Maruti Suzuki India, the country's largest carmaker, locked out workers at a factory near New Delhi and ruled out restarting production until a probe is completed into rioting that led to the death of a manager.
The automaker, majority owned by Suzuki Motor, won't import cars to make up for the loss of production at its Manesar factory, which accounts for about 40 per cent of its total capacity, chairman RC Bhargava said.
He didn't say how long the investigation would take or when workers would return to the plant. The latest production stoppage is the fourth in the past year at the Manesar factory.
All 3000 union workers at the plant will be charged with murder and attempted murder for the mob attack that caused the death of Awanish Kumar Dev, a human resources general manager, and at least 70 injuries, Indian police said.
The Federation of Indian Chambers of Commerce and Industry, one of the nation's two largest business lobbies, said that the violence threatens India's investment reputation.
"It's a matter of deep concern for a country that seeks to project itself as offering an environment that is business-friendly," RV Kanoria, president of the lobby, said in a statement, calling for authorities to deal "firmly" with the situation.
Maruti has no plans to relocate the plant out of Manesar in northern Haryana state, Bhargava said.
A factory at Gurgaon, about 20km northeast of Manesar, is operating at full capacity, he said. Suzuki has said production facilities weren't damaged by the unrest.
"This is bad news for Maruti as it may take as little as five days or as long as 50 days to identify the rogue elements in the workers who did this," said Mahantesh Sabarad, an analyst at Fortune Equity Brokers India in Mumbai. "It also shows the trust deficit between the management and the workers. This lockout comes at a very efficient factory that produces some of Maruti's most popular models."
The lockout comes amid a slowdown in car sales in India as high fuel prices and interest rates deter buyers.
The Society of Indian Automobile Manufacturers on July 10 cut its forecast for growth to a range of 9 per cent to 11 per cent for the year ending March 31, 2013, from an estimate of 10 per cent to 12 per cent given in April.
India's economic growth slowed to the weakest in almost a decade in the quarter ended March and the rupee slumped to a record low amid a paralysis in policy-making that has hurt efforts to spur investment as a global recovery falters.
The Government's recent setbacks include the December suspension of plans to let foreign companies such as Wal-Mart Stores open supermarkets, and abandoning of plans to allow investment in the pension and insurance industries.
- Bloomberg