

Manufacturing is taking off in India. But not in the way many hoped - JumpCrisscross
http://www.economist.com/node/21560263

======
kshatrea
>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
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._

------
nsns
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.

~~~
iridium
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.

~~~
nsns
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...).

------
tathagata
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.

