The labour strike at Samsung’s Sriperumbudur plant in Tamil Nadu is quickly becoming a major crisis, threatening the state's position as a leading electronics manufacturing hub. Over 2,000 workers at the plant are involved, with the Centre of Indian Trade Unions (CITU) pushing for higher wages, reduced working hours, and formal union recognition.
Global Trade Research Initiative (GTRI) in a report stated that 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. It is casting doubt on India’s ability to maintain stable manufacturing operations, a key factor for investors and multinational corporations.
If the Tamil Nadu government does not intervene swiftly, the situation could mirror the closure of Nokia’s Sriperumbudur plant a decade ago, resulting in job losses and shifting manufacturing dominance to China," according to the report. The think tank recommended that India should establish industrial intelligence units to determine whether disruptions are influenced by foreign entities.
With the state contributing 34 per cent to India’s electronics exports, the economic implications are major as it threatens to derail years of effort to attract investment in Tamil Nadu’s electronics sector. GTRI predicted that delays in resolving the strike could lead to job losses, stalled development, and a significant decline in investor confidence. Both the state and central governments need to act quickly to prevent the spread of unrest to other key manufacturers in the region.
Escalating Tensions At The Samsung Plant
Samsung has been operating its Sriperumbudur plant since 2006, employing over 2,000 workers who produce items like colour TVs, washing machines, and laptops. However, the strike led by the Centre of Indian Trade Unions (CITU) is now demanding a wage increase from Rs 25,000 to Rs 36,000 for blue-collar workers with seven to eight years of experience, in addition to official union recognition.
Notably, CITU is also pushing for union recognition at other major manufacturers in the area, including Foxconn, Flex, and Sanmina. If left unchecked, this unrest could severely disrupt Tamil Nadu’s electronics manufacturing sector, potentially affecting India's broader manufacturing industry.
Talking about the impact on foreign investment and the "Make in India" initiative, the report added that the ongoing strike could also hinder India’s broader goal of becoming a global manufacturing hub. Under Make in India, the country aims to triple its electronics production to USD 500 billion over the next six years. However, this ambition may be undermined if labour unrest continues unresolved.
Tamil Nadu has long been a destination for global electronics manufacturers, particularly from South Korea and ASEAN countries. However, labour instability could deter future investments. Foreign investors are closely watching the situation at Samsung, and concerns over prolonged labour unrest may lead them to reconsider their plans in India.
The think tank stated, “The timing of the strike is especially worrying, as India is in the midst of reviewing its free trade agreements (FTAs) with South Korea and ASEAN countries. Any escalation of the strike could negatively impact these negotiations.” The Tamil Nadu government has so far remained silent on the issue, but the urgency of the situation cannot be overstated.
The report also mentioned, “The state's dominance in electronics exports and its manufacturing reputation are at serious risk. A prolonged strike will not only affect the operations of Samsung but could also disrupt production at Foxconn, Flex, and Sanmina—three companies that are crucial to Tamil Nadu's electronics industry.”
To resolve this crisis, the Tamil Nadu government and Samsung must address the legitimate concerns raised by its workers regarding working hours and conditions, it stated. The government could allow CITU to participate in industry-wide policy discussions on wage benchmarking, safety, and welfare measures, without granting formal recognition at the firm level. Such an approach could address workers' concerns while maintaining the stability of operations, GTRI suggested.
Nokia's Closure: A Cautionary Tale
The current strike at Samsung evokes memories of Nokia's downfall in Sriperumbudur. A decade ago, Nokia was one of India’s most successful mobile phone manufacturers. The company employed over 7,000 direct workers and 10,000 indirect workers, with exports exceeding USD 2 billion between 2010 and 2013.
However, a combination of tax disputes with the Tamil Nadu government and mounting union pressures crippled Nokia's operations, leading to the plant's closure in 2013. The collapse of Nokia’s operations caused significant job losses and shifted mobile manufacturing dominance to China.
The think tank added, “The parallels between Nokia’s experience and Samsung’s current labour unrest are concerning. If the strike at Samsung escalates, it could result in another wave of job losses and a blow to Tamil Nadu’s reputation as a business-friendly state. The potential impact on India’s electronics manufacturing ambitions cannot be understated.”
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