States Fight Each Other for Jobs With Laws To Hire Local

A slowing economy and a dearth of new jobs has promptedHaryana, where Gurugram is located, to implement a new law last month that limits private companies from hiring workers from other states.

A short drive from the capital of New Delhi, Gurugram has become one of India's wealthiest cities with business-friendly policies that have attracted multinationals such as Alphabet Inc.'s Google, PepsiCo Inc. and Nestle India Ltd. But suddenly that reputation is at risk. A slowing economy and a dearth of new jobs has prompted Haryana, where Gurugram is located, to implement a new law last month that limits private companies from hiring workers from other states. Passed by a government controlled by Prime Minister Narendra Modi's ruling Bharatiya Janata Party, such laws are quickly becoming popular with other states. The law in Haryana has raised concerns among foreign business groups and prompted them to look elsewhere. One Korean logistics company that recently shifted operations to Gurugram is now drawing up alternate plans because its skilled workforce doesn't meet requirements under the new law. "The current restriction is something opposite of ease of doing business," said Hee Chul Jung, secretary-general of the Korean Chamber of Commerce and Industry in India. "The new regulation could scare future investors away that favor flexibility and a dynamic business environment."