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Hyundai to shift part of Indian production

Hyundai Motor India is planning to shift production of one of its premium models to Europe after a strike over unionisation at its south India plant that led to the mass arrest of 750 protesters. The move by South Korea’s biggest carmaker is believed to be the first time such a step has been taken because of labour unrest since the country opened up to foreign investors in 1991.

“Because of these problems, we cannot keep up with targets and hence some production will shift to one of our facilities in Europe,” said Rajiv Mitra of Hyundai. Mr Mitra said production of Hyundai’s i20 compact saloon was likely to be moved. A decision was expected this quarter. The company originally planned to produce 120,000 i20s this year at its south Indian plant, of which 80,000 would have been exported, mostly to Europe.

The Hyundai strike comes as a big domestic auto manufacturer, Mahindra & Mahindra, said workers at one of its plants had downed tools. Employees at a facility run by health group Wockhardt Hospitals have also gone on strike. Last September, a labour dispute that turned violent led to the murder of the chief executive of an Italian automotive parts company based on the outskirts of New Delhi. Nevertheless, the company decided to keep its entire operation in India.  Tata Motors, the country’s largest automaker, was forced last year to relocate a plant for the world’s cheapest car, the Nano, after protests by farmers.

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