Investors may pull out of Karnataka if job reservations persist: Sweden-India Business Council

Karnataka Job Quota:  Sweden-India Business Council has cautioned that investments may flow to other states if Karnataka job quota bill becomes a reality. “I think if this becomes a law, it’s very important for the industry to ensure they have the right talent and plan for it now. This means they will be forced to look at other places in India to ensure they have the right talent and open up offices in other places as well,” Robin Sukhia, CEO and Secretary of the Sweden-India Business Council, told Republic Business.

He criticised the Karnataka cabinet’s recent draft of State Employment of Local Candidates in Industries, Factories, and Other Establishments Bill which mandates reserving 50 per cent of management jobs and 75 per cent of non-management jobs for local residents ( Kannadigas).

Sukhia added further that the IT and engineering industries may choose second-tier and third-tier cities which  will become increasingly attractive for them

When asked about the impact on foreign direct investment (FDI) and company setups in Bangalore, Sukhia suggested that the law could deter companies from choosing Bangalore as their preferred location. “If this becomes a permanent law, companies might choose other states. This presents a threat to the government as companies may look elsewhere if this law becomes permanent,” he said.

He emphasised the importance of talent mobility across India. “One of the main reasons for setting up business in India, apart from the large market, is the talent pool, which needs mobility to function effectively. It’s better to have broad mobility within the country rather than limiting it this way,” Sukhia explained.

In conclusion, Sukhia advised that if the law becomes permanent, companies would need to cater to their own talent needs and may invest in other locations to ensure they have the right talent. “Instead of increasing their base in Karnataka, firms might set up new bases in other states as well,” he concluded.