Integrate ‘Assemble in India’ into Make in India

• Move will boost exports, create 80 mn jobs in next 10 years, survey says
• The Survey gives China’s example, where labour-intensive exports between 2001 and 2006 created 70 million jobs

NEW DELHI : India should draw a lesson from China’s success in exports, and launch a project to ‘Assemble in India for the world’ that would create 80 million well-paid jobs in the next 10 years, the Economic Survey 2019-20 said on Friday.

The survey suggested that with China-US trade tensions at a high, India should step in to seize opportunities in export manufacturing and create well-paid jobs. Adopting such a move will also help India in its aspiration to become a $5-trillion economy, it said.

“China’s remarkable export performance vis-à-vis India is driven primarily by deliberate specialization at large scale labour-intensive activities, especially in ‘network products’, where production occurs across GVCs (global value chains) operated by multi-national corporations. By importing components and assembling them in China for the world, China created jobs at an unprecedented scale," it added.

“Similarly, by integrating ‘Assemble in India for the world’ into Make in India, India can raise its export market share to about 3.5% by 2025 and 6% by 2030, which is highly feasible. In the process, India would create about 4 crore well-paid jobs by 2025 and about 8 crore by 2030," the survey explained.

Exports growth provides a pathway for job creation in India, the survey said, explaining how between 2001 and 2006, labour-intensive exports enabled China to create 70 million jobs for workers with primary education.

In India, increased exports explain the conversion of about 800,000 jobs from informal to formal between 1999 and 2011, representing 0.8% of the labour force, it added.

The US-China trade war is causing major adjustments in GVCs and firms are scouring alternative locations for operations. Even before the trade war began, China’s image as a low-cost location for final assembly of industrial products was rapidly changing due to labour shortages and increases in wages, the Economic Survey said in a separate chapter on jobs.

“These developments present India an unprecedented opportunity to chart a similar export trajectory as that pursued by China and create unparalleled job opportunities for its youth. As no other country can match China in the abundance of its labour, we must grab the space getting vacated in labour-intensive sectors," the survey added.

It said India must focus on “a group of industries, referred to as ‘network products’, where production processes are globally fragmented and controlled by leading multinational enterprises within their producer-driven global production networks." Examples of network products include computers, electronic and electrical equipment, telecommunication equipment and automobiles, the survey explained.

But a labour economist expressed doubts over the efficacy of such a scheme. “You cannot compare 2001-06 China with 2020 India. Second, assembly model of manufacturing, especially in electronic and auto sector, is giving way to automation thus reducing job creation potential," said K.R. ShyamSundar, a labour economist, and professor, XLRI, Jamshedpur.

“It is true that capital will fly from high labour cost markets to low labour cost markets...that’s why you see some export manufacturing contracts going to Cambodia and Vietnam from China. The key point for India is: can a pluralistic, aspirational country like ours focus on export revenue by keeping labour standard and wages low? If so, how can you climb the labour market value chain?" ShyamSundar added.

India’s job market is facing a huge demand-supply mismatch with employment generation falling way behind jobs on offer. At least 12 million new fresh faces enter the labour market every year in India. On an average, India created 4.36 million formal jobs per year between 2011-12 and 2017-18, the Economic Survey said, asserting that the percentage of salaried workers’ proportion in the labour market has gone up from 18% earlier to 23%.

To be sure, all salaried workers not necessarily form part of the formal employment space. Formal employment in the economy increased from 8% in 2011-12 to 9.98% in 2017-18, the survey clarified.