India faces a significant challenge in job creation, even as it holds the title of the fastest-growing major economy. To meet the growing demand for employment, the focus must shift to sectors that can absorb large numbers of workers.
Labor-intensive exports are crucial in this context. Industries like textiles, leather, and apparel are well-suited for job generation. However, despite India’s long tradition in these sectors, it has faltered. While India hesitated to seize the opportunity left by China’s gradual withdrawal from labor-intensive manufacturing, countries like Bangladesh and Vietnam stepped in and captured a greater share of global exports.
India’s share in global apparel exports has slipped, not due to a lack of demand for its goods, nor because the global market for apparel is saturated. In fact, untapped markets in Africa and Latin America offer significant potential for Indian textiles, footwear, and other labor-intensive products. These regions present an opportunity for India to diversify its export base, which in turn could create much-needed jobs.
One key recommendation to boost labor-intensive exports is to leverage India’s Production Linked Incentive (PLI) scheme. By offering targeted incentives, India can attract investors to low-skilled, labor-intensive industries, potentially making these sectors a game-changer for employment generation.
Beyond incentives, India’s integration into global value chains is crucial. Historically, India has relied on high import tariffs to protect its domestic markets—a protectionist approach that may offer short-term benefits but hampers long-term global competitiveness. Reducing import tariffs and increasing participation in global value chains would make Indian exports more competitive and unlock new opportunities for both growth and employment.
India’s urban unemployment remains alarmingly high, and without significant intervention, this could destabilize the economy. What was once viewed as a demographic dividend is now at risk of becoming a liability.
Job creation in labor-intensive sectors is not just an economic necessity; it is a social imperative. As India navigates its path toward becoming an economic powerhouse, it must ensure that this growth is inclusive. While the high-tech sector generates impressive returns, it cannot absorb the millions of workers entering the job market each year.
In contrast, labor-intensive industries offer the dual advantages of economic growth and large-scale employment. Expanding exports in these sectors could be the key to unlocking job creation and sustained economic growth.
India must act swiftly to identify and seize these opportunities. By revitalizing its manufacturing sector, targeting untapped markets, leveraging policies like the PLI scheme, and reducing barriers to trade, India can ensure rapid and sustainable growth, while creating jobs for its vast workforce.
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