{"id":3495,"date":"2015-05-07T16:20:07","date_gmt":"2015-05-07T10:50:07","guid":{"rendered":"https:\/\/teekhapan.wordpress.com\/?p=3495"},"modified":"2015-05-07T16:20:07","modified_gmt":"2015-05-07T10:50:07","slug":"the-make-in-india-lesson-i-learnt-when-i-bought-a-television-set","status":"publish","type":"post","link":"https:\/\/vivekkaul.com\/2015\/05\/07\/the-make-in-india-lesson-i-learnt-when-i-bought-a-television-set\/","title":{"rendered":"The Make in India lesson I learnt when I bought a television set"},"content":{"rendered":"

\"make<\/a>Vivek Kaul <\/span><\/span><\/span><\/p>\n

Yesterday’s edition of The Times of India had <\/span><\/span><\/span>a very interesting newsreport<\/span><\/span><\/span><\/span><\/span><\/a>. As per the newsreport: \u201cData available with the Bureau of Indian Standards (BIS) shows that over 60% of the recently registered products are \u201cMade in China.\u201d\u201d
\nThese include products like mobile phones, printers, power adapters, notebooks, tablets and so on. What this tells you clearly is that a vast majority of electronic products that we buy in India are not made in India, but in China.
\nInterestingly, the last time I bought a television set few years back, it came with a weird looking plug\u2014something that I had never seen before. It wouldn’t fit into the electrical socket at home. It took a helpful neighbour to solve the problem. He told me that I would need a converter to fit the plug into the socket. The converter cost me Rs 25 and left me wondering that why did a company which sold a product worth Rs 15,000 inconvenience its customers for something worth Rs 25? Maybe marketing professionals can throw some light on that.
\nLast year when I bought a smart phone a similar experience awaited me. But this time around I was prepared and as soon as the smart phone was delivered at home (I had ordered it online), I went out and bought a converter, which cost Rs 20 this time around.
\nAs you must have figured out by now, dear reader, both the products were made in China. Not just technology products which are made in China are flooding the Indian market. There are other products as well. As The Times of India newsreport referred to earlier points out: \u201cThere are a vast majority of goods \u2014 from electricity bulbs and thermometers to Ganesha and Laxmi idols \u2014 where the government is yet to have domestic standards resulting in unregulated entry of Chinese product.\u201d Even Rakhis are now made in China. Indeed, this has been a worrying trend for sometime now.
\nThe reason for this is fairly straightforward\u2014no country has gone from developing to developed without the expansion and success of its manufacturing sector. As Cambridge University economist Ha-Joon Chang writes in\u00a0<\/span><\/span><\/span>Bad Samaritans\u2014The Guilty Secrets of Rich Nations & the Threat to Global Prosperity:\u00a0<\/i><\/span><\/span><\/span>\u201cHistory has repeatedly shown that the single most important thing that distinguishes rich countries from poor ones is basically their higher capabilities in manufacturing, where productivity is generally higher, and more importantly, where productivity tends to grow faster than agriculture and services.\u201d
\nAnd the Indian manufacturing sector cannot flourish with products being made in China. For a while there was great hope that India does not need to go through a manufacturing revolution to pull its citizens out of poverty. And that the information technology led services revolution would do that trick. But services by their very design have certain limitations.
\nAs Chang writes: \u201cThere are certainly some services that have high productivity and considerable scope for further productivity growth\u2014banking and other financial services, management consulting, technical consulting and IT support come to mind. But most other services have low productivity and, more importantly, have little scope for productivity growth due their very nature (how much more \u2018efficient\u2019 can a hairdresser, a nurse or a call centre telephonist become\u00a0<\/span><\/span><\/span>without diluting the quality of their services?).\u201d
\n<\/i><\/span><\/span><\/span>So, where does that leave us? Over the last few years the education infrastructure that has been built to feed trained individuals into the services sector has been huge. As Akhilesh Tilotia writes in <\/span><\/span><\/span>The Making of India<\/i><\/span><\/span><\/span>: \u201cAn analysis of the demand-supply scenario in the higher education industry shows significant capacity addition over the last few years: 2.4 million higher education seats in 2012 from 1.1 million in 2008.\u201d In 2016, India will produce 1.5 million engineers. This is more than the United States (0.1 million) and China (1.1 million) put together.
\nThe number of MBAs between 2012 and 2008 has also jumped to 4 lakh from the earlier 1 lakh. As Tilotia writes: \u201cIndia faces a unique situation where some institutes(IITs,IIMs, etc.) are intensely contested while a large number of the recently-opened institutes struggle to fill seats…With most of the 3 million people wanting to pursue higher education now having an opportunity to do so, the big question that should…be asked…are all these trained personnel required? Our analysis seems to suggest that India may be over-educating its people relative to the current and at least the medium-term forecast requirement of the economy.\u201d
\nWhat this means is that a large number of people going in for higher education will find it difficult to find jobs which are commiserate with the kind of money they have paid for their education, after they pass out. And they will not be the only ones having a tough time. India is adding nearly 13 million people to the workforce every year. And enough jobs are not being created.
\nThis is something that the latest economic survey points out: \u201cRegardless of which data source is used, it seems clear that employment growth is lagging behind growth in the labour force. For example, according to the Census, between 2001 and 2011, labor force growth was 2.23 percent (male and female combined). This is lower than most estimates of employment growth in this decade of closer to 1.4 percent. Creating more rapid employment opportunities is clearly a major policy challenge.\u201d
\nAnd these rapid employment opportunities will be created only if more and more products are made in India and not China. For products to be made in India, major labour reforms need to happen. <\/span><\/span><\/span>A report in The Indian Express <\/span><\/span><\/span><\/span><\/span><\/a>seems to suggest that the government is working on this front. It is planning to make amendments to the Industrial Disputes Act, 1947. The government is also planning to: \u201ccodify the Central labour law architecture wherein the labour ministry plans to merge all 44 Central legislations into four codes on labour laws \u2014 one each on wages, industrial relations, social security and safety & welfare. Apart from industrial relations and wages, other codes are likely to be released during the course of the year.\u201d
\nLet’s see how far is it able to go with this.\u00a0<\/span><\/span><\/span><\/p>\n

The column originally appeared on The Daily Reckoning<\/a> on May 6,2015<\/p>\n","protected":false},"excerpt":{"rendered":"

Vivek Kaul Yesterday’s edition of The Times of India had a very interesting newsreport. As per the newsreport: \u201cData available with the Bureau of Indian Standards (BIS) shows that over 60% of the recently registered products are \u201cMade in China.\u201d\u201d These include products like mobile phones, printers, power adapters, notebooks, tablets and so on. What … <\/p>\n

Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"qubely_global_settings":"","qubely_interactions":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2,12,30],"tags":[203,392,561,1381,1514,2039,2155,2173,2946,3703],"qubely_featured_image_url":null,"qubely_author":{"display_name":"Vivek Kaul","author_link":"https:\/\/vivekkaul.com\/author\/vivekkaul\/"},"qubely_comment":3,"qubely_category":"Analysis<\/a> Books<\/a> Equitymaster<\/a>","qubely_excerpt":"Vivek Kaul Yesterday’s edition of The Times of India had a very interesting newsreport. As per the newsreport: \u201cData available with the Bureau of Indian Standards (BIS) shows that over 60% of the recently registered products are \u201cMade in China.\u201d\u201d These include products like mobile phones, printers, power adapters, notebooks, tablets and so on. What…","jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/posts\/3495"}],"collection":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/comments?post=3495"}],"version-history":[{"count":0,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/posts\/3495\/revisions"}],"wp:attachment":[{"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/media?parent=3495"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/categories?post=3495"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vivekkaul.com\/wp-json\/wp\/v2\/tags?post=3495"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}