Maruti, Hero Shut India Plants Amid Strike Over Singh Revamp

Maruti Suzuki India Ltd. and Hero MotoCorp Ltd. said they will shut their factories tomorrow as a nationwide strike called by trade unions disrupted public transport and other services in parts of India.

Maruti, the nation’s biggest carmaker by volume that witnessed labor riots in July at one of its facilities near New Delhi, said in a text message that its plants in Gurgaon and Manesar will be closed after a call for a two-day strike by workers’ groups opposed to rising prices and the government’s economic agenda. Hero, the biggest motorcycle maker, said in an e-mail statement that its facilities in Gurgaon and Dharuhera near the capital will remain shut “keeping in mind the safety and best interests of our employees.”

The impact of the industrial action that started today varied across the country, in part a reflection of the local power of left-leaning political parties and affiliated unions. Taxi and auto-rickshaw drivers joined the stoppage in New Delhi while markets and restaurants were closed in the southern state of Kerala and eastern Odisha. In West Bengal, until 2011 run by a coalition of Marxist parties, shops were mostly open while bus services were hit.

Mixed Response

The strike is the latest in a string of protests Prime Minister Manmohan Singh has faced since the end of 2010 as issues ranging from inflation and alleged corruption to the opening of the economy to more foreign investment stirred dissent. The budget session of parliament begins tomorrow as the government fends off the damage from charges in Italy that bribes were paid for an India order of helicopters from defense contractor Finmeccanica SpA. The budget for the next financial year will be unveiled on Feb. 28.

“The response to the strike is very mixed” as the demands of the trade unions are neither “focused nor convincing,” said N. Bhaskara Rao, chairman of the New Delhi-based Centre for Media Studies. “But that does not mean that public anger against the government has subsided, particularly on price rises.”

Flights at New Delhi’s airport haven’t been affected, said Saptarshi Sanyal, a spokesman for Delhi International Airport Ltd. In Mumbai, airlines were facing no disruptions.

Policy Logjam

The benchmark 30-stock Sensitive Index was little changed from yesterday, while the yield on the government’s 10-year bond slipped 2 basis points, or 0.02 percentage point, to 7.81 percent, according to data compiled by Bloomberg. The rupee gained 0.3 percent to 54.0675 against the dollar in Mumbai.

More than two years of demonstrations over graft charges, linked to the hosting of 2010 Commonwealth Games, an earlier sale of mobile phone permits and the award of coal assets, helped lead to a two-year logjam in policy making and an economic slowdown, in the process fracturing the ruling coalition headed by Singh’s Congress party.

Fighting back, Singh in September began his biggest policy push in a decade, relaxing rules on foreign investment in the retail and aviation industries, among other measures, and overhauling his cabinet ahead of a general election scheduled for the first half of next year.

The biggest challenge facing Congress is recovering from the series of corruption scandals, according to 31 percent of people polled last month.

Checking Inflation

In the Jan. 22-24 survey of 800 voters in eight cities for Outlook Magazine, 41 percent said they would vote for a Congress party headed by its newly anointed vice-president, Rahul Gandhi. Meanwhile, 38 percent said they would support the main opposition block if it was led by current Gujarat Chief Minister Narendra Modi, who is pitching for the leadership of his party. The poll had a margin of error of 3.46 percent.

The government is battling to check an inflation rate exceeding 6 percent and to boost an economy which may expand at a decade-low 5 percent in the fiscal year ending March.

Trade unions supporting the protests include the Indian National Trade Union Congress, affiliated to Congress, and Bharatiya Mazdoor Sangh that owes political allegiance to the main opposition Bharatiya Janata Party.

In a statement which begins with a call for an end to the government’s “imperialist globalisation,” trade union federations demanded the government curb price gains, create jobs, stop the sale of stakes in state-run companies and enforce labor laws, social security provisions and minimum wages for workers.

The government raised $2.1 billion this month selling shares in NTPC Ltd., the nation’s biggest power generator, and $1.1 billion from a December offering in NMDC Ltd., the largest iron ore producer.

Maruti will be halting production for the second time since a brawl between an employee and a supervisor escalated into a riot on July 18, resulting in the death of a manager and a lockout that shuttered its Manesar factory for almost a month.

To contact the reporter on this story: Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net

To contact the editor responsible for this story: Hari Govind at hgovind@bloomberg.net

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