Even as industry leaders and associations lashed out at the Congress government in Karnataka on the proposed bill to reserve jobs in the private sector for Kannadigas, the Government went into damage control mode. Industries Minister MB Patil said that the draft bill reserving jobs to locals in the private sector will be discussed with the Chief Minister, IT-BT Minister, Law Minister, and Labour Minister. However, several industry leaders and IT software and services association Nasscom called the bill ‘fascist’ and argued that the proposed measure will deter talent and investment in the state.
On Monday the state cabinet approved the ‘Karnataka State Employment of Local Candidates in Industries, Factories and Other Establishments Bill 2024’ which makes it mandatory for the private sector to reserve jobs for Kannadigas only, in their establishments. The bill mandates 50 per cent of management jobs and 70 per cent of non-management roles to be reserved for locals in the private sector. The bill is likely to be tabled in the assembly on Thursday.
Nasscom expressed its ‘disappointment and deep concern’, pointing out that the tech sector, which contributes 25 % to the GDP of the state and houses a quarter of the country’s digital talent, may be forced to relocate. Kiran Mazumdar-Shaw, executive chairperson of Biocon Limited, said, “As a tech hub, we need skilled talent and whilst the aim is to provide jobs for locals, we must not affect our leading position in technology by this move. There must be caveats that exempt highly skilled recruitment from this policy.”
Similarly, former Infosys CFO T V Mohandas Pai called the bill ‘fascist.’ He said the bill in its current form should be junked as it is discriminatory, regressive and against the Constitution.
After the backlash, the state government has tried some damage control measures. On the official X account of the Chief Minister, a post in which the CM had earlier endorsed a 100% quota for Kannadigas in Group C and Group D jobs (blue-collar workers) in the private sector has now been deleted without any explanation.
Industries minister M B Patil said there will be wider consultations to protect the interests of Kannadigas. “Karnataka is a progressive state, and we cannot afford to lose in this once-in-a-century race of industrialisation. The industries need not have fear or apprehensions, and can rest assured,” he said.
Other states
To be sure, Karnataka is one of many states in the country to try to reserve jobs for locals. In November last year, the Punjab and Haryana High Court quashed a Haryana government law that mandated 75 per cent reservations of locals in private sector jobs with gross salaries of less than ₹30,000.
It had held that the Haryana State Employment of Local Candidates Act, 2020, was “unconstitutional” and “violative of Part III of the Constitution”. Industry bodies had argued that the law creates an “unprecedented” intrusion by the state government into the fundamental rights of private employers to carry on their business and trade. However, the Haryana State Government moved the Supreme Court to appeal against the order, and the matter is now pending before the Apex court.
Rajeev Chawla, Chairman, IamSMEofIndia, an industry body that was one of the petitioners in the Haryana reservations case, said, “ Any proposal of this kind of reservations on parochial grounds in the private sector hurts the competitiveness of the industry, impacts ease of doing business and also increases the compliance burden. Karnataka is the hub of start-ups and IT companies, has one of the highest levels of industrialisation and is home to a large number of higher education and professional educational institutions. Hence, such a reservation proposal is not logical.”
The Telangana Government, too, had similarly introduced a policy in August 2020, announcing incentives for companies that provided jobs to local employees. “It was not mandatory. Mandating it will act as a deterrent, and companies may stay away. We offered incentives to those who complied with,” a government official said.
The policy offered incentives like SGST rebates and lower power tariffs based on the level of localisation in Category I (skilled) and Category (Semi-skilled) jobs. The reservations ranged from 50% to 70% across the two categories.
Andhra Pradesh, too, had tried something similar. During the previous YSR Congress Party (YSRCP) government in Andhra Pradesh, led by Y S Jagan Mohan Reddy, the Government mandated 70 percent employment to locals in the new industries to be set up. However, according to a senior official, the rule was not implemented strictly as many investment proposals remained on paper. The new NDA Government of N. Chandrababu Naidu is yet to decide on its continuation.
Nara Lokesh invites Nasscom to Vizag
Meanwhile, Nara Lokesh, the Minister for IT, electronics, and education of Andhra Pradesh, which is fishing in troubled waters, posted on a social media site, ‘Dear @Nasscom members, We understand your disappointment. We welcome you to expand or relocate your businesses to top our IT, IT Services, AI, and data centre cluster at Vizag.’
He added, ‘We will offer you best-in-class facilities, uniterrputed power, infrastructure and the most susitable skilled talent for your IT enterprise with no restrictions for the Government. AP is ready to welcome you. Please get in touch.’
CM Siddiaramiah, along with a few ministerial colleagues, is expected to address a press conference on Thursday morning to discuss the controversies surrounding the bill.
(with inputs from Kurmanath K V, Meenkashi Verma Ambwani and Naga Sridhar G)