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

Despite abundant low-cost labour, India's manufacturing exports have skewed toward capital-intensive sectors (chemicals, autos, engineering) rather than labour-intensive ones like textiles, leather and footwear, unlike the East Asian model.

Reasons for the failure

• Rigid labour laws and firm-size thresholds discourage large labour-intensive units, keeping firms small and informal.
• Infrastructure and logistics costs erode competitiveness in price-sensitive light manufacturing.
• Loss of competitiveness to Bangladesh and Vietnam, plus tariff disadvantages after exiting some trade arrangements.
• Skill gaps and low productivity, and capital-biased incentives that favour automation over labour.

Measures suggested

• Rationalise labour laws through the four Labour Codes to enable scale.
• Targeted support for textiles, leather, gems and food processing via PLI and cluster development.
• Cut logistics costs (PM Gati Shakti) and sign trade agreements for market access.
• Expand skilling (Skill India) and ease credit for MSMEs.

Reorienting incentives toward employment-generating sectors can convert India's demographic dividend into an export advantage.