Video Summary

[RSTV The Big Picture] Jobs: Locals First Policy

Fulfilling one of its biggest election promises, the Andhra Pradesh government passed a bill in the Assembly which reserves 75 per cent jobs factories for Andhra Pradesh youths, making it the first state in the country to introduce such a provision in the private sector.
By IT's Video Summary Team
July 30, 2019


  • Introduction
  • Provisions of Andhra Pradesh Employment of Local Candidates in Industries/Factories Act, 2019
  • Other states with similar ‘locals first’ policy
  • Does the act Contradict fundamental rights?
  • Comparing with the Domicile reservation in Educational Institutions
  • Challenges Andhra Pradesh will face as a result of the Act
  • Negative Consequences of the Act
  • Suggestions
  • Way Forward

[RSTV The Big Picture] Jobs: Locals First Policy

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  • A new law in Andhra Pradesh now reserves 75% of private sector jobs in the state for locals.
  • Some other states like Madhya Pradesh, Tamil Nadu and Gujarat have also demanded similar provisions for employment of locals first in the states.

Provisions of Andhra Pradesh Employment of Local Candidates in Industries/Factories Act, 2019

  • Industries that would come up either in the public sector or in public-private partnerships must reserve 75% of jobs for the locals.
  • The people who forego their land for the development of industries will be given the first preference along with other locals.
  • The act mandates the private industries to hire local workers. If an industrial unit fails to find enough skilled local workers, then it will have to train them in association with the state government.
  • The onus to train locals adequately now falls on the employers.
  • It exempts some key industries in the state like cement, coal and fertilizers.

Other states with similar ‘locals first’ policy

  • Comparable rules were implemented in Karnataka and Himachal Pradesh a few years ago.
  • In Maharashtra, any industry wanting to gets state incentives should have at least 70% local manpower (unskilled labour).
  • In Karnataka, similar laws were brought in 2013 in which IT and biotech industries were exempted by giving them fiscal and non-fiscal incentives.

Does the act Contradict fundamental rights?

  • A Political leader has to act in the parameters of the law while fulfilling the aspirations of the electorate as the equality amongst the citizens of India is the basic feature of Indian constitution.
  • The act threatens the constitutional fabric of the country as it will create social disharmony in the country.
  • Article 16 of the constitution specifically says that no citizen shall, on grounds only of religion, race, caste, sex, descent, place of birth, residence or any of them, be ineligible for, or discriminated against in respect of, any employment or office under the State.
  • However, in this article, there are provisions in which parliament can make a law for the reservation of any backward class of citizens which is not adequately represented in the services under the State.

Comparing with the Domicile reservation in Educational Institutions

  • In 1984, the supreme court, in Dr. Pradeep Jain vs Union of India in 1984 allowed the domicile reservation in the educational institutions at some level.
  • However, the supreme court in the same case said that policy promotion that violates fundamental right is not allowed.
  • The domicile reservation in educational system became a trend in most of the institutions. For instance, The National Eligibility cum Entrance Test-Under Graduate (NEET) exam allows states to make domicile reservation for medical seats.
  • Moreover, the original reservation in India was held only for 20 years, however, it is still prevalent.
  • The supreme court in Indira sawhney case draw the demarcation line about where reservation can be allowed.
  • Students across the country are already facing problems due to the provisions of domicile in educational institutions.
  • In nutshell, issues such as copying the trend of the Andhra Pradesh act in other states could rise leading to internal fragmentation of India.
  • Also, after enforcing such reservation in a state and then after all over the coutnry, it is impossible to control/curb those reservations as it happened with domicile reservations in educational intuitions.

Challenges Andhra Pradesh will face as a result of the Act

  • It will be difficult for the state to attract investors.
  • There is no meaning of this scheme as there is a lack of trained skilled workforce in Andhra Pradesh. Moreover, most of the trained workforce are unemployable.
  • As government do not have enough jobs, there will be soon demand for reservation in private sector as well, which will come along with its own challenges.
  • Post bifurcation of Andhra Pradesh and Telangana, Andhra Pradesh is facing infrastructure problems and the act will increase it.
  • Reservations to locals in private industrial jobs would be counterproductive as industrialists look at returns on investments by hiring meritorious people.
  • At a time when the state is demanding a special status and more funds from the Centre, this act will create more problems for economy of the state.

Negative Consequences of the Act

  • It will jeopardize India’s unity and problems such as local versus outsiders will arise.
  • Region based reservation will promote reservation in private sector since there are no jobs in Government sectors.
  • Localized protectionism will impede and affect growth of not just the respective states but whole India eventually.
  • India has a comparative advantage because of the large pool of labor available, and localizing jobs will negate this advantage.
  • It will stop the migration of laborers from other states with surplus working force which keeps the wages low. This will increase the cost of production, and India’s advantage of being able to create products at lower cost will disappear.
  • The act does not address the issues of a person coming from another state to Andhra Pradesh (due to several reasons).
  • The act was made merely as a fulfilling requirement of a political party without noticing whether it will stand the scrutiny of court.


  • The states can come up with incentives for Private Industries, and urge them to invest in skill development of locals.
  • Lowering electricity charges or land use charges are some of the incentives that the state government can offer to private industries to invest in hiring and training locals.
  • Policies should be framed to bring the best of all of us, from corporate sectors to citizens.
  • The states should create more skill development policies and programs which will make the labor employable.

Way Forward

  • The basis of reservation affirmative action to treat people who are fundamentally unequal. However, such reservation in Anhdra Pradesh will be fatal to the social harmony.
  • Incentivizing the industry and providing capital to deprived sections of the nation for business would be a better approach. For example, Dalit community in Maharashtra were provided with incentives which created jobs for other people.
  • For any business to flourish it must function within well-defined parameters with very clear set out policies, and states should focus more on polices that attract investors with capital.


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