20-India's Manufacturing Strategy - Global Perspective.pdf - Mimts.org

66 LBS Journal of Management & Research
ADVANTAGE INDIA: THE LOW LABOR COSTS IN THE MANUFACTURING SECTOR
No comparison can be made with the share of labor
costs in manufacturing in China because of nonavailability
of data. Available figures show that labor
costs of manufacturing are much lower in India as
compared to Malaysia and Korea. However, the share
of labor cost in manufacturing in Indonesia is much
lower than that India. Estimates show that the
average share of labor costs in manufacturing
across 15 major industries was 6.9% in India as
compared to 8.7% in Malaysia, 10.7% in Korea
and5.5% in Indonesia.
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Table-10: SHARE OF COST OF LABOR IN TOTAL OUTPUT OF DIFFERENT INDUSTRIES IN
THE MANUFACTURING SECTOR (%)
India Indonesia Malaysia Korea
Food Products 3.7 4.2 3.2 7.7
Leather & Fur products 4.4 7.7 16.7 8.1
Industrial chemicals 4.6 4.9 2.9 5.5
Plastic products 4.9 6.0 12.9 12.0
Iron & Steel 4.9 2.2 5.0 5.9
Rubber products 5.3 4.8 10.0 13.8
Non ferrous metals 6.1 3.4 5.1 5.8
Electrical machinery 7.1 4.6 6.4 9.1
Textiles 7.2 4.7 8.8 13.4
Metal products 7.4 6.1 10.7 13.7
Wood products 7.6 5.9 10.9 12.6
Glass 7.9 7.5 8.1 14.0
Non-Electrical machinery 8.4 6.3 6.6 11.2
Transport equipment 10.2 3.9 6.0 10.7
Printing & publishing 13.9 10.1 16.7 16.6
Average 6.9 5.5 8.7 10.7
Source: UNIDO Report on Share of cost of labor in total output of different industries in the
manufacturing sector, pp 72-75
CONCLUSION
Over the last decade, India's manufacturing sector
has changed dramatically and emerged as the key to
meeting the ambitious nine percent growth target in
the Tenth Five Year Plan. Manufacturing is the logical
engine to provide employment growth in India,
because the work force in the organized sector core
engine for grow this currently only eight percent. The
challenges are significant. There are numerous
constraints to growth, and India has its work cut out
as it makes the transition from being an attractive
labor pool to a global manufacturing power. While
focusing on operational efficiency, innovation, hightech
research and development, India needs to reform
its fiscal policy, labor laws, regulatory system,
foreign investment policy etc. in order to attract all
the top manufacturing giants of the world by offering
them world class facilities. Based on the speed at
which India is growing and the kind of role it is
playing in the field of global manufacturing, it can be
safely predicted that India is going to be universally
accepted as the "Global Manufacturing Hub".