Apex IT industry body Nasscom has expressed deep disappointment and concern over Karnataka's quota-for-locals bill mandating reservation for locals in private sector, and has exhorted the state government to withdraw the bill.

Nasscom's strong note of dissent assumes significance as it adds to the growing chorus of top industry voices, which have warned that the legislation would erode the state's edge in technology, and reverse the progress made so far.

The IT industry body has sought an urgent meeting with state authorities to discuss the concerns and "prevent the state's progress from being derailed", the association said.

"Nasscom members are seriously concerned about the provisions of this bill and urge the state government to withdraw the bill. The bill's provisions threaten to reverse this progress, drive away companies, and stifle startups, especially when more global firms (GCCs) are looking to invest in the state," a Nasscom release said.

Stating that the tech sector contributes to 25 per cent of the state GDP, houses a quarter of the country's digital talent, has over 11,000 startups and 30 per cent of the total GCCs, Nasscom contended that the restrictions could force companies to relocate as local skilled talent becomes scarce.

Globally, there is a huge shortage for skilled talent and Karnataka despite the large pool, is no exception, the industry body argued.

"In today's highly competitive landscape, knowledge-led businesses will locate where talent is as attracting skilled workers is crucial for success... For states to become a key technology hub a dual strategy is key - magnet for best talent worldwide and focussed investment in building a strong talent pool within the state through formal and vocational channels," it said.

The technology sector has been crucial to Karnataka’s economic and social development, with Bengaluru known globally as India's Silicon Valley.

"The technology sector contributes almost 25 per cent of the state GDP and has played a key role in enabling higher growth for the state, higher per capita income than the national average. With over a quarter of India’s digital talent, the state houses over 30 per cent of the total GCCs and around 11,000 start-ups," it said.

Nasscom rued that it is "deeply disturbing" to see this kind of bill which will not only hamper the growth of the industry, but impact jobs and the global brand for the state.

The Karnataka State Employment of Local Candidates in the Industries, Factories and Other Establishments Bill, 2024 was approved by the state cabinet on Monday, and it seeks to reserve 50 per cent of management positions and 75 per cent of non-management positions in the private sector for locals.

The Bill has triggered controversy and criticism from across industry. Industry veteran Mohandas Pai termed the Bill "very regressive", and "draconian".