Assemble in India: Why it may not be prudent to follow China’s strategy


The Economic Survey 2020 was tabled on Friday, January 31st, amidst an economic slowdown, coupled with rising food inflation. While the Survey emphasized on the importance of an expansionary fiscal policy and an investment-led growth, it also advocated 10 key ideas that could help address some of the structural issues that have caused the slowdown. Among the idea of creating wealth, enabling entrepreneurs, examining go nment’s intervention, and reducing financial stress, one of the focus was on creating jobs and growth by emphasizing on “Assemble in India for the world” and integrating it into our “Make in India” programme.


The desire to continue to build on initial reforms and programmes undertaken during Modi 1.0 comes across loud and clear in this idea. But what it also stressed was to chart a China-like, labour-intensive, export trajectory. It was argued that by adopting a strategy like that of China, India can not only improve its share in global exports, but also create well-paid jobs.



Creating jobs will be crucial in order to deal with concerns regarding sustaining consumer demand at the macro level, and the economic survey addressed this issue. Highlighting the importance of the manufacturing sector in its ability to create jobs is also worthwhile. However, following China’s strategy might require some prudence among policymakers given that the world has dramatically changed in terms of technology and the environment since China adopted it in the early 1990s.


Post its liberalization, China rode the wave of globalization and low factor costs aided in creating a scale and capacity that was needed to be globally competitive. During this process, China also emphasized on building its own infrastructure, thus creating a sustainable demand for its own manufacturing produce. As the economy expanded its scale and scope of production, it also evolved in terms of creating its own ecosystem of technology and entrepreneurship.


This time it’s different


Over the past few years, Industry 4.0 has provided manufacturers with faster, flexible, and more proficient processes that produce goods of higher-quality and at lower costs. Manufacturing industry leaders in today’s world have taken an increasingly large role around climate change and environmental sustainability as well as resource scarcity. Besides, India has to fight the wave of anti-globalisation and trade uncertainties that the world is experiencing currently.


If India wants to be the next manufacturing hub for the world and improve its exports share in global trade, it has to move up the global value chain and has to close a quality gap faced with the best in class among its peers, while ensuring environmental sustainability. This would require manufacturers to leapfrog to newer technologies and transition to a new and exacting definition of competition, both of which will have implications on job creation, especially for the unskilled.


According to a study by WEF in 2018, the adoption of Industry 4.0 may impact low skilled employees because of their vulnerability to automation. These employees and workers may need to upskill or shift their focus to a new discipline to stay in the game. Besides, the technology ecosystem and the social infrastructure, which is needed to support the kind of manufacturing growth the survey envisages, will have to evolve rapidly.


Over the last eight years, the average productivity in India fell to 5.5 percent during FY 2011-18 from an average of 7.0 percent during FY 2002-10. Health and wellness, ecosystem for sustainability, water and sanitation, disparity in terms of education and income are some of the areas that India has not fared well relative to its peers. Over 75 percent of the population work as informal employees. Gender disparity remains high, with a greater proportion of employed women belonging to the vulnerable employment category. India has successfully reduced some of the poverty gap, but owing to its population, a lot needs to be done.


What we can learn from China


One of the things India can learn from China is to create a sustainable demand for its manufacturing products over a long period of time and investing in infrastructure could be the way to follow. One of the largest sources of demand for manufacturing products is the go nment’s investment in infrastructure and building assets. The good news is the massive infrastructure investment of Rs 102 lakh crore announced by the go nment in December 2019 suggests that the go nment is already taking the necessary steps in that direction.


India has to work toward building a strong social infrastructure to ensure that the manufacturing sector growth translates into job creation for poor and the unskilled. It can begin from allocating higher resources for health and family welfare, women and child development, human resource development, drinking water and sanitation, and social justice and empowerment.


Doing what China did will be challenging because India has to overcome several structural bottlenecks. However, being selective of its strategy and rapidly growing such identified technologies to global scale and sophistication will help in achieving the aim of becoming a US$5 trillion economy by 2025.



译文来源:三泰虎      http://www.santaihu.com/49274.html     译者:Joyceliu 

Hemant Pisat

"Assemble in India"; will the supply chain cost sustainable, just to assemble here and export from India? Why would one do that? Two distant infrastructures to cater customers? Plus taxation is involved. Conceptually difficult.



Srinivasan G Kailasam

A good article. We should concentrate on improving our technological Capabilities to compete with China and increase our exports. Agro based industries increase can also help us to increase employment. The GOI has done well to increase allotment of Funds to Dairy, Fisheries sector.Where manufacturing complexity increases we are definitely more competitive.Pharma and IT are examples.Shipbuilding is another area which has scope for increased employment and also funds for skilling people.Health Tourism has also contributed to increased skilling and increased employment.




Ideas need to pursued. Have to walk the talk. All talk no action means result is zero. Strong political will is needed now. We need to be leaders not followers.Sad that we have turned back into the 1960s again. Original Thinkers are the need of the hour. How many patents do we have under our belt ? A paradign shift in thoughts is what this country needs.



Ravikiran Komarraju

Is India investing enough to create future skills needed for technology enabled jobs in Manufacturing sector? Further, I feel it is time for Govt. to partner with the likes of Microsoft, Bosch, Intel and Indian corporates to take skill India forward.



Ramaben Patel

India should never ever follow the cunning China. No Chinese nor any of their firms be allowed in India. We shall like to go hungry than allow China in our Country as we can never forget 1962.



Truth Seeker

Chinese people work very hard and honestly. They believe in moving out of poverty by building products/infra fast and at large scale, whereas many Indians believe in doing jugaad and cheating others.Also Chinese are less selfish and more patriotic. So many things to learn before becoming successful like them.



Ban Tight Transparent Leggings

Make all jobs part-time. 4 hours per day. Run factories/offices 24 hours per day. So they can work in 6 shifts. Now India can increase jobs 6 times.




Most of indians can not be trained.It depends on state to state.A indian worker needs to have basic 12 th science education to understand basic concepts.



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