Q2. 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.

Model Answer:

Introduction

India's manufacturing sector has struggled to achieve the goal of labor-intensive exports, relying more on capital-intensive exports such as chemicals, machinery, and automobiles. The shift towards capital-intensive industries has limited the job creation potential that labor-intensive sectors, like textiles and leather, could have provided. Understanding the reasons for this failure and suggesting corrective measures is essential for harnessing India’s demographic advantage and boosting employment.

Body

Reasons for the Failure of Labor-Intensive Exports

• Skill Mismatch and Low Productivity
  • The workforce in labor-intensive industries often lacks the required skills. Moreover, low labor productivity has hindered the competitiveness of Indian products in the global market.
  • Example: Despite being a major textile producer, India’s textile exports lag behind countries like Bangladesh, where productivity is higher.
• Rigid Labor Laws
  • India’s stringent labor laws discourage large-scale employment in labour-intensive industries. Manufacturers prefer capital-intensive methods to avoid regulatory complications.
  • Example: The inflexibility of hiring and firing workers under existing labor laws dissuades companies from scaling labor-intensive operations.
• Lack of Infrastructure
  • Poor infrastructure, including logistics and power supply, increases production costs for labor-intensive industries, making them less competitive globally.
  • Example: In the apparel sector, delays in port operations and high energy costs reduce profit margins, affecting global competitiveness.
• Inadequate Technology Adoption
  • Labor-intensive industries have been slow in adopting technology that could improve efficiency and quality, hampering their ability to scale up and compete internationally.
  • Example: Countries like Vietnam have adopted better technology in garment manufacturing, allowing them to dominate export markets.

Measures for Promoting Labor-Intensive Exports

• Skill Development Programs
  • Investing in vocational training and skill development tailored to labor-intensive sectors like textiles, leather, and food processing can enhance productivity.
  • Example: Expansion of government programs like “Skill India” can prepare a more qualified workforce for these industries.
• Reform Labor Laws
  • Simplifying labor laws to make hiring and firing more flexible will encourage companies to expand labor-intensive operations, fostering employment growth.
  • Example: Recent labor code reforms are a step in this direction, but further easing of regulatory burdens is needed to encourage large-scale employment.
• Investment in Infrastructure
  • Building better infrastructure, particularly in transport, logistics, and power, can reduce production costs, making labor-intensive industries more competitive globally.
  • Example: The development of industrial corridors such as the Delhi-Mumbai Industrial Corridor can reduce logistics costs and enhance export competitiveness.
• Export Incentives for Labor-Intensive Sectors
  • Targeted incentives and subsidies for labor-intensive industries can stimulate their growth and attract investment.
  • Example: Export subsidies for textile and garment manufacturers would enable them to compete with countries like Bangladesh and Vietnam.

Conclusion

‍The failure of India’s manufacturing sector to promote labor-intensive exports can be attributed to skill gaps, rigid labor laws, inadequate infrastructure, and slow technology adoption. To shift towards labor-intensive exports, the government needs to invest in skill development, reform labor laws, improve infrastructure, and offer targeted export incentives. These steps will help India leverage its labor surplus and boost employment, contributing to inclusive growth.

‍

Instant Mains Evaluation with SuperKalam

✅ Now that you have gone through the model answer, try practicing and writing it in your own words and evaluate it instantly with SuperKalam here - Evaluate Mains Answer instantly