The Karnataka government on Wednesday cleared a draft bill to reserve 50 to 100 per cent of private-sector jobs for Kannadigas, but had to “temporarily” put it on hold within hours following an uproar from industry leaders and the nation’s apex tech body.

Karnataka houses the country’s tech capital, Bengaluru, and attracts lakhs of job-seekers from Bengal and other parts of the country every year.

The Karnataka State Employment of Local Candidates in the Industries, Factories and Other Establishments Bill that the cabinet cleared earlier in the day reserved 50 per cent of managerial jobs, 75 per cent of non-management jobs and 100 per cent of unskilled jobs for Kannadigas.

As much as 50 per cent of all managerial and other higher position slots were proposed to be set aside for Kannadigas. The draft bill also reserved 75 per cent of jobs in the information technology (IT) and IT-enabled services (ITeS) sectors for Kannadigas. The same quota was to apply to clerical jobs and contract and casual workers, while 100 per cent of unskilled jobs were to be set aside for Kannadigas.

The bill defined a Kannadiga as someone who is born in Karnataka, or has lived in the state for at least 15 years and can speak, read and write Kannada and qualifies a yet-to-be-announced eligibility test to be conducted by a nodal agency to be formed once the bill is enacted.

Violations of the quota were to attract penalties ranging from ₹10,000 to ₹25,000.

Soon, Nasscom, the country’s apex tech industries’ body, warned the Karnataka government that investors would have to move to other states if the proposed legislation was enacted. Industrialists called the move retrograde.

Chief minister Siddaramaiah announced in the evening that the Karnataka State Employment of Local Candidates in the Industries, Factories and Other Establishments Bill was being “temporarily put on hold”.

“The bill approved by the cabinet to provide reservation for Kannadigas in private sector organisations, industries and enterprises has been temporarily put on hold. This will be revisited and decided in the coming days,” he commented on X late on Wednesday.

An aide to Siddaramaiah told The Telegraph that the “government will take up the issue at next week’s cabinet meeting”.

Other than the warnings from industry leaders and Nasscom, neighbouring states Andhra Pradesh and Kerala — the latter already having a vibrant startup ecosystem — wasted no time in inviting investors to their states promising that only merit, and not domicile, would matter.

Nara Lokesh, human resources minister of Andhra Pradesh, invited tech players by tagging his X message to Nasscom.

“Dear @NASSCOM members, we understand your disappointment. We welcome you to expand or relocate your businesses to our IT, IT services, AI and data centre cluster at Vizag,” Lokesh stated.

“We will offer you best-in-class facilities, uninterrupted power, infrastructure and the most suitable skilled talent for your IT enterprise with no restrictions from the Government. Andhra Pradesh is ready to welcome you. Please get in touch!”

The Left government in Kerala, desperately trying to shed its anti-investor image, tried to cash in on the Karnataka conundrum. “Invest in Kerala. Employee talent and merit are the only criteria for recruitment,” its industries minister P. Rajeev posted on X.

One of the biggest job markets in the country, Karnataka attracts lakhs of skilled and unskilled workers from states including Bengal. Bengaluru is a magnet for skilled workers, especially in the IT and service sectors, while other districts in the state take in a large number of unskilled workers.

Roughly a quarter of engineering graduates from Bengal are headed south for jobs every year and most of them to Karnataka, said an official of the state higher education department. “This includes top-rung government institutions like JU and Calcutta University and the top self-financed private institutes.”

More than 15 Karnataka-bound trains run from stations like Howrah, Santragachhi and Shalimar every week, said an official of the Howrah division.

“All of these trains run packed, often at 150 per cent capacity. It would mean roughly 1,500 passengers per train. The sleeper and general classes are literally brimming with people,” the official said.

Snaking queues take shape on the platforms at least an hour prior to the departure of the trains. Most of those waiting in the queues are men from the districts of Bengal, headed south to work as masons, construction labourers, painters, tailors, or cooks because opportunities back home are scarce.

Bengaluru-based entrepreneurs expressed concern at the bill and warned of losing out on talent.

“As a tech hub we need skilled talent and whilst the aim is to provide jobs for locals we must not affect our leading position in technology by this move. There must be caveats that exempt highly skilled recruitment from this policy,” Kiran Mazumdar Shaw, executive chairperson of Biocon Limited, commented on X.

T.V. Mohandas Pai, former CEO of Infosys, called for trashing the bill.

“This bill should be junked. It is discriminatory, regressive and against the constitution @Jairam_Ramesh is govt to certify who we are? This is a fascist bill as in Animal Farm, unbelievable that @INCIndia can come up with a bill like this — a govt officer will sit on recruitment committees of private sector? People have to take a language test?” Pai commented on X.

Nasscom warned Karnataka: “Restrictions could force companies to relocate as local skilled talent becomes scarce.”

“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 (global capability centres) and around 11,000 start-ups,” a Nasscom statement noted.

“The bill’s provisions threaten to reverse this progress, drive away companies, and stifle startups, especially when more global firms are looking to invest in the state. At the same time, the restrictions could force companies to relocate as local skilled talent becomes scarce,” Nasscom, which sought an urgent meeting of industry representatives with the state government, added.

Additional reporting by our Calcutta bureau