RC 9 NOV 14

For decades, manufacturing in India has been hobbled by antiquated
labour laws, creaking infrastructure and paperwork. The new economy of
call centres and software campuses arrived to buoy the relatively
privileged, but for many of the three-quarters of Indians with less
than middle-school education, few factories meant few jobs.

But, today across India, total exports - mostly manufactured goods -
are rising at a 26 percent annual clip, the Commerce Ministry reported
recently. The manufacturing sector is growing at 9.4 percent annually,
compared to 6 percent a year from 1991 to 2004, according to the
Finance Ministry. Special economic zones - the same enclaves of
relative economic freedom that spearheaded China's export-led
industrialization - are now spreading here, providing tax holidays,
more control over infrastructure like water and power and less
regulation. This kind of pilot-project recalls how China once tested
new policies and created an appetite for them nationwide, said Li
Kui-wai, an economist at Hong Kong University.

In Tamil Nadu, where the changes are brisk, global corporations are
already taking advantage of a shift the world has scarcely noticed.
Nokia has just erected a high-volume factory here that it says will
produce more than 30 million phones a year and account for at least
one-tenth of its global output. Hyundai Motor, which produces a new
car in Tamil Nadu every minute, has made India its global hub for the
Santro hatchback; it plans to ship 100,000 India-made cars to 60
nations this year, and 300,000 within two years. "Geographically, it's
close to the market, and the second thing is the highly educated
people in India," said Heung Soo Lheem, chief of India operations for
Hyundai, explaining why his company had invested in the country.
Thirdly, he said, "the suppliers here are - I do not say better than
China, but maybe the same. And the labour costs are less than those
incurred in China."

In a gold rush that evokes the start of China's factory boom,
multinationals like Bayerische Motoren Werke, General Motors and Intel
are locking down real estate in Tamil Nadu, as are scores of
little-known companies from South Korea to Italy. Outside Chennai,
barren grazing land that was $1,000 an acre, or $2,500 a hectare, 20
years ago sells for up to 65 times as much today.

No one knows how many jobs the boom has spawned. But recent government
statistics show that auto plants and associated industries alone
employ more than 10 million people - exceeding the entire worker
population of Indian factories in the 1990s. India's emergence as a
manufacturing hub comes as multinationals look for alternatives to
China. A talent shortage is lifting wages there, which could make
Chinese goods costlier and cancel out one major advantage over India:
world-class infrastructure that reduces the cost of production.

Indian wages are also relatively low, beginning at about $2 a day for
factory jobs. That compares with a minimum of $ 3.50 to $ 4.50 a day
in Thailand, depending on the area, and the $4 to $8 that some Chinese
workers are beginning to command as labour shortages spread. China is
not in any immediate danger of falling behind, however. Its exports
exceed India's by several multiples, and the gap keeps widening. In
2005, India's exports were worth about $8 billion a month, and
China's, $63 billion, with manufactured goods being the bulk of both
countries' exports.

Experts say the two countries will occupy different positions in the
vast market for offshore manufacturing. The first wave of low-cost
manufacturing to be sent overseas - the making of toys, electric
kettles and television sets, among other wares - will remain out of
India's reach because of the difficulty of running Indian factories as
large as Chinese ones. Official paperwork and regulation is still
sticky here, and power still costs about twice as much. But a vast
middle segment of factory-made goods relies on a mixture of technical
skill and low-cost labour, and here Indian manufacturing can be a
supplement to China, experts contend. Not toys, but cellphones. Not
patio furniture, but car parts. Not synthetic shoes, but leather ones.
Orchestrating China's industrial boom was the hand of government. In
India's boom, the government is more of a cheerleader than a driving
force.



1.The 'shift' from which both the global corporations and the people
of India seem to benefit can be explained by one of the following.
a)
Investor-friendly rules and regulations.
b)
The changeover from manufacturing-centric economy to service based one.
c)
The rural to urban migration of landless labourers.
d)
India being considered to be a viable low-cost alternative



2
.Multinationals are on the look out for an alternative to China because of
a)
the higher quality standards maintained by suppliers.
b)
the antidumping laws adopted by the western governments.
c)
the steps taken by the other Asian countries in improving their infrastructure.
d)
increasing wage rates that push up the cost of production.


3


In the event of increased competition between China and India, one of
the following would be the prognosis.
a)
India will overtake China in this race in near future.
b)
India can benefit more from the manufacture of certain goods than can China.
c)
China is far ahead for India to dislodge it from its position of preeminence.
d)
India and China are soon going to be business rivals.


4

It can be understood that the performance of the manufacturing sector
of China had been bolstered by
a)
the special benefits provided in special economic zones.
b)
the relatively low cost of labour.
c)
the better infrastructure facilities available there.
d)
all the above factors