Gurgaon labor action may drive Maruti to Gujarat

Long headquartered in Haryana, India's largest car maker may move its operations to Gujarat if strikes continue at its Manesar and Gurgaon plants, the Times of India reports.

The move would make Maruti-Suzuki the fourth major automobile manufacturer to choose Gujarat for its production center this year, following Tata Motors, Ford and Peugeot.  Ford and Peugeot plan billion dollar investments in the business-friendly state.

The rumblings could well be an attempt to push Haryana to act against the striking workers, of course. But the stakes are high for Gurgaon, which has over the past decade sought to emerge as a hub for multinational corporations keen to enter the Indian market.

Already, Maruti car sales have been affected by the strike, and demand seems to be slowing because of uncertainty about delivery schedules, the Times of India said.

Suzuki chairman Osamu Suzuki met Gujarat chief minister Narendra Modi on September 8 after a deal to end the first strike of the summer collapsed but before the second one began, the paper said.  Now, the company's board looks set to approve a proposal to invest some $3.6 billion in the state, including a $120 million investment by parts makers.  The cash would go towards a 1,000-acre plant with a capacity of two million units, which would be larger than any other Suzuki plant around the world.

Meanwhile, for Haryana, this will be the second blow after Japanese auto major Honda Motorcycles and Scooters India decided to set up plants in Rajasthan and Karnataka following a strike at its Manesar facility. Japanese management of both companies have said privately that they are not particularly happy with the Haryana government's handling of labor problems, the paper said.