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Has contemporary industrialisation taken India down the ‘low road’?

by Tom Barnes on November 23, 2018
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Globalisation has been shifting manufacturing from richer to poorer countries for decades. In its initial phase, the global shift of labour-intensive products like garments, shoes and toys was criticised as an exercise in the exploitation of low-wage labour—the so-called ‘low road’ of capitalist development. But what conclusion can we draw from the more-recent global shift of capital-intensive production, especially automotive manufacturing, to countries like China and India?

In contrast to garments and shoes, auto manufacturing is historically associated with the high road of development—that is, with secure lifetime employment, generous wages and social protection which fosters a rise in living standards. The high road is a mainstream philosophy, having even been adopted by the Obama administration in the United States.

In India, the policymaking elite expects that auto manufacturing will positively transform development and living standards in a country where over 90 percent of work is undertaken in the informal economy, involving low wages with inadequate social protection. The current Modi government has spent the past four years embedding auto production at the centre of its ‘Make in India’ mantra. India has risen to become the world’s fifth largest auto manufacturer. Virtually all of the world’s global carmakers are now ‘making in India’ and have transformed local production, communities and labour relations through the imposition of global production networks and the emergence of new industrial corridors.

Therefore, one might hypothesise that these global lead firms have transplanted ‘high road’ labour standards and employment relations into India’s industrial landscape, thereby fulfilling the picture of all-round development and prosperity envisaged by policymakers.

In contrast to this elite vision, the most arresting feature of Indian automotive industrialization since the turn of the century is its very high level of industrial conflict. My new book, Making Cars in the New India: Industry, Precarity and Informality, explores this contradiction between the promise of prosperity and the reality of frequent and offer bitter conflict. In some of the most spectacular cases, managers were killed in violent confrontations with workers. This includes the most infamous example—the long dispute at Maruti Suzuki’s facility in the industrial township of Manesar, south of New Delhi. Involving numerous solidarity strikes, lockouts, street protests and factory occupations over 14 months in 2011-12, the Maruti dispute was arguably the most significant in India since the great Bombay textile strike in the early 1980s. Maruti is the pioneer of automotive modernization in India and easily the country’s largest car manufacturer. The workers’ campaign for permanent jobs, higher wages and union rights severely disrupted Maruti’s operations.

These events had a contradictory outcome—on one hand, thousands of workers were fired and 31 former-Maruti employees were convicted with a range of criminal offences in March 2017—13 of these workers were handed life sentences for murder. On the other hand, the dispute forced Maruti to recognize a new union and to radically modify the labour regime it had used to recruit and control auto workers in the region since the 1990s.

My book’s main aim is to try to explain why India’s auto industry has been beset with such a high level of conflict. By comparison, few of India’s rivals in the global auto industry—including China—have experienced anything close to this level and ferocity of conflict.

The book locates the source of conflict in four inter-linking explanations. First, it argues that the industry has been transformed since the 1980s by the arrival of foreign manufacturers who imposed global ‘lean manufacturing’ principles, laying the foundations for new industrial conflicts. Second, state institutions forged new industrial policies which encouraged a shift from restrictive openness in the 1980s to emergent neoliberalism in the 1990s. This gradually opened domestic production to intense competition between lead firms, leading to new pressures to transform labour relations.

Third, the ‘first mover’ global entrants from Japan—especially Maruti Suzuki and Honda, who partnered with local institutions in joint ventures—responded to growing competition and market instability by replacing the majority of their permanent assembly-line workforce with workers hired through multiple labour contractors. These ‘contract workers’—known in other countries as agency workers, temps or labour-hire workers—were paid a fraction of permanent workers’ wages and had little employment security.

Fourth, the imposition of global production networks linked lead firms like Maruti and Honda, and many other foreign and domestic lead firms, with hundreds of supply chain companies in each industrial region, creating enormous demand for labour. Most of this demand has been met by workers migrating from poorer interstate regions. In the National Capital Region (NCR), for example, the exploitation of low-wage workers from poorer regions in the states of Uttar Pradesh and Bihar has been central to industrial growth.

While the book contains analysis of manufacturing activities in all the main producing regions of India, it focuses on events in the district of Gurgaon—recently renamed Gurugram—on the southern outskirts of the NCR. This is the largest industrial corridor in the country and provides the base for India’s largest auto producers. I conducted field research in this region over three periods stretched from 2011 to 2013 and spoke with dozens of workers and employers as well as labour contractors and trade union leaders.

There are now several excellent analyses of Indian auto workers’ struggles; for example, Bose and Pratap (2012), Nowak (2016) and Monaco (2017), to name just three. While building upon this research, my work tries to delve deeper into the networked character of production. I interviewed workers and employers across all key tiers of the industry in Gurgaon district, from the global lead firms and their ‘Tier 1’ and ‘Tier 2’ suppliers down to the small and micro-sized Tier 3 and Tier 4 firms at the bottom of the supply chain where profit margins are squeezed by lead firm control over prices, quality and design. In doing so, I have tried to bring together Global Production Networks (GPN) analysis, with its focus on the firm, with a ‘labour-centred development’ approach that responds to the labour blindness in much GPN (and value chain) analysis. The result, I hope, will be especially relevant to scholars and students of global labour studies.

Tom Barnes
Tom Barnes is a postdoctoral research fellow at the newly-established Institute for Religion, Politics and Society at the Australian Catholic University. He did his PhD in Political Economy at the University of Sydney. His new book, Informal Labour in Urban India: Three Cities, Three Journeys, is out with Routledge in early 2015. He blogs at http://tombarnes.info/.

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