Synopsis–“Whilst we encourage employment generation, it would’ve been easier if we could find a better solution. We don’t want to be in a situation where we are not competitive,” said Sunjay Kapur, chairman of auto components maker Sona Comstar.
Delhi-NCR has long been India’s biggest personal mobility market, a fact that helped transform the rural suburbs of Faridabad, Gurgaon and Manesar into shiny industrial hubs, drawing bulge-bracket investors such as Suzuki, Honda and the Hero Group. But those funds could dry up after the latest Haryana fiat requiring companies to largely employ ‘sons of the soil’ on jobs paying up to ₹6 lakh a year.
Industry veterans told ET the new legislation will impact more than 70% of all new recruitments. Given the shortage of locally available skilled labour, the new law would make doing business more difficult, compelling companies to rework their expansion plans in the state.
With investments of ₹40,000 crore, the automotive industry currently accounts for a quarter of Haryana’s GDP and generates employment for more than a million people. Of these, 200,000 personnel are employed by vehicle manufacturers, while the rest work with auto component makers. The majority of the workforce in the sector operate on the shop-floor, and earn wages where the new rules will apply.
“Our industry requires a skilled workforce to produce high-quality products that are globally competitive. Hiring in our sector is done on the basis of merit and talent rather than the domicile of the candidates,” said Deepak Jain, president, ACMA (Automotive Component Manufacturers Association). “The reason for the industry to employ candidates from outside the state is due to the shortage of adequately skilled and locally available manpower.”
Not the Best Advertisement
Jain said that the rule requiring companies to employ 75% locals on jobs paying ₹50,000 a month will also hurt Haryana’s image of “an industry friendly destination”.
India’s auto component industry exports more than 25% of its production, and counts the US and Europe among its leading markets.
“Whilst we encourage employment generation, it would’ve been easier if we could find a better solution. We don’t want to be in a situation where we are not competitive,” said Sunjay Kapur, chairman of auto components maker Sona Comstar. “We want to hire the best talent available; we don’t necessarily want to hire from outside. If there are restrictions, it could become a challenge.”
More Money, More Jobs
The Gurgaon-Manesar industrial belt is one of the largest automotive clusters in the country and houses among others automakers Maruti Suzuki, Hero MotoCorp, Honda Motorcycle & Scooter India (HMSI) and hundreds of their suppliers. The state is also a large base for outsourcing/IT, consumer goods and electronics companies.
“As per our discussions with major industrial houses in the state regarding the impact of the Act on their businesses, they have maintained that this Act is going to affect their businesses in a big way and they are looking forward to rework their expansion plans in Haryana,” said a senior official at CII (Confederation of Indian Industry).
In its representation to the Haryana government, CII has instead recommended that the state may consider opening one worldclass ITI in every district to enhance the employability of local youth in various trades.
aniltikotekar4sme.com 