Industrial development and private investment will be hit, ‘ultimately hurt the interests of the State’
Warning that its move to reserve private sector jobs for locals “spells disaster” for industrial development and private investment in Haryana, the India Inc. has asked the State to “re-look” the legislation, highlighting the lack of adequate availability of skilled manpower.
Industry sources cautioned that this may force a rework of their expansion plans in the State, adding that it could also provide a shield to some firms indulging in unethical practices to retrench the existing workforce.
The Haryana Governor earlier this week approved a Bill that reserves 75% of jobs in the private sector that pay less than ₹50,000 per month for candidates from the State.
“Investors and entrepreneurs need to source the best human resources available in the country to be competitive and successful. To force them in such a regressive straightjacket will force them to look beyond Haryana and this will ultimately hurt the interests of the State,” Uday Shankar, president, Federation of Indian Chambers of Commerce & Industry (FICCI), said on Thursday.
Mr. Shankar added that the industry body believes the move was against the spirit of the Constitution, which gives citizens of India the freedom to work anywhere in the country.
Other industry bodies, including the Automotive Component Manufacturers Association of India (ACMA), the Confederation of Indian Industry (CII) and the National Association of Software and Service Companies (NASSCOM), have requested the Bharatiya Janata Party (BJP)-led Haryana government to reconsider the legislation, while pitching for a consultation with the industry.
Deepak Jain, president, ACMA, said, “Our industry requires skilled workforce to produce high quality products that are globally competitive. Hiring in our sector is done on the basis of merit and talent rather than the domicile of the candidates. The reason for the industry to employ candidates from outside the State is due to the shortage of adequately skilled and locally available manpower.”
Mr. Jain also highlighted that the automotive industry, with investments of over ₹40,000 crore, accounts for more than 25% of the State’s GDP and creates employment for over 10 lakh people.
NASSCOM added that the move would impact the business friendly image of the State and be detrimental to Gurugram’s growth trajectory as an IT-BPM (Infomation Technology-Business Process Management) hub. Stating that it had already raised industry’s concerns with the State government, NASSCOM added that the growth of the IT-BPM industry was closely intertwined with the availability of skilled talent on demand and such restrictions would be limiting for the industry.
In a representation to the State government, CII has stated that the industry should be consulted to understand the overall impact on the State’s economy and employment arising out of the job reservation law.
Noting that Haryana is facing tough competition from other States in terms of attracting industrial investment, the CII added that all major industrial houses have maintained that the Act was going to affect their businesses in a big way and they were now looking to rework their expansion plans in Haryana.
CII has recommended that the State may, after analysis and discussions, come out with a percentage and also the associated incentives to be offered to industry for employing local people. It added that job reservation for locals could not be made mandatory for existing units as they could not lay off a trained employee from other States to give those jobs to locals. “The purpose can be achieved in case of new industrial units being set up and offering attractive incentives to the unit in lieu of providing reservation,” it has suggested.
Recommending that there should be no penalty clause for violation of the reservation criteria, the CII has in the representation said that there needs to be a procedure to employ persons from outside in instances wherein the required talent is not available locally.
According to Anupam Varma, partner at the law firm J Sagar Associates, the legality of the Act is prima facie suspect and it may not be able to withstand judicial scrutiny on the touchstone of Article 19(1)(g) and 16(2) of the Constitution of India. “The Act impinges upon the sacrosanct fundamental right of freedom to practice any occupation or business. The implementation of the Act just when industrial and business activities are resuming after the COVID pandemic might result in an exodus of investors from the State,” he said.
Neeraj Tyagi, co-founder, WeFounderCircle, a startup investment platform, said that the decision might impact new-age entrepreneurs who were still building their teams and start-ups more.
Mr. Tyagi said that in recent years, the NCR region, especially Gurugram, had attracted a huge number of start-ups, following which talented professionals from across the country had shifted to the region. “Gurugram gradually became a rising ‘Silicon Valley’ in north India. Now, if these companies have to pick their 75% resources from within the region, then certainly they will face challenges somewhere on the grounds of talent. And for the ones that run majorly on tech talent, it will become a point of repulsion from the region,” he said.