Recent economic growth has benefited industries which rely more on capital and skilled workers as opposed to unskilled/low skilled workers. This fact combined with the rising capital intensity of production over the decade partly explains the limited contribution of the manufacturing sector to employment generation. At the state level, we find that states with more inflexible labour regulations have witnessed slower growth in employment and output in manufacturing than states with more flexible labour market regulations. However, it would be incorrect to put the entire onus of the dismal performance of the manufacturing sector on labour regulations as firms are responding to rigidities in the labour market in innovative ways such as the greater use of contract workers. Factors such as cumbersome product market regulations and infrastructural bottlenecks have also adversely affected the growth of the manufacturing sector. In this paper I have discussed about the Impact of Labour Reforms on Industry in Rajasthan.