Labour-intensive exports involve a higher proportion of human labour in the production process, while capital-intensive exports rely more on machinery and equipment. Despite its potential, the manufacturing sector in India has struggled to achieve the goal of labour-intensive exports, focusing instead on capital-intensive sectors like auto parts, chemicals, software, and pharmaceuticals.
Reasons for the failure of labour-intensive exports:
- Slow movement of workers from agriculture to export-oriented manufacturing due to skill requirements.
- Lack of ease of doing business in India, including labour market rigidities, tax uncertainties, and impediments to entrepreneurial growth.
- High initial investment costs and maintenance costs in capital-intensive industries.
- India’s competitive advantage in labour-intensive sectors like apparel, textiles, and footwear has not been fully utilized.
Measures for promoting labour-intensive exports:
- Ease labour law regulations to encourage flexibility and reduce complexity.
- Improve the ease of doing business by addressing tax uncertainties and promoting entrepreneurial growth.
- Invest in skill development programs to equip workers with the necessary skills for labour-intensive industries.
- Encourage the growth of labour-intensive sectors by providing incentives and support.
- Focus on export-led growth by leveraging India’s comparative advantage in labour.
- Address the issue of an overvalued rupee, which discourages the export of price-sensitive labour-intensive goods.
In conclusion, India’s manufacturing sector has not fully capitalized on its potential for labour-intensive exports. To address this, the country needs to implement measures that ease labour laws, improve the business environment, invest in skill development, and support the growth of labour-intensive sectors. By doing so, India can create more job opportunities and foster inclusive economic growth.