Police pickets have been put up across Gurgaon and Manesar, with a few road blocks at sensitive junctions on National Highway 8, which connects Gurgaon and Manesar to Jaipur.
The factory opened in the morning for the first shift. However, around 2 pm, about 50 police personnel were seen rushing into the premises and the factory shut down for the rest of the day.
A company official said they had received word that the situation could worsen and, hence, as a precautionary measure the factory was shut down.
"The decision to stop production applies only for today. Any decision to re-open the factory will be taken as the day progresses," said a spokesperson.
The strife in Manesar is finding its echo in business circles. Earlier, Japanese Ambassador to India Y Enoki said, "This is a disadvantage for India's image as an FDI destination and also a negative image on Japanese management."
The Gurgaon incidents held up routine work in both Houses of Parliament. In fact, barring the Rashtriya Janata Dal, the other allies of the UPA turned on the Congress criticising the party's chief minister in Haryana handling of the episode in strong language.
The Left parties walked out of the Lok Sabha angered by Home Minister Shivraj Patil's reply to the House, making this the first time since May 2005, when they became part of the UPA, to react so strongly against their allies.
Annoyed at the Japanese Ambassador's remark that events in Gurgaon would have an impact on foreign direct investment flows into India, an official spokesperson said an isolated incident involving a labour dispute should not become a benchmark for judging the investment climate in India.
"The country's democratic institutions and its legal system provide an effective mechanism to deal with such incidents in a transparent manner. The legal interest of foreign investors will be fully safeguarded," he said.