Communist unions in India, often guided by Marxist ideology, have significantly disrupted industries and deterred investment. From violent labour strikes in West Bengal and Kerala to operational shutdowns of iconic brands like Sumeet and Meenumix, the influence of communist labour movements has repeatedly caused economic instability. This has led to job losses and hurt local businesses while benefiting foreign companies. Many Indian companies have been forced to relocate operations to avoid the stranglehold of militant unionism.
Communist Ideology
Communist ideology, rooted in the works of Karl Marx and Friedrich Engels, emphasizes class struggle and the pursuit of a classless society. It advocates for collective ownership of the means of production to eliminate private property and worker exploitation. It aims to create a system where resources are distributed according to need, promoting equality and social justice. However, in practice, particularly in India, this ideology has sometimes been wielded to undermine businesses, deter investments, and threaten industrialists. This dynamic can trap labourers in a cycle of poverty and job loss, benefiting only a few union leaders while allowing foreign companies to flourish at the expense of local brands.
India has a complex history of labour strikes and political movements, influenced mainly by communist ideologies. In several states, particularly in West Bengal and Kerala, strong communist trade unions have led to significant strikes that impacted business operations.
Key examples include:
- West Bengal: The Communist Party of India (Marxist) ‘s long rule from the late 1970s until 2011 created a labor environment characterized by frequent strikes and militant unionism. These strikes sometimes led to companies reconsidering their investments or operations in the state.
- Kerala: Like West Bengal, Kerala has a history of strong communist influence and labour activism. Strikes and shutdowns organized by unions have sometimes disrupted business operations, leading to challenges for companies trying to operate in the state.
- Naxalite Movements: In various parts of India, particularly in rural areas, the Naxalite movement (which has communist roots) has led to violence and instability. This has driven away businesses from regions where safety and law enforcement are concerns.
These movements often resulted in companies either pulling out or hesitating to invest in certain regions due to fears of labour unrest, political instability, and disruptions to their operations.
Here, let’s explore and recall some veteran Indian brands that succumbed to pressure from communist labour unrest, which posed operational challenges in the region. Many companies have strategically relocated some operations or projects to states with favourable labour conditions to diversify their risks.
Binny Mills strike
Reflecting on the history of trade unions in India, Chennai emerged as a crucial hub for labour movements alongside various national efforts. The Binny Mills strike was pivotal in establishing the Madras Labour Union, the first trade union in India.
Workers at Binny Mills, who faced gruelling 12 to 16-hour shifts with inadequate wages, experienced significant exploitation, which prompted the strike. Leaders such as Thiru V Ka, BP Wadia, Singaravelar, and Sakkarai Chettiar founded the Madras Labour Union. Between 1921 and 1924, Binny Mills became the site of numerous struggles, including police violence and fatalities, which compelled the British government to address the workers’ grievances. During this period, the management of Binny Mills even filed a lawsuit against the union for financial losses incurred due to the strike.
However, the union successfully contested the case. This struggle ultimately led to the passage of the Indian Labour Act 1926, designed to protect trade unions. Around the same time, the All India Trade Union Congress was established to unify and coordinate the efforts of trade unions across the nation, marking the beginning of a more organized labour movement in India.
After India gained independence, trade unions and the Communist Party were banned in 1948, but the ban was lifted in 1951. Dr. Veeraraghavan noted that Tamil Nadu became known for its militant trade union movement during that period, distinguishing it from other regions.
Sumeet Appliances
Once a leading kitchen mixer-grinder brand, Sumeet has largely faded from the market due to distribution challenges, labour strikes, and succession disputes, becoming a memory for the older generation. While the name Sumeet may not be familiar to many today, an industry veteran aptly compares its significance to that of Dalda in the vanaspati ghee sector.
Contrary to popular belief, Sumeet, which means “good friend” in Hindi, originated in Mumbai rather than being a South Indian brand. Known for its unique selling proposition a motor designed to withstand even the toughest grinding and backed by reliable after-sales service, Sumeet quickly established itself as a household favorite, with products that could last up to 20 years.
Established by SP Mathur, the brand indeed revolutionized Indian kitchens; a sentiment echoed even by its competitors. Despite the influx of similar brands and a fragmented market, Sumeet maintained its stronghold well into the ’90s. At its peak in the ’80s, Sumeet sold around 60,000 monthly units and held a market share of 43 per cent.
Unfortunately, the struggles faced by its Coimbatore and Chennai plants, which succumbed to communist labour protests alongside distribution challenges, mark a poignant chapter in the brand’s history in Tamil Nadu.
Regrettably, what Indian leaders once envisioned as a means to protect vulnerable workers has now become a tool for political affiliates, often used to manipulate and control business interests.
Brand Meenumix
Meenumix, established by Kerala-born Balakrishna Pillai, faced significant labour issues in the mid-1990s, leading to a major market setback in Kerala and Tamil Nadu. As a result, the original manufacturer, Meenu Equipment, which had been built up since its founding in 1969, had to sell the brand.
Unfortunately, Meenumix was acquired by a newer company, Hometeck Commercial Agencies Pvt Ltd (HTL), a Kochi-based distributor of home appliances. Ibrahim Khamis, the group chairman of HTL, took over its customer base from the UAE and Bahrain.
Metal Box India limited
Metal Box India Limited, with branches in Chennai, Cochin, and Calcutta, was a multinational company that produced and exported metal tins worldwide. In the late 1960s, it manufactured various tin containers, including petrol cans, Pond’s powder cans, and Danish cookie tins, providing well-paying jobs.
However, when communist influences took hold, workers became embroiled in strikes, undermining the company’s operations. What was once a source of prosperity became a significant setback as the workforce lost its way. Instead of reaping the rewards, they faced layoffs, factory closures, and abandoned machinery. The livelihoods that had once flourished were destroyed, leaving workers without the means to support themselves.
While claiming to advocate for workers, these movements often led to devastating consequences for the individuals they aimed to support. This experience illustrates the detrimental impact that extreme labour activism can have on society and the economy.
Pricol
The nastiest was the labor unrest in 2009 at Pricol, an auto parts manufacturer in Coimbatore, took a tragic turn when a group of workers attacked the company’s Vice President of Human Resources, Roy J George, with iron rods, resulting in his death from multiple injuries. Additionally, four other employees were injured in the incident, sending shockwaves through the local business community and raising concerns among investors.
In response, various trade unions condemned the violence and called for the government to take action against unlawful organizations like CPI-ML, which they believe are inciting unrest among workers. This unsettling situation is particularly alarming in a state known for its industrial advancement and skilled workforce. The increasing number of disputes in major companies is partly attributed to rivalries among unions vying for dominance in representing workers.
Rico Auto Industries
To understand the potential impact of a trade union protest on a supply chain, consider the 2009 Rico Auto Industries incident. In October of that year, the Gurgaon-Manesar region, known as India’s automobile hub, came to a near halt as approximately 90,000 workers from various auto and component manufacturers participated in protests.
The unrest began at Rico Auto Industries following the death of an employee during demonstrations against the management’s suspension of several workers. This strike severely disrupted production at around 60 automotive and component manufacturing facilities, with far-reaching consequences.
The repercussions were felt globally; Ford Motor Company experienced a shortage of transmission parts, leading to temporary shutdowns at its Ontario plant, which produced Edge SUVs, and its Chicago facility, which manufactured Taurus sedans. General Motors also had to pause operations at its SUV plant in Delta Township, Michigan, for a week and reduce shifts at a transmission plant in Warren, Michigan, impacting production schedules significantly.
NOKIA
In 2021, nearly 2,000 workers from Nokia India’s Chennai plant, which employed close to 8,000 people, took to the streets to highlight their job insecurity and demand protections for their livelihoods.
At that time, the Finnish handset manufacturer was embroiled in two separate tax disputes—one with the central government and another with the Tamil Nadu government. Tax authorities had frozen the company’s assets, including the Chennai plant, until the issue with the central government was resolved. This situation left the plant’s future uncertain, especially since it needed to be transferred to Microsoft by the end of April as part of an impending acquisition.
If some workers lost their jobs, as management had suggested might happen due to ongoing tax disputes, the issue of re-skilling and finding new employment would become critical for them.
Industries In Kerala
Major multinational corporations like Coca-Cola and PepsiCo struggled to withstand labor strikes. In 2004, Coca-Cola halted operations at its Plachimada plant in the Palakkad district following widespread protests concerning pollution and the overexploitation of groundwater. The company had established the plant in 1999.
Similarly, PepsiCo opted to close its production facility in Kerala due to labor unrest, marking 15 years since Coca-Cola ceased operations in the state. The PepsiCo unit in Palakkad, managed by franchisee Varun Beverages Ltd, issued a mandatory closure notice to the state labor department in 2020. This facility, established in 2001 in the Kanjikode industrial area, focused on producing packaged drinking water and soft drinks under the Pepsi brand.
In March 2019, PepsiCo transferred control of the plant to Varun Beverages after a labor strike that demanded better wages and benefits for contract workers. Prior to the franchise arrangement, the plant had faced a temporary shutdown, which ended only after an agreement was reached with the workers. Management sources indicated that the decision for lockdown stemmed from significant losses incurred during a strike in February of that year. They noted that, despite police protection, employees on duty faced assaults.
In 2021, KITEX Garments, which had planned to invest ₹3,500 crore in Kerala, announced its withdrawal, citing harassment by government officials. This decision sparked debates about the state’s investment climate. The situation was further complicated by concerns over labor issues and pollution, despite job creation.
Case Study – West Bengal
To understand the destructive impact of communist movements on a state’s viability, one can look to West Bengal as a case study of strategic devastation caused by Communists led labor strikes.
In the late 1960s, political unrest, fueled by the rise of the Naxal movement in urban areas like Kolkata, created an environment detrimental to industrial progress. Business owners were often perceived as class enemies, resulting in violent confrontations and aggressive trade union activities that targeted various companies. This climate of fear was underscored by incidents such as bomb attacks on executives, which severely undermined workplace morale and operations.
Prominent firms, including Jessop & Company, Braithwaite, and Aluminium Corporation of India, faced significant challenges due to strikes, violence, and governmental hostility, ultimately leading to closures and nationalization. Key industries such as Burn & Company and Indian Standard Wagon were nationalized following intense labor disputes, signaling a considerable retreat from private enterprise.
This hostile atmosphere prompted many industrialists, like the Singhanias and the Birlas, to move their operations to more favorable states like Maharashtra and Delhi. The Left Front government’s antagonistic approach to capitalists contributed to a dramatic decline in industrial investment, forcing major companies such as Philips and Ispat Industries to exit the state.
Efforts to revitalize the industrial sector in the 1990s were largely fruitless, as initiatives to attract substantial investments were thwarted by ongoing labor disputes and land rights issues, particularly in Singur.
As industries declined, unemployment surged, further aggravating the region’s political and economic instability. The interplay of militant unionism, hostile policies, and the exodus of major businesses resulted in West Bengal’s dramatic fall from its status as an industrial hub, thwarting any hopes for a return to its former economic prominence.
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