Social Investigation

A Survey on Peenya Industrial Estate

(As a part of the process of social investigation, the Bangalore City Leading Team of CPI(ML) and AICCTU jointly organised a survey on Peenya Industrial Estate from March 1-15. A questionnaire was prepared and answers gathered from various sources, including workers of the respective factories. Some observations arising out of available information from the survey are summarised below.)

“Peenya Industrial Estate in Bangalore occupies a pride of place among small scale industries in Karnataka as well as in whole of India. It is considered to be the biggest in Asia with about 800 sheds constructed for housing the small units. The Karnataka Small Industries Development Corporation (KSIDC) has been developing Peenya since 1971-72. It has been built in two stages. The first stage of the estate spreads over an area of 125 acres, while the second stage, which was established in 1979, occupies an area of 141.50 acres. The Karnataka Industrial Area Development Board has also taken up the development of bigger industrial units in this estate. Furthermore, the Government of Karnataka has been encouraging the Karnataka Small Scale Industries Association (KASSIA), which has been functioning since 1949, to promote small-scale industries in Karnataka. Lastly, it may be noted that the small scale industrial units in Peenya themselves formed an association known as the Peenya Industries Association -- a voluntary association established in 1977, to protect and promote the interests of small scale entrepreneurs.”

This is a quotation from a study conducted by Dr.B.R.Patil and Prof.N.Krishnaswamy on behalf of the Indian Institute of Management. This study was conducted during 1983-85. Perhaps that was the first and last study documented about Peenya Industrial Estate. This estate was constructed in a period when the country was taking pride in “small is beautiful” and was banking on small-scale industries to generate huge employment opportunities to ward off the unemployment crisis. One can easily make out the thrust given to small-scale industries if one closely watches the “Five Year Plans” in the past. Moreover, Bangalore being one of the major centres of public sector enterprises, most of the industrial units in Peenya were getting their orders from these public sector units, and were entirely dependent on them. Mainly, they are manufacturing sector units. In fact, launching a small scale unit was considered to be a profitable venture in those days in the context of heavy tax and other concessions, infra-structural facilities offered, loan facilities extended to such units and, above all, number of products reserved for manufacturing only in small scale sector.

But, the small-scale industrial units are on the verge of extinction today. On the one hand, most of the small-scale units being ancillary units of PSUs or some other parent company, had to follow suit, as their parent companies themselves were on the verge of closure. On the other hand, with most of the erstwhile-reserved items being progressively dereserved, many big capitalists and even multi-national companies are competing with small-scale sector. The latest announcement of the removal of Quantitative Restrictions is a body blow dealt to the small-scale sector. Dynamatics Limited, a joint venture company with Dowty, UK, is demanding more productivity from workers and is also depressing wages so as to face competition from Chinese products in the market. With the removal of QRs, many more companies are to follow suit. Ancillary units in the automobile sector too are facing a similar situation. Automobile ancillary units are among the major segments in Peenya Industrial Estate. Most of the SSI units in Peenya produce for export orders, for the automobile sector and public sector units.

The small-scale units are the worst victims of severe recession in the economy. To cite a cruel illustration of the destruction of the manufacturing sector, a factory called Metal Lamp Caps, involved in manufacturing activities for a few decades, is now closed, demolished and a ‘new economy’ industry called Philips Innovations, a software company is standing on the debris of the same. Even in Peenya and the surrounding areas closures and lock-outs are the order of the day. Fouress, Kamala Dials, Bharathamatha, Kirloskar(Peenya unit), Brindavan Alloys, Bata, Rajaram Cornflakes, Asea Brown Boveri-IInd Stage, J.L.Morrison, Mysore Wires, Insulated Conductors are the standing testimonies to the ongoing process of de-industrialisation.

Neglect of Peenya Industrial Estate also has an added dimension of the neglect of the manufacturing sector. With all the concessions withdrawn and little attention being paid to infra-structural facilities like road, water and electricity, Peenya is now facing a severe crisis. Recently, all small-scale industrialists of Peenya, led by Peenya Industries Association, held an impressive and unprecedented demonstration in front of KPTCL demanding regular supply of electricity and reduction in power tariff hike. They are also planning for more struggles on similar issues in the coming days.

When we conducted a pilot survey covering 60 factories, we found that one factory called KKNag Limited was planning to relocate the factory to a far-away place as the water cost and raw material cost were touching their all time highs, making the products uncompetitive in the market, while another unit by BPL with new machinery and all facilities could supply the same at a cheaper rate. Almost 50% of the owners of industries covered by the survey own 2 or more units either in other industrial areas or in Peenya itself. Most of them own few units in the newly emerging Bangalore-Hosur industrial belt because of less cost on infrastructure.

So, flight of capital from the manufacturing sector to attractive service sectors like IT, or from one region to another less expensive region, are the trends of industrial restructuring in Peenya, apart from other forms like introduction of new machinery etc., in the era of liberalisation and globalisation. But this is not all. The impact of liberalisation has a telling effect on labour market conditions too.

With the ongoing new reforms, the concept of job security has become obsolete. The ‘right to hire and fire’ is offered on a platter to the industrialists along with the new budget proposals for 2001-2002. We found that the ratio of confirmed workers to contract/casual workers has been reversed in the last 10 years in most of the factories in Peenya. Say, for example, in Hindustan Electro Technology (P) Ltd. there were 100 confirmed workers and 25 contract workers in 1990. Later, most of the confirmed workers were sent out on some pretext or other and contract employees were appointed in their place. In this process, now, in the year 2001, the number of confirmed workers are just 25 and the number of contract workers is 100. This is only a tip of the iceberg. The survey reveals that 80% of the workmen in most of the factories are not regular employees of the concern and are drawing a meagre salary ranging from Rs.600 to 1500, not even the statutory minimum wage declared by the Government of Karnataka. There are various boards and government departments to fix minimum wage, revise it, to calculate CPI, to implement labour laws, etc., but none of them are of any use to this deprived lot of workers.

The worst is the functioning of the Department of Labour and the total ineffectiveness of conciliation machinery in Karnataka. Generally, a worker in other states has an option of going to the court only in case of failure of conciliation before the Labour Commissioner, that too after obtaining government permission. While in Karnataka the whole thing is different. It is not mandatory for a worker to approach the conciliation machinery for any legal remedy for the first six months immediately after the action is taken against him/her, and one is free to approach the court directly within that period of six months. While this is a positive aspect from the point of view of accessibility of courts to the workers, even small grievances take a long time for settlement because of the delay in courts. The buraucratic machinery is inept and powerless while the courts keep prolonging the disputes. This is one reason why we could witness total disillusionment with the conciliation machinery in Karnataka. Moreover, as the court verdict is binding on everybody and annuls the collective bargaining power of the workers after a verdict, unlike a conciliation outcome it leaves no scope for any direct resistance movement. Workers prefer approaching a lawyer rather than a trade union leader in such a situation. It is quite tragic that only 7 out of 60 factories surveyed have some presence of workers’ unions.

Bangalore, which is considered to be a Silicon Valley, is known for its high-wage islands, particularly in IT sector. But, there are sweatshops in the IT sector too. The computer operators are offered a salary equivalent to that of the workers in the garment industry and are experiencing similar working conditions and labour relations, of course with a more sophisticated appearance. We can find a large number of girls, employed as computer operators, drawing a salary of Rs.1500-2000, after completing their computer courses having spent Rs.10,000-20,000.

It is true that this is not a complete picture of restructuring in Peenya Industrial Estate but these are various facets of the ongoing process of de-industrialisation and changes in labour market conditions. But, this poses a serious question of trade union tactics in the face of industrial restructuring in the era of liberalisation and globalisation.

On the one hand, factory based trade unions, particularly in SSIs, are losing their collective bargaining power, that too in the context of draconian amendments to Chapter V(b) of the ID Act and CLARA. There are talks of exempting units with less than 1000 workers from the statutory need to take permission from the government for closure. But there are very strong opinions that reducing the number even up to 300 may not be of any help, as a vast majority of the factories have a workers’ strength of 300 and below. Practically, a large section of workers – especially those in the SSI sector -- are removed from the purview of a key provision in the ID Act. This condition necessitates the trade union movement to come out of its narrow legal framework to find a solution to workers’ problems. The parameters of trade union movement have to be redrawn and redefined. There are also talks of having a single union at national or regional level in order to enroll all the workers in the union irrespective of the number of workers in a particular factory. There are also talks of restructuring TUs along the lines of unions in European countries. Leaving these debates apart, the trade union movement has to prepare itself for formulating a comprehensive political response to the problems of workers in the backdrop of the liberalisation policies. The seats of power, the governments, policy-making bodies are to be made the prime targets of the trade union movement.Also, it has to think of novel forms of struggle in order to achieve the workers’ demands. It goes without saying that militant forms of struggle assume a significant dimension while there are little legal safeguards. The workers’ movement turning into a spontaneous, anarchistic movement also cannot be ruled out. So, the trade union movement has to look for newer demands, newer forms of struggles, newer political responses and new structures. Mere formalistic, legalistic approach to workers’ issues cannot be a proper response to the workers’ problems in the present phase.

Peenya has seen vibrant left trade union movement in the early ‘80s. More than 50% of industrial workers in the estate, according to available information, were organised in trade unions then. But, not even 10% of the workforce is organised now. One can very well look for a militant trade union movement, sooner or later, in this new turbulent phase.

–V.Govindarajan and Subramani