Why has the Indian auto industry reproduced “low road” labour relations?

Indian policymakers are now centrally concerned with the future of manufacturing as the basis for economic development, prosperity and rising living standards. The automotive industry is pivotal to this transformation. All global carmakers now have major investments in India, often operating alongside major Indian transnational corporations. Key automotive clusters are in the National Capital Region, the Chennai Metropolitan Region and the “Chakan corridor” near the city of Pune, as well as emerging clusters and production facilities in several other parts of the country. Much of the optimism about the auto industry flows from its historically transformative role in Western Europe, the USA and Japan where it sets standards in quality manufacturing, technology, wages and employment relations. Understandably, some have predicted that the expansion of auto production in India should lead to similar “high road” labour relations, based on high wages, long-term employment contracts, stable career paths, social protection and enterprise-based benefits. But the evidence suggests otherwise. The Indian auto industry has instead reproduced “low road” employment relations based upon high wage inequality and employment relations that are over-reliant upon labour contractors. Serious industrial conflict has been common. Given the global developmental promise of the auto industry, why has this happened? Critiquing the global production networks framework from an uneven and combined development perspective, this chapter argues that the answer lies in a combination of India’s distinctive national and regional norms, social relations and institutions with the global carmakers’ governance practices