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>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 em

>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 14y ago
Thanks for the comment. To add to that, http://www.voxeu.org/article/why-india-lags-behind-china 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.

edge17 14y ago

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