Samsung's Sriperumbudur strike may impact India's manufacturing: GTRI

India risks losing significant ground in its quest to become a global manufacturing powerhouse if the labour strike at the Samsung’s Sriperumbudur plant is not resolved soon, Delhi-based think tank Global Trade Research Initiative (GTRI) said on Monday.

If the Tamil Nadu government does not intervene swiftly, the situation could mirror the closure of Nokia’s Sriperumbudur plant a decade ago, resulting in job losses and shifting manufacturing dominance to China. India should establish industrial intelligence units to determine whether disruptions are influenced by foreign entities, according to the report prepared by former trade ministry official Ajay Srivastava.

Operations at the Samsung Electronics manufacturing unit at Sriperumbudur, near Chennai have been hit since September, following a strike by hundreds of workers demanding a hike in wages, reduction in work hours, among other issues.

“The strike is no longer confined to Samsung. Centre of Indian Trade Unions (CITU) is also pushing for union recognition at other major manufacturers in the area, including Foxconn, Flex, and Sanmina. If left unchecked, this unrest could severely disrupt Tamil Nadu’s electronics manufacturing sector, potentially affecting India's broader manufacturing industry,” the report said.

Besides, foreign investors are closely watching the situation at Samsung, and concerns over prolonged labour unrest may lead them to reconsider their plans in India. India is also currently reviewing its trade pact with South Korea and the 10-member Association of Southeast Asian Nations (ASEAN) nations. Any escalation of the strike could negatively impact these negotiations.

“India urgently requires a dedicated, fast-track dispute resolution mechanism for large firms, including multinational corporations… a proactive labour dispute resolution framework would help prevent labour unrest from escalating into full-scale strikes. The government should also consider creating a special task force to handle disputes in the electronics manufacturing sector, a key part of Tamil Nadu’s economy,” it added.

Set up in 2007, the manufacturing facility in Sriperumbudur produces luxury televisions, refrigerators, washing machines, air conditioners, among its key products. Some of these innovative digital appliances are exported to other countries.