The labour intensive industries in India have been showing sluggish growth presently. Highlight the factors responsible for this and give some remedial measures.
India has been experiencing a decline in growth led by consumption decline, lower exports, policy reforms, uncertainty at global level and many other factors.
This has also been seen in labour intensive Industries like textile, leather, and others.
Reasons behind sluggish growth:
- Tough competition from economies like Bangladesh and Vietnam who have diversified their market and reduced costs (in textile sector).
- Global uncertainty and protectionism has reduced demand leading to fight for survival in some industries.
- Lack of technology has reduced their competitiveness and the market share is stagnant (or declining).
- Access to credit has been a lingering issue.
- Skilled workforce lacking – lower productivity of labour leading to higher costs.
- Policy focus has been majorly on bigger projects leading to lesser space for labour intensive industries.
- Globalisation and liberalisation has been constantly pushing the labour intensive industries on the verge of ‘death’.
- Capital intensive growth of India has been a major reason.
Steps to reverse the trend:
- Skilling initiatives like SAMARTH of textile ministry.
- Policy Framework supporting entry of new firms and reducing labour compliances.
- Incentive to grow big and reap benefits of economies of scale.
- Providing credit (through formal sources) and easy compliance & relaxed norms.
- Focus on research and development to provide access to technology, which doesn’t replace labour but increases their productivity.
- One district one approach (or cluster-based approach) to reap the benefits of traditional expertise and reduce costs.
Labour intensive industries are critical to India for achieving a demographic-led growth and leveraging its dividend to make up an inclusive economy of $5 trillion.