Manufacturing is taking off in India. But not in the way many hoped

http://www.economist.com/node/21560263

by JumpCrisscross • 14 years ago

44 8 14 years ago

kshatrea• 14 years ago

>But “commodity manufacturing is unsuccessful. It is the opposite of China…We have archaic labour laws. Nobody in their right mind is going to set up a plant employing 10,000 people.”

This. The labour laws protect unions; many businesses simply do not want to create large manufacturing jobs due to historical labour trouble. The communist ruled states of Kerala and (previously) West Bengal have been very prone to labour troubles and strikes in the past. We don't have a Scott Walker (R-Wisconsin) here to take these labour unions on. Most of our politicians consider the unions as a good place to buy votes for cheap, and wouldn't consider reforming the old labour laws. Indian IT has far less union laws and has had a higher growth rate in the past decade, whereas manufacturing and textiles are still laggards in terms of growth. There is just too much socialism in this country. And people want even more.

edge17• 14 years ago

Thanks for the comment. To add to that, http://www.voxeu.org/article/why-india-lags-behind-china

The most important factor that still holds back large firms from entering these products is a set of draconian labour laws in India. Under these laws, it is virtually impossible for a firm with 100 or more employees to fire the workers even in the face of bankruptcy. It is equally difficult for the firms to reassign the workers from one task to another. These provisions impose very low worker productivity or a high real cost of labour. Large-scale capital-intensive sectors such as automobiles, where labour costs are a tiny proportion of the total costs, can profitably operate in such an environment. But the same is not true of large-scale labour-intensive sectors labour. Few foreign manufacturers are willing to enter India outside of a small subset of capital- and skilled-labour intensive sectors.

tathagata• 14 years ago

It is indeed possible that India may become 'the next workshop of the world'. This will, at least in the short term, lift the country more in the span of a decade than it has risen, against all odds I might add, in the last 50 years. The only thing we Indians need to do is change our cultural bias against physical labour. And every passing day I can see this changing.

nsns2• 14 years ago

Is there any other place in the world, called a "nation" but made up of 28 different states, each with its own unique language and culture (not minorities, but full blown states)? Just see what happened in Europe when they tried to unite their currency.

In reality, India is more like Europe than the US (shared culture and history, different national entities, never really jointly ruled until modern times), yet its government is centralized and cultivates hopes of becoming like China. I'd be extremely sad to see India break up into separate states, but I'm becoming more and more convinced it's the only way to solve its real problems.

arethuza• 14 years ago

The Eurozone (17 countries, 333M people) is a subset of the EU (27 countries, 503M people) which is a subset of Europe (50 countries, 739M people).

So less than half of the people in Europe united their currencies into the Euro.

iridium• 14 years ago

You would surprised to see how mind numbingly similar the middle class is across all the states in India. Or for that matter similar to middle classes across the world.

Also - I dont think breaking it up will solve anything - If anything pakistan and bangladesh are excellent examples of states that were broken out of what you could call old India, and their struggles are getting worse after 60 odd years, not better.

nsns2• 14 years ago

I'm not Indian, but I do know Tamil, Bangla and Hindi, and love this country. I've been watching the rise of the middle class in India, and was devastated to see how the poor have become much much poorer (I'm thinking about Adivasis and migrant workers mostly), and how some north Indian families that were semi-middle class ten years ago, are poor now. The situation is really bad, IMO, and I hope there will be some improvement in the near future, perhaps after the imminent fall of the UPA2 government (though the alternatives seem just as bad...).

FlyingSnake• 14 years ago

The demise of modern India has been predicted ever since it gained independence from British. It is hard to understand from a western perspective how such a diverse nation can survive without anything common except religion. However there is a strong sense of unity (despite clashes) among Indians. E.g. legendary boxer Mary Kom still wants to win a gold medal form India despite the atrocities of Indian government has committed on her region. I feel the people know that in order to prosper they've to be together as a nation. An independent Chhattisgarh nation will be ineffective.

The Southern and Western states are way ahead of Northern states in terms of progress but Bihar has shown that it can have good governance and make economic strides.

The main issue is the media which wants to portray India as an alternative to China and the ruling class who think it's possible. India is an elephant; slow, messy and taking its own course on its own terms. I will consider India a superpower the day it solves all its internal problems and citizens can achieve what they aspire.

Manufacturing is taking off in India. But not in the way many hoped

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