Friday, May 19, 2006

Indias industrial renaissance?

Link thanks to Abi

From NYTimes, this piece talks about how

As global manufacturers seek new places to plant their flags, India is seeing early stirrings of an industrial renaissance.

India has cultivated an image as a center for outsourcing, creating a new economy of call centers and software campuses that has lifted the relatively privileged. And even though workers here have for years stitched clothing and apparel, a widespread manufacturing base has been elusive, and factories have long been conspicuous for their relative absence here.

So the new murmurings of manufacturing could have a profound effect for a vast number of India's poor people, as well as for the international sourcing of goods from cars to bras.

The piece as usual brims with optimism, but in reality, we are some way off, as the piece itself says:

In 2005, India's exports were worth about $8 billion a month, against China's $63 billion. Thats 8 times.

Yet, all is not lost. With focus on SEZs, we may yet get some more manufacturing into the country, but for that our labour laws will have to be changed. For a government thats more obsessed with making peace with tails of dogs that will never straighten and in creating ever divisive quotas within the country when it is not indulging in vote bank politics, this may be too much to ask. Until infrastructure is straightened out, labour laws eased, our industrial renaissance is a castle in the air. Except for the brave few who set up industries in our country, we are not going to see action on the scale of China. Forget competing with them, we are nowhere in the picture as of now. Our high end skills are touted, with some justification, but without infrastructure (thats the third time I say this within this post) the road to nowhere will be the only road under construction.


ChinaLawBlog said...

I agree with you that China's infrastructure is what separates Chinese manufacturing from India's right now. Also, the NYT article makes it seem almost as though Chinese wages are out of control and that is certainly not the case. Wages are up in places like Shanghai, yes, but there are plenty of other places in China, with great infrastructure, where wages are half those in Shanghai, and barely rising.

Prashant said...

>>Yet, all is not lost. With focus on SEZs, we may yet get some more manufacturing into the country<<
I agree, Also rampant product piracy which is several times severe in China when compared to India can work in our favour. So if we invest and effectively spend a decent amount of money on infrastructure, say for next 5 years, this combined with our software skills..I dont see why we can't sell a better deal when compared to China in manufacturing

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