Haryana hikes wages after unrest; auto sector faces cost pressure

Haryana has ordered a 35% increase in minimum wages following a week of factory protests and work boycotts by labourers grappling with rising living costs linked to the U.S.-Israeli war on Iran.

The state government said on Friday it would raise the minimum wage for unskilled workers to $165 per month from about $120, effective April 1. While the move offers relief to workers, it is set to intensify cost pressures for India’s auto industry, which is already dealing with rising input costs and supply chain disruptions.

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The decision comes a day after clashes between police and workers in Manesar, around 30 miles (48.28 km) south of New Delhi. The industrial hub houses major manufacturers such as and hundreds of ancillary units.

“We urge the workers to … peacefully carry on their work,” state official Ajay Kumar said in a video address on Friday.

Workers have been hit hard by a surge in food prices, with eateries raising rates amid disrupted gas supplies in recent weeks. The strain has prompted some migrant workers to return to their villages.

India, the world’s second-largest liquefied petroleum gas (LPG) importer, is facing its worst gas crisis in decades. The government has cut supplies to industries to shield households from shortages of cooking gas.

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The wage hike is likely to push up costs for automakers already contending with higher raw material prices linked to the Iran conflict. Companies such as and have raised vehicle prices, while has indicated it may follow suit.

Heavy reliance on gas

India’s broad dependence on gas — spanning businesses, households, agriculture and public transport — has left both factories and low-income workers among the most vulnerable in Asia.

Akash Kumar, 25, who works at , a supplier to , told Reuters that street vendors were charging double for a basic meal of bread, curry and yogurt.

Friday’s wage revision, he said, would offer some relief. “Whatever we get, we have to be happy,” he said, adding that workers have resumed duties after being informed of the pay hike.

Industrial unrest in Manesar disrupted operations across several auto suppliers this week, according to Reuters interviews with more than 30 workers. Many said they were demanding higher wages to cope with rising food costs and erratic gas supplies.

The central government has maintained there is no shortage of cooking gas for households and said it is increasing availability of smaller cylinders for daily-wage earners and migrants.

Munjal Showa told Reuters its production was partially affected during the unrest. At Roop Polymers, which supplies to Maruti and Honda, notices at the factory gate warned of disciplinary action against absentee workers, while a company executive said “work was heavily disrupted inside” due to the protests.

Although talks between Iran and the United States have raised hopes of de-escalation, auto industry executives said supply chains could take weeks to stabilise, particularly as migrant workers continue to head home.

India has an estimated 400 million migrant workers who travel to industrial centres such as Manesar, typically working around 48 hours a week for minimum wages.

“Most employers are trying hard to hold on to the workforce that is running back by offering two meals a day or paying a small bonus,” said Vinod Kumar, president of the India SME Forum, which represents thousands of small and medium-sized businesses.

The group is seeking government support for “emergency” measures, including cluster-based common kitchens. Kumar warned: “once labour leaves, it is very difficult to get them back. (With inputs from Reuters)