Corporates seek exemption from state on job reservations

Korean chaebol LG asks for a written undertaking from Maharashtra

Private companies have sought a written undertaking from the Maharashtra government that they will not have to reserve 52 per cent of their annual jobs requirements for the backward classes.

The state government's recently enacted legislation ""- The Maharashtra state public services (reservation for scheduled castes, scheduled tribes, denotified tribes, nomadic tribes, special backward category and other backward classes) Act, 2001 "" seeks just this.

Confirming this, a senior government official told Business Standard: "Corporates such as fast moving consumer goods (FMCG) major LG have communicated to us that they need a written undertaking that the job reservations policy of the state would not be applicable to them.

Similarly, all industry chambers "" the Maharashtra Chamber of Housing Industry, the Indian Merchants Chamber, the Confederation of Indian Industry and the All India Association of Industries "" have also opposed the applicability of the Act to the private sector."

When contacted Y V Verma, head, human resources, at LG Electronics said: "We have verbally communicated to the state government that it should take a relook at its Act." Asked if LG would think of relocating its planned plant in Maharashtra elsewhere, Verma said, "I would not like to make a public statement on this."

LG Electronics' plant at the Ranjangaon industrial township near Pune is expected to start rolling out airconditioners, televisions and refrigerators next month, according to a recent company statement.

The government official said that the state government had held its first hearing with industry associations recently to understand their reservations about the new Act. "One of the things that these corporates are seeking to know is what exactly constitutes 'financial concessions to industry' as mentioned fleetingly in the Act.

"A corporate like LG, for instance, has taken no financial concessions. However, even it wants to know whether the land it purchased from the Maharasthra Industrial Development Corporation (MIDC) could be construed as a concession under the Act," the official said.

According to a senior official at the law and judiciary department, the Act is enforceable across the board for all companies.

"The Act is in force. However, this does not mean that companies across the board have to begin recruiting employees of reserved category. They have an option not to do so if they do not seek any incentives, concessions in land rates and similar assistance from the state government. The two clauses of the Act (stated above) have to be read along with the enabling provision in the Act where it is clearly mentions that the reservation in corporate jobs would be incorporated as a condition for compliance by the state government while entering into or renewing an agreement with any establishment for the grant of aid by the government," he said.

The Act seems to also have a bearing on various other companies set up in Maharashtra Industrial Development Corporation (MIDC)-created industrial townships across the state, besides those eligible for major incentives (such as sales tax exemptions) as they are to be housed in the special economic zones to be set up in Navi Mumbai and other parts of the state.