Indian Economy: News and Discussion

another_armchair

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Overall manufacturing percentage of GDP has gone down on national scale.

Gujrat Tamilnadu and Maharashtra seem to be the few bright spots but overall trends are quite worrying.
Not trying to raise a strawman here but what is the role of automation in manufacturing job losses?

Automation has definitely led to job losses in the automobile manufacturing sector.

Consumer durables started sourcing from China in the past decade so your Indian mixer grinder, washing machine etc or a good part of its components are sourced from China and assembled here.

All raw material for bags, jackets etc are sourced from China.

VIP Skybags gets most of its bags manufactured in China and partly in Bangladesh.

A good number of Amazon basics backpacks are made in Bangalore through some third party vendor.

Same with large clothing brands including Flying Machine.

Manufacturers say they simply can't match the wages in India and remain profitable.

A pretty large 'plain' t-shirts manufacturer has a couple of factories in Tiruppur. They make about 10% on a finished product that leaves the factory. Focus is on volumes... or they will have to shutter down. T-Shirt prices range from Rs. 90 to Rs. 145 for premium imported Egyptian cotton t shirts that probably retail for over Rs. 700-900.

Another chap has a pretty big embroidery unit here in Bangalore. His t-shirt manufacturing unit is also in Tiruppur. He goes 'agar Bangalore mein factory khola toh kangaal ho jaounga'.

The minimum wages here are almost Rs. 14-16k pm and labor laws are pretty strict unless you are bribing the labor commissioner big time.

Who will manufacture? What will they manufacture? Why will they manufacture? Why take so much headache? Being a trader is less of a headache. Most manufacturer's turn into traders within 2-3 years of opening their units. The brave one's last about 10 years if policy is in their favor. Babu's have repeatedly fucked our economy with no remorse. Strange, the minister signs on that policy document and it becomes the law affecting livelihood of millions year after year, decade after decade.
 

Knowitall

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Predicted this a few months back.


Once again this is not how it works.

There is something called the fiscal deficit which the govt needs to maintain very carefully in order to uphold both the consumers and markets confidence.

India's current fiscal deficit stands at 9.3% of the GDP for FY21 which is a lot but slightly better than the expected 9.5%. the govt always tries to stays in single digits 9.3, 6.9 for example. Once double digits start to come a sense of panic starts to build in therefore the govt will always try to stay below 10% while slowly but steadily moving back to 6-7%.

Now look at this idiot.


And people wonder how the economy is still recovering from the past decade.

Printing and spending money might seem like a good idea at the start but it is anything but good. India has had a horrible experience with deficit financing in the 80s where the govt would just spend without thinking twice and the results of that experiment is there for everyone to see.

Printing or borrowing money without any plan will result in more inflation which is something that the govt is trying to control. The other issue as of now is the the "scale of bad loans"

Remember this.


It will take almost a year for us to know the extent of bad loans and NPA's in the banking sector. How many people went bust hoe many had their checks bounced and hoe many lost their assets is simply a unknown factor as of now. Borrowing more money above that is just madness.

Govt has already done a lot by spending generously during the first wave and is now trying to create "bad bank" of sorts to mitigate the damage done. These are steps in the right direction to bring the deficit under control.

spending more will simply increase the damage.
We still don't know the true extent of damage that we have faced in light of the second wave. Banks and govt both need time to gauge and plan accordingly. A lot of industries like real estate are waiting for more govt sops to go on.

In such a time it makes sense to tread cautiously and not spend endlessly without any foresight as many were suggesting here a few months back.
 

Lonewolf

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Not trying to raise a strawman here but what is the role of automation in manufacturing job losses?

Automation has definitely led to job losses in the automobile manufacturing sector.

Consumer durables started sourcing from China in the past decade so your Indian mixer grinder, washing machine etc or a good part of its components are sourced from China and assembled here.

All raw material for bags, jackets etc are sourced from China.

VIP Skybags gets most of its bags manufactured in China and partly in Bangladesh.

A good number of Amazon basics backpacks are made in Bangalore through some third party vendor.

Same with large clothing brands including Flying Machine.

Manufacturers say they simply can't match the wages in India and remain profitable.

A pretty large 'plain' t-shirts manufacturer has a couple of factories in Tiruppur. They make about 10% on a finished product that leaves the factory. Focus is on volumes... or they will have to shutter down. T-Shirt prices range from Rs. 90 to Rs. 145 for premium imported Egyptian cotton t shirts that probably retail for over Rs. 700-900.

Another chap has a pretty big embroidery unit here in Bangalore. His t-shirt manufacturing unit is also in Tiruppur. He goes 'agar Bangalore mein factory khola toh kangaal ho jaounga'.

The minimum wages here are almost Rs. 14-16k pm and labor laws are pretty strict unless you are bribing the labor commissioner big time.

Who will manufacture? What will they manufacture? Why will they manufacture? Why take so much headache? Being a trader is less of a headache. Most manufacturer's turn into traders within 2-3 years of opening their units. The brave one's last about 10 years if policy is in their favor. Babu's have repeatedly fucked our economy with no remorse. Strange, the minister signs on that policy document and it becomes the law affecting livelihood of millions year after year, decade after decade.
Can't the textile manufacturer turn towards , up ,bihar , Rajasthan ,these areas have some cheap labor
 

another_armchair

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Can't the textile manufacturer turn towards , up ,bihar , Rajasthan ,these areas have some cheap labor
What is the business environment in those states?

Small example - In Jamshedpur, though crime has fallen a great deal, peace also comes with a price. People have to pay 'chanda' to political parties.

A travel agent known to me pays 45-50k every month to the ruling party. It was BJP last time. Now its JMM.

It is a bit more if you are into manufacturing. If you are concealing your income, or making more unaccounted money, you will have to pay more. For example, the travel agent had multiple IRCTC logins and a backdoor and would charge a fat commission on every ticket booked no matter how much the WL. He had his sources in the Railway Booking too including in Kharagpur division.

If you are operating in tribal areas, you have to pay quite a bit, and if you refuse, you pay with your life.

My uncle had bought a property some years back near Jamshedpur jail. Considered it a safe place. There were two warring men - both local tribals fighting over who corners money from setting up the lay out. Guess what one guy did to the other? Bombed him to pieces. Yeah. Bombed him.

There are pockets where there is governance, the rest is still wild which is why people continue to migrate from these states to other states where L&O and business environment is conducive.

My uncle was a civil contractor in Assam. He was abducted by ULFA and had to spend three days in their captivity till he withdrew from a tender where he had emerged the lowest bidder.

The t-shirt manufacturer from Tiruppur I quoted is from Bihar. Quite a big shot.. says no chance of setting this up in Bihar. Says I can get people from Bihar and make them work here but I can't work in Bihar. Sooner or later I will end up selling my business to a local heavyweight or end up dead.

What about Mumbai? Can a builder reduce Rs. 300/sqft and survive for a week?
 

Knowitall

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Can't the textile manufacturer turn towards , up ,bihar , Rajasthan ,these areas have some cheap labor
The unit labour cost of producing a cotton shirt in the United States is around $7, while the unit labour cost of producing the same shirt in India comes at around 50 cents, whereas in Bangladesh the unit labour cost is only 22 cents.

Turnaround time of Indian firms from order to delivery is 63 days. In Bangladesh, this turnaround time is far less at 50 days. Also, it takes only one day for a consignment to reach a port in Bangladesh. In India, it can take as many as 10 days for a consignment to reach a port. All such factors are barriers to creating scale. Lack of flexible laws is the issue here.

Landlocked states will only end up increasing time due to lack of infrastructure and proper laws. The further you move away from the shores the higher the costs go therefore cheap labor starts to lose its appeal.
 
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sauntheninja

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What is the business environment in those states?

Small example - In Jamshedpur, though crime has fallen a great deal, peace also comes with a price. People have to pay 'chanda' to political parties.

A travel agent known to me pays 45-50k every month to the ruling party. It was BJP last time. Now its JMM.

It is a bit more if you are into manufacturing. If you are concealing your income, or making more unaccounted money, you will have to pay more. For example, the travel agent had multiple IRCTC logins and a backdoor and would charge a fat commission on every ticket booked no matter how much the WL. He had his sources in the Railway Booking too including in Kharagpur division.

If you are operating in tribal areas, you have to pay quite a bit, and if you refuse, you pay with your life.

My uncle had bought a property some years back near Jamshedpur jail. Considered it a safe place. There were two warring men - both local tribals fighting over who corners money from setting up the lay out. Guess what one guy did to the other? Bombed him to pieces. Yeah. Bombed him.

There are pockets where there is governance, the rest is still wild which is why people continue to migrate from these states to other states where L&O and business environment is conducive.

My uncle was a civil contractor in Assam. He was abducted by ULFA and had to spend three days in their captivity till he withdrew from a tender where he had emerged the lowest bidder.

The t-shirt manufacturer from Tiruppur I quoted is from Bihar. Quite a big shot.. says no chance of setting this up in Bihar. Says I can get people from Bihar and make them work here but I can't work in Bihar. Sooner or later I will end up selling my business to a local heavyweight or end up dead.

What about Mumbai? Can a builder reduce Rs. 300/sqft and survive for a week?

This is the situation in the financial capital of the country and this situation would stay the same regardless of any party in power
 

Bhumihar

Cheeni KLPDhokebaaz
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Not trying to raise a strawman here but what is the role of automation in manufacturing job losses?

Automation has definitely led to job losses in the automobile manufacturing sector.

Consumer durables started sourcing from China in the past decade so your Indian mixer grinder, washing machine etc or a good part of its components are sourced from China and assembled here.

All raw material for bags, jackets etc are sourced from China.

VIP Skybags gets most of its bags manufactured in China and partly in Bangladesh.

A good number of Amazon basics backpacks are made in Bangalore through some third party vendor.

Same with large clothing brands including Flying Machine.

Manufacturers say they simply can't match the wages in India and remain profitable.

A pretty large 'plain' t-shirts manufacturer has a couple of factories in Tiruppur. They make about 10% on a finished product that leaves the factory. Focus is on volumes... or they will have to shutter down. T-Shirt prices range from Rs. 90 to Rs. 145 for premium imported Egyptian cotton t shirts that probably retail for over Rs. 700-900.

Another chap has a pretty big embroidery unit here in Bangalore. His t-shirt manufacturing unit is also in Tiruppur. He goes 'agar Bangalore mein factory khola toh kangaal ho jaounga'.

The minimum wages here are almost Rs. 14-16k pm and labor laws are pretty strict unless you are bribing the labor commissioner big time.

Who will manufacture? What will they manufacture? Why will they manufacture? Why take so much headache? Being a trader is less of a headache. Most manufacturer's turn into traders within 2-3 years of opening their units. The brave one's last about 10 years if policy is in their favor. Babu's have repeatedly fucked our economy with no remorse. Strange, the minister signs on that policy document and it becomes the law affecting livelihood of millions year after year, decade after decade.
I think stringent labor laws are the reason why industries are keen on automation, when the administration makes it hard for u to earn profit workers becomes additional liability.
 

another_armchair

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I think stringent labor laws are the reason why industries are keen on automation, when the administration makes it hard for u to earn profit workers becomes additional liability.
Worker productivity must be optimal else it becomes unviable to operate in a highly competitive and challenging business environment.

Manufacturers are also at fault. They want easy credit, then they divert funds to non core businesses then NPA's mount.. operating cash flow gets hit... they fire people... delay wages... this in turn results in lock outs... vultures like Yogendra Yadav and others move in... we still have a lot of evolving to do.

I believe our worker productivity in terms of quantity and quality is quite low when compared to our other Asian peers. @SKC has already highlighted this in the past.
 

Bhumihar

Cheeni KLPDhokebaaz
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What is the business environment in those states?

Small example - In Jamshedpur, though crime has fallen a great deal, peace also comes with a price. People have to pay 'chanda' to political parties.

A travel agent known to me pays 45-50k every month to the ruling party. It was BJP last time. Now its JMM.

It is a bit more if you are into manufacturing. If you are concealing your income, or making more unaccounted money, you will have to pay more. For example, the travel agent had multiple IRCTC logins and a backdoor and would charge a fat commission on every ticket booked no matter how much the WL. He had his sources in the Railway Booking too including in Kharagpur division.

If you are operating in tribal areas, you have to pay quite a bit, and if you refuse, you pay with your life.

My uncle had bought a property some years back near Jamshedpur jail. Considered it a safe place. There were two warring men - both local tribals fighting over who corners money from setting up the lay out. Guess what one guy did to the other? Bombed him to pieces. Yeah. Bombed him.

There are pockets where there is governance, the rest is still wild which is why people continue to migrate from these states to other states where L&O and business environment is conducive.

My uncle was a civil contractor in Assam. He was abducted by ULFA and had to spend three days in their captivity till he withdrew from a tender where he had emerged the lowest bidder.

The t-shirt manufacturer from Tiruppur I quoted is from Bihar. Quite a big shot.. says no chance of setting this up in Bihar. Says I can get people from Bihar and make them work here but I can't work in Bihar. Sooner or later I will end up selling my business to a local heavyweight or end up dead.

What about Mumbai? Can a builder reduce Rs. 300/sqft and survive for a week?
No place in Bihar is safe from extortion rackets, Brik klin buisness is big in Bihar and everyone in this sector has to pay hafta to Political parties in non naxalite district and hafta to naxals in the naxalite district.
My folks have to pay 45,000 every year to these guys and that too when we have political connection in BJP and JDU. The lal salams still haven't lost power here.
Other than that u will hardly find constant electricity supply here since there are no major power projects.

For transportation u have to be in south Bihar because this part is connected to NH but alas lal salam mitro.

Cheap labor is the only saving grace u can find unskilled labour at as much as 8,000 to 10,000 and semi skilled at 14,000 to 20,000

I consider Law and order as the first and foremost thing when industry come into question second Power, third Transport.

Other than that there is also the bureaucracy that is a nation wide phenomenon but here in Bihar it will suck u dry.

My friend Who operates petrol pump in Barhi has to pay 1lakh each year to lal salam and that is the least naxal effected region of Jharkhand.
 

another_armchair

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No place in Bihar is safe from extortion rackets, Brik klin buisness is big in Bihar and everyone in this sector has to pay hafta to Political parties in non naxalite district and hafta to naxals in the naxalite district.
My folks have to pay 45,000 every year to these guys and that too when we have political connection in BJP and JDU. The lal salams still haven't lost power here.
Other than that u will hardly find constant electricity supply here since there are no major power projects.

For transportation u have to be in south Bihar because this part is connected to NH but alas lal salam mitro.

Cheap labor is the only saving grace u can find unskilled labour at as much as 8,000 to 10,000 and semi skilled at 14,000 to 20,000

I consider Law and order as the first and foremost thing when industry come into question second Power, third Transport.

Other than that there is also the bureaucracy that is a nation wide phenomenon but here in Bihar it will suck u dry.

My friend Who operates petrol pump in Barhi has to pay 1lakh each year to lal salam and that is the least naxal effected region of Jharkhand.
One lakh is quite less imo. Lucky guy.

My friend's cousin sister is a big wig in Rajasthan excise department. The entire extended family gets to tank up for free in some of the biggest fuel stations in Rajasthan, Jaipur in particular.

Well, Tata's pay money to LOL Salam. They get exclusive rights to mine and operate. Suspense account kisliye hain poocho?
 

Bhumihar

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Well, Tata's pay money to LOL Salam. They get exclusive rights to mine and operate. Suspense account kisliye hain poocho?
Kek dint they pay ulfa as well?
So much for Ambani is the best Businessmen but Roton ji is the best human.
I don't know if the day would come when Naxals are totally eradicated from India.
 

Chandragupt Maurya

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No place in Bihar is safe from extortion rackets, Brik klin buisness is big in Bihar and everyone in this sector has to pay hafta to Political parties in non naxalite district and hafta to naxals in the naxalite district.
My folks have to pay 45,000 every year to these guys and that too when we have political connection in BJP and JDU. The lal salams still haven't lost power here.
Other than that u will hardly find constant electricity supply here since there are no major power projects.

For transportation u have to be in south Bihar because this part is connected to NH but alas lal salam mitro.

Cheap labor is the only saving grace u can find unskilled labour at as much as 8,000 to 10,000 and semi skilled at 14,000 to 20,000

I consider Law and order as the first and foremost thing when industry come into question second Power, third Transport.

Other than that there is also the bureaucracy that is a nation wide phenomenon but here in Bihar it will suck u dry.

My friend Who operates petrol pump in Barhi has to pay 1lakh each year to lal salam and that is the least naxal effected region of Jharkhand.
Which place in India is safe from extortion Mumbai is infested with underworld still the manufacturing hub of India
If the living standard improve law and order situation will improve automatically
 

Bhumihar

Cheeni KLPDhokebaaz
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Which place in India is safe from extortion Mumbai is infested with underworld still the manufacturing hub of India
If the living standard improve law and order situation will improve automatically
As time goes Extortion is going down in MH, I don't think big firms like L&T, Mahindra, Reliance pay extortion to anyone same in case of MSME the only thing they may give money to is Politicians.
In case of Bihar which has no ports, no infra, no power it does not make sense to set up industries.
 

Knowitall

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Not trying to raise a strawman here but what is the role of automation in manufacturing job losses?

Automation has definitely led to job losses in the automobile manufacturing sector.

Consumer durables started sourcing from China in the past decade so your Indian mixer grinder, washing machine etc or a good part of its components are sourced from China and assembled here.

All raw material for bags, jackets etc are sourced from China.

VIP Skybags gets most of its bags manufactured in China and partly in Bangladesh.

A good number of Amazon basics backpacks are made in Bangalore through some third party vendor.

Same with large clothing brands including Flying Machine.

Manufacturers say they simply can't match the wages in India and remain profitable.

A pretty large 'plain' t-shirts manufacturer has a couple of factories in Tiruppur. They make about 10% on a finished product that leaves the factory. Focus is on volumes... or they will have to shutter down. T-Shirt prices range from Rs. 90 to Rs. 145 for premium imported Egyptian cotton t shirts that probably retail for over Rs. 700-900.

Another chap has a pretty big embroidery unit here in Bangalore. His t-shirt manufacturing unit is also in Tiruppur. He goes 'agar Bangalore mein factory khola toh kangaal ho jaounga'.

The minimum wages here are almost Rs. 14-16k pm and labor laws are pretty strict unless you are bribing the labor commissioner big time.

Who will manufacture? What will they manufacture? Why will they manufacture? Why take so much headache? Being a trader is less of a headache. Most manufacturer's turn into traders within 2-3 years of opening their units. The brave one's last about 10 years if policy is in their favor. Babu's have repeatedly fucked our economy with no remorse. Strange, the minister signs on that policy document and it becomes the law affecting livelihood of millions year after year, decade after decade.
Exactly.

There seems to be assumption or belief both in the forum and India in general that a large population is bound to invite low end manufacturing simply due to cheap labor.

It is only after the recent trends over the past few years have people started to realize that cheap labor cannot be used as a magnet to invite manufacturing.

Contrary to the popular belief the low end manufacturing segment of the world economy is not up for grab to the lowest bidder.

It is extremely competitive in nature and the low cost segment focus on cost savings in the entirety and not labor only.

Location
infrastructure
transportation
shipment duties
skilled labor in that category
friendly market
cheap labor

All of these combinations together form the core of low end manufacturing industry worldwide. Excelling in only one or few of these will not bring in the desired results.

1627407175613.png


This is also one of the prime reasons of ASEAN successfully taking over the manufacturing leaving china.

1627406797727.png


Until and unless we identify the core problems and act on them we will continue to face similar results.
 

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