The Main Challenge For India While Taking on the Dragon— Labor Skills

The Ladakh Standoff between the soldiers of the Indian Army and the People’s Liberation Army (PLA) of China has triggered the same old tune of the #BoycottChina initiative.

Since the Coronavirus pandemic erupted and businesses started to move out from arguably the only manufacturing hub—the Republic of China (PRC), here in India people started to voice their opinions about ways to fight against the Dragon and boycott Chinese products was on top of it all.

It was fueled by the Government of India’s new Aatmanirbhar Bharat (Self-reliant India) campaign spearheaded by none other than Prime Minister Narendra Modi.

While the effects of the campaign are being greatly discussed among all classes in the country, everyone failed to address the elephant in the room—the wide gap of skill levels between the Indian and Chinese labor.

I agree that with Make in India, India has started to win the lost grounds when it comes to battling against the mighty Chinese. From 70% of smartphones that were imported in 2014 to 99% of them ar being “assembled” in India now is a great achievement from how bad the situation was.

The Modi government’s self-reliant India campaign has also started to show its impact with Von Wellx becoming the first company moving its production house from China to India’s Agra.

But this is negligible when it comes to what China does and cater to the companies worldwide. Then, what’s the problem? Few issues like lack of administrative support while starting any business, etc. are worth to be noted. But India has shown continuous progress when it comes to Ease of Doing Business for the last few years. Then, why companies are still not interested in seeing India as a major choice for their business. Why Thailand, Singapore, and Taiwan are being considered as the most favored destinations after China?

The answer lies in the skills of the workforce that China offers. Till a few years back, everyone thought that businesses are moving to China due to the cheaper workforce that it has.

But things started to change rapidly. Analyzing the future trends, Chinese lawmakers took drastic steps to upgrade their workforce and enhance the skillset of their workers, especially in the Information and Communications Technology (ICT) field.

Look at what Tim Cook, CEO of Apple said when he was asked why Apple manufactures its smartphones and tech pieces in China,

China has moved into very advanced manufacturing, so you find in China the intersection of craftsman kind of skill, and sophisticated robotics and the computer science world. That intersection, which is very rare to find anywhere, that kind of skill, is very important to our business because of the precision and quality level that we like. The thing that most people focus on if they’re a foreigner coming to China is the size of the market, and obviously it’s the biggest market in the world in so many areas. But for us, the number one attraction is the quality of the people.

This is the real reason why the Chinese have gone way ahead than India and other countries when it comes to becoming a manufacturing hub. Having a large workforce is one thing, having a large pool of skilled, digitally-enabled, futuristic workforce is different.

Just like Apple, companies nowadays don’t want their manufacturers to just copy what has been given to them. They want a deep-rooted partnership that can help them innovate world-class products. And China just served them what they needed.

It’s a big challenge for the Indian government to be able to produce such kind of workforce that can be leveraged on the global level. Are we ready for it? Unfortunately not.

India Skill Report 2020 says that India has only 46% of employable talent. It has certainly increased from 33% in 2008 but the growth is not up to the mark and on top of it much behind the other countries.

We not only have a large pool of poorly-trained workers, but we still are not able to take all of them under one roof. Our informal sector is still taking a huge portion and very few efforts have been made to formalize it. The ongoing migrant workers’ crisis has shown the incompetency of the government authorities in managing it well. This also shows our poor readiness to manage our informal workers, who play a fundamental role in running the whole economy and the supply chain.

While India has only 4.69% trained workforce, China’s trained labor counts to 24%. This wide gap is the major issue that the Indian government has to address and address fast. This detailed report by the Financial Express talks in detail about the crisis. No wonder, the World Economic Forum’s Global Competitive Index, which contains skills as one of the factors, sees India dropping its rank by 10 places in 2019 compared to 2018.

Lack of workforce modernization and education, poverty, etc. are some of the issues which have to be discussed in detail while dealing with skill enhancement.

It’s heartening to see that the Indian government has identified this problem and taking steps to counter it. India’s Skill India Mission under Pradhan Mantri Kaushal Vikas Yojana could train 34 lakh workers and place over 10 lakh among them into various jobs across the country.

But many things still have to be done. We already have started to face this issue in the construction sector as the field is in dire need of modernization. The same goes for the automobile sector, which is dying rapidly due to the lack of a world-class manufacturing ecosystem. Implying the Chinese model of introducing artificial intelligence, robotics, digital infrastructure, India needs to go ahead at the full pace. the Digital India initiative, which the government claims to be a big success needs to be connected and channelized in the proper manner.

While it’s not bad to focus on regional businesses but making the right balance between the local and global businesses is even better. And for that to happen, India needs a huge push to upgrade its workforce. Of course, it has to be backed by creating a business-friendly atmosphere—both economic and social.

India also will need to spend more on research and development (R&D)which will help pave the road for innovation. Currently, India’s spend on R&D is just 0.7% of its GDP which is the least among BRICS (Brazil, Russia, India, China, and South Africa) nations. China spends a whopping 2.1% of its GDP on R&D and the results are in front of us all.

As I said earlier it’s not at all the gone game for India. Coronavirus pandemic certainly has opened gates for India to bring back the lost territory. The steps taken by the Indian government to attract businesses exiting from China are surely commendable. But India has to fix its weak spots sooner than later. Poor infrastructure capabilities, the under-developed workforce, lack of business-friendly atmosphere, administrative hurdles are not going to attract businesses.

And, certainly, #BoycottChina isn’t going to help anywhere! It’s essential to fight on two fronts with China—both militarily and economically. Because as the nature of the dragon, it can sting from anywhere. Boycotting their products won’t do any damage to China but making ourselves the favored option would certainly tame the Dragon.