By Sudeshna Sarkar - IANS 

Kathmandu, June 16 : Indian tobacco major ITC has declared an indefinite lockout at its garments factory in Nepal -- producing its John Players and Springwood brands of menswear for export to India, Bangladesh and other countries -- after factory workers went on the warpath.

The state-of-the-art factory in Biratnagar town, whose jute mills were the cradle of the trade union movement in Nepal, was shut down indefinitely Wednesday after workers held 42 company employees captive for more than 24 hours and clashed with police when the latter sought to rescue the victims.

Violence erupted after workers staged demonstrations for almost a week over a pay-cut.

In April, the workers had called a strike and the authorities, following a new industrial act that authorises "no work, no pay", decided to dock salaries for the duration of the protest they termed illegal.

The decision triggered the rampage Tuesday with workers locking up 42 employees and refusing to release them.

It was not known immediately if any of the major political parties were behind the unrest. The factory employs nearly 600 people, the majority being women.

In 1986, attracted by the cheap labour in Nepal and the trade concessions it enjoyed, ITC formed a joint venture, Surya Nepal Private Limited (SNPL), in which the Indian company holds 69 percent stake while the balance shares are owned by 20 Nepali individuals and corporates, including the deposed royal family of Nepal, and British American Tobacco (Investment) Limited.

From tobacco, the joint venture diversified into apparel in 2004, first setting up a factory in Nepal and then upgrading it three years later so that 4,000 articles could be produced daily.

Recently, concerned at the growing insecurity in Nepal's Terai plains, especially frequent strikes, Surya Nepal, now Nepal's largest private-sector enterprise with a turnover of over $100 million, began constructing a new factory in Tanahun in western Nepal, where security is better.

Surya Nepal's management called a council of war Thursday to discuss the situation.

The joint venture is also facing growing lobbying by the anti-tobacco group in Nepal who have called for the country to be tobacco free by 2020.

The campaign won significant concessions from the government which is now readying a new law that will force tobacco manufacturers to enlarge warning signs on cigarette packets and restrict the sale of tobacco.

The lockout at the factory comes less than a month after Maoists attacked Indian power and infrastructure major GMR Group's hydropower project office and site camp in farwestern Nepal, burning down everything.