Account for the failure of manufacturing sector in achieving the goal of labour-intensive exports. Suggest measures for more labour-intensive rather than capital – intensive exports. (10 Marks)

India’s manufacturing exports have remained relatively capital- and skill-intensive, limiting the sector’s capacity to absorb its large workforce.

Reasons

• Rigid labour-market arrangements, small firm size and high compliance costs.
• Power, logistics and land constraints raise transaction costs.
• Skill mismatch, weak industrial clusters and limited access to credit.
• Trade policy uncertainty and competition from East Asian production networks.

Measures

• Integrate MSMEs into global value chains through cluster infrastructure, quality labs and export credit.
• Expand apprenticeship-linked skilling and portable social security.
• Improve ports, customs, power and multimodal logistics.
• Target textiles, footwear, food processing, toys and electronics with stable, WTO-consistent incentives.

Labour-intensive exports require competitiveness, not merely wage-based subsidies.

Keywords: industry; employment; labour-intensive exports.