Posted by: John Elliott | September 24, 2008

“Indian govt backs workers who killed boss” – arrests follow a day later

Violence is becoming more prevalent as Indian workers protest against their lot – usually over the transfer of agricultural land to industry and property speculators (which has finally led to Tata Motors moving its Nano car production out of West Bengal).

But not for many years has the ceo of a business been killed by angry workers (in the past there have been killings on tea estates in the north-east). Yet that is what happened on September 22 in Delhi’s satellite city of Noida, when Lalit Kishore Chaudhury, the chief executive of Graziano Trasmissioni India, an Italian auto parts company, was beaten to death at his office.

A dreadful tragedy for Mr Chaudhury’s family, the killing is also a blow for India’s image abroad. “Is this what happens when executives upset their workforce,” company headquarters overseas will be asking. “Is there no police protection quickly available when situations become violent?”

Yet  Oscar Fernandes, India’s Labour Minister, chose yesterday to criticise foreign managements in remarks widely reported this morning.  “Indian govt backs workers who killed boss” was the headline on the AFP news agency story.

“This should serve as a warning for the managements,“ he said.

“It is my appeal to the managements that the workers should be dealt with compassion. There are disparities in the wages of permanent employees and contract workers. The workers should not be pushed so hard that they resort to whatever happened in Noida.”

That was crass, and surprising coming from an experienced (Congress Party) politician. We have not yet heard what the problems were at Graziano that led to such a serious labour dispute and Monday’s extreme violence – but, whatever they were, Mr Fernandes could have done better. He made a valid point about gaps between wages of contract workers and permanent employees, but yesterday was not the time to say it.

He has now been firmly criticised by top businessmen and industry federations, and has apologised. More than 100 people have been jailed, some charged with killing and others with rioting.

But that is not the end of the affair. It appears that the company warned the government about its labour problems that have been rumbling for nearly a year, and apparently received no help. So what till recently seems to have been a successful auto parts company, part of the Oerlinkon Graziano group, has been seriously let down.

Foreign companies will have learned of another peril of investing in India.


Responses

  1. I read about this in an article titled “India, When Can it Get any Worse” at http://economicefficiency.blogspot.com/2008/09/india-when-it-cant-get-any-worse.html

    This violence and intimidation is going to make India a pariah state for FDI and businesses won’t take Indian companies seriously.

    It is truly a bad time for Indian commerce.

  2. The rule of law is breaking down here, especially in “wild-west” Gurgaon and the Noida badlands. This will be a severe disincentive for local and overseas business.


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