Account for the failure of the manufacturing sector in achieving the goal of labour-intensive exports. Suggest measures for more labour-intensive rather than capital-intensive exports.

A lacuna in India’s growth has been the slow growth of manufacturing in the labour-intensive sector. The movement of the workers from agriculture into export-oriented manufacturing industries has been slow owing to the requirement of a certain skill set, which is absent among most of the labourers thus resulting in jobless growth.

Lack of ease of doing business in India due to labour market rigidity, an impediment to entrepreneurial growth and tax uncertainty has further increased expansion of labour-intensive export manufacturing in the country.

Promoting labour-intensive exports

  • Easing of labour law regulations which include wide-ranging and complex labour laws, mandatory contributions made by low paid workers and lack of flexibility in case of part-time work. The government’s decision to rationalise the labour laws by framing four labour codes is a positive step in this regard to encourage exporters.
  • Promotion of labour-intensive sectors like leather, apparel and footwear sector which also has high export potential.
  • Promotion of the role of Small and Medium enterprises as the labour intensity of the SMEs is four times higher than that of larger firms by the provision of adequate state support.
  • Availability of Cheap power supply for labour-intensive manufacturers who operate on low-profit margins and for whom high electricity costs can result in operating issues.

Further, there is a need to fill in the gap of skills for labourers, to help provide employment in case of the manufacturing sector.

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