Nasscom Raises Concerns Over Karnataka’s New Reservation Bill for Locals
The Karnataka government recently introduced a controversial bill that mandates 50% reservation in management jobs and 75% in non-management jobs for locals in the private sector. This decision has sparked significant backlash from industry leaders and bodies across India, with the National Association of Software and Services Companies (Nasscom) describing the move as “deeply disturbing.”
Industry Leaders Voice Disapproval
Nasscom, representing India’s $250 billion technology industry, expressed profound disappointment and concern over the passage of the Karnataka State Employment of Local Industries Factories Establishment Act Bill, 2024. The bill, cleared by the state cabinet on Tuesday and expected to be tabled during the current legislative session, has been criticized by industry leaders as discriminatory and regressive.
Mohandas Pai, chairman of Manipal Global Education Services and former CFO of Infosys, condemned the bill on X (formerly Twitter), labeling it as fascist and unconstitutional. He questioned the government’s authority in dictating private sector recruitment and suggested that such policies would hinder the state’s growth and competitiveness.
Kiran Mazumdar Shaw, executive chairperson of Biocon, also criticized the bill, emphasizing the need for skilled talent to maintain Karnataka’s leading position in technology. She warned that the policy could negatively impact the state’s reputation as a global tech hub.
Potential Impact on Karnataka’s Economy
Nasscom highlighted that the technology sector has been instrumental in Karnataka’s economic and social development, with Bengaluru recognized globally as India’s Silicon Valley. The association warned that the new bill would stifle the growth of the industry, affect job creation, and damage the state’s global brand.
The bill mandates 100% reservation for locals in lower posts (grades C and D) in the private sector, and stipulates that Kannadigas should hold 50% of management positions and 75% of non-management positions. This policy has raised concerns among industry bodies about its potential to drive companies away from Karnataka, particularly in sectors heavily reliant on non-local talent.
Reactions from Industry Bodies and Experts
R K Misra, co-chairman of ASSOCHAM-Karnataka, criticized the bill as short-sighted, arguing that it would scare away Indian IT and Global Capability Centers (GCCs). He expressed concern that government oversight in private company recruitment would deter investment and innovation in the state.
Praveen Agadi of the Karnataka Chamber of Commerce and Industry (KCCI) described the bill as a double-edged sword, affecting both large companies and micro, small, and medium enterprises (MSMEs). He highlighted the state’s dependence on migrant workers in major sectors like IT and construction, questioning where local employees would be sourced under the new rules.
Migration and Employment Statistics
According to the 2011 census, over 51% of Bengaluru’s population consisted of migrants, with Karnataka having a higher proportion of interstate migration (37.82%) compared to the national average (4.48%). This reliance on migrant workers underscores the challenges the new bill could pose for industries in the state.
A R Ramesh, CEO of TeamLease Degree Apprenticeship, stressed the importance of focusing on skill development to bridge the gap between job opportunities and requisite skills. He argued that Karnataka’s growth should be founded on meritocracy rather than artificial barriers, emphasizing the need for a skilled and productive workforce.
Nasscom’s Call for Dialogue
Nasscom reiterated its serious concerns about the bill’s provisions, urging the state government to reconsider and withdraw it. The association warned that the restrictions could force companies to relocate, particularly as local skilled talent becomes scarce. Nasscom is seeking an urgent meeting with state authorities to discuss these concerns and prevent Karnataka’s progress from being derailed.
Economic Contributions of the Technology Sector
The technology sector significantly contributes to Karnataka’s GDP, accounting for almost 25% of the state’s economic output. Karnataka also boasts over a quarter of India’s digital talent, houses over 30% of the total GCCs, and is home to around 11,000 startups.
Conclusion
The Karnataka government’s reservation bill has sparked widespread concern among industry leaders and bodies. Critics argue that the policy is regressive and could undermine the state’s position as a global technology hub. As the debate continues, it remains to be seen how the government will address these concerns and balance the need for local employment with maintaining Karnataka’s competitive edge in the global market.