The Scooters India factory is a symbol of the messiness of India’s manufacturing sector. The facility is one of the largest industrial buildings in Lucknow, the capital of Uttar Pradesh, a state in northern India that is as populous as Brazil. “[The factory] is like an ugly sister to efficient private companies,” write Victor Mallet and James Crabtree at the Financial Times, “a monument to the folly of earlier government attempts to build a mass manufacturing economy.”Scooters India employs 1,500 staff who churn out just 16,000 auto-rickshaws each year. Thanks to India’s restrictive labor laws, the employees at this state-owned facility are unlikely ever to be fired. “It never had a future, nor does it have one now,” one economist told the FT.India’s manufacturing sector as a whole doesn’t have much of a future, according to some analysts, as long as things stay the way they are now. Mallet and Crabtree report:
A National Manufacturing Policy launched three years ago by the Congress-led government has so far failed in its aim to create 100m manufacturing jobs and raise manufacturing as a share of gross domestic product from 16 per cent to 25 per cent within a decade. Instead, the share declined further, to 15 per cent today.
Is Narendra Modi the man to change this depressing trend? He has a difficult task ahead of him. In part because urban industrial jobs are so hard to find, 12 million more Indians will be working agriculture jobs in 2019 than are currently employed in that sector, says one market research firm.If there is one thing that the next Prime Minister must do, it’s enable India to emerge as a leading manufacturing economy. That will require reforming the laws governing land sales, labor, intellectual property, taxes, and a host of other issues—which will naturally be unpopular. But the payoff would be immense: A tsunami of growth would transform the life prospects of hundreds of millions of people and allow India to play a major global role.