“India is at last getting good at making things—but not in quite the way its founding fathers envisioned,” writes the Economist. Driven by manufacturers of electrical equipment, car parts, and the cars themselves, Indian engineering and manufacturing is finally taking off: manufacturing increased to 15 percent of India’s GDP in 2011.As the Economist notes, no major country has grown rich without a large manufacturing base. India is finally making stuff. With 250 million young people entering the job market, that would seem to be good news. However, much of the work is being done by robots, not humans:
Even as high-end engineering boomed, manufacturing jobs dropped slightly between 2004 and 2010, to 50m. Basic industries that soak up labour, such as textiles and leathers, are in relative decline.
Still, “Indian labour is dirt cheap.” Labor costs are at just 3 percent of America’s and very competitive with China’s.Major problems remain. The government is championing Special Economic Zones to overcome labor, environmental, and infrastructural hurdles. Ford, Volkswagen, Mercedes, and homegrown companies like Tata have set up plants in manufacturing powerhouses like Gujarat state, Chennai (where I have been driving past large automobile factories during my visit here), and Pune.But there is still much to be done to improve infrastructure, especially electricity networks, before India becomes the “workshop of the world.” It’s unlikely that export-oriented manufacturing can take India as far and as fast as it took early adopters like Taiwan, South Korea and Japan, but doing its best to be a major manufacturing powerhouse is the most important next step that India can take on the road to full emergence as a global power.