India Can Occupy Sectors China Is Exiting

India must make it attractive for foreign firms to invest in light manufacturing sectors such as apparel and footwear in order to breakwhat he calls Indian industry’s “Brahminical mindset” of investing in capital-intensive sectors instead of those that can generate more jobs, outgoing vice chairman of the NITI Aayog, Arvind Panagariya has said.

India, he said, is well-positioned to occupy the space being vacated by China in such sectors but its large domestic businesses are reluctant to venture into that space as they prefer sectors such as automobiles, pharmaceuticals, software and petroleum refining.

“Mobilising global firms is an effective way of breaking the current vicious cycle in which our entrepreneurs are interested only in capital- and skill-intensive industries. It is a great time because China is beginning to exit. Their wages are very high and ours are, maybe, a third of China,” Dr. Panagariya told The Hindu, adding that India’s wages won’t rise fast as its labour supply is rising while China’s is shrinking.

The Aayog Vice Chairman, who returns to Columbia University after a close to three-year stint in government, said the scope for job creation in these sectors was enormous.

A leading apparel exporter had informed Dr. Panagariya that a ₹35 crore investment in the business yields a ₹100 crore turnover and creates 2,200 high-quality jobs with just six weeks’ training for requisite skills.