Indian Economy: News and Discussion

Suryavanshi

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We have also tried the Chinese model of Special Economic Zones, which has repeatedly failed for us, even in a state like Maharashtra.
I respectfully disagree bro SEZ is one of the most efficient model of Industrialization.
It encompasses each and every aspect of Industrial Planning.
 

Suryavanshi

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The classic case of Fuck up of a SEZ or a city supposed to be a economic hub in general is Bihta, Bihar.

Bihta was supposed to be a Smarty city and a economic sector of Bihar. It already has a Airport which also encompasses the Air Force base. But ignorance of government has led to people buying land for houses, result localities and illegal settlement popping up near and inside the proposed area.
IT was supposed to have a IT sector and a SEZ for manufacturing high value goods but now being reduced to cheap housing society for illegal Bangladeshis. The Government is careless, the Babus are happy munching on money and the people of state are migrating out for jobs. It is absolute shameful for me when I hear 2 to 3 million people are working outside the state to fill their stomach and how they are treated. A single well planned city could house 1 to 2 million people and give them decent life but no kismat me nahi he.
 

Tibarn

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I respectfully disagree bro SEZ is one of the most efficient model of Industrialization.
It encompasses each and every aspect of Industrial Planning.
I am not denying that the SEZ model has had good success in China, I definitely agree with you there, but, to me, China is a special case. I think only another dictatorship like Vietnam can follow the Chinese method. Any decision their government takes can be ruthlessly and efficiently enforced. There is also the fact that China is communist, so they have no desire to provide economic reforms to the whole country, they create little capitalist bubbles in the country while the rest of the country is still under the yoke of socialism/communism.

If Modi was dictator, I would say that we could efficiently implement SEZ policy, but I think they don't work in a democracy like ours. They haven't in the past, and I don't see a scenario where they do in the future.

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Here is a link to a paper, for anyone who is interested, regarding countries, including India's experience regarding SEZ.

Moberg, L. (2013). The Political Economy of Special Economic Zones. SSRN Electronic Journal. doi:10.2139/ssrn.2297871

The whole paper is 34 pages long, but I have extracted the particularly India-relevant parts and posted them below (I am copying and pasting from a different forum, where I posted these excerpts before, so some of it may look formatted weird after I click post).


Page 17

Quote
India introduced their first SEZ in 1965 but had by 2000 only established seven zones (Gopalakrishnan, 2011: 139). These first zones were small enclaves for export manufacturing. They formed very few linkages with the rest of the Indian economy, and had virtually no impact on the country (Palit and Bhattacharjee, 2008: 19; Engman, Onodera and Pinali, 2007: 18). They also did not help improve India’s negative trade balance or even increase the country’s exports (Seshadri, 2011a).
Pages 17-18

Quote
India introduced a new SEZ Act in 2005, modeled on the Chinese SEZ scheme. The goal was to further promote zone exports and develop zones of larger scale (Palit and Bhattacharjee, 2008: 88-9, 97; Seshadri, 2011a: 28). With the new law, the number of zones has increased. By the end of 2010, India had approved as many as 580 SEZs, 112 of which were actually exporting. 3 Alas, many SEZs became grounds for real estate speculation (Mitra, 2007; Seshadri, 2011b). Meanwhile, there has been much controversy over the dispossession of farm land, with opposition to SEZ development resulting in violence (Roy, 2009: 79). The 2005 Act has also been criticized for pricing farmers out from their lands and causing “conversion of the fertile land into cement structures” (Mitra, 2007: 13; Levien, 2011; Kahn, 2008: 14). Many SEZ plans have been obstructed by unpredictable and burdensome government policies. The SEZs that currently operate are allegedly not very profitable (Govardan and Srivastav, 2012). Let us start with India’s possible knowledge problem. From the start, the Indian governmental authorities often determined both zone location and the nature of zone production. In several cases, they chose poor, backward and unattractive zone locations. As a result, SEZ investments did not match market conditions. The most successful zones were already high performing before becoming SEZs. In addition, SEZ regulations frequently posed obstacles for businesses in the zones to subcontract with firms outside the zones (Seshadri and Storr, 2010: 363).
Page 18

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India has made some progress towards decentralization. Prior to 2005, the Indian zone authority was a government department office that lacked autonomy over SEZ approval clearances and zone development (Aggarwal, 2005: 16).4 With the 2005 SEZ Act, India moved towards more decentralized political decision making. State and central governments both have greater discretion to regulate the zones (Burman, 2006: 5). There is also more emphasis on private zone development (Palit and Bhattacharjee, 2008: 174). Still, decentralization does not seem to have gone far enough. The central government has imposed significant limits on how the SEZs may operate. Even though the aim is to develop larger scale SEZs like those in China, the zones have been limited to 5,000 hectares (Mitra, 2007: 15). On the other hand, while the government designated many of the new zones in urban areas, they set a minimum size of 1,000 hectares for the zones. In areas where vacant land is scarce, such a requirement is an impediment to SEZ development (Patil, 2013).

Pages 18-19

Quote
Other regulations are likely to stem India’s SEZ success. Prospective private developers must specify what facilities will be developed, how much investment they will attract and how many jobs they will create (Palit and Bhattacharjee 2008: 114). At least 35% of zone areal must host processing activities, and 60% of the new zones are allegedly designated as technology zones (Harding, 2011: 166).5 In 2008, all SEZs in India except twelve were industry specific, which means that the government only allows for a particular form of production in them (Palit and Bhattacharjee 2008: 170). With all the government’s regulations and restrictions, it seems unlikely that India is overcoming the knowledge problem.

Page 19

Quote
Palit and Bhattacharjee (2008: 182) argue that the government needs to conduct more research and gather more information to make better decisions about SEZ policies. The Indian government is a frequent employer of think-tanks, which provide policy analyses and the necessary information to design the zones (Id.). However, no amount of government induced research will give policy-makers the market knowledge that they would need to improve on the economy. A solution to the knowledge problem should rather lie in more solid decentralization of decisionmaking. India’s incentive problem can also help explain the modest performance of the SEZs. Corruption in India makes it an unattractive place for investors (Keshava, 2008: 18), and has plagued much government planned infrastructure in the country (Mitra, 2007: 11). It is therefore worth noting that the Indian SEZ scheme to a large extent relies on single-factory zones. Introduced in 1980, by 1998, India had 1,210 such “zones” in production, compared to 525 regular zones (Seshadri, 2011a: 36). As previously discussed, single-factory zones facilitate rent-seeking. The fact that the country relies so much on them indicates their potential role as vehicles for graft
Pages 19-20

Quote
Low-level corruption is pervasive in India (TI, 2011: 12), which contributes to the incentive problem with SEZs, as they offer officials additional opportunities to extract rents. Aggarwal (2005) finds that prior to 1991, the Indian Board of Approval granted companies SEZ status first, after which additional permission was needed from the Secretariat of Industrial Approvals, the Ministry of Commerce, and state and central government departments. A possible rationale behind such an arduous process is the creation of rent-seeking opportunities. As of 2005, most companies had to go through 15 authorities to enter an Indian zone. In a survey, over 60% of SEZ firms reported frequently making “irregular payments”, both to custom clearance and zone authorities (Id.: 26). Since 2005, a “single-window” policy is meant to simplify the registration process. The 2005 law is however complicated and unclear, so the process may still be too opaque to enhance the adverse incentives surrounding the SEZs (Harding, 2011: 164).

Page 20

Quote
India is allowing for more private development, which could be a way to alleviate the incentive problem. Private developers have the incentive to create good conditions for businesses, as they compete for investments with other zones. The developers should only invest in SEZs to the extent that they create value, because they must finance the development and still need to make profits (Mitra, 2007: 12). Harding (2011: 163) points out however, that the Indian government still has broad powers to direct resources to the new SEZs. Urban land is largely a state monopoly, which inevitably induces rent-seeking (Seshadri, 2011b: 9). Indian officials thus have the incentive to use the SEZs in corrupt and inefficient ways. As a blatant example of this, the government has allegedly used eminent domain to sell land to private developers at artificially low prices (Levien, 2011: 460).
While private investments have been modest, local governments have not had the incentive to contribute in their stead. Because many SEZs have not been successful, state governments are reluctant to support them or finance the infrastructure. Some states even discourage their creation (Govardan and Srivastav, 2012).

That is the entire portion on the Indian experience with SEZs. We have tried this method since 1965.
A lot of the same problems that SEZ's have are those that businesses outside of SEZ have in India as well, including corruption, excessive red tape, an inability to acquire land, etc.

In my opinion, why would we not target those issues at the national level rather than try again with a policy, after hundreds of previous attempts and failures with SEZs?
 

no smoking

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Vietnam indeed is among front runners. But it's not the country that could absorb all the manufacturing that left China, only India can.
No, India can't either. India seems to have a huge labour pool matching Chinese size. The reality is the number of experienced engineers and qualified workers are far less than Chinese of 1990s. When our company set up the first factory in China in 1998, for every manufacturing position, we had over 100 candidates, each of them had good related experience, lots of them used to manufacture tanks, fighter jets.
On the case of India in 2015, it was really, really hard to find enough skilled workers/engineers.

Another issue is this time, the factories are being absorbed not by one countries, but ALL Asian countries, from Vietnam to Bangladesh and India. No one wants another China.
 

charlie

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No, India can't either. India seems to have a huge labour pool matching Chinese size. The reality is the number of experienced engineers and qualified workers are far less than Chinese of 1990s. When our company set up the first factory in China in 1998, for every manufacturing position, we had over 100 candidates, each of them had good related experience, lots of them used to manufacture tanks, fighter jets.
On the case of India in 2015, it was really, really hard to find enough skilled workers/engineers.

Another issue is this time, the factories are being absorbed not by one countries, but ALL Asian countries, from Vietnam to Bangladesh and India. No one wants another China.
I agree with you on no one wants another China, but your Comment about Chinese being experienced is a big joke, the manufacture suffered same issue as they face in every low income countries. China was no different.
 

Craigs

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No, India can't either. India seems to have a huge labour pool matching Chinese size. The reality is the number of experienced engineers and qualified workers are far less than Chinese of 1990s. When our company set up the first factory in China in 1998, for every manufacturing position, we had over 100 candidates, each of them had good related experience, lots of them used to manufacture tanks, fighter jets.
On the case of India in 2015, it was really, really hard to find enough skilled workers/engineers.

Another issue is this time, the factories are being absorbed not by one countries, but ALL Asian countries, from Vietnam to Bangladesh and India. No one wants another China.
Your thinking is still linear. Your company experience in China is of no relevance to India. Times are different and solutions will be different too.
 

Indx TechStyle

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No, India can't either. India seems to have a huge labour pool matching Chinese size. The reality is the number of experienced engineers and qualified workers are far less than Chinese of 1990s.
There is no specific source to suggest this timeline. India's proportion of skilled labour is simply in synergy with its current income levels. If skills, no India isn't behind What China used to be in late mid 2000s.

Jumped from just 6% in 2015 to 21% to 2018. It'll continue to grow and still was among single largest pools because of sheer numbers. Total population will continue to keep India up the chart with even faster rising numbers.
Another issue is this time, the factories are being absorbed not by one countries, but ALL Asian countries, from Vietnam to Bangladesh and India. No one wants another China.
Economic complexity index and "experience" you are talking about of most of these countries is too low to make a significant difference. Indian economy draws most revenues for itself from manufacturing of machines/vehicles or softwares etc. against these countries encashing on textile and primary sector only.

Beyond certain nations of East & Southeast Asia, there is no Asian country except India with significant R&D and share of industrialization of global chains. India still holds spot among largest producers of steel and certain basic gadgets/products outside East Asia.

Same South Asian neighbors like Pakistan or Bangladesh, of India with same income levels are based on even lower end industries than India and have only multiple instances of monetary growth periods. There is no point of expecting a good factory in countries who don't even manufacture bicycle chains.

As for "another China", attempts from around the globe to localise their chains are a result of closing gap among powerful and weak countries, not China factor specifically. Trend will again reverse as Asian population starts to decline. Further, "another China" has a lot of interpretations. PRC was never considered a reliable country. Nor so many countries are looked upon with such suspicions fearing blatant abuse of misery of other countries. At least India is one of them, holding a far more lenient and soft image than "mighty" PRC.
 

Sanatani

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No, India can't either. India seems to have a huge labour pool matching Chinese size. The reality is the number of experienced engineers and qualified workers are far less than Chinese of 1990s. When our company set up the first factory in China in 1998, for every manufacturing position, we had over 100 candidates, each of them had good related experience, lots of them used to manufacture tanks, fighter jets.
On the case of India in 2015, it was really, really hard to find enough skilled workers/engineers.

Another issue is this time, the factories are being absorbed not by one countries, but ALL Asian countries, from Vietnam to Bangladesh and India. No one wants another China.
I heard from a reliable source that in India it takes at least 2 to 3 weeks to get a dye made but in China you get it within 48 hrs and that too of a better quality.
Obviously China makes everything on a large scale ,with more automation and lesser time all these at a lower cost to customer.
To all of you who have a good idea about China ,can you all shed some light on different factors that made China capable of becoming the biggest manufacturing hub of the world but India lagging behind despite having good natural resources.
 

Suryavanshi

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I heard from a reliable source that in India it takes at least 2 to 3 weeks to get a dye made but in China you get it within 48 hrs and that too of a better quality.
Obviously China makes everything on a large scale ,with more automation and lesser time all these at a lower cost to customer.
To all of you who have a good idea about China ,can you all shed some light on different factors that made China capable of becoming the biggest manufacturing hub of the world but India lagging behind despite having good natural resources.
1) Authoritarian Government.
2) No self stagnating Politics.
3) Good Transport system, land, Rail, Sea.
4) Skilled labour.
5) No Reservation.
6) Little to no Bureaucracy.
7) Indigenous Industry Protection.
8) Protestors disappear
9) Unproductive People get Rekt
10) Bitchslapping Islam and Religion in General

China is like a large company that can't be held accountable by any higher authority.
 

DG7867

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20 lakh cr economic package .. as usual exact details missing

Huge Announcement by PM
@narendramodi
Indian ₹ 20000000000000.00 Economic Package for self dependent India. 10% of Indian GDP For neighbours it is Pakistan ₹ 42486325440000.00 105% of Pakistan GDP || Gilgit Temperature 19℃ ||
 

Craigs

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I heard from a reliable source that in India it takes at least 2 to 3 weeks to get a dye made but in China you get it within 48 hrs and that too of a better quality.
Obviously China makes everything on a large scale ,with more automation and lesser time all these at a lower cost to customer.
To all of you who have a good idea about China ,can you all shed some light on different factors that made China capable of becoming the biggest manufacturing hub of the world but India lagging behind despite having good natural resources.
What if the dye made in China does not stay true to spec?
 

Illusive

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By negotiating a better job once industries start to appear in your state. :troll:

Unless we get a 12.5 lakh crore stimulus ghotala in the future.
Work!!..........Ain't got time for that.

The best CM of the world better give me my share.
 

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