Lamps, toys, batteries, small home appliances… Any tourist can see immediately how Chinese products are indispensable to Indian life.
In my opinion, Indians feel repugnance toward products made in China, but must accept them. Most of the Chinese products Indians rely on in their daily life are actually the cheaper, low-end products that Indians could or should be manufacturing themselves. India could manufacture its own stuff, but the country has no such plans.
The imbalance in India’s manufacturing industry, especially the underdevelopment of a low-end manufacturing, drives the country’s gargantuan trade deficit with China. This issue is also to blame for the high unemployment that has for so long bedeviled the country.
Unemployment remains without a doubt the Indian government’s most serious problem. Every year about 17 million people pour out onto the labor market to compete for 5.5 million jobs. The depressing youth unemployment statistics undermine development.
Manufacturing is essential to addressing unemployment and thus is a top economic goal for nearly all developing Asian countries. New Delhi may need to bolster and round out its industrial base.
In an earlier article I advised India to pick up some sunset industries off China and perhaps use them to form a foundation for development.
Participation in the global production chain is a prerequisite for development for all states in this era of globalization. How much a country decides to join in that chain determines its development and prospects. Most developing countries start with low-end manufacturing and build from there.
Based on its demographics, India can develop low-end manufacturing, but the government has no real plans to attract foreign capital and instead focuses far too much of its energies upstream.
If India offered preferential policies to foreign investors and integrated its low-end manufacturing industry and market with the help of an external power, it would be possible to address unemployment and lay the foundations for a truly competitive high-end industry.
Low-end manufacturing is essential for improving global competitiveness. Competitiveness depends on openness, education, technology, salaries and the popular attitude toward low-end jobs. This attitude thrives best among the masses of young people who work in manufacturing.
China became a world factory through the sacrifice of millions of migrant workers. Only if and when India’s young men and women are willing to endure hardship, obey discipline and work hard can the nation join in the global production chain.
Low-end manufacturing regrettably means pollution, but that is just a problem of supervision and management. Chinese industry today is much cleaner than it was 30 or 40 years ago.
India is a populous country and unlike smaller countries, India can probably establish a complete end-to-end manufacturing system. But if India does not reform and open up in coming years, sustainable development is simply impossible.