The Karnataka government's proposal to secure a larger share of private-sector jobs for local candidates has entered another phase of uncertainty, with differences emerging within the administration over whether to pursue mandatory employment quotas or give Kannadigas priority in recruitment.
The proposed legislation, which seeks to ensure that people born in Karnataka benefit from employment generated by industries operating in the State, was first cleared by the Siddaramaiah-led Cabinet in July 2024. However, strong opposition from industry representatives forced the government to put it on hold before introducing it in the Legislature.
A revised draft dated May 20, 2026, proposes retaining the 50 percent reservation in management positions and 70 percent in non-management jobs. It also reduces the domicile requirement from 15 to 10 years and removes the explicit requirement for a Kannada proficiency test. At the same time, it drops the provision allowing establishments to seek relaxation from the prescribed quotas and extends the proposed legislation's coverage to all industries, factories and establishments. The copy of both the drafts were reviewed by TNIE.
Accordingly, the May 2026 document should be treated as a draft under consideration, not as an approved or reintroduced Bill. The government's latest thinking appears to be moving towards a preference-based recruitment model, with the Labour Department exploring ways to give local candidates priority instead of imposing fixed quotas.
The debate raises three interconnected questions: how to improve employment opportunities for Kannadigas, whether the State can legally compel private employers to reserve jobs based on birth and domicile, and how to balance local employment aspirations with the interests of investors and industries.
What is the objective of the proposed legislation?
The central objective is to ensure that people from Karnataka get a fair share of jobs created by industries, factories and commercial establishments operating in the State. The proposal stems from a longstanding demand that local people benefit from industrialization and investments, particularly in Bengaluru, which has emerged as a major centre for IT, ITES, manufacturing and other services.
Supporters argue that industries benefit from the State's infrastructure, land, electricity, water and other facilities and should therefore provide employment opportunities to qualified local candidates.
The proposal also seeks to address complaints that some companies are overlooking Kannadigas in recruitment, particularly in the technology sector.
Chief Minister D K Shivakumar and Kannada and Culture Minister Shivaraj Tangadagi have recently warned companies against discriminating against local candidates and urged those facing such discrimination to bring it to the government's notice. Deputy Chief Minister Dr G Parameshwara has also maintained that industries receiving government support should provide suitable jobs to qualified Kannadigas.
What did the July 2024 proposal provide?
The Siddaramaiah Cabinet approved the draft Karnataka State Employment of Local Candidates in the Industries, Factories and Other Establishments Bill on July 15, 2024.
The Cabinet-approved proposal was publicly described as providing:
Management positions: 50 per cent reservation for local candidates.
Non-management positions: 75 per cent reservation for local candidates.
The Chief Minister also announced 100 percent reservation for Kannadigas for Group C and D posts.
The draft covered supervisory, managerial, technical, operational and administrative positions under the management category, excluding directors.
The non-management category included clerical, unskilled, semi-skilled and skilled positions, besides employees in IT/ITES establishments and contract and casual workers.
The definition of a local candidate required a person to have been born in Karnataka, domiciled in the State for 15 years and capable of speaking, reading and writing Kannada. Candidates without a secondary school certificate showing Kannada as a language were required to pass a proficiency test prescribed by the Nodal Agency.
The draft also provided for training local candidates within three years if suitably qualified or skilled candidates were unavailable. Establishments could approach the government for relaxation from the prescribed quotas, subject to an enquiry and government approval.
The proposed penalties ranged from Rs 10,000 to Rs 25,000, with an additional penalty of up to Rs 100 for every day the violation continued.
Why was the 2024 proposal put on hold?
The proposal triggered strong opposition from industry representatives, particularly from the technology sector.
NASSCOM said the proposed restrictions could affect the technology industry's growth and Karnataka's reputation as a global technology destination.
Biocon chairperson Kiran Mazumdar-Shaw called for exemptions for highly skilled recruitment, while technocrat and former Infosys executive Mohandas Pai criticised the proposal.
Industry representatives also questioned the constitutionality of compelling private companies to recruit a specified percentage of employees based on their State of birth and domicile.
Following the backlash, the government announced on July 17–18, 2024, that it would withhold the proposal pending wider consultations and due diligence. Industries Minister M B Patil said the government remained committed to creating more employment opportunities for Kannadigas but would pursue the objective more amicably.
Though the Cabinet approved the draft in July 2024, the Bill was never introduced in the Legislature. It did not become an Act and its proposed quotas never came into force.
What has changed in the May 2026 draft?
A comparison of the July 2024 draft and the document dated May 20, 2026, shows that the core quota percentages remain unchanged in the versions being compared. However, the eligibility conditions and enforcement framework have changed.
A. Local-candidate eligibility relaxed
The 2024 draft required candidates to have been born in Karnataka, lived in the State for 15 years and demonstrated Kannada proficiency.
The May 2026 draft reduces the domicile requirement to 10 years while retaining the birth-in-Karnataka condition.
It also removes the explicit Kannada language proficiency requirement and the mandatory test conducted by the Nodal Agency.
This makes the eligibility criteria less restrictive regarding domicile duration and language testing. However, the birth condition remains. Consequently, a person who has lived in Karnataka for several decades but was born outside the State could still fall outside the proposed definition.
B. No provision for quota relaxation
The 2024 draft allowed an industry, factory or establishment to approach the government for relaxation if sufficient qualified local candidates were unavailable. Even after relaxation, the quota could not fall below 25 per cent in management positions and 50 per cent in non-management positions. The May 2026 draft removes this relaxation mechanism altogether. This could become a major concern for industries that require specialised skills or struggle to
find suitably qualified local candidates.
C. Coverage extended across Karnataka
The 2024 draft proposed applying the legislation to establishments in government-notified areas.
The May 2026 draft removes the notified-area concept and states that it would apply to all
industries, factories and establishments.
D. Training provision retained
Both drafts provide that where qualified or suitable local candidates are unavailable,
establishments must take steps, in collaboration with the government or its agencies, to train and engage local candidates within three years.
E. Changes in enforcement and definitions Other changes include:
The definition of industry refers to the Industrial Relations Code, 2020, instead of the Industrial Disputes Act, 1947. The definition of establishment additionally incorporates the Occupational Safety, Health and Working Conditions Code, 2020. The 2026 draft provides for appointing a Gazetted Officer as an authorised officer, instead of an officer not below the rank of Assistant Labor Commissioner. The non-management definition explicitly includes non-clerical and technical employees. The draft retains the proposed compliance reporting, the Nodal Agency's powers to seek records and documents, penalties ranging from Rs 10,000 to Rs 25,000 and an additional penalty of up to Rs 100 for every day a violation continues.
Why is the proposal facing constitutional challenges?
The most significant legal question is whether a State government can compel private-sector employers to reserve a specified percentage of jobs for people who meet birth and domicile conditions prescribed by that State. The debate involves several constitutional principles:
Article 14: Equality before the law
This guarantees equality before the law and equal protection of the laws.
Critics argue that excluding otherwise qualified Indian citizens from employment opportunities because they were born or domiciled outside Karnataka could amount to unreasonable discrimination.
Legal expert Alok Prasanna Kumar, co-founder of the Vidhi Centre for Legal Policy, has questioned the proposal's constitutional validity.
“Any law proposing any kind of reservation for locals in private-sector organisations is unlikely to meet the requirements of Article 14. This is because they are forcing discrimination upon employees based on where they are from and that is not permitted under the Constitution,” he has said.
He has also questioned whether the State can establish a rational basis for such discrimination by demonstrating that local people are being denied employment opportunities.
Article 19: Freedom to pursue employment and business
This protects citizen's freedom to move freely, reside and settle anywhere in India, and pursue an occupation, trade or business, subject to constitutionally permissible restrictions. Critics argue that domicile-based employment restrictions could affect citizens's ability to seek jobs across State boundaries. They also raise concerns about the impact on private employers' freedom to recruit employees according to their business requirements and specialised skill needs.
The State, on the other hand, would have to establish that any restrictions imposed are constitutionally permissible and proportionate to the objective of improving local employment.
Legislative competence: Can a state impose such a quota?
Another question is whether a State Legislature has the legislative competence to impose mandatory domicile-based employment quotas on private establishments.
The division of legislative powers between the Union and States, along with constitutional provisions governing employment and freedom of trade, would become relevant in examining such legislation.
The Haryana judgment has brought this question into sharper focus.
Clarification on Article 16, which specifically deals with equality of opportunity in public employment. Since the Karnataka proposal concerns private-sector employment, Article 16 should not be presented as the direct constitutional provision governing the proposed quotas. The more immediate questions involve equality under Article 14, freedoms under Article 19 and the State's legislative competence.
What happened to Haryana's 75 percent local jobs law?
The most directly relevant judicial precedent is Haryana. The Haryana State Employment of Local Candidates Act, 2020, provided 75 per cent reservation for local candidates in private-sector jobs paying up to Rs 30,000 a month. The Punjab and Haryana High Court struck down the law on November 17, 2023, declaring it unconstitutional and violative of Part III of the Constitution.
The court examined questions relating to the State's legislative competence, the imposition of reservation in private employment and the restrictions on employers' freedom to conduct business. It held that the State could not impose such restrictions on private employers by discriminating against citizens based on their State of origin.
The Haryana government challenged the High Court verdict before the Supreme Court, which issued notice on the appeal in February 2024.
What about Punjab?
IT/BT Minister Priyank Kharge has said the government would examine legal challenges involving similar measures in Tamil Nadu, Haryana and Punjab before finalising Karnataka's approach.
However, these cases should not automatically be treated as identical precedents.
Punjab cases need to be identified by the specific legislation and legal
issue involved before they can be cited as direct precedents on private-sector domicile quotas.
Therefore, the Haryana judgment remains the clearest directly comparable case for Karnataka's
proposed private-sector employment legislation.
What is the government's latest position?
The Labour Department has been exploring a fresh approach that would give local candidates priority in private-sector recruitment rather than impose mandatory quotas.
According to officials, the department's revised approach would give Kannadigas first preference. Labour Minister Santosh Lad has also said the government intends to revisit the proposal at an appropriate time.
However, departments differ.
The Commerce and Industries Department believes an existing policy already provides 100 percent reservation for locals in non-management jobs and that a separate law may not be necessary. The Labour Department has sought a meeting convened by the Chief Minister, involving the departments concerned, including Law and Parliamentary Affairs and Finance, to reach a common position and examine possible legal hurdles. This suggests the government has yet to decide whether to pursue the May 2026 draft, further modify the proposal, or adopt a preference-based hiring policy.
Why is the IT sector particularly concerned?
The proposed quotas could significantly affect Bengaluru's technology and services industries because recruitment in these sectors often depends on specialised skills, experience, and talent availability. Companies may need to recruit professionals from across India and overseas for certain positions. A mandatory local quota, particularly without a relaxation mechanism, could complicate recruitment when suitably qualified local candidates are unavailable.
What are the possible concerns for employers and job seekers?
The proposed framework raises several practical questions:
Birth and domicile criteria: Long-term Karnataka residents born outside the State could be excluded from the definition of local candidates.
Specialised recruitment: Companies may face difficulties meeting fixed percentages in positions requiring specialised qualifications and experience.
IT/ITES employment: Including technical, contract, and casual employees could affect a wide range of technology-sector recruitment:
Compliance burden: Reporting, verification, and penalties could increase employers' regulatory obligations.
Investment climate: Companies may reconsider expansion or recruitment plans if they perceive the rules as restrictive.
Training requirements: The three-year training provision could help develop local talent, but its implementation would require coordination between industry and government agencies.
On the other hand, supporters argue that companies benefiting from Karnataka's infrastructure and the investment climate should make a greater effort to recruit, train and promote qualified local candidates.
How did the demand originate?
The demand for employment preference for Kannadigas has been debated for decades.
The Sarojini Mahishi Committee, constituted in 1983, submitted its report in 1986 and recommended preferential employment opportunities for Kannadigas in government departments, public-sector undertakings and private industries.
What happens next?
If the government decides to pursue the May 2026 draft, it will first need Cabinet approval before introducing it in the Legislature for debate and passage. It would then need the Governor's assent to take effect.
The government will also have to address concerns raised by industry representatives and examine the constitutional questions arising from the Haryana judgment.
The BJP and JD(S) will also likely scrutinise the government's approach during any legislative debate. The central question is whether the State can secure a larger share of private-sector jobs for its people through legally sustainable measures without undermining the economic ecosystem that generates those jobs.
