medical board Form-03 for the ESIC pension was finally completed at the ESIC branch office.

The Price of Delay: Disability, Debt, Displacement

When the system fails, the damage does not stop at the factory gate. Workers with untreated injuries, many of them young migrants, return to their villages with reduced earning capacity. Families are forced to pull children from school, compromise on healthcare, and live under long-term economic stress.

For women, the situation is even more precarious. They often earn less for the same work, operate high-risk machines with minimal training, and have little to no opportunity for redress or promotion. They experience virtually no career progression, in stark contrast to even

the rare instances of men being promoted to supervisory roles. These factors collectively deepen their vulnerability to injury and exploitation.

“Our evidence aligns: over 8,500 injured workers have come to us, 78 per cent from auto-component factories, mostly on illegally operated power presses. Women remain disproportionately at risk. Many employers falsify records and deny even basic ESIC entitlements,” the report notes.

Private Hospitals, Public Neglect

Another troubling trend is the continued reliance on private hospitals for emergency care. Nearly half of all injured workers were taken to private hospitals instead of ESIC facilities, despite being entitled to the latter. In Haryana, this figure touches 52 per cent.

This diversion is not always about better care. In many cases, employers need time to “fix the paperwork” and avoid the consequences of non-compliance with ESIC norms. But the delay in proper treatment, especially during the critical golden hour, can result in worse outcomes, like permanent disability.

Insurance Without Accountability

India’s factories run on informal labour, and insurance coverage remains more performative than protective. Non-permanent workers make up the majority of those injured, and yet they are often excluded from formal protections. And among the most injured are “helpers”, untrained workers illegally made to operate high-risk machines like power presses.

These are the very machines that cause 75 per cent of all crush injuries, with each accident resulting in an average loss of two fingers. The data points to a grim conclusion: the worse a factory’s insurance compliance, the more unsafe it tends to be.

A System Stretched, Not Serving

The ESIC system, despite being one of the largest of its kind globally, is riddled with inefficiencies and bureaucratic inertia. Even when workers are eligible, navigating the system is often impossible without external help. In fact, SII has helped secure Rs 100 crore in delayed benefits for over 10,000 injured workers, a figure that should not exist in a functioning public insurance system.

It’s not just a moral failure but an economic one.

India ranks 133rd in labour productivity globally. The report highlights that the Economic Survey 2024-25, for the first time, acknowledges what SII has long argued: unsafe workplaces are not only a human tragedy, they are an economic liability. According to SII estimates, productivity losses due to workplace injuries cost India Rs 12.5 lakh crore every year, or over 4 per cent of national GDP.