Why Make-in-India isn't (is) a guaranteed success despite U.S. tariffs on China \ stacker news ~econ

....while labor costs can be low in India, it doesn’t mean savings for companies moving their manufacturing base to India.....because....the productivity is no good.

I always read the Inside India newsletter by CNBC and it's good source for some unbiased economic news. But this time CNBC needs some slapping for not linking any data source on the claims of lower productivity by Indian workers.

Anyways, let me take this honour. But before that I'd like to say that I believe labour productivity can vary highly, also depending a lot on the company and work environment.

Let me first show you the Minimum wages for some countries including India and US.

Now compare this with the productivity (mind it, it's just average)

Alright, let's ask Tim Cook which country he'd prefer for setting up a production unit of of the above mentioned five. Well, he's already answered India. Doesn't he know that Indians are very bad at labour productivity?

I guess he knows something the world doesn't know or believe. Let me guess again what he knows...

Ratio between productivity and wages is the best. (Please do the math by yourself)
The data for labour productivity includes India's huge % of worker directly involved in agriculture. While more than 50% India's population is engaged in agriculture, the contribution of agriculture in India's GDP is around 20%¹
Besides this India is providing a subsidy for companies to setup manufacturing plants in India. This is also mentioned in the CNBC article.

“Today, India earns just $30 per iPhone, much of which is given back to Apple as subsidy under the [Production Linked Incentive] scheme,”

The last but the best is that I don't believe that there can be huge difference in production when it comes to certain businesses. Can anyone ~~tell~~ confirm if a chinese worker produces (assembles) twice as many units as an Indian worker can in the same amout of time?

I'm not against Trump or his intentions of MAGA by Make in America but if Apple agrees, that could possibly be a killing blow for one of the most successful of companies in the last few decades.

Agriculture in India ↩

21 sats \ 0 replies \ @Undisciplined 23 May

I imagine that, similar to China, productivity is much higher in some of the major Indian metros. The coastal urban areas of China are pretty similar to Japan or South Korea, in terms of productivity, while rural China is still very poor.

Taking national averages of extremely large heterogeneous countries paints a very unclear picture of what's going on.

Footnotes