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politics | IST

Companies in Andhra seek clarity over state's private sector reservation bill

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Weeks after the Andhra Pradesh passed the Employment Of Local Candidates In Industries And Factories Bill, companies with business interests in Andhra Pradesh have begun waking up to the prospect of reservation in the private sector.

Weeks after the Andhra Pradesh government passed the Employment Of Local Candidates In Industries And Factories Bill in the state assembly, companies with business interests in Andhra Pradesh have begun waking up to the prospect of reservation in the private sector.
The bill mandates that all industries and factories in the state of Andhra Pradesh ensure 75 percent quota for locals while recruiting its workforce. However, the new law has left these businesses with more questions than answers.
In the last few years, the bifurcated state has attracted names like Kia Motors and Isuzu, and new investments from old names like the Amara Raja Group, among others. Each of these names had established big manufacturing facilities in Andhra. But the new bill has disappointed some of these companies.
“Instead of mandating a law, they (Andhra Pradesh Government) should have put an affirmative — a suggestion or advice — that this is what we expect you to do, which could be seen as an advisory,” said Ramachandra N Galla, chairman, Amara Raja Group, speaking exclusively to CNBC-TV18.
Interestingly enough, the Amara Raja Group claims to have 90 percent of its employees from the state but feels a law mandating the same could be problematic.
Much of the problem is to do with the definition of ‘local’. As on date, the bill states that ‘local’ refers to either an inhabitant of Andhra or someone who holds ‘domicile’ status in the state.
However, with no government order issued yet, speculation is rife that the government could look at calling on companies to ensure that those inhabitants of the region, who have been displaced by the construction of a factory, get jobs.
Companies with business interests here feel that unless this grey area is ironed out, acquiring and training talent will be a problem. This, despite the Government granting three years to these companies, to implement the quota in question.
“It’s going to be a major issue," said C Krishna Prasad, chairman and managing director, Granules India, “I don’t know if three years will be enough time to implement the quota, and I don’t think there are enough employable or trainable people within the displaced group.”
The bill is also being seen as protectionist and bad for business, with potential to adversely impact Andhra Pradesh’s 258 industrial parks and 32 Special Economic Zones (SEZs) spread across three industrial corridors. The fear is that companies that have committed to investing a total of $1.5 billion in Andhra will have a limited talent pool to hire from.
Adding to these concerns is the question of whether multi-nationals who have invested heavily in infrastructure, will be willing to cough out more money towards training. In the absence of a legal precedent surrounding the implementation of such a quota in the private sector, experts say that challenging the bill in court, is also a real possibility.