Global Firms Meeting Local Customs Triggered the Conflict in India's Auto Industry

'Making Cars in the New India' fills an important gap in our knowledge about the new phase of labour and industrial relations in the country.

“The core aim of this book,” says the author Tom Barnes – who is described as an economic sociologist working at the Australian Catholic University in Melbourne – “is to explain why Indian manufacturing has experienced such high level of industrial, social and political conflict in recent years.”

The research conducted by the author is meticulous. The table listing industrial strife since 2000 is most instructive as far as strikes are concerned. But that’s not the end of the story because the author also says that “different forms of conflict have shaped industrial development”. These comprise “commercial conflict between firms, industrial conflict between employers and workers, social conflict between groups of workers from different regions and different castes, institutional conflict involving labour market intermediaries and trade unions and political conflict between firms, workers and state institutions”.

The chief reason why industrial relations have worsened is that global firms have come into contact with local customs. While by and large things have been peaceful, it is only recently that the friction has worsened. Barnes tells his story around the violent incidents at the Manesar plant of the Maruti-Suzuki where in 2012 a manager was killed.

Tom Barnes
Making Cars in the New India: Industry, Precarity and Informality
Cambridge University Press, 2018

According to Barnes, the origin/s of the industrial relations problem can be traced back to the decade of 1990-2000 when Maruti started to “reduce the benefits given to its unionised workforce.” Then, when the unions protested, it began to replace permanent workers with contract/casual labour. These seem to come in different shapes starting with the contract worker at the top of the status chain and ending with the apprentice at the bottom going through the casual worker, the undeclared worker and the trainee. All are impacted, says Barnes.

Tom Barnes. Credit:

There is a detailed discussion of this process and it makes for interesting reading.

What is missing, however, is a detailed discussion of the original sin, the Industrial Disputes Act and its use by trade unions, both Marxist and no-Marxist to insist on benefits without much concern for productivity. An analysis of this would have added to the book’s value.

There is a chapter called ‘Work and Life at the Bottom of the Auto Supply Chain’ which is useful for understanding the dynamics of worker-employer relationships in low capital-intensive firms. What has happened, says the author, is that very basic manufacturing units have mushroomed in what were rural areas. The landowners have built slums for the daily wage workers. The result is a Dickensian world which is not nice at all.

But since the average wage for skilled workers tends to be around Rs 8,000 per month and about half that for unskilled ones, we get into Arthur P. Lewis’s world of economic development with unlimited supply of labour and the broad Left economists’ world where while profits tend to equalise across borders, wage rates don’t. A chapter on these theories would have provided a much-needed context for the book which contains a wealth of micro detail. Some discussion of the macroeconomic variables – interest rates and exchange rate in particular – would also have been helpful. The absence of substantive economic content weakens the book, which appears to be a slightly revised version of a PhD thesis. It lacks in some much-needed context for that reason.

That said, it fills an important gap in our knowledge about the new phase of labour and industrial relations in India. For that reason alone, the joint secretaries who deal with the auto industry and those who deal with labour relations should read it.

T.C.A. Srinivasa-Raghavan is a retired journalist.

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