Vice-chairman of the National Institution for Transforming India (NITI) Aayog Arvind Panagariya expressed hope that the so-called light manufacturing sector will relocate to India from China.
“There is considerable scope for large firms in the light manufacturing sector to move out of China due to rising wages and relocate in India. China is slowing down and the wages there are extremely high,” Panagariya said, addressing the annual session of the industry lobby Confederation of Indian Industry (CII) on April 4.
“A similar process happened in the 1980s when firms moved out of Taiwan and Hong Kong into China and began selling to the world market. This process will create an ecosystem in which small and medium enterprises (SMEs) can become more productive,” he said.
With economic growth in 2015-16 estimated at 7.6% as compared to 7.2% in 2014-15, Panagariya said: “We are close to striking the 8% growth rate.”
Commenting on the challenges being faced by the Indian economy, he said that good progress had been made in the last two years in addressing the infrastructure deficit.
Highway construction has been stepped up from 3,500 km in 2013-14 to 8,000 km in 2014-15 and 10,000 km in 2015-16. The railways have also been able to step up track laying and modernization of railway stations. In the power sector, electrification of villages has progressed according to plan and is expected to be completed by May 2018.
He said that financial stress in the banking system remains a challenge and discussions are on to address this. He praised the government for bringing in reforms across sectors, including land and labour—issues that are in the concurrent list.
He said that many states had gone ahead and amended laws related to labour, including Gujarat where firms located in special zones have the right to lay off workers, irrespective of their size.
Source: Mint
