Amid criticism from a number of industry organizations and stakeholders, recently introduced controversial Karnataka State Employment of Local Industries Factories Establishment Act Bill, 2024 which aims to reserve 75% of non-management jobs and 50% of management jobs for locals in the private sector has been put on hold.
In a post on X, Karnataka Chief Minister (CM) Siddaramaiah said that the bill is still in the planning stages, and before a final decision is reached, a thorough discussion will take place at the upcoming cabinet meeting.
"The draft bill intended to provide reservations for Kannadigas in private sector companies, industries, and enterprises is still in the preparation stage. A comprehensive discussion will be held in the next cabinet meeting to make a final decision," said Chief Minister Siddaramaiah in a post on X.
“The IT industry, which is valued at over $245 billion and houses major companies including Google and Infosys, is facing an influx of Indians from elsewhere in the country, leaving fewer employment opportunities for the locals, said the CM. "We are a pro-Kannada government; our priority is to look after the Kannadigas," he added.
The Karnataka government, led by Chief Minister Siddaramaiah, has said that the bill is necessary to give locals enough job opportunities and that it is practical to give locals jobs in factories, industries, etc.
The CM first announced a 100% job reservation for Kannadigas in C and D job categories of private companies. However, after facing harsh backlash, the post was later deleted, and a revised announcement made no mention of the reservation marking.
"The cabinet meeting held on July 15 approved a bill to establish a 50% reservation for administrative posts and a 75% reservation for non-administrative posts for Kannadigas in private industries and other state organizations," Siddaramaiah wrote in the new post in Kannada language.
The draft bill follows a report by the Sarojini Mahishi Committee, which recommended that in large, medium, and small-scale industrial units with more than 50 workers, 65% and 80 % of jobs in A and B categories, respectively, be reserved for Kannadigas, while 100 % quotas be given to locals in C and D categories.
Furthermore, it was stated in the Kannada Language Comprehensive Development Act, introduced in 2022, by the Department of Kannada and Culture that industries that have benefited from tax breaks and other state government benefits ought to be granted reservations. But as of yet, no policy guidelines have been developed for this.
As per the bill, any person born in Karnataka with a domicile in the state for the last 15 years and who is well versed in reading and writing Kannada is defined as a local. The candidates should have a secondary school certificate with Kannada as a language. If not, they must pass a Kannada proficiency test as stipulated by the nodal agency.
Within a specified timeframe, industries, factories, and establishments are required to notify the nodal agency of their compliance with the Act. After that, the organization will confirm these compliance reports and provide the government with its findings. The nodal agency is also empowered to request any records, information, or documents from employers or managers for verification purposes.
The government may designate an officer, at least of Assistant Labour Commissioner rank, to ensure compliance with the Act. Employers, occupiers, or managers who breach the Act would face penalties ranging from ₹10,000 to ₹25,000.
If violations continue after penalties are imposed, an additional fine of up to ₹100 per day will be levied until the contravention ceases. “If the contravention continues after penalty has been imposed, then, with further penalty, which may extend to one hundred rupees for each day till the time contravention continues,” the bill read.
In cases where there are no competent local candidates, companies must work with the government or its agencies to train available staff within three years. Organizations may ask the government to relax the provisions of the Act if they are unable to locate enough local candidates. The local candidate criteria cannot be lowered below 25% for management positions and 50% for non-management roles as a result of this waiver.
"Such orders passed by the government shall be final, provided that the relaxation provided under this section shall not be less than 25% for management categories and 50% for non-management categories," the proposed bill read.
Priyank Kharge, the State Information Technology (IT) minister said he has requested the CM to loop in industry experts and other departments on the bill’s clauses and only then implement it.
“There’s no need to panic; we will have wider consultations and arrive at a common ground,” he said, adding that the state government’s aim is to provide jobs to local residents and bring in investments at the same time.
Industry veterans sharply opposed the state government's proposed quota, calling it "fascist" and “short-sighted.”
TV Mohandas Pai, a well-known entrepreneur and former Chief Financial Officer of Infosys, described the law as "regressive.".
"This bill should be junked. It is discriminatory, regressive, and against the constitution. @Jairam_Ramesh (Congress leader) Is the government supposed to certify who we are? This is a fascist bill, as in Animal Farm. Is it unbelievable that @INCIndia can come up with a bill like this—a government officer will sit on the recruitment committees of the private sector? People have to take a language test?" Pai said on X.
"Another genius move from the Govt. of Karnataka. Mandate LOCAL RESERVATION & APPOINT GOVT OFFICER IN EVERY COMPANY to monitor. This will scare Indian IT and GCCs. Shortsighted,” said R. K. Misra, Associated Chambers of Commerce and Industry of India (ASSOCHAM), Karnataka co-chairman on X.
The National Association of Software and Service Enterprises (NASSCOM) warned the government on July 17 that the restrictions may push enterprises to relocate as local skilled manpower becomes scarce.
Nara Lokesh, The general secretary and IT minister of Telugu Desam Party (TDP, Andhra Pradesh, tried to tap the opportunity for the benefit of his state.
In a post on X inviting NASSCOM to Andhra Pradesh, he said, “To expand or relocate your businesses to our IT, IT services, AI, and data center cluster at Vizag. We will offer you best-in-class facilities, uninterrupted power, infrastructure, and the most suitable skilled talent for your IT enterprise with no restrictions from the government. Andhra Pradesh is ready to welcome you. Please get in touch!”
Priyank Kharge jumped into the discussion and clarified to Lokesh that this draft bill will include recommendations from our industry partners.
He also told NASSCOM, “Be rest assured, we will not do anything that will not withstand legal scrutiny. This is your government, and as always, we are just a call away.”
The executive chairperson of Biocon, Kiran Mazumdar Shaw, said the aim of providing jobs to local residents must not affect the state’s leading position in technology.
“As a tech hub, we need skilled talent, and while the aim is to provide jobs for locals, this move must not affect our leading position in technology. There must be caveats that exempt highly skilled recruitment from this policy. @siddaramaiah, @DKShivakumar, @PriyankKharge,” she said in a post on X.
Speaking about the bill, Communist Party of India (Marxist) (CPI-M) Rajya Sabha Member of Parliament, John Brittas said that it was discriminatory and not a “well-thought-out decision” by the Karnataka Cabinet.
“Bengaluru was not built by Kannadigas alone; it was built by everybody. You cannot make such discriminatory decisions. This will provoke a flight of companies, drive away investors, and ultimately harm Kannadigas in the long run,” Brittas said.
“There are thousands of Kannadigas living in Delhi who don’t know Hindi. This bill is just to create a divide,” he added.
Welcoming the bill to clear the reservation bill for locals, pro-Kannada activists slammed Mohandas Pai and Kiran Mazumdar-Shaw, accusing them of making broad generalizations about the state's alleged talent shortage.
“This bill provides a cushioning effect for Kannadigas. It doesn’t mean that any Tom, Dick, or Harry on the street would be appointed for the job,” pro-Kannada activist Chethan Jeeral said.
The Andhra Pradesh State Assembly passed the Andhra Pradesh Employment of Local Candidates in the Industries/Factories Act in 2019 to reserve 75% of jobs for local candidates. It was challenged before the Andhra Pradesh High Court, and in 2020, the Court observed that the 75% quota might be unconstitutional. The legislation is yet to be fully implemented by the state.
In 2020, Haryana enacted the Haryana State Employment of Local Candidates Act, mandating 75% reservation in private sector jobs for locals. The Act was challenged before the Punjab and Haryana High Court, and in 2022, the Court quashed the law, terming it ultra vires of Part III of the Constitution and in breach of Articles 14 and 19 of the Constitution.
In 2022, the Jharkhand government passed the Jharkhand Reservation of Vacancies in Posts and Services (Amendment) Bill, proposing to raise reservation in state government jobs from 60% to 77% for people belonging to the Scheduled Castes (SC), Scheduled Tribes (ST), Other Backward Classes (OBC), or Economically Weaker Sections (EWS) categories.
A year later, the bill was returned by the governor, asking for a review. The state passed the bill again in 2023 without any revision. However, it has yet to be sent to the governor for assent.
(PTI syndicate)
