Even as state governments invest in social welfare measures, they are forced into constant competition with one another to attract private investments, offering a good “investment climate” that includes access to a low cost workforce and a physical infrastructure geared towards capital accumulation. The need to provision welfare within an accumulation regime premised on global competition, fiscal austerity and marketisation, and a simultaneous need to reduce labour costs and to ensure social security, to exclude and include labour appears paradoxical. Does this emphasis on social welfare by the local state imply resistance to or accommodation of the current growth paradigm? How does such welfare provisioning influence livelihood strategies of labour embedded in global production networks and subject to flexibilisation? What are the new spaces of mobilisations that the regulatory imperatives open up? This paper addresses these questions through a microlevel study of worker livelihoods and state regulation in Tiruppur in Tamil Nadu that has been integrated into global networks of commodity production through garment exports.