Shan Li and Megha Mandavia of The Wall Street Journal report that to challenge China, India needs to get out of the way of its factory owners. They write:
Boosting manufacturing is critical to India becoming an economic powerhouse. It now has a fresh shot at that with the election of Donald Trump, whose promise to levy sky-high import tariffs on Chinese goods could send more manufacturers to the South Asian nation.
But first India has to get out of the way of its factory owners.
In the southern city of Bengaluru, A. Dhananjaya, who has run a garment manufacturing company for nearly three decades, says he grapples with high labor costs and hundreds of labor-compliance rules. He wouldn’t dare grow beyond about 100 workers, because that would mean more forms to fill out, more licenses to apply for, and more expenses. […]
Factories in India with over 100 employees require government permission to fire workers. Those with at least 50 female workers must set up an on-site nursery. Adding a second shift to turnaround large orders quickly also requires prior government approval.
Dhananjaya said he has kept his full-time workforce small to avoid regulations that require going in person to the local labor department to obtain an updated labor license every time a factory wants to expand. […]
“Labor is just a headache,” he said. “It adds costs that make us less competitive.” […]
“We are like clusters fending for ourselves,” he said. “The government has not looked out for us as an industry.”
If the company had stuck to only manufacturing simple garments, he said, they would be struggling just like 80% of the industry.
“You reinvent yourself, that is the only mode of survival,” Kapur said. “If you haven’t, it’s already too late.”
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