This paper aims to understand the changing dynamics of internal labour market segmentation intertwined with the history of working-class struggle in an industrial belt in India's National Capital Region (NCR). Nuances of workers' class struggle in the automobile sector in Delhi-NCR over the last 15 years have shown that unity between permanent and contract workers was key to several successful struggles against worsening work conditions and management control within the global value chains of automobile production. Our fieldwork findings, along with direct and indirect political engagement in the region, reveal that increasing salaries and allotment of supervisory roles to small sections of permanent workers, coupled with the simultaneous fragmentation a lower strata of workers into multiple categories with very low salaries, benefits and heavy workloads, have been significant attempts by capital to break class solidarity among different sections of workers. Relatively pro-labour legislation and trade unions tend to concentrate in high-wage zones, while low-wage and precarious employment remains unprotected by such institutional mechanisms. Labour segmentation is inherent to capitalist exploitation, guarded by institutional mechanisms. Advanced mechanisation reduces distinction of skill requirements between highly paid permanent and lowly paid contract workers. In this context, labour segmentation is a political response to trade unionism from the side of capitalist management. [ABSTRACT FROM AUTHOR]