plus India has had slow structural transformation which could not have been helped by the heavy industry focus. So yes, India has surprisingly sophisticated manuf capabilities. But what has it been for? Manuf not a big employer. Are we just waiting for the big spillovers?
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We will be waiting for another 100 years! In the meantime, small scale manufacturing is being killed by high input costs and competition from Chinese imports. Whatever the purported benefits, they have been completely squandered.
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“Let’s tax machine-made cloth to support hand-made cloth, in the meanwhile we will build steel mills”
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Replying to @pseudoerasmus @teasri and
But there were also policies to support small scale industry. Part of a larger strategy. Question is why those were abandoned and why they were allowed to be swept away by international competition.
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Replying to @arjun_jayadev @pseudoerasmus and
Will tweet more about this in detail. Interesting study in an of itself. According to PN Dhar, former Principal Secretary to Prime Minister Indira Gandhi, a Japanese delegation studied India's small industry policies and lauded them in the early 1960s.
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Replying to @teasri @arjun_jayadev and
He also notes that small industries were actually more capital intensive than large industries and did not serve the original purpose of labor intensive growth. He also laments that they were not systematically studied.
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Replying to @teasri @arjun_jayadev and
India bizarrely combines high capital intensity & small average firm size; Indian manufacturing was more K-intensive than Chinese 1980-2000 yet yet ~90% of Indian manuf firms employed <50 whereas for China that was only ~25%
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Replying to @pseudoerasmus @arjun_jayadev and
The direct result of byzantine licensing policies combined with the draconian application of Monopolies and Restrictive Trade Practices Act in the 1970s. Keeping firm size small was a necessity to get licenses and also reduce regulatory requirements.
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Replying to @teasri @pseudoerasmus and
I wonder if the recent changes in Labour law in western indian states will change this.
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Maharashra/Rajasthan/MP/Haryana have adopted labour law changes that lift thresholds where stricter labour law kicks in form 10 to 100.
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That's not enough. Number should be 1000 at least q
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