Indian business leaders were outraged last night after a government minister said that the murder of a chief executive by a mob of sacked workers “should serve as a warning for management”.

Lalit Choudhary, 47, the head of the Delhi-based operations of Graziano Transmissioni, an Italian car-parts maker, died of head wounds on Monday after being beaten by scores of employees he had earlier dismissed.

The attack, at the Graziano plant in Greater Noida, a suburb of the Indian capital, followed a dispute between the factory’s management and workers, who had demanded better pay and permanent contracts.

Mr Choudhary was holding a meeting with more than a hundred former staff to discuss a possible reinstatement deal when the attack occurred. The murder has left much of corporate India in shock. However, Oscar Fernandes, who heads the country’s Ministry of Labour and Employment, declined to criticise the attack, saying it “should serve as a warning for management”.

Mr Fernandes added: “Workers should be dealt with with compassion . . . workers should not be pushed so hard that they resort to whatever happened.”

The Government has admitted that there is widespread resentment among hundreds of millions of Indians who have failed to benefit from their country’s much publicised economic renaissance.

Manmohan Singh, the Prime Minister, has conceded that India’s recent runaway growth in gross domestic product of close to 9 per cent a year are not reflected in most of the electorate’s experiences. This year he unveiled a massive debt waiver for India’s poor farmers in an attempt to make the country’s growth more inclusive — one of several such populist policies.

Indian business groups reacted with disbelief to Mr Fernandes’s apparent suggestion that a workforce’s “simmering discontent” justified beating to death a boss.

“I cannot believe that someone in the Government is condoning something like this,” Rajeev Chandrasekhar, the president of the Federation of Indian Chambers of Commerce and Industry, said. “An innocent man has died. I am frankly flabbergasted. I am shocked.”

The Confederation of Indian Industry said there was “nothing in the world that can justify lynching of any person and no dispute can be settled by murdering an adversary”. The organisation had earlier given warning that the mob killing — one of several violent episodes to have blighted Indian industry in recent months — would tarnish the sub-continent’s global standing as a place to do business.

The country has already seen a massive exodus of foreign capital from its stock markets this year in the wake of the credit crisis affecting Wall Street and much of the rest of the world.

India, which is also fighting a surge in inflation and the first slowdown in GDP growth for three years, can little afford to spurn overseas investment.

Graziano immediately demanded an apology for what it called Mr Fernandes’s “very unfortunate comment”. The minister later said he had not meant to condone violence.

In a statement issued from Rivoli, Italy, the company said that some of Mr Choudhary’s attackers did not have any connection with the company. It added that the chief executive was killed by “serious head injuries” caused by the intruders.

“We absolutely condemn the attack,” Marcello Lamberto, the head of Oerlikon Segment Drive (Systems), which owns Graziano, said. “This is by no means a regular labour conflict, but is truly criminal action. The whole of Oerlikon Group is close to the family of Mr Choudhary in this terrible moment.”

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