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2026.04.07
India’s reservation system is an affirmative-action policy that secures quotas for specific categories in education, employment, and political participation, aimed at correcting the historical discrimination caused by the caste system. It is known as a system that predates the United States’ affirmative action.
This article explains in detail how the reservation system works, the categories it covers, its historical background, its scope, its advantages and disadvantages, and its practical impact on Japanese companies. An overview of the caste system together with it to deepen your understanding.
The reservation system (Reservation) sets aside a fixed proportion of places in education, government jobs, and legislative seats for social groups that have historically faced discrimination. Its legal basis is Article 15(4) and Article 16(4) of the Indian Constitution.
At the root of the reservation system is a corrective response to thousands of years of structural discrimination under the varna (caste hierarchy) system. Dalits (formerly known as “untouchables”) and other people from lower castes have historically been excluded from education, career choice, and political participation alike. The system’s basic philosophy is that legally banning discrimination alone is not enough, and that affirmative measures are needed to achieve substantive equality.
B. R. Ambedkar, the principal drafter of the Indian Constitution, was himself a Dalit, and his strong convictions shaped the design of this system. It was originally introduced as a temporary measure for ten years, but due to the depth of the discrimination it addresses, it has been extended repeatedly and continues today.
The reservation system’s targets fall into four main categories, together securing quotas amounting to about 59.5%.
| Category | Abbreviation | Reservation quota | Example groups covered | Share of population (estimated) | Basis |
|---|---|---|---|---|---|
| Scheduled Castes | SC | 15% | Dalits (formerly “untouchables”) | About 16.6% | At the time the Constitution was adopted (1950) |
| Scheduled Tribes | ST | 7.5% | Indigenous peoples (Adivasi) | About 8.6% | At the time the Constitution was adopted (1950) |
| Other Backward Classes | OBC | 27% | Socially and educationally backward classes | About 41% (estimated) | Mandal Commission recommendation (implemented in 1990) |
| Economically Weaker Sections | EWS | 10% | Upper-caste households with an annual income below 800,000 rupees | — | The 103rd Constitutional Amendment (2019) |
| Total | — | 59.5% | — | — | — |
In its 1992 ruling in the Indra Sawhney case, the Supreme Court set a cap stating that the combined reservation quota for SC, ST, and OBC must not exceed 50%. The EWS quota (10%) added in 2019 sits “outside” this 50% cap, bringing the total to 59.5%.
The reservation system was not created all at once; it has a history of gradual expansion spanning more than 70 years.
The Indian Constitution, adopted in 1950, abolished untouchability under Article 17 while simultaneously introducing a reservation system for SC (Scheduled Castes) and ST (Scheduled Tribes). The 15% SC quota and 7.5% ST quota roughly correspond to each group’s share of the population.
Ambedkar designed the reservation system as a “temporary measure,” intended to become unnecessary once discrimination was eliminated. In practice, however, the depth of the discrimination has meant it has been extended every ten years ever since.
The biggest turning point for the reservation system was the implementation of the Mandal Commission’s recommendations in 1990. The report submitted by the B. P. Mandal Commission in 1980 recommended setting a 27% reservation quota not only for SC/ST but also for OBCs (Other Backward Classes).
When Prime Minister V. P. Singh announced the implementation of this recommendation in 1990, it triggered a fierce backlash from upper-caste communities. A wave of self-immolations by university students followed, along with large-scale riots across the country. In 1992, the Supreme Court upheld the constitutionality of OBC reservation in the Indra Sawhney ruling, but capped the combined reservation quota at 50% and attached a condition excluding the economically well-off “creamy layer” within the OBC from receiving the benefit.
In 2019, the Modi government created a new 10% reservation quota for Economically Weaker Sections (EWS) through the 103rd Constitutional Amendment. It targets “upper-caste” households with an annual income below 800,000 rupees (roughly 1.4 million yen).
This measure is aimed at relieving economically disadvantaged members of the upper castes who do not belong to SC, ST, or OBC, and it is the first reservation quota based on economic status rather than caste. The Supreme Court upheld its constitutionality in 2022, but there remains persistent criticism that it “departs from the original purpose of the reservation system, which is to correct caste-based discrimination.”
In August 2024, the Supreme Court ruled 6-1 to allow state governments to create finer sub-classifications (setting priority order) within the SC/ST categories. This measure recognizes that disparities exist within SC/ST and allows quotas to be allocated with priority to the most disadvantaged sub-groups. The ruling was also accompanied by an opinion that the “creamy layer” concept applied to OBCs should be introduced for SC/ST as well.
| Year | Event | Impact |
|---|---|---|
| 1950 | India's constitution enacted | SC 15% and ST 7.5% reservation quotas established |
| 1980 | Mandal Commission report submitted | Recommends a 27% quota for OBC |
| 1990 | Prime Minister V. P. Singh announces implementation of the Mandal recommendation | Large-scale backlash and riots among upper castes |
| 1992 | Indra Sawhney Supreme Court ruling | Upholds OBC reservation as constitutional, subject to a 50% cap and exclusion of the creamy layer |
| 2019 | 103rd Constitutional Amendment | Creates a new 10% EWS quota (outside the 50% cap) |
| 2022 | Supreme Court rules the EWS quota constitutional | Economic-status-based reservation confirmed |
| 2024 | Supreme Court allows sub-classification within SC/ST | Opens a path to correcting disparities within SC/ST |
The reservation system is applied in three areas: education, employment, and politics. However, the scope and enforceability differ by area.
National and state universities and graduate schools set aside admission quotas of 15% for SC, 7.5% for ST, 27% for OBC, and 10% for EWS. This also applies to elite institutions such as the IITs (Indian Institutes of Technology) and IIMs (Indian Institutes of Management). Private universities that receive government subsidies are also subject to the reservation quotas.
The same reservation quotas apply to recruitment for civil service positions at both the central and state government levels. Reservation quotas for SC/ST also exist in promotions, though this remains a continuing subject of litigation.
For legislative seats, 84 of the 543 constituencies in the Lok Sabha (the lower house) are reserved for SC and 47 for ST. In these constituencies, only candidates from the corresponding category may stand for election. There is no seat reservation for OBC or EWS.
Under current law, there is no mandatory application of reservation quotas to private companies. However, some states (such as Haryana and Jharkhand) have enacted state laws requiring reservation quotas in local hiring by private companies. Cases where foreign companies, including Japanese firms, are directly affected remain limited for now, but future legislative developments are worth watching closely.
India's labor laws is amended frequently, so it is important to stay on top of the latest regulations.
Over its more than 70-year history, the reservation system has achieved certain results, but it has also created serious social divisions.
| Aspect | Advantages (arguments from supporters) | Disadvantages (arguments from critics) |
|---|---|---|
| Education | Higher university enrollment rates among SC/ST | High dropout rates after admission |
| Employment | Increased share of SC/ST in the civil service | Criticism that merit-based selection is undermined |
| Politics | Has produced presidents of Dalit background | Reinforces fixed caste-based voting blocs |
| Society | Formation of a middle class among lower castes | Can end up reinforcing caste consciousness instead |
| Economy | Expanded economic participation among the poor | Benefits tend to be skewed toward the “creamy layer” |
The reservation system has produced clear results in raising the social standing of SC/ST. Two presidents of India (K. R. Narayanan and R. N. Kovind) have come from Dalit backgrounds, and more SC/ST students are gaining admission to the IITs and IIMs. A new middle class is emerging within SC/ST, and the system has been shown to help break the cycle of poverty across generations.
At the same time, the reservation system is constantly subject to “reverse discrimination” criticism from upper-caste communities. In 2016, the Patel (upper-caste) community in Gujarat staged large-scale protests demanding OBC status, which contributed to the addition of the EWS quota in 2019.
Three criticisms of the system come up most often: that its benefits concentrate on the wealthier “creamy layer” within SC/ST/OBC and fail to reach the most disadvantaged; dissatisfaction that selection is based on caste rather than merit; and the concern that political maneuvering around reservation quotas is, ironically, reinforcing caste consciousness.
The reservation system also indirectly affects the operations of Japanese companies in India. Hiring Talent in India, it is important to understand the following points.
The legal obligation for reservation quotas at foreign-owned private companies is currently limited. However, when bidding on government projects or participating in public procurement, vendor companies may also be required to comply with SC/ST-related requirements. In addition, some state laws are moving toward mandating reservation quotas in local hiring by private companies, so it is necessary to check the state law where you plan to operate.
Even without a legal obligation, hiring a diverse workforce has a direct bearing on corporate image and ESG evaluation. Investors and partners in India are placing growing importance on a company’s commitment to diversity. Understanding the purpose behind the reservation system and voluntarily formulating your own diversity policy is Failures in entering the India market one key to avoiding it.
Under current law, there is no direct mandatory application to foreign-owned private companies. However, you may be affected through participation in government procurement or by certain state laws (such as in Haryana). Since future legislative changes could expand the scope of application, it is important to keep track of the latest developments.
The 50% cap set by the 1992 Supreme Court ruling applies to the combined SC/ST/OBC quota (49.5%). The EWS quota (10%) added in 2019 sits “outside” this cap, which is why the total comes to 59.5%. This structure was upheld as constitutional by the Supreme Court in 2022.
It refers to the economically well-off segment excluded from OBC reservation. Households with an annual income above 8 lakh rupees (1 lakh = 100,000 rupees) — that is, 800,000 rupees, or roughly 1.4 million yen — do not receive the benefit of the OBC quota. The 2024 Supreme Court ruling was accompanied by an opinion that this creamy-layer concept should also be introduced for SC/ST.
The reservation system is an affirmative-action policy that sets aside a fixed proportion of places such as admission to educational institutions, civil service posts, and legislative seats for specific categories, in order to correct the historical discrimination caused by the caste system. The Indian Constitution is its legal basis.
The main categories are Scheduled Castes (SC), Scheduled Tribes (ST), Other Backward Classes (OBC), and Economically Weaker Sections (EWS). Each was introduced at a different point in history, and together they secure a substantial share of quotas.
A Supreme Court ruling set a cap on the combined reservation quota for SC, ST, and OBC. Because the EWS quota, added later, sits outside this cap, the overall total ends up exceeding it.
The creamy layer refers to the economically well-off segment excluded from OBC reservation. Households above a certain income level do not receive the benefit of the OBC quota. The concept was introduced to address the problem of benefits failing to reach the most disadvantaged.
Supporters point to results such as higher university enrollment and civil-service representation among SC/ST. Critics argue that merit-based selection is undermined, that benefits skew toward the better-off, and that the system can end up reinforcing caste consciousness. Movements calling for an expansion of reservation quotas also arise from time to time.
Under current law, there is basically no direct mandatory application to private companies, including foreign-owned ones. However, compliance may be required when bidding on government projects or in public procurement, and some states have laws requiring reservation quotas in local hiring by private companies. It is necessary to check the state law where you plan to operate and stay current on legislative developments.
India’s reservation system is one of the largest affirmative-action policies in the world, aimed at correcting caste-based discrimination. Here is a recap of the key points covered in this article.
An overview of the caste system, The Reality of Dalits, The Basics of Varna together with this article to build a fuller understanding of the structure of Indian society.
[References and sources]
-JETRO, "India Overview"
-Government of India"Constitution of India"
-Wikipedia"Reservation in India"
-Wikipedia"Mandal Commission"
-Wikipedia"Indra Sawhney v. Union of India"
-Drishti IAS"Reservation in India"
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