Politics and economics have never been the best of friends, but a prime-time lathi charge on workers of the Honda Scooter and Motorcycle India (HSMI) in Gurgaon on July 25 changed all that. As much as the Left got an opportunity to highlight the perils of liberalisation, it also managed to rattle the UPA Government. In one fell swoop, even as workers lay bleeding and injured, at the receiving end of Meham-like police brutality, the Congress leadership at the Centre was reduced to a quivering mess. On the one hand was Sonia Gandhi's anger at Chief Minister Bhupinder Singh Hooda's cavalier handling of the issue, which led to his about-turn on a judicial inquiry. On the other hand was Prime Minister Manmohan Singh's unprecedented intervention in what was essentially a company's internal matter.

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BRUTE FORCE: (Top) Police assault workers; a police Gypsy (above)

The next morning, Japanese envoy Yasukuni Enoki announced "concern" that the incident could affect FDI in India. Gurudas Dasgupta, CPI leader in the Lok Sabha and president of the All-India Trade Union Congress (AITUC), fumed in Parliament, displaying a blood-stained towel and calling the Government a stooge of MNCs. CPI(M) Politburo member Brinda Karat and her colleague from the party's Central Committee Nilotpal Basu took to the streets protesting against the police atrocities on the demonstrators. There was some attempt at damage control: Sonia condemned the police action at a meeting of the CPP, Hooda announced the suspension of the sp and the dc and Commerce Minister Kamal Nath went into overdrive, assuaging investors' fears. The sentiment was echoed by West Bengal Industries Minister Nirupam Sen which revealed the extent of Left doublespeak on the issue-not surprising, since Japan is the largest foreign investor in the state.

But by then, the damage had been done. Gurgaon is the India address of several Fortune 500 brands. This was probably the first time that a clash of this magnitude happened in a 100 per cent foreign-owned company. Worse, it was captured live on TV. Even as policemen could be seen caning scores of young men who a few hours ago were protesting against the dismissal of four and suspension of 50 co-workers, there were also images of policemen being attacked and stoned by workers.

HONDA DISCORD

MANAGEMENT'S DEFENCE APRIL 2005: Production down due to worker indiscipline. Four employees dismissed and 25 suspended. MAY 24: 1,000 employees shouted slogans, gheraoed president on factory premises in response to suspensions. JUNE 27: Production down to 20 per cent. More workers suspended. Workers began strike. JULY 18: Verbal settlement reached after month-long negotiation through the Labour Department. JULY 25: Workers clashed with police. Violence was engineered by outsiders. Will take back all employees except those dismissed or suspended. WORKERS' CHARGES No indiscipline. Management took action only to prevent a trade union from being formed. Deny that the company president was gheraoed by workers. Deny that they went on strike. They say the management resorted to a lockout and didn't pay salaries. No settlement was reached with the management. It sacked half the employees. The violence was engineered by outsiders. Willing to resume work if all dismissed and suspended workers were taken back.

Left-affiliated unions, stymied by the government in West Bengal, have for long looked to spread their wings in the North. The CPI(M)-controlled Centre for Indian Trade Unions (CITU), the largest trade union in the country, has seen only a 4.2 per cent rise between 1999 and 2005-much of its base is restricted to the three CPI(M) state bastions. Their reaction was understandably pointed. A day after the assault, AITUC held a protest rally outside Haryana Bhavan with Secretary D.L. Sachdev demanding that changes be made in the labour laws to prevent their abuse by MNCs. A CPI(M) Politburo statement underlined this resolve: "Workers in Gurgaon factories are not allowed to form trade unions and efforts are made by big companies to suppress all trade union activities.''

Honda, a $8 billion (Rs 34,400 crore) Japanese conglomerate, runs three separate companies in India-a joint venture with the Munjals, Hero Honda; Honda Siel for cars and HSMI. Set up four years ago, the company is already India's largest scooter maker and has made a foray into motorcycles. But the company says that starting April this year, production fell-to just 20 per cent in July-due to worker indiscipline. To arrest the problem, HSMI suspended 25 employees and fired another four but it snow-balled into a big issue (see box: Honda Discord).

That the lathi charge happened almost 20 km away from the HMSI factory and over 70 people in the mob were later identified by the police as non-Honda workers just proves that the incident was engineered. Executives at the company said they learnt of the incident from TV. "Most of the people who were lathi-charged are not our employees," they say.

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DEEP IMPACT: (left) Hooda visits the injured; police vent their fury (right)

LABOUR PAINS

WHAT LEFT WANTS Eight central trade unions have called a nationwide protest day on August 1. The unions have asked members to mobilise MNC workers to establish unions in private companies. Left parties have proposed more safeguards in existing labour laws. Will pressurise Government to legislate the Unorganised Sector Workers' Bill which has been lying in cold storage for past few months.. WHAT INDIA INC NEEDS Do not want internal company matters and labour issues to be politicised. Want foreign companies to recognise local labour culture and let locals manage industrial relations. Want the Left to realise that 8 per cent GDP growth is unachievable with labour unrest and breakdown of law and order. Want industrial disputes to be resolved only through discussions across the table without the interference of outsiders.

Other companies in the Dharuhera-Gurgaon-Manesar belt have been facing similar labour pangs in the past few months because of increased AITUC involvement in disputes as evidenced by the registration of a union at HSMI in July. "There's been trouble in bits and pieces and as our suppliers are hit we are losing too," says Ravi Sud, vice-president, finance, Hero Honda. Other industrialists in the area are also on red alert. "The politicisation of the incident needs to be addressed. The Left must realise that you don't get 8 per cent growth with labour unrest and law and order problems," says Surinder Kapur, chairman, Sona Koya Steering. But industrial relations in the area have been extremely peaceful after Maruti resolved a union problem in 2000. The labour movement in the country has been on the downturn with the number of mandays lost due to strikes down from 10.62 million in 1999 to 3.2 million in 2003, according to the Economic Survey 2004-5. The number of strikes slumped from 540 to 255.

The Gurgaon episode has turned out to be a double whammy for Hooda. His disastrous handling of the labour unrest will not only cost him on the political front but also act as a damper on his hardsell about Haryana as an ideal investment destination. Hooda must cop the blame for letting things get out of hand by his inaction. At the time of the mayhem, he was in Delhi. Much of the information he got on the clash was from TV, not his officials on the ground. His Government woke up to the crisis only when Manmohan called him up that night and bluntly asked him to punish the guilty.

The crisis may not end soon. With trade unions organising a nationwide protest rally on August 1, CITU Secretary W.R. Vardarajan says the workers have no option but to take to the streets. Sounds ominous.

-with Ramesh Vinayak

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