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Trade unions in India are registered and file annual returns under the Trade Union Act (1926). Statistics on trade unions are collected annually by the Labour Bureau of the Ministry of Labour, Government of India. As per the latest data, released for 2012, there were 16,154 trade unions which had a combined membership of 9.18 million (based on returns from 15 States – out of a total of 28 states and 9 union territories). The trade union movement in India is largely divided along political lines and follows a pre Independence pattern of overlapping interactions between political parties and unions. The net result of this type of system is debated as it has both advantages and disadvantages. According to the data submitted by various trade unions to the Ministry of Labour and Employment as part of a survey, INTUC with a combined membership of 33.3 million, has emerged as the largest trade union in India as of 2013. The firm or industry level trade unions are often affiliated to larger federations. The largest federations in the country represent labour at the national level and are known as central trade union organisations (CTUO). As of 2002, when the last trade union verification was carried out, there are 12 CTUOs recognised by the Ministry of Labour.

The setting up of textile and clothing mills around the port cities of Bombay (now Mumbai), Calcutta (now Kolkata), Madras (now Chennai) and Surat in the second half of the 19th century led to the beginnings of the industrial workforce in India. Several incidents of strikes and protests by workers have been recorded during this time. The credit for the first association of Indian workers is generally given to the Bombay Mill Hands Association founded by N. M. Lokhande in 1890. This was in the period just after the passing of the 'First' Factories Act in 1881 by the British government of the time. The following years saw the formation of several labour associations and unions. The first clearly registered trade union is considered to be the Madras Labour Union founded by B. P. Wadia in 1918, while the first trade union federation to be set up was the All India Trade Union Congress in 1920. Following the rapid growth of unions around the time of the First World War, the Russian Revolution and the setting up of the ILO, industrial conflict began to increase and over 1,000 strikes were recorded between 1920 and 1924. The waves of strikes boiled over with the arrest of prominent leaders and trade unionists in the infamous 'Cawnpore Conspiracy case' in 1924 with the union leaders being arrested and accused of attempting a Communist revolution to try and overthrow the ruling British government. Subsequently, the Trade Union Act (1926) was passed which created the rules for the regulation and closer monitoring of trade unions. In the first year of the law's operation, 28 unions registered and submitted returns with a total membership 100,619. The number of unions grew rapidly after that and by the time of independence of India in 1947, there were 2,766 unions registered which had a combined membership of over 1.66 million. This resulted in a wide influence of unions and workers' organisations and led to significantly favourable social legislation being enacted in the first decade of Independence. Several important labour laws were passed during this time.

Following the country's independence in 1947 and the formation of the republic in 1950, India largely followed a socialist economic approach encouraging public sector employment and pro worker legislations. The trade union movement reflected the main political divisions of the time and was divided mainly along socialist and communist lines. The subsequent decades saw significant expansion in trade union membership with the number of active unions reaching its peak in the mid 1970s and mid 1980s. While the 1970s in India was a period characterised by political instability, the 1980s was characterised by the beginnings of a distinct turn towards more market friendly policies, support for industrialists and an implicit opposition to workers. Two key events during this period were the 1974 railway strike in India and the Great Bombay textile strike of 1982, the latter of which subsequently led to a long and complicated stalemate.

The period following the economic liberalisation in 1991 was characterised by declining government intervention in the economy, a decline in the creation of public sector employment and encouragement for the private sector. Efforts for unionisation in the private sectors were often met with opposition and the wider general withdrawal of state support for workers further undermined their bargaining power. These policies led to a stagnation in the number of unionised formal sector workers. A gradual shift in focus about the importance of the Informal sector and 'Informal employment in the formal sector' from the late 1990s onwards meant that trade unions also began to focus on these workers. This has led to greater enrolment of these workers and subsequently led to increases in union membership. The central trade union organisations (CTU's) increased their combined membership from 13.21 million in 1989 to 24.85 million in 2002. Almost all the CTUOs now have at least 20 percent of their official members coming from the informal sector.

According to the Periodic Labour Force Survey (PLFS) of 2019, it shows that the Indian economy has shrunk for the first time in four decades, from 467.7 million in 2011 12 to 461.5 million in 2017 18. Agriculture experienced the most massive layoffs, with 29.3 million workers losing their jobs. Women account for the vast majority of those who have lost their jobs (24.7 million).