Roadmap for Answer Writing
1. Introduction (Contextualization)
- Begin by acknowledging India’s growing working-age population and the potential of labour-intensive manufacturing in addressing employment challenges.
- Provide relevant data to highlight the need for employment generation.
- For example: India’s working-age population (15-64 years) stood at 950.2 million in 2021, but only 487.9 million were part of the labour force (World Bank, 2021). Additionally, India’s working-age population is expected to grow by 9.7 million per year between 2021-31.
2. Key Obstacles to Labour-Intensive Manufacturing
A. Focus on Capital-Intensive Manufacturing
- The Indian manufacturing sector has historically been more focused on capital-intensive industries, leaving less space for labour-intensive sectors.
- As a result, employment in manufacturing has decreased from 51 million workers in 2017 to 27.3 million in 2021.
B. Policy Challenges
- Government initiatives like Make in India and Production-Linked Incentive (PLI) schemes primarily support capital-intensive industries, rather than labour-intensive ones.
- There is insufficient focus on MSMEs, which contribute 70% of employment in the manufacturing sector but face challenges such as access to finance, infrastructure, and banking.
C. Structural Bottlenecks
- India faces cumbersome labour laws and complex land acquisition processes, which hinder the ease of doing business and discourage investments in labour-intensive sectors.
- Logistics costs in India are high at 14% of GDP compared to under 10% in developed nations.
D. Unskilled Workforce
- Only 21.2% of India’s workforce had formal skills training (UN Human Development Report, 2020), limiting productivity in sectors like textiles, footwear, and food processing.
- Lack of skilled workers impacts the competitiveness and growth potential of labour-intensive industries.
E. Competition from Emerging Economies
- Countries like Bangladesh and Vietnam, which offer lower wages and better support for labour-intensive sectors, are becoming key competitors in the global market.
3. Conclusion
- Summarize the importance of addressing these obstacles for creating jobs in India.
- Suggest potential solutions such as enhancing policies for MSMEs, focusing on skills development, and improving infrastructure to reduce costs and attract investments in labour-intensive manufacturing.
Relevant Facts and Sources to Use in the Answer:
- India’s Working-Age Population & Labour Force:
- India’s working-age population in 2021: 950.2 million, with 487.9 million in the labour force (World Bank, 2021).
- Manufacturing Employment Decline:
- Manufacturing workforce decreased from 51 million (2017) to 27.3 million (2021) (MOSPI, 2021).
- Challenges for MSMEs:
- MSMEs generate 70% of manufacturing employment but struggle with financial and infrastructure support (Ministry of MSME, 2021).
- Logistics Costs:
- India’s logistics cost is 14% of GDP, compared to less than 10% in developed nations (NITI Aayog, 2020).
- Workforce Skills:
- Only 21.2% of India’s workforce has formal skills training (UN Human Development Report, 2020).
- Competitor Countries:
- Bangladesh and Vietnam are increasingly competing with India in labour-intensive industries (World Bank, 2020).
This roadmap ensures a well-structured answer that covers all major obstacles, while providing evidence from reliable sources to back the arguments.
Model Answer
India’s growing working-age population, expected to increase by about 9.7 million annually from 2021 to 2031, presents both an opportunity and a challenge. Labour-intensive manufacturing could help create jobs, but several barriers hinder this strategy.
1. Capital-Intensive Focus in Manufacturing
India’s manufacturing sector has been more capital-intensive than labour-intensive. The workforce in manufacturing shrank from 51 million in 2017 to 27.3 million in 2021, as industries focus more on automation and capital-heavy production processesmits the potential for job creation in sectors that traditionally employ large numbers of workers.
2. Policy Gaps and Lack of Support for MSMEs
While initiatives like Make in India and Production-Linked Incentive (PLI) schemes primarily target capital-intensive industries, the bulk of employment in manufacturing lies in MSMEs (Micro, Small, and Medium Enterprises). However, MSMEs struggle with inadequate banking, financial, and infrastructure support . There for policies that provide tailored support to MSMEs, especially in labour-intensive sectors like textiles, food processing, and footwear.
3. Structural Bottlenecks
India’s complex labour laws, restrictive land acquisition regulations, and high logistics costs (14% of GDP compared to under 10% in developed nations) further complicate the path to scaling labour-intensive manufacturing . These barriersnt and make manufacturing less competitive.
4. Competition from Emerging Markets
Countries like Bangladesh and Vietnam, which have benefited from lower production costs and better market access, are increasingly competing with India in global markets for labour-intensive products . India must address this rising coto retain its market share.
5. Unskilled Workforce and Technology Upgradation
A lack of formal skills training—only 21.2% of India’s workforce had such training in 2019 —limits productivity in labour-intensive secover, sectors like textiles have increasingly adopted automation, reducing the need for manual labour and hindering job creation.
To tackle these challenges, India must focus on supporting MSMEs, improving infrastructure, and upskilling its workforce, creating a more favorable environment for labour-intensive manufacturing to thrive.