Samsung relocation buzz sends alarm bells ringing; strike enters 2nd month

Andhra Pradesh's Sri City is said to have approached Samsung for an informal round of talks to shift the plant as the strike at Tamil Nadu unit enters second month

Sri City, a special economic zone in Andhra Pradesh, may be seeing an opportunity next door as a strike at Samsung’s Sriperumbudur plant in Tamil Nadu — which is just 75-km away — entered the second month.

Officials from Sri City are said to have approached Samsung executives for an informal round of talks regarding a possible relocation of the plant, a source privy to the development said. “Officials from Sri City have already approached the company,” confirmed the source.

However, there was no confirmation or denial on it by Samsung.

Sri City has become a hub of increased activities since N Chandrababu Naidu took over the reins of Andhra Pradesh earlier this year. In August, he inaugurated projects and signed a memorandum of understanding for investments worth Rs 3,700 crore in the industrial city which lies in the state’s Tirupati district.

When asked if they have indeed been approached by officials from Sri City, a Samsung spokesperson didn’t deny or confirm it. He told Business Standard, “Samsung has been a strong partner in India’s growth journey for nearly three decades and is committed to the government’s ‘Make in India’ initiative. We will continue to work with the Government of India and various states where we are present, to realise their vision of nation-building through investments in manufacturing, research and development, responsible citizenship, and tran­s­fo­­rm­ational innovations. We are thankful to the Tamil Nadu government for their support.”

Meanwhile, the strike, which started on September 9, continued for the 31st day on Wednesday.

In a midnight crackdown, Tamil Nadu police arrested 10 workers on Monday night who were continuing the strike in the Sunguvarchatram area of Kanchipuram district. 

The source added that in case of a prolonged strike, the company may also consider options like shifting part of the production to its Noida unit.

On the other hand, a top executive involved in Sri City’s development said no such talks or proposals had happened so far at his level.

During talks, the company offered a Rs 5,000 special allowance for each employee. But CITU refused to back down, demanding registration of its union.

Tamil Nadu Finance Minister Thangam Thennarasu too refuted reports which claimed that the plant may be relocated.

He reportedly said that the CITU union can only be registered following a court order, and the government has no say in that, urging employees to return to work.

Though Sri City lies only 75-km from Chennai, an hour-and-a-half to two hours by car depending on traffic, it is in Andhra Pradesh. Moreover, it has all the advantages in terms of its access to five seaports within its 100 km radius, including Chennai, Ennore, Kattupalli, Krishnapatnam, and the upcoming Durgarajupatnam.

“The government is taking all measures to ensure a solution to the issue. At present, it has not affected any of the company’s festival sales plans,” said another source aware of the discussions between Samsung, CITU, and the government.

From the government’s side, Industries Minister TRB Rajaa, Micro, Small, and Medium Enterprises (MSME) Minister T M Anbarasan, and Labour Minister C V Ganesan are leading the talks with all stakeholders.

According to the striking employees, they were working overtime at low wages, given unrealistic overtime targets, and on the top of that the company was not recognising their union.

The company on Monday signed an MoU with representatives of its workmen, in which it agreed to pay a special incentive of Rs 5,000 to its employees. CITU, which was leading the strike, was not part of the talks with the company.

G S K Velu, chairman of FICCI's Tamil Nadu state council, said it was vital to reach a swift resolution to maintain the state's industrial momentum and attractiveness to investors. "Employees should return to work and collaborate with management to find a mutually beneficial solution,” Velu said.

Srivats Ram, chairman of CII Tamil Nadu state council, said the state was creating numerous jobs across several sectors due to proactive policies and several measures related to ease of doing business. “We urge all the stakeholders engaged in the recent industrial dispute to work amicably towards an early solution so that the momentum of economic activity and high image of Tamil Nadu is sustained,” Ram said.