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Introduction

Global supply chains are shifting from efficiency to resilience, creating export opportunities. Yet India has underperformed in labour-intensive manufacturing exports, reflecting structural bottlenecks that limit employment-intensive growth despite favourable global realignments.

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Reasons for Failure of Manufacturing Sector

• Cost Disadvantage: High logistics, power and compliance costs reduce competitiveness of labour-intensive sectors.
  Eg: India’s logistics cost ~13-14% of GDP vs ~8% in developed economies (Economic Survey).
• Supply Chain Gaps: Weak integration into global value chains limits scale and export readiness.
  Eg: India lacks deep trade linkages compared to Vietnam.
• Skill Deficit: Workforce lacks industry-specific skills needed for textiles, footwear, electronics assembly.
  Eg: Periodic Labour Force Survey shows low formal skill training penetration (~5%).
• Policy Uncertainty: Frequent tariff changes and compliance burden discourage long-term export investments.
  Eg: Sudden export restrictions (e.g., textiles/raw materials) affect global buyer confidence.
• Capital Bias: Incentive structures favour capital-intensive sectors over labour-intensive industries.
  Eg: PLI schemes heavily focused on electronics, semiconductors rather than garments/footwear.

Measures Needed

• Cost Reduction: Improve logistics, ports and reduce compliance burden to enhance competitiveness.
  Eg: PM Gati Shakti aims to integrate infrastructure and cut logistics costs.
• Trade Integration: Deepen FTAs and global value chain participation to access stable markets.
  Eg: India-UAE CEPA boosting textile and gem exports.
• Skill Alignment: Promote industry-linked skilling tailored to labour-intensive sectors.
  Eg: Skill India programs aligned with textile clusters (e.g., Tiruppur model).
• Policy Stability: Ensure predictable export-import policies to build investor confidence.
  Eg: Foreign Trade Policy 2023 emphasises long-term export facilitation.
• Sector Support: Target labour-intensive sectors with incentives and cluster-based development.
  Eg: Mega Integrated Textile Region and Apparel (MITRA) parks for scale and jobs.

Conclusion

As supply chains become strategic assets, India must shift from capital-heavy growth to employment-intensive exports. Leveraging reforms, stable policies and global integration can convert current disruptions into sustainable, job-rich manufacturing expansion.

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