Labour reform in India has always been a prickly subject and any attempt to amend legislation sparks outrage and resentment among one or the other group of stakeholders in the economy. When the Narendra Modi government crunched 29 Central laws into four labour codes last year, India Inc was ecstatic. The move ignited the hope that industry would finally break free from the decades-old straitjacket of recruitment laws and labour practices that are totally out of step with present-day realities. But the Centre’s efforts to introduce reformist laws to reinvigorate the business ecosystem can often be stymied by the states through regressive legislation. Earlier this month, Indian industry received a body- blow when the Haryana government issued a notification outlining plans to implement a tough, sons-of-the-soil policy in the private sector. From January 15 next year, 75 per cent of all jobs in the private sector with a gross salary threshold of Rs 30,000 will have to go to people domiciled in the state of Haryana. Industry has recoiled with horror and intends to vigorously challenge the most noxious elements of the notification.

Trouble had been brewing for some time after the Haryana State Employment of Local Candidates Act received the governor’s assent in late February. The Haryana legislation is modelled on the one passed by the Andhra Pradesh government in 2019 but contains a few more draconian provisions. Unlike Andhra Pradesh, Haryana has opted to go ahead and notify a date from when the provisions will come into effect. Industry has been granted very little wiggle room to plead for exclusion from the provisions and violations will attract stiff penalties. The new law will impact construction, real estate, small and medium businesses, and factories the hardest. Automobile component makers will face the heat since they have a very large pool of migrant workers. Large business houses and multinationals could look to house their new projects in other states even as they scale back production in their factories in Haryana. There could be one saving grace: the Manohar Lal Khattar government relaxed its domiciliary rules earlier this year by trimming the residency requirement to five years from the earlier 15. Mr Khattar had insisted that this relaxation would apply only to private-sector jobs. The worry is that there is no mention of this in the November 6 notification, indicating that politics may have torpedoed the principle.