Labour reforms should lead to productivity: Volkmar Denner, CEO, Bosch

BANGALORE: Bosch, the German industrial conglomerate which has seen its Indian subsidiary battling labour strife, has asked for a calibrated approach from Narendra Modi-led BJP government at the centre when it seeks to reform the archaic labour laws of the country. Significantly, this call from the boss of the world’s biggest supplier of car parts came even as it considers India to be a key pillar of its growth strategy in Asia Pacific, the share of which it estimates to double in the parent company’s revenues by 2020.

"Today there are many free trade zones in this region," said Volkmar Denner, CEO of Bosch. "And they will increase. India has to be competitive with other countries in the free trade zone and therefore labour reforms should address this." The BJP government at the centre is looking to make changes that benefit workers, by introducing a slew of measures, including making more workers eligible for minimum wages and increasing overtime hours. This has made many manufacturing firms jumpy, with Bosch taking the lead in voicing concern.

Denner, who took over the boss’ seat in 2012, is on a three-day visit to India and had been to Bosch’s facility in Coimbatore on Wednesday, said that though the present impasse between workers and management is of “concern”, it remains hopeful that an amicable solution will be reached. Striking Bosch workers at the Adugodi plant in Bangalore are continuing with their fiveweek strike, demanding a 20% wage hike and in the process defying the outlawing of their strike by the Karnataka state government.

Earlier this month, chief minister Siddaramaiahled Congress government in the state arrested 150 of the protesting workers and invoked the 1947 Industrial Disputes Act, terming the strike as “illegal.”

India, of late has witnessed an increase in worker unrest, especially at auto manufacturing facilities. Earlier this year, Toyota India, an 89:11 joint venture between the world’s largest car maker, Toyota and Kirloskar Group, saw a two-month long intermittent production at its facility at Bidadi, 30 kilometers from Bangalore. will do at its manufacturing plant near Bangalore what it is best at - make cars.

A few years back, executives at Graziano Trasmissioni India, Pricol and Regency Ceramics were been beaten to death by enraged workers. In 2012, the general manager of human resources at Maruti Suzuki was burnt to death at the company's Manesar plant. Bosch maintains that the wages paid by the company are "up to the highest standards" in the country.

To a question on future investments, Denner skirted away from a direct answer saying that "labour reforms have to lead to productivity of business" Some experts, however, believe that it is tad too early to believe the new government will do anything to dent business sentiment.

"I believe, there is a positive vibe running in business environment of the country after new government," said Gaurav Vangaal, senior analyst, forecasting, at consultancy firm IHS Automotive.

"The government has initiated many policy reforms and easing of labour reforms are one of the key areas, which is expected to increase the business confidence for the existing players & new entrants (FDI) in the country. We need to give proper time for the reforms to take place before any significant decisions" Bosch India is one of the largest auto component supplier to car makers, including Toyota and Maruti Suzuki, and employs 2,300 permanent workers, 370 temporary workers and 1,000 contract workers.

On average, permanent workers are paid Rs 40,000. Bosch, which first set up shop in the country in 1922, generated sales of €1.2 billion in 2013, a threefold increase over 10 years ago. Since 2010, the German parent has invested Rs 5,400 crore in the expansion of manufacturing and research facilities, with about Rs 1,200 crore invested in the current year alone.