‘Seriously concerned’: NASSCOM asks Karnataka govt to withdraw bill on reservation for locals in private firms

Trade association National Association of Software and Service Companies (NASSCOM) said that it is ‘seriously concerned’ about the new Karnataka bill that mandates reservation of 50 percent of management roles and 75 per cent of non-management roles in private firms for local candidates. It urged the Karnataka government to withdraw the bill. 

“NASSCOM members are seriously concerned about the provisions of this bill and urge the state government to withdraw the bill. The bill’s provisions threaten to reverse this progress, drive away companies, and stifle startups, especially when more global firms (GCCs) are looking to invest in the state. At the same time, the restrictions could force companies to relocate as local skilled talent becomes scarce,” it said on Wednesday. 

The industry body also sought an urgent meeting with industry representatives and state authorities to discuss the matter and “prevent the state’s progress from being derailed”. 

It underscored the importance of the technology sector for Karnataka’s economic and social development. The technology sector of India’s ‘Silicon Valley’ contributes 25 per cent of the state GDP, it said. The state houses 30 per cent of the total GCCs and around 11,000 startups, it pointed out. 

The Karnataka Cabinet in the new legislation said violating the ‘Karnataka State Employment of Local Candidates in Industries, Factories, and Other Establishments Bill, 2024’ would incur penalties. If suitable candidates are not available locally, the bill mandates companies to train and engage local talent within three years.

Meanwhile, Karnataka Minister for Commerce & Industries, Infrastructure, MB Patil said that there would be wider consultations to ensure that the interests of Kannadigas are protected along with that of the industries. “Karnataka is a progressive state, and we cannot afford to lose in this once-in-a-century race of industrialization. We will make sure that everyone's interests are safeguarded. The Industries are assured that they need not have any fear or apprehensions and can rest assured,” said Patil. 

Minister for Electronics, IT, Priyank Kharge also said, "The bill has been brought in by the labour department. They are yet to consult with the industry, the Minister of Industry and the Department of Information Technology. I am sure that before coming up with the rules of the bill, they will have due consultations with the respective ministries and more importantly, a wider consultation with the industry. So there is no need to panic.”