India’s auto-making state of Haryana has ordered a 35 per cent hike in minimum wages, after factory workers boycotted work and staged protests this week over rising living costs as a result of the US-Israeli war on Iran.
Haryana’s government said it was raising the minimum wage for unskilled workers to $165 per month, from roughly $120, effective April 1, a move that helps workers but will raise cost pressures for India’s auto industry at a time of rising input prices and supply chain disruptions.
The decision comes a day after clashes between the police and workers in Manesar, located 30 miles (48.28km) south of New Delhi and home to companies like Maruti Suzuki, as well as hundreds of ancillary units that feed into it.
“We urge the workers to ... peacefully carry on their work,” Ajay Kumar, a state official, said in a video address. Factory workers have been hit hard as prices at eateries have surged due to disrupted supplies of gas in recent weeks, prompting some to return to their villages.
India is the world’s second-largest liquefied petroleum gas (LPG) importer and is battling its worst gas crisis in decades, with the government cutting supplies for industries to shield households from any shortage of cooking gas.
The government’s move will increase costs for India’s car industry, already dealing with higher raw material prices stemming from the Iran war. While the likes of Tata Motors and Mahindra have raised car prices, Maruti has warned of a similar move. India’s heavy reliance on gas across the economy – businesses of all sizes, households, agriculture, public transport – makes its factories as well as lower-income earners among the most vulnerable in Asia.
While talks between Iran and the US have raised hopes of de-escalation, auto industry executives said supply chains could take weeks to normalise, as a growing number of migrant workers head back home.
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