Question 16Discuss the advantages and challengesGS3GS1

Why is there a shift of labour-intensive industries from China to South and Southeast Asia? Discuss the advantages and challenges for India in this context. (Answer in 250 words)

Introduction

As China weaponizes its supply chain (tactic of hybrid war), the world is moving towards reshoring based on idea of techna+1. Shift of labour intensive industry:

26 words

Main Body

① China → new high middle income country. It has wage premium +80% India, -50% Vietnam, -30% Thailand

② Ageing population in China's 1 child policy, older demographic dividend is over

③ Favourable government policies (eg Vietnam → plug and play model relaxed labour laws)

④ Strategic reasons (eg geopolitical)

⑤ Force trade agreements, low income country → D rated exports (eg Bangladesh → new textile hub)

⑥ Rise of skilled workforce + demographic dividend → 65% of India's population → working age)

⑦ Advancement in modern skills in South Asia as China moves to capital industry [Flying geese model]

Advantages for India:

① Boost to manufacturing sector → Make In India, PLI scheme

② Create Jobs in India → transition → solve for jobless growth

③ Job led growth → multiplier effect create [rural demand → values for [inclusive growth] [SDG]

④ Credibility → [Stateable supply] chain partner

⑤ Demographic Dividend → avoid 90 crore strong workforce

⑥ Create [export] led growth → goods based [Foreign Trade Policy]

⑦ Cheaper labour in India

⑧ Better infrastructure than South East Asian countries [BODB growth

demographic dividend] (eg 65% of India's population → Working age)

9Advancement in modern skills in South Asia as China moves to capital industry [Flying goose model]

Advantages for India:

① Boost to manufacturing sector → Make In India, PLI scheme

② Create Jobs in India → transition → solve for jobless growth

③ Job led growth → multiplier effect create [rural demand → values for [inclusive growth] [SDG]

④ Credibility → [Stateable supply] chain partner

⑤ Demographic Dividend → avoid 90 crore strong workforce

⑥ Create [export] led growth → goods based [Foreign Trade Policy]

⑦ Cheaper labour in India

⑧ Better infrastructure than South East Asian countries [BODB growth

Challenges/Disadvantages for India:

① Employability is an issue → only 51% generally skilled → 60% in Vietnam. Stringent labour laws vs counterparts

② Stringent labour laws vs counterparts

③ Productivity adjusted wage rate is lower than Cambodia, Thailand for India [East Asian Tigers] part of RCEP, more part of global supply chain

④ High logistics cost [12-13%] LLEADS India

⑤ Democracy led challenge in India vs dictatorship (no dissent)

Way Forward:

① Upskill skilled modern workforce

② Invest summit (eg Maruti in Mayoral) Plug and play infra, industrial corridor

③ Plug and play infra, industrial corridor

④ Balance labour laws → implement [open code 2019]

— Akansh Dhull · AIR 3

391 words5 paragraphs

Conclusion

India should seize this moment to be a preferred alternative. Provide all the necessary support for mfg excellence

18 words

Diagram

Fig 1. shows wage differential between China, India, Vietnam, and Thailand

Comprehensive coverage of reasons for shift
Multiple factors identified (economic, demographic, geopolitical)
Clear comparison of wage differentials
Strong linkage to India's advantages
Connection to SDG and inclusive growth
References relevant government schemes

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Topper

Akansh Dhull

AIR 3

Subject & Paper

GS3GS1

Topic

Resource Distribution & Industries

Generic Resource based

Labour-intensive industries shift from China

Writing Stats

435

Total words

Paragraphs

analytical and structured

Tone

Linked PYQ

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