The previous chapter outlined the mutually constitutive role of global Original Equipment Manufacturers (OEMs) and state institutions in the modernisation of Indian auto manufacturing and the industrial transformation of regional economies. Through a process of ‘first-mover coupling’, a minority of foreign and domestic OEMs were able to reap positional advantages by undertaking pioneering investments in the 1980s and 1990s. During this period, India was emerging from an Import Substitution Industrialisation (ISI)-based economic policy framework to a neo-liberal economic policy framework through a gradual process of trade, investment and financial liberalisation.

Firms like Maruti Suzuki India Limited (MSIL) – or Maruti Udyog Limited (MUL) as it was known until the 2000s, Honda and Hero MotoCorp – which operated as the Hero Honda joint venture from 1984–2010, Tata Motors and Hyundai Motor India Limited (HMIL) played critical roles in modernising local industry by establishing their global production networks in key regions. These firms were rewarded with dominant shares in their respective vehicle markets and, for MSIL, Hero, and HMIL, with the capacity to pursue the preferred firm-level and network strategies of their global parent companies.

Along with the capacity to reshape commercial relations with networks of components manufacturers and vendors on a regional level, these pioneering firms were also in a position to strongly influence practices of employment relations and norms in Indian manufacturing. One of the key features of labour standards and employment relations in Indian auto manufacturing is its transformation in the hands of these firms and their key suppliers via tension and conflict with state institutions, key competitors and employees.

Yet the liberalisation of trade and investment in domestic auto manufacturing has also reflexively challenged the capacity of these pioneering firms to shape employment relations as they originally intended. As this chapter will demonstrate, this led to dramatic changes in the social regulation of employment relations which began in the early 2000s, and have continued to reverberate over the last 15 years.

This chapter focuses on the social organisation and social relations of work in small automotive manufacturing enterprises in India's National Capital Region (NCR). These enterprises are a mix of Tier-3 and Tier-4 firms. Tier-3 firms primarily manufacture automotive products for Tier-2 firms, although many produce for enterprises in different tiers of auto-based global production networks, including direct sales to the lead firm Original Equipment Manufacturers (OEMs) that dominate them. Tier-3 firms are generally much smaller than Tier-2 and Tier-1 firms when measured by production volume, sales, or number of employees.

This chapter will demonstrate that the participation of Tier-3 firms within global production networks in the NCR is usually based upon aggressive market price competition as well as strict oversight of product quality by OEMs and Tier- 1 firms. These inter-firm, commercial relations have major implications for the capacity of these smaller firms to lock themselves into global production networks, and for the organisation of work and employment relations within them.

Some of the enterprises discussed in this chapter are informal enterprises by virtue of their small number of employees. In India, firms are informal enterprises if they employ fewer than 10 workers on a regular basis, or fewer than 20 if they lack electrical power. These firms form part of the ‘unorganised sector’ (see Chapter 1). Many state regulations and labour laws do not apply to firms in the unorganised sector, such as the Factories Act 1948 which regulates working hours and conditions for regular workers in firms with 10 or more workers (the organised sector), medical insurance through the Employees’ State Insurance Corporation Act 1948 or an employment-based pension scheme through the Employees Provident Funds Act 1952.

However, many regulations, such as minimum wage laws at a national and state level, are meant to apply to all workers in firms in both organised and unorganised sectors. In the auto industry, some Tier-3 firms operate within the organised sector while others operate within the unorganised sector. In contrast, Tier-4 firms generally represent unorganised sector enterprises. Tier-4 firms tend to be own-account operations that function with a single, self-employed producer working with unpaid helpers from their family or with a small number of temporary wage workers.