1. Account for the limited success of India’s manufacturing sector in achieving labour-intensive exports. Suggest measures to promote competitiveness and shift towards more labour-intensive rather than capital-intensive exports.
| Syllabus: General Studies – III: Indian Economy (issues re: planning, mobilisation of resources, growth, development, employment); Inclusive growth and issues there in |
India’s manufacturing sector, despite contributing around 17% to GDP and employing millions, has failed to emerge as a global hub for labour-intensive exports (e.g., textiles, footwear, toys). Instead, capital-intensive sectors such as petroleum products, chemicals, and automobiles dominate exports. Understanding the reasons and charting corrective measures is crucial for achieving the vision of Atmanirbhar Bharat and Viksit Bharat 2047
Challenges:
1. High Logistics and Infrastructure Costs:
Poor port connectivity, high power tariffs, and transport bottlenecks make exports uncompetitive.
Example: India’s logistics cost 13–14% of GDP vs. China’s 8–9%.
2. Rigid Labour Laws and Informality:
Stringent compliance discourages large-scale employment.
Example: Over 80% of apparel units employ fewer than 50 workers, limiting economies of scale.
3. Skill Gaps and Low Productivity:
Lack of vocational training leads to low worker productivity compared to competitors.
Example: Bangladesh’s garment sector outperforms India despite lower wages due to higher skill intensity.
4. Global Competition from Low-Cost Economies:
Countries like Vietnam and Bangladesh offer duty-free access to EU/US markets.
Example: Bangladesh enjoys EU’s GSP+ benefits; India lost competitiveness post-GSP withdrawal in 2019.
5. Fragmented Supply Chains:
Absence of integrated clusters increases costs and delays.
Example: India’s apparel exports are fragmented vs. China’s large-scale integrated clusters.
6. Focus on Capital-Intensive Exports:
Policy incentives like PLI are often skewed towards electronics, automobiles, and pharma.
Example: India’s top 5 export items include petroleum, gems, and chemicals, not labour-intensive goods.
7. Trade Policy Uncertainty:
Tariff hikes and slow FTAs affect predictability for exporters.
Example: India walked out of RCEP in 2019, missing access to Asia-Pacific supply chains.
Measures to Promote Labour-Intensive Exports
1. Develop Integrated Manufacturing Clusters:
Expand PM MITRA parks, toy clusters, leather hubs to reduce costs.
Example: 7 PM MITRA parks approved; Dhar park attracted ₹23,000 crore investment proposals.
2. Labour Law Rationalisation:
Ensure smooth rollout of the four labour codes to boost formalisation and large-scale hiring.
Example: Simplified labour codes can help apparel and footwear units scale like in Bangladesh.
3.Skill Development and Upskilling:
Expand programs like Skill India with sector-specific skilling.
Example: Apparel Made-ups and Home Furnishing Sector Skill Council training workers for export needs.
4. Low-Cost Financing & Credit Access:
Expand credit schemes for MSMEs, reduce interest rates for exporters.
Example: RoDTEP scheme reimburses exporters for embedded taxes, but needs higher coverage for textiles and footwear.
5. Improved Market Access through FTAs:
Conclude FTAs with EU, UK, and expand Indo-Pacific trade ties.
Example: India-UAE CEPA (2022) already boosting gems & jewellery exports; similar benefits can be extended to textiles.
6. Promote Women’s Workforce Participation:
Encourage women in textiles, garments, electronics assembly.
Example: Tamil Nadu’s garment sector employs ~70% women, driving labour-intensive exports.
7. Encouraging Technology Adoption in Labour-Intensive Sectors:
Balance between automation and labour use for competitiveness.
Example: Bangladesh uses basic automation in garments while retaining high employment intensity.
India’s manufacturing export basket remains skewed towards capital-intensive sectors, limiting job creation. By addressing structural bottlenecks, boosting FTAs, creating large-scale clusters, and focusing on skill-based employment, India can replicate the success of Bangladesh in garments or Vietnam in electronics. Achieving this will not only enhance exports but also realise the goal of generating labour-intensive employment for India’s demographic dividend.
| PYQ REFERENCE [2017] Q. Account for the failure of the manufacturing sector in achieving the goal of labour-intensive exports rather than capital-intensive exports. Suggest measures for more labour-intensive rather than capital-intensive exports. [10 Marks] |
2) “India–Japan relations are entering a ‘new golden chapter’ marked by deeper cooperation in economic security, defence, technology, and people-to-people ties. Critically examine the strategic significance of this partnership for India’s Indo-Pacific vision.”
India–Japan ties have evolved from cultural affinity and economic cooperation into a Special Strategic and Global Partnership. PM Modi’s 2025 visit to Japan elevated the relationship, aligning it with the Indo-Pacific vision of “free, open, and inclusive seas” amid growing geopolitical volatility. Both nations now see each other as indispensable partners for regional stability and prosperity.
Strategic Significance of India–Japan Partnership
1. Economic Security & Supply Chains:
Collaboration in semiconductors, AI, critical minerals, and resilient supply chains.
Example: Japan’s $68 billion investment target in India; MoC with Tokyo Electron on semiconductors.
2. Technology & Industrial Cooperation:
Flagship projects like Maruti Suzuki’s EV line in Hansalpur and the Mumbai–Ahmedabad Shinkansen (bullet train) demonstrate technology transfer and industrial deepening.
3. Defence & Security Cooperation:
Revised Joint Declaration on Security Cooperation (after 17 years) strengthens joint exercises, defence equipment co-production, and technology sharing.
Example: Project UNICORN naval unified complex radio antenna.
4. People-to-People Exchanges:
Japan–India Human Resource Exchange Initiative fosters skilled workforce mobility.
Example: Japan hosts ~40,000 Indian workers under skill training programs, expected to rise with new initiatives.
5. Multilateral & Minilateral Cooperation:
Both countries work closely in Quad, G20, UN, and counterterrorism fora.
Example: Japan supports India’s role as Quad Summit host, crucial for Indo-Pacific stability.
6. MSMEs & Inclusive Growth:
Japanese MSMEs support India’s “Make in India, Make for the World” vision.
Example: Collaboration in auto-components and electronics sectors generates local jobs.
7. Cultural and Civilizational Connect:
Shared Buddhist heritage, soft power diplomacy, and initiatives like “Japan Month” in India strengthen societal trust.
Challenges
- Slow project execution (e.g., Shinkansen delays).
- Trade imbalance still tilted in Japan’s favour.
- Security dependence on the US alliance may constrain Japan’s autonomy.
- China factor – balancing deterrence without escalating tensions.
India–Japan cooperation is central to shaping an open, resilient, and rules-based Indo-Pacific order. By strengthening supply chains, defence, and technology partnerships while expanding people-to-people ties, the two nations are scripting a “golden chapter” that goes beyond bilateralism — becoming a pillar of stability for the wider Indo-Pacific and global order.
| PYQ REFERENCE [2019] Q. ‘The time has come for India and Japan to build a strong contemporary relationship, one involving global and strategic partnership that will have a great significance for Asia and the world as a whole.’ Comment. [10 Marks] |