The controversial bill, which was approved by the Siddaramaiah government, mandated the appointment of Kannadigas to 50 per cent of management positions and 75 per cent of non-management positions. Additionally, it required hiring 100 per cent Kannadigas for “C and D” grade posts in all private industries in the state. However, the third point that led to outrage is under reconsideration, and the bill is currently on hold.
Despite assurances by Karnataka’s Deputy Chief Minister DK Shivakumar and IT Minister Priyank Kharge, industry influencers in Karnataka have been left seething with the new legislation.
‘Disappointing And Concerning’
NASSCOM, the IT industry body, wrote a hard-hitting letter to the Karnataka government, urging it to roll back the decision. They argued that it would reverse progress, drive away companies, and stifle start-ups, especially as global firms look to invest in the state.
Calling the move disappointing and greatly concerning, NASSCOM stated that mandating significant reservations for locals would hurt the technology sector and the talent pool. They pointed out that Karnataka’s economy, contributing 25 per cent to the state GDP and hosting over 30 per cent of the total Global Capability Centres (GCCs), could be adversely affected by such decisions, deterring future investments.
Please Get in Touch: Andhra Minister to Businesses
Neighbouring Andhra Pradesh found an opportune moment to entice investments into their state. AP, under the newly elected TDP government led by Chandrababu Naidu and his son and IT Minister Nara Lokesh, offered NASSCOM the chance to expand or relocate their businesses to Visakhapatnam if they found Karnataka unfavourable.
On X (previously Twitter), Lokesh wrote, “We welcome you to expand or relocate your businesses to our IT, IT services, AI, and data centre cluster at Vizag…Andhra Pradesh is ready to welcome you. Please get in touch!”
Adding an enticing touch to the pitch, the Andhra Pradesh Minister also assured that his state would provide uninterrupted power, infrastructure, and the most suitable skilled talent for the companies without any government restrictions.
We Are Just a Call Away: Karnataka Minister to NASSCOM
“This is your Government, and as always, we are just a call away,” tweeted Karnataka’s IT Minister Priyank Kharge, who immediately went into firefighting mode. He assured NASSCOM that their government would not take any decision that could not withstand legal scrutiny.
Kharge also had a counter-pitch of sub-nationalism for his AP counterpart Lokesh, asking whether he would not also want to ensure that every company investing in AP employed deserving, trained, and skilled locals from Andhra Pradesh.
States That Brought Similar Quotas
In 2019, the Andhra Pradesh Assembly had passed a bill to reserve 75 per cent of jobs for local candidates. The Andhra Pradesh Employment of Local Candidates in the Industries/Factories Bill mandated reservations of up to 75 per cent for jobs with a monthly salary of Rs 30,000. However, in 2020, the Andhra Pradesh High Court said that the Bill “may be unconstitutional”.
In 2020, Haryana too passed a similar bill reserving 75 per cent jobs with monthly salary up to Rs 30,000 in the private sector for locals. However, the bill was challenged in Punjab and Haryana High Court, which struck it down. The bill is now in Supreme Court after the Haryana government had challenged the High Court order.
How Karnataka Lost Opportunities Over The Years
There have been several instances when Karnataka has lost multiple-crore business deals due to delayed land acquisitions, non-EV-friendly laws, or delayed responses to industries seeking to set up shop.
The latest instance was in June this year when Bengaluru-based electric two-wheeler maker Ather Energy made Maharashtra its home for establishing its new and third manufacturing facility. This became a political blame game, with the BJP criticising the Congress for its lack of effort and initiative to retain companies. The Congress countered by saying that it was the previous BJP government in Karnataka that forced Ather to relocate to Maharashtra due to insufficient land allocation. Ather had sought 50 acres for the plant, while the government sanctioned only 35 acres, of which 5 acres were allegedly under dispute.
Frustrated with the political back-and-forth, Ather set up its plant at the Aurangabad Industrial City (AURIC) in Maharashtra with an investment of Rs 2,000 crore.
In February 2023, during the Basavaraj Bommai-led BJP rule, Karnataka saw another electric vehicle producer leaving its soil for neighbouring Tamil Nadu. Ola Electric, with plans to set up an EV hub in Karnataka, faced disappointment when the BJP government could not grant the necessary land. Industry leaders had sought changes in the EV policy to make Karnataka more investor-friendly. Ola then announced plans to set up the world’s biggest EV hub in Tamil Nadu and signed a Memorandum of Understanding (MoU) to invest Rs 7,614 crore, including the world’s largest EV hub with integrated 2W, car, and lithium cell gigafactories.
In June 2016, under Congress rule during Siddaramaiah’s first stint as chief minister, another two-wheeler giant, Triumph Motorcycles India, decided to pull out its investment from Karnataka. They initially planned to build a manufacturing facility in the Kolar district on a 30-acre plot in Narasapura Industrial Area, with an investment of Rs 850 crore. The company claimed that despite several reminders and redressals of their grievances, the state government did not respond, prompting them to move operations to Manesar.
Triumph had also paid an undisclosed amount as an advance to the Karnataka Industrial Areas Development Board (KIADB) towards land acquisition and allotment, but they faced several land-related issues which were not sorted out by the government, forcing them to look elsewhere. They even sought a refund of the investment made to KIADB.
So, the big question is, will this play on sub-nationalism bear any fruit other than political posturing? Will any lessons from past experiences be learnt? It clearly helps to play on Kannadiga pride, but the growth of a state is measured by its development, infrastructure, and investments- showcasing one’s local pride is just the icing on the cake.