Maruti lock-out highlights India’s labour unease

NEW DELHI, September 19, 2011 (AFP) - India's top automaker Maruti Suzuki, already grappling with sliding sales, is in a test of nerves with its factory workers after production was hit by a dispute over alleged sabotage. Output at the Japanese-controlled firm's Manesar plant in northern India has been thrown out of gear for three weeks after Maruti accused disaffected workers of deliberately damaging cars on the assembly line.

The subsequent lock-out has rapidly come to be viewed as a test case for India's car industry and wider foreign investment in the country's fast-growing economy as Maruti bosses say they are determined to face down the workers.

"Global investors are watching this very closely," Jagannadham Thunuguntla, head of research at Delhi-based share traders SMC Global Securities, told AFP.

"India's low-cost manufacturing growth story is built upon labour stability.

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After the sabotage claim, Maruti fired 21 people and locked out the rest of the workforce.

It insisted all employees sign a "good conduct bond" -- a pledge not to sabotage output -- before returning to work, but the demand has been heeded by only about 100 of its 950 permanent workers.

India, Asia's third-largest