Honda incident not a dampner to Indian investment climate

By agencies   |   Wednesday, 27 July 2005, 07:00 Hrs
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NEW DELHI:India sought to calm foreign investor fears as tensions kept up for a third day near a Honda Motor plant unit where police and workers have fought pitched battles.

"An isolated incident involving a labor dispute should not become a benchmark for judging the investment climate in India," a foreign ministry spokesman said in the capital New Delhi.

"The country's democratic institutions and its legal system provide an effective mechanism to deal with such incidents in a transparent manner. The legal interest of foreign investors will be fully safeguarded," he added.

His comments came after Japan's envoy to India, Y. Enoki said the clashes in the industrial city of Gurgaon on the capital's fringes that began Monday were "a disadvantage for India's image as a (foreign investment) destination and also (gave a) negative image of Japanese management."

India has been aggressively wooing foreign investment to stimulate economic growth and spur development.

At least 139 police and workers were hurt in two days of violence and at least 300 demonstrators arrested according to officials and media reports.

The battles between workers and police were among the most violent in years in India.

On Monday, riot police herded hundreds of workers of the Honda Motorcycle and Scooter India Private Ltd, a unit of Japan's Honda Motor Co Ltd, into a park and whacked them with bamboo batons, local officials said.

Police said the clashes erupted Monday when they were forced to take action after a mob went on a rampage swinging axes, iron rods, logs and stones. In the melee both hands of a senior police official were broken.

The clashes continued Tuesday when angry relatives of the injured workers visited them at a hospital in Gurgaon.

In a bid to avert further violence Wednesday, a huge posse of policemen guarded the hospital and access roads as restive workers gathered on the streets. A large security cover was also thrown around the factory compound.

The demonstrations were part of a campaign by the workers to press for reinstatement of colleagues suspended on insubordination charges.

A company official, who did not wish to be named, told AFP four employees were sacked one-and-half months ago for misbehavior including breaking machines, causing production losses.

"Later, about 60 were suspended in batches as they started misbehaving, showing insubordination and breaking machines. They also started a go-slow," he said.

A Japanese economic daily reported Honda had already lost about three billion yen ($27 million) from reduced output during the labor dispute.

Average production at the factory dropped to 400 motorcycles a day in June, although it gradually recovered somewhat to 1,000 units after some employees returned to work, the Nihon Keizai Shimbun said.

Indian Prime Minister Manmohan Singh expressed "anguish" over the incident which caused uproar in parliament on Tuesday. The opposition Hindu nationalists walked out of parliament's lower house to protest the police action.

The communists -key allies of Singh's Congress led coalition - followed the Hindu nationalists, embarrassing the over one-year-old government.

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