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MSI strike costs exchequer Rs 350 crore in excise duty

By Motortrend India Staff   |   11 October,2011

A series of strikes at the country’s largest carmaker Maruti Suzuki India’s Manesar plant since June this year has resulted in excise revenue losses to the tune of nearly Rs 350 crore for the government, while the company has already suffered a hit of up to Rs 1,540 crore.

Since the first round of strike for 13 days in June this year to the 33-day-long standoff from August 29-October 1, and the fresh strike at the Manesar plant from October 7, MSI has suffered a total production loss of 51,375 units.

According to the industry calculations, it is estimated that per car on an average, the government is losing Rs 68,000 in the form of excise duty, thereby, resulting in a total loss of Rs 349 crore.

The Haryana government, on the other hand, is also losing out Rs 6,000 per car on an average as sales tax, resulting in a total of Rs 30.8 crore so far.

The revenue loss to the company from the series of strikes since June is estimated at Rs 1,540 crore.

When contacted, a company spokesperson confirmed the production loss due to the series of strikes but declined to comment on the financial losses.

The year 2011 has proved to be a tough one for India’s biggest carmaker. In June, the workers at the Manesar plant had gone on a 13-day-long strike demanding the recognition of a new union, Maruti Suzuki Employees Union.

After it was resolved, a standoff broke out between the workers and the management on August 29 over the issue of signing of a good conduct bond, a prerequisite made for permanent workers to enter the factory premises.

On October 1, an agreement was reached to end the standoff with MSI agreeing to conditionally take back 18 trainees who were suspended. However, it refused to take back 44 regular employees against whom disciplinary action was taken and who remain under suspension.

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