California's Democratic Governor, Gavin Newsom, has vetoed a bill banning caste discrimination.
Advocates had argued the bill would protect people of South Asian descent who had been treated unfairly.
Mr Newsom said the state already banned discrimination based on religion, origin and other characteristics. "Because discrimination based on caste is already prohibited under these existing categories, this bill is unnecessary," he said in a statement.
The caste system in India, which dates back more than 3,000 years, divides Hindu society into rigid hierarchical groups. India banned caste discrimination more than 70 years ago, although biases persist, especially against the Dalits, once called "untouchables".
California lawmakers voted 31-5 last month to approve the first state-wide bill explicitly banning caste discrimination. It was sponsored by Democratic state senator Aisha Wahab, who sought to add caste as a protected category in the state's anti-discrimination laws alongside gender, race, religion and disability.
It came after Seattle became the first US city to ban caste discrimination in February. In California, home to one of the largest South Asian populations in the US, the caste bill had been met with both praise and backlash from some community members.
Public hearings about the bill lasted hours and brought out hundreds of residents. The Hindu American Foundation described the measure as a divisive bill that singles out South Asians.
In a statement following the veto, the foundation said that Mr Newsom had averted a civil rights and constitutional disaster that would have put a target on hundreds of thousands of Californians simply because of their ethnicity or their religious identity. Several Republican lawmakers who opposed the bill had echoed those arguments, saying discrimination was already prohibited under state law and the latest measure would lead to racial profiling of South Asian Californians.
The bill's supporters had included Dalit civil rights organisation Equality Labs, which launched a hunger strike last month to push for the bill to be passed. They said Dalits have faced harassment, biases and workplace discrimination in the US from upper-caste people.
In 2020, the technology company Cisco was sued by the state after two high-caste Indian managers allegedly discriminated against a Dalit engineer, paying him a lower salary. The case was dismissed in April by order of the court.
