India risks jeopardising its ambition to become a global manufacturing powerhouse if the ongoing labour strike at Samsung’s Sriperumbudur plant remains unresolved, the Delhi-based think tank Global Trade Research Initiative (GTRI) warned on Monday. The think tank stressed the importance of industrial intelligence units to investigate whether foreign entities are playing a role in instigating such disruptions.
The GTRI cautioned that if the Tamil Nadu government does not act swiftly, the current situation could mirror the closure of Nokia’s Sriperumbudur plant a decade ago, which led to significant job losses and shifted manufacturing dominance to China.
Tamil Nadu accounts for 34 per cent of India’s electronics exports, making it a crucial region for the country’s manufacturing sector.
The unrest is escalating and poses a serious risk to the manufacturing ecosystem in the region, which includes major players like Foxconn, Sanmina, and Flex,” GTRI Founder Ajay Srivastava was quoted as saying by The Economic Times.
He added that the strike raises serious concerns about India’s capacity to maintain stable operations — an essential factor for both investors and multinational corporations.
GTRI cautioned that the strike poses serious threat to Tamil Nadu’s reputation as a leading electronics manufacturing hub. Prolonged delays in resolving the crisis could result in job losses, stall development, and erode investor confidence. The think tank urged both state and central governments to intervene immediately to prevent the unrest from spreading to other major manufacturers in the region.
“The timing of this strike is especially concerning as India is in the midst of reviewing its Free Trade Agreements (FTAs) with South Korea and ASEAN nations. Any escalation could have a negative impact on these negotiations,” Srivastava said.
He further emphasised the need for a fast-track dispute resolution mechanism for large firms, particularly multinational corporations (MNCs), to ensure stability in India’s manufacturing sector.
GTRI also warned that the strike could hinder India’s broader goal of becoming a global manufacturing hub. Under the Make in India initiative, the country aims to triple its electronics production to $500 billion over the next six years. However, unresolved labour unrest could severely impact this ambitious target, according to the think tank.
First Published: Sep 24 2024 | 12:52 PM IST
