Mob killing threatens India’s business appeal
By James Lamont in New Delhi
Published: September 26 2008 18:04 | Last updated: September 26 2008 18:04
The last moments of Lalit Kishore Chaudhary, chief executive of a multinational auto parts company in India, were filled with terror.
On Monday, the quiet and dedicated 47-year-old businessman was hunted through Graziano Trasmissioni India’s plant on the outskirts of Delhi by an angry mob. His assailants had forced their way through the entrance gate with a truck to embark on what his company described as a hunt for white-collar workers.
“He tried to escape the mob by locking himself into one of the offices. The locked door was broken. He tried to escape again by jumping out of the window and was beaten to death at the very point he landed,” Graziano told the Financial Times.
For 10 years, the company’s factory in Greater Noida ran smoothly. The Italian multinational was part of a wave of foreign interest from Europe, the US and Japan that identified big savings in tapping Indian engineering skills.
Now the plant is closed and the owners, the Swiss industrial group Oerlikon, are pondering whether to keep it that way.
The frenzied killing of Mr Chaudhary in an industrial zone has plunged the business community into shock.
His murder by former employees armed with hammers and metal bars is sharply at odds with India’s image of opening up to foreign capital and non-violent protest, whether political or industrial.
It also asks uncomfortable questions about India’s labour relations, striking a blow to a sector at the forefront of the country’s foreign investment drive.
A torrent of disapproval has poured from prominent Indian business associations and people, including Nandan Nilekani, chairman of Infosys, the outsourcing company.
Mr Nilekani said no dispute could be settled by “murdering an adversary”.
Others have expressed shock that a severe breakdown in law and order could take place in an industrial hub that is also home to LG, Samsung, Yamaha and Honda.
“[Graziano] is not a high- profile company,” said Jayant Bhuyam, deputy director general of the Confederation of Indian Industry. “It’s not in the badlands stuck out in the country. It’s near the capital.”
By contrast, the killing has sown discord in the government. Oscar Fernandes, the labour minister, was forced to apologise for remarks in which he appeared to defend the actions of the rioters.
His response that the attack “should serve as a warning for management” betrayed an antipathy towards foreign capital that lurks behind India’s transformation from a largely agrarian economy to a fast-industrialising one.
Kamal Nath, the commerce and industry minister and India’s trade negotiator, swiftly set about setting the record straight. Describing the violence as a “stray occurrence”, Mr Nath said it was “completely at variance with the Indian culture and tradition of peace”.
The police have arrested 136 people and are pledging to reveal on Tuesday the names of those charged with murder. But they face sharp criticism for failing to prevent Monday’s attack and being ill-equipped to tackle labour unrest.
Mr Chaudhary was the victim of an industrial dispute over the use of contract workers and the registration of official unions at the plant. “Some of the union leaders repeatedly attempted to destroy the relationship between the company and the employees and to impede the operations in Noida with activities illegal under Indian as well as international law,” Graziano said.
Workers and management had signed a three-year wage pact in January. However, this did not prevent a strike in May, and then vandalism and a go-slow in June.
So quickly were industrial relations deteriorating that Rome issued a warning to the government of Uttar Pradesh state, which is led by Kumari Mayawati, India’s most powerful low-caste leader, that the Italian company was under threat.
“For months there was an industrial dispute going on,” said Aditya Ghildiyal, vice-president of Greater Noida Industries Association. Mr Ghildiyal has been a vocal critic of crime in the area but had never imagined the head of a local company would be killed, his management in hospital with critical injuries and a factory ransacked.
“It’s very sad that this is what happened. It’s the first incident like this. From the industrial point of view, there must be the hand of outsiders,” Mr Ghildiyal said.
“There has been a big outcry by investors. If this is the state of affairs, they say, we should be quite worried. There are concerns that no foreign investment will come.”
Uwe Krüger, chief executive of Oerlikon, is weighing the security threat to his management against the benefit of Graziano’s Noida plant remaining part of his company’s supply chain.
India’s attraction for the global car industry is strong. Analysts estimate that sourcing parts from India offers a 50 per cent saving for European carmakers. But the calculation Mr Krüger faces is whether the margin was worth a chief executive’s life.
“Our most important priority is to take care of our people and their families and to make sure that whatever our next steps are it must happen in a safe and secure environment,” he said.
No one is too certain when the plant will be reopening.
Copyright The Financial Times Limited 2008
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