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The development is likely to impact operations and raise employment costs.
The development is likely to impact operations and raise employment costs.

Haryana bill adds to auto firms’ woes

State assembly mandates filling 75% positions at pvt firms via local staff

NEW DELHI : Some of India’s leading automakers and their component manufacturers based in Haryana may face disruptions following the state government’s move to reserve 75% of private jobs for locals.

A senior industry executive said the development will impact operations and raise employment costs at a time when auto sales are under pressure due to slowdown.

The state assembly on Friday passed a bill that requires private firms to employ at least 75% local candidates for posts where the gross monthly salary is less than 50,000. The bill will now require the assent of the Haryana governor to become a law.

Haryana is one of the biggest automobile manufacturing hubs in India, housing five factories of the country’s leading passenger vehicle and two-wheeler makers including Maruti Suzuki India Ltd, Hero MotoCorp Ltd and Honda Motorcycle and Scooter India Ltd.

“The automotive industry ecosystem works in a very integrated manner and these kind of measures act as a constraint for manufacturers. If a state is deficient in skilled manpower, then employers will have to look at other options. The auto industry is one the biggest sources of employment generation and these conditions will impede the efficiency of manufacturers and might lead to increase in cost of operations," said Vinnie Mehta, director general, Automotive Component Manufacturers Association (Acma).

Recently, Andhra Pradesh and Gujarat had also passed similar laws to protect local jobs. “If this law gets implemented, we will have to let go a lot of people. Though majority of the workers in these factories are locals, but 75% is a high number. We have already faced problems related to availability of labour post-lockdown and our production suffered as a result. Related costs also went up substantially. This new law will be a big inconvenience to us since hiring happens based on skill sets," said the promoter of an auto component manufacturer in Haryana.

Auto firms and component manufacturers had faced acute shortage of skilled workers, after the lockdown was eased in May, as most workers left for their hometowns. This led to delays in ramping up production and higher employee costs. Most contractual blue collar workers are recruited by parts suppliers and this new law will make it tougher for these companies to recruit skilled workers.

“Whenever the law is formed, we will study the exact text and details," said a Maruti Suzuki spokesperson. Emailed queries to Hero MotoCorp and Honda Motorcycles on Friday remained unanswered.

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