Karnataka becomes the first state to try to decriminalise factory owners' compliance violations

Karnataka is the first state in the country to declare its intent to decriminalise employers' compliance violations, labour issues and removing criminal penalties for procedural lapses—something that can ease the stranglehold of the inspector raj and threats that hang over the heads of the factory owners like the proverbial Damocles sword.

- LAKSHMANA VENKAT KUCHI

State Chief Minister S Siddaramaiah announced plans to introduce the Karnataka Employers' Compliance Decriminalization Bill and the Karnataka Employers' Compliance Digitization Bill to simplify employer compliance requirements that are aimed at simplifying and digitizing employer compliance and removing criminal penalties for procedural lapses. He made the declaration in the budget for 2025-26, which he presented on 7 March, with a clear intent to step up job creation by removing hurdles in the form of various compliance clauses, some of which date back to the British era.

Industry watchers have come out with a cautious welcome of this declared intent, describing it as a step in the right direction, but they are waiting for the details; the devil is often hidden in the details.