Those marvelling at B'Desh's rise, should know that our labour laws were designed since 1950's to discourage capex-lite manufacturing units (like garments etc), and encourage capital-heavy units like Auto-ancs, pharma etc.

(1/n)

The intent was to ensure "Domestic labour" didnt become "slaves to the foreign consumer".

Instead domestic labour became a slave to domestic poverty (which obviously seemed like a better option to our policy-makers!!)

Now lets see how this played out in our exports:-
(2/n)

Here is a graph of India's %age share in US/EU imports across different categories, with 2002 being used as base.

Our initial gains in capex-intense exports (the greenline) have steadily petered out, after peaking 2012. (3/n)

The ignored capex-light sectors (blue and yellow line) have stayed stagnant. And that is a sacrilege for a country like India where capital stock per worker is only 13% of global avg. Which means our relative advantage will remain our labour force for a long long while(4/n)

With all the talk of capturing the business that will leave China, a lot of light-manufacturing has already been leaving since 2010. It is moving to "New Asian tigers" : Vietnam, Cambodia, B'desh...not India, married to 1st world principles with 3rd world demographics (5/n)

But here is the bright-ending to this rant... our growth in GDP per capita, adjusted for PPP remains at a steady clip, almost enviable actually.

But that is no excuse to rest. We still have miles to go. (fin/n)