Karnataka Factories Amendment Act – A boon for Technology & Electronics manufacturers

Karnataka Factories Amendment Act – A boon for Technology & Electronics manufacturers

Over the last few months, Karnataka has been making incremental changes to its policies and laws to further attract and accelerate manufacturers to set up shop in the state.

Factors Steering Technology & Electronics Manufacturers Advent to Karnataka:

Recently, the Government of India imposed a ban on the import of laptops, tablets and certain types of computers to restrict the inflow of consignments from technology and electronics manufacturers based in countries like China & Korea. Printers, cameras and hard disks are also suspected to face similar bans[1]. A licensing requirement is also planned for by the government for imports of certain electronics. Union IT minister Mr. Ashwini Vaishnaw has announced that at least 38 international electronics companies have applied to make laptops, tablets and servers under the country’s incentive programmes. Manufacturers such as Foxconn Group, HP, Dell and Lenovo are some of the big names wanting to reap the benefits of the incentive programmes[2].

Another interesting development took place in the early months of 2023. Apple communicated to its suppliers the need to prepare for a significant shift in iPhone production dynamics. Emerging out of the supply-chain crisis as a result of the COVID-19 lockdowns, Apple’s leaders saw a need to protect its future production lines and global supply chain ecosystem. They soon announced that a major step towards this strategy was to focus on augmenting its manufacturing capacity in India, aiming to transform its role from primarily overseeing routine assembly tasks to the creation of more integral mobile phone components. With this, Apple and its major suppliers have committed substantial investment, involving the deployment of numerous R&D units and the collaboration of thousands of engineers[3].

In June 2023, a noteworthy event took place as US President Biden and India’s Prime Minister Modi celebrated the signing of a Memorandum of Understanding (MoU) related to the Semiconductor Supply Chain and Innovation Partnership. This landmark agreement is seen as a substantial advancement in the alignment of semiconductor incentive-based programs between the two nations, fostering opportunities for commerce, research, as well as talent and skill development[4].

India’s appeal as a manufacturing hub encompasses its expansive market, cost-effective labour, and
government-backed production-linked incentives. This contrasts with the recent challenges Apple faced due to a COVID-19 outbreak at Foxconn plants in China, which led to disruptions in production during a crucial period leading up to the Christmas shopping season. These disruptions prompted Apple to function at a significantly reduced capacity.

Luxshare Precision Industry, a prominent electronics supplier from China, made an unsuccessful attempt to acquire smaller iPhone assembly plants in Bengaluru, India, owned by Taiwan’s Wistron. The Tata Group also joined the bidding process. As a facet of Apple’s endeavour to strengthen its local supply chain, the company has allocated orders for iPhone metal casing frames in India. This strategy echoes that of other companies like Xiaomi, Oppo, and Vivo from China, which shifted manufacturing to India to mitigate costs and circumvent import tariffs, aligning with India’s “Make in India” campaign introduced in 2014 to boost domestic manufacturing.

India’s government introduced incentives in 2019 to bolster its National Policy on Electronics, aimed at attracting increased technology investments. Although Foxconn maintains investments in China, it has also committed to investment plans in Bengaluru[5]. 

A New Frontier – Amendment to the Karnataka Factories Legislation

On February 22, 2023, the Factories (Karnataka Amendment) Bill, 2023 was passed by the Karnataka
legislature. This amendment carries several provisions that enables and attracts companies to invest in the state. Among the several changes, the following are key provisions.

1. Section 54 – 4-day work week: The State Government is empowered by notification in the official gazette to extend the number of hours of work from the existing nine hours up to twelve hours inclusive of rest intervals in any day subject to a maximum of 48 hours.

2. Section 55 – 6 hours of work without interval: State Government is empowered by notification to extend the total number of hours of work without an interval to six hours.

3. Section 56 – Spread-over extended to 12 hours: State Government is empowered to increase the spread over upto 12 hours inclusive of workers intervals for rest.

4. Section 65 – Overtime hours per quarter: The overtime limit per quarter stands extended from seventy-five hours to one hundred and forty-four hours.

5. Section 66 – Women allowed to work at night and work overtime.

The Governor of Karnataka had reserved the bill for Assent of the President of India. The bill has received the assent of the President of India on 10th July 2023. Thus, the bill has become an Act, and the amendment gets incorporated into the respective section of the Factories Act.

Amendments to Sections 54, 55, 56 can be implemented only after the Government of Karnataka frames the rules. The other provisions would come into force with effect from 07th August 2023 (date on which the amendment notification was published in Karnataka Gazette)[6].

These changes are anticipated to facilitate and accelerate the entry of technology and electronics manufacturers into Karnataka.

While these amendments are largely hailed by employers as a positive development, concerns persist about the potential for employee exploitation. The overarching question remains whether these changes will inadvertently lead to the mistreatment of workers.  The expectation is mainly the enablement & expansion of manufacturing output in Karnataka. On the flip side, it can further compound existing challenges for employers and workers like:

  • Non-payment / irregular payment of overtime wages for increased overtime work by the workers.
  • Not ensuring necessary safety measures for the employment of workers during night shifts.
  • Engagement of workers on weekly, national & festival holidays.
  • Workers engaging in dual employment with direct competitors.

Striking a Balance

In conclusion, the recent amendments to the Factories (Karnataka Amendment) Act, 2023 represent a significant milestone in Karnataka’s efforts to attract technology and electronics manufacturers to the state. These changes, particularly the provisions related to extended working hours, overtime limits, and allowing women to work at night, are designed to enhance the state’s appeal as a manufacturing hub.

While these amendments may provide employers with greater flexibility to meet production targets, it is crucial to strike a balance between increasing productivity and safeguarding the rights and well-being of workers. The principle that should guide these developments is that employers should not transition towards exploiting workers in their pursuit of higher production levels and/or increasing profits.

In the long run, a harmonious and fair working environment benefits both employers and workers. It fosters loyalty, productivity, and a positive corporate image. Therefore, while embracing these legislative amendments and the opportunities they present, it is essential for employers to remain committed to upholding workers’ rights, safety and well-being, ensuring a mutually beneficial relationship that drives sustainable growth in Karnataka’s technology and electronics manufacturing sector.

[1]https://www.moneycontrol.com/news/business/after-laptops-tablets-centre-may-impose-import-curbs-on-printers-and-cameras-11152821.html

 

[2]https://www.telegraphindia.com/business/at-least-38-international-electronics-companies-apply-to-indias-incentive-programme/cid/1962726

[3]https://asia.nikkei.com/Spotlight/The-Big-Story/Inside-Apple-s-India-dream

[4]https://www.whitehouse.gov/briefing-room/statements-releases/2023/06/22/joint-statement-from-the-united-states-and-india/

[5]https://asia.nikkei.com/Spotlight/The-Big-Story/Inside-Apple-s-India-dream

[6]https://erajyapatra.karnataka.gov.in/WriteReadData/2023/6043.pdf

– Sumanth Nagaraj,

Advocate & Senior Associate

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B. Chandrashekar Shetty - Advocate

Mr. Chandrashekar Shetty is a Senior Labour Law Compliance Auditor at BCP Associates and has audited multiple client companies across India. He is also a member of our senior legal advisory practice. Previously he has worked as Deputy Controller, Manager-Industrial Relations and Industrial Relations Officer in KPTCL, Bangalore for more than 30 years. Prior to this, he has dealt with Legal, Personnel and IR matters including Wage Settlements, Grievance Machinery, Manpower Study and Social Security Compliances for about 10 years. He is a Faculty member of Labour Law, HRD Centre, KPTCL Bangalore.

Mr. Shetty holds a B.Com. and L.L.B. degree, Post-Graduate Diploma in Business Administration, Diploma in Public Relations from Bangalore University and PG Diploma in Industrial Relations & Personnel Management from Bharatiya Vidya Bhawan. He is enrolled as Advocate in Karnataka Bar Council and is a Govt. Arbitrator of Chit Funds in Karnataka.

S Venugopal Rao

S Venugopal Rao is an experienced labour law and service matters expert and is a member of the senior advisory team at BCP Associates. Having joined the chambers of Mr. B C Prabhakar in 2012, he is knowledgeable and well versed in multiple employment and labour law topics.

S Venugopal Rao holds a Bachelor’s degree in Science from Karnataka University, Dharwar and Bachelor of Law from Bangalore University. He enrolled as advocate in Karantaka State Bar Council in 1976. He joined the chamber of Sri. Kolachalam Srinivasa Rao a leading civil advocate. After practicing for 6 years at Ballari, he joined Orient Paper Mills, Orissa (of G P Birla Group). He was designated as Manager (Law) under the Factories Act in 1995. In 1999, he joined Andhra Pradesh Paper Mills Rajahmundry as Manager Legal and was subsequently elevated as Dy. General Manager (Legal). As Factory Manager & Legal Head, he oversaw compliance of Factories Act and Rules there under towards safety, health and welfare, including compliance under Pollutions and Environmental laws and Explosives Act, etc. Additionally, he is well acquainted with Environment Management System ISO 14001: 2004, Occupations, Health and Safety Series 18000:1999. As Legal head in APPM he has briefed and appeared along with Senior Advocate before Appellate Authority constituted under Water (Prevention & Control of Pollution) Act. He retired from the services of Andhra Pradesh Paper Mills in 2011.

As legal head he has handled important cases both in Labour and Civil and has experience in drafting and vetting Contracts, Agreements, Lease Agreement, Conveyance Deeds, , Affidavits and scrutiny of several legal and other documents, Preparing and settling Petitions, Appeals, Plaints, Written Statements, Rejoinders, Affidavits and Written Arguments etc. for submission/pleadings for various legal proceedings.

C K Devappa Gowda - Advocate

C.K. Devappa Gowda (CKD) is an Advocate and Labour Law expert. He holds a Bachelor’s Degree in Science from the University of Mysore and a Degree in Bachelor of Law from Bengaluru respectively. He also holds a Diploma in Social Service Administration from the National Institute of Social Science, Bengaluru. After completing his studies, he had enrolled as a Advocate and initially practiced in the Civil Code attached to the office of BCP. He then worked as Personnel Officer in Chemicals and Textile Manufacturing Industries for 5 years. Thereafter took up employment in one of the largest Public Sector Bank. He has worked in different parts of the country and has extensive experience in the cross country IR domain. The significant part of his service was at corporate level overseeing and implementing HR policies and practices and management of IR. He has been a member of personnel committee of Indian Bank Association.

After retirement from service, Mr. Gowda has been working with Mr. BC Prabhakar’s firm for the last 12 years. He has expertise in all areas of people management, drafting of documents relating to service matter including the settlements under the ID Act. He has dealt with all employment laws including appearance before the Courts, Tribunal and Authorities under the different Labour Laws. Mr. Gowda is one of the senior Labour Law experts at BCP Associates.

Srijatha Ghosh - POSH Specialist & Advocate

Srijata Ghosh serves as external member on the Internal Committee of several Companies across various sectors. She handles all kinds of POSH related matters including investigations and inquiries. She provides Training on Sexual Harassment across all verticals for Managers and Senior Management, General Awareness for all employees and Internal Committee members on the legislation (The Sexual Harassment of Women at Workplace Prevention, Prohibition and Redressal Act, 2013). She also formulates Policies for Prevention of Sexual Harassment at Workplace (“POSH”) and advises Companies on setting up of their Internal Committees. Srijata is involved in providing Legal Advisory services on POSH and other labour law matters for various clients.

In her previous experience, she has extensively dealt with End-to-End Contract Management, Due Diligence, POSH Compliances, Legal Advisory, etc. Srijata worked with Companies like Accenture India Private Limited, Quess Corp., Capgemini Business Services (India) Limited and Pramata Knowledge Solutions Private Limited. Srijata has handled varied legal issues including drafting, vetting and negotiation of contracts, drafting policies of various organizations. She has resolved issues relating to employment laws and has worked closely with the HR teams. She has provided legal advisory services to senior management. She was also associated with Kolkata High Court in counselling clients with legal matters such as Property, Due Diligence etc. Srijata has worked in an LPO Service Firm, Manthan Legal Services Private Limited for Legal Research, depositions, medical summaries, demand drafting etc.

Srijata completed her B.A.LL.B from M. S. Ramaiah College of Law, Bangalore University in 2009. Srijata is a member of the Karnataka Bar Council since 2010. She is also a member of the Gender Sensitivity Sub Committee of Karnataka Employer Association (KEA).

Caroline Lobo - POSH Specialist & Advocate

Caroline Lobo has been with BCP Associates for the past 2+ years. She has been handling matters and Inquiries related to the POSH Act including conducting inquiries and trainings/awareness programmes for Senior Management, employees as well as members of the Internal Committee on the POSH Legislation (The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“Act”) to address Workplace Harassment of Women. She is a member of the Internal Committee for many varied companies and organisations and has reviewed and scrutinized numerous hearings and inquiries on matters relating to sexual harassment at workplace.

She has also handled matters relating to employer-employee related Enquiries, wherein she has reviewed and conducted hearings and enquired into the matters and has guided the Internal Committee and provided guidance in providing recommendations to the management. She is also a Member of the Gender Sensitivity Sub-committee of Karnataka Employer Association (KEA).

Prior to joining BCP Associates, Caroline has has a wide range of experience in corporate, commercial and contract law, mergers and acquisition and has undertaken drafting, vetting, negotiating and finalizing legal and commercial transactions. She started her career in litigation then moved onto the Corporate sector. In the span of 13 years, she has worked at Chambers of Advocate Jayashree Murali, Krishnamurthy and Co. Legal Consultants, Colt Technology Services and Oracle India Pvt. Ltd. She always had a keen interest in Women and Child related issues. She has worked with Child Welfare Committee and NGOS’s. In addition, she has worked with Swasthi Health Resource and Centre, where she was the External member to the Internal Committee (IC). She worked closely with the committee in strategizing, planning, reviewing and implementing the assigned tasks, which included building material to raise awareness against sexual harassment at workplace. Further, she has been involved in conducting inquiries into matters related to sexual harassment at workplace.

Caroline earned her Law degree from University Law College, Bangalore, from where she graduated in the year 2005.

Manoj Kumar – Senior Associate

At BCP Associates, Manoj Kumar is involved in managing and conducting labour law compliance audits of principal employer and contractors. He is also involved in client co-ordination and conducting labour law training programs for vendors. He has conducted on-ground labour law audit for factories. Manoj also provides support in advising vendor clients on labour law queries. He completed B.A., LL.B. from BMS College of Law, Bangalore in 2016.

Rashmitha Venkatachalam Das - POSH Specialist & Advocate

Rashmitha Venkatachalam Das is the External Member of the Internal Committee of several reputed Organizations across various sectors. Handling complex inquiries has been her forte and she is extremely passionate about it. She is actively involved in providing Training on Sexual Harassment (Prevention, Prohibition and Redressal) Act, 2013 across all verticals for Managers and Senior Management, General Awareness for all employees and Internal Committee members. Rashmitha possesses capabilities in delivering sessions in Hindi and Kannada, in addition to English. She has formulated Policies for Prevention of Sexual Harassment at Workplace (“POSH”), advised companies on setting up of their Committee. Rashmitha is involved in providing Legal Advisory services on POSH for various clients spread across diverse sectors. She has also been handling domestic enquiries for various clients. 

Rashmitha possesses experience both at Law Firms and Corporates in various capacities. She started her career at Krishnamurthy and Co, Legal Consultants and then moved on to work as an In- House Legal Counsel with Companies such as Biocon Limited, Columbia Asia Hospitals Private Limited, Adecco India Private Limited. With a long stint in the Corporate side, Rashmitha decided to pursue further education in Law with a specialization in Labour and Employment Laws. She has rich experience in drafting, vetting and negotiation of various types of contracts, providing legal opinions and has driven the team in formulating process and procedures and their implementation. She has drafted several employment related policies in Corporates. Rashmitha has been a part of various key committees in Organizations and assisted committees in scrutiny of documents pertaining to human organ transplant as well as clinical trials.

Rashmitha holds an LL.M. in Labour and Employment Laws from University Law College, Bangalore, which she completed in the year 2018 with Two Gold Medals. She is also a Rank Holder at the University. She has completed BA, LL.B. from Bangalore Institute of Legal Studies, Bangalore University in the year 2009. Rashmitha is a member of the Karnataka Bar Council since 2009 and also a member of the Gender Sensitivity Sub Committee of Karnataka Employer Association (KEA).

Manisha Vidyadhar – Senior Associate

At BCP Associates, Manisha Vidyadhar is involved in managing and conducting labour law compliance audits of principal employer and contractors. She is also involved in client co-ordination and conducting labour law training programs for vendors. She has conducted on-ground labour law audit for factories. Manisha also provides support in advising vendor clients on labour law queries.  She completed B.A., LL.B. from BMS College of Law, Bangalore in 2016.

Amrutha Ananth – Principal Associate

At BCP Associates, Amrutha is a part of the Legal Advisory practice, Legal Audit practice and Labour Code Alignment Programme (LCAP). Amrutha specialises in Labour and Employment Laws and compliance having advised some of India’s leading companies for some of their most complex labour law matters.

Amrutha has more than seven years of experience in labour and employment law and has conducted several audits for both, principal employer and contractor for various leading IT/ITES companies, manufacturing sectors like pharma, automobile, construction and start-ups.

She is actively involved in drafting and reviewing employment contracts, HR policies, Employee Handbook, show cause notice, etc. for various organizations spread across diverse sectors. As a part of the Labour Code Alignment Program, she assists companies in review and alignment of their existing wage and employment policy with the provisions of the Labour Codes.

Sunil Arya – Principle Associate

At BCP Associates, Sunil Arya is part of the labour and employment law advisory and HR Policy practice and is actively involved in drafting and reviewing of employment contracts, opinions, HR policies, employee handbook, show cause notice, etc. for various clients spread across diverse sectors. He conducts training on labour and employment laws. Sunil is also involved in labour law compliance audits of principal employer and contractors and has conducted on-ground labour law audit for factories. In addition, he is engaged in knowledge creation and management of the firm and keenly writes on developments in labour and employment laws.

Prior to joining BCP Associates, Sunil has 10 years of post-qualification experience in diversified portfolios of advisory, drafting, policy analysis and dispute in the domains of contracts, general civil matters, employment law, competition law and construction arbitration matters. Sunil started his career as a Law Researcher in Delhi High Court. He moved on to be part of regulatory analysis team of CIRC, a unit of CUTS International. In addition, Sunil has been part of legal team of Jindal India Thermal Power Limited. He has also taught competition law, tax law and investment law at VIPS, Delhi.

Sunil holds LL.M. from The Indian Law Institute, Delhi. He is First Rank Holder in his thesis. He completed B.A, L.L.B. (Hons.) from I.P. University, Delhi. He also holds First Rank in P.G. Diploma in Competition Policy and Laws from The National Law University, Delhi.

Chandrakala K A – Principle Associate

At BCP Associates, Chandrakala has 12+ years of experience in conducting and managing labour law compliance audits of principal employer and contractors. She is also involved in co-ordination with many clients. She has conducted on-ground labour law audit for factories. She also provides support in advising vendors on labour law queries. Chandrakala is actively involved in research and providing valuable inputs to the firm pertaining to updation in labour law audit function.

Chandrakala started her career in litigation in chamber of Sri. Ashok where she was involved in drafting, pleading and appearance before Karnataka High Courts and lower courts on the criminal side.

Chandrakala completed B.A in Arts from Kuvempu University, Shimoga in 2003 and LL.B. from Mangalore University in 2006.