Sri Lankan Average wage vs India

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Re: Sri Lankan Average wage vs India

Postby raja » Sat Jun 09, 2018 6:50 pm

Atul, I am not disagreeing with the need for those elements you mention.
It is a competitive world - countries are competing with each other for foreign investment, to boost their economies.
They are competing with each other to increase their exports, so as to find markets beyond their home markets, otherwise their domestic production will be market-constrained.
I also agree that textiles/leather can only take you so far.
So I totally agree with all this.

But even Bangladesh has realised this. It is also trying to move to a different level.
Of course it will take time, considering where it is starting from.
And it might not even succeed - it is easier to talk about something than to execute, that too in a globally competitive environment.
But am happy that Bangladesh is at least looking beyond its garments sector.

Here's an article about IT parks being set up in Bangladesh.
Will they succeed? Will they get international customers at all?
Why would a client go to Bangladesh when he has many other options (including India next door)?
All questions that I have in my mind.
https://www.dhakatribune.com/tribune-su ... ladesh-hub

Maybe Leo can add more to the Bangladesh aspect of this topic.

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Re: Sri Lankan Average wage vs India

Postby Paddles » Sun Jun 10, 2018 12:02 am

bolero wrote:China's economy is an export driven economy. If trade barriers are erected, China is in trouble.

There is very little internal consumption unlike India and a lot of money has been sunk into infrastructure projects.


China has stuff all free trade deals with western countries as far as I know. China has succeeded over the top of trade barriers. China signed a free trade with NZ that actually cost China more, but China, I think anyway, wants to champion Free Trade for its benefit in getting into USA and Europe where it will really cash in if ever occurring in existing export and import climates.

Further, China's economy still regulates and limits imports (huge tariffs on imports). They don't just export, they service their own. In NZ, Canada, and Australia, Chinese money has flown into the property markets pushing housing prices up higher. NZ took notice when Chinese investors started to buy NZ farms and it suddenly became a political issue in NZ.

Further, there are billions of debt in the USA economy for balance of trade deficits owed to China. Chinese citizens have money invested globally.
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Re: Sri Lankan Average wage vs India

Postby squarecut » Sun Jun 10, 2018 1:24 am

Here I want to add that I have full respects for the efforts made by Bangladesh to improve their lot. What I am pointing out are the things that are needed to be done by them. I am sure there are people in Bangladesh who must be working on such issues, but lots and lots of things need to be done. I do not see too many signs of that at the moment.

It is not that India is vastly superior, but there are people in India who have been silently and unnoticeably working for decades and they have prepared a strong launch pad for India to take off in many areas.

For instance, the new big thing in industry is AI. Indians are ready to grab their piece of the pie.

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Re: Sri Lankan Average wage vs India

Postby raja » Sun Jun 10, 2018 4:14 pm

Yes, it's decades of work for India to be where it is today.
Still a long way to go, but it's better placed than many other countries in the developing world.
One big reason is that India has been a largely stable democracy since independence - the importance of this cannot be overestimated for economic development. This, despite India's extreme poverty, masses being mostly illiterate, 500+ kingdoms, and huge religious tensions at time of independence.
Life Magazine at that time gave India no chance of survival.
Since then India has come a long way, weathering every storm.
Plenty of natural calamities, and even a few wars have been weathered.
A strong Constitution, the building of institutions, setting up of industry and emphasis on education early on (in the 1950s itself) helped tremendously to pull millions out of abject poverty and illiteracy over the last 7 decades.
Again, I maintain there's a long way to go (millions still languish in these conditions) - but a strong foundation has been laid, right from independence.
As a result, Indians can now be found all over the world in skilled jobs.

Bangladesh has not had this vision right from the start.
For one, it was treated like dirt by Pakistan before it got independence.
In fact, one of the main reasons for independence was for self-respect.
India had very successful industrialists even before independence - like Tatas and Birlas, and many many more.
Bangladesh didn't have this to start with.
Their early history was very troubled - with assassination of their Founding Father, Sheikh Mujibur Rahman, in less than 4 years of independence.
Their geographic conditions make them very prone to flooding disasters.
And they have a massive population density.
So, it's a combination of multiple challenges.

Even now, I don't know how successful Bangladesh's initiatives for moving to a different level will be.
I'd like India to help Bangladesh out to take it to this different level.
Not being arrogant about it, but just as a friendly neighbour.
India can provide managerial talent and skills - for a period of time.
It can provide knowhow on how to develop a global IT industry.

One can ask what's there for India in this.
I think it is in India's interest to develop its neighbourhood - while respecting each country's sovereignty.
Of course India has its own challenges - but it helps to have a friendly neighbourhood.

Eventually I'd like the same with Pakistan - but that's a totally different challenge. :-)

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Re: Sri Lankan Average wage vs India

Postby raja » Sun Jun 10, 2018 4:18 pm

This would also increase respect for India in the neighbourhood - increase its sphere of influence, which could come in useful on international fora like the UN.
China has already gone deep in its influence in many countries in the neighbourhood, using its financial muscle to win their support.

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Re: Sri Lankan Average wage vs India

Postby squarecut » Mon Jun 11, 2018 5:17 am

Gaining ground through goodwill is called soft power. Gaining ground through force (military or money power) is hard power. China is gaining influence among smaller countries through its patented money power where they lend money to the smaller country to build some infrastructure and then that country is unable to repay the loan, then China grabs that infrastructure on lease. Example, Hambantota in Sri Lanka. CPEC in Pakistan will go the same way. China is doing that in Bangladesh, Nepal and Maldives as well. The billions of dollars that China "lend" to these countries as "loan" is huge money for these countries but is small change for China. So China is grabbing strategic areas in foreign countries through its loan giving strategy, literally by spending small change.

India on the other hand build similar projects treating the money spent as grant and does not treat that money as loan given to that nation. For example, Chabahar port in Iran. So, Indians are doing the right thing, viz gaining goodwill among countries that matter.

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Re: Sri Lankan Average wage vs India

Postby Paddles » Mon Jun 11, 2018 6:09 am

I'm not persuaded raja. I think Bangladesh has made a savvy choice in pursuing manufacturing over services for national growth. Services leads to an exodus of talent to global institutional centres or simply the best pay. Just how many of India's IIT graduates have gone to Silicon Valley or USA in general or elsewhere?

Services are a great career for individuals, but not so great for countries outside of institution based provision thereof. It is like the "brain drain" of lawyers and mathematicians to banking, finance and insurance capitals of New York, London, Singapore, Hong Kong etc. While services may be outsourced, they are often insourced by leading companies and lead to the migration of the high earning workers.

But Bangladesh need to be manufacturing more tech and less textiles. But I am led to believe that the change there is happening as we speak.
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Re: Sri Lankan Average wage vs India

Postby bolero » Mon Jun 11, 2018 7:38 am

India has already bypassed the manufacturing boom. For India to be competitive in next gen manufacturing, we need robotics which would replace machines.

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Re: Sri Lankan Average wage vs India

Postby Paddles » Mon Jun 11, 2018 8:54 am

bolero wrote:India has already bypassed the manufacturing boom. For India to be competitive in next gen manufacturing, we need robotics which would replace machines.


Call me a cynic but even this seems overstated. Over 10 years ago - people were aware China wanted to get into cars. Now I see plenty of Chinese vehicles on the roads. At an exponentially increasing rate.

People need goods, the old made in Europe or USA was replaced by made in Japan, then Korea and China, and next Bangladesh.

People need cellphones, tvs, fridges, washing machines, cooking instruments, that kind of thing with electrical componentry often made in Taiwan. Even furniture.

Next gen is a gamble. Where stuff in demand and perpetual demand is made now matters.

In extreme political theory, manufacturing labour payments result in a race to the bottom to where stuff is made, what this theory overlooks is the fact it a brilliant way for undeveloped nations to catch up to developed nations, and by making a mass infrastructure, keep future costs of production low and keep manufacturing domestic in supply by reducing transport and associated costs.

Real goods have to be made somewhere. Specialist and skilled labour is far more migratory.
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Re: Sri Lankan Average wage vs India

Postby squarecut » Mon Jun 11, 2018 11:07 am

It is not correct to say that India does not have a manufacturing sector worth mentioning.

Indian manufacturing sector is 16 % of its GDP, which amounts to some $400 billions. This includes machinery and equipments (3.6% of GDP), metal products (2.3% of GDP), textiles and leather products (2% of GDP), Foods and beverages (1.6% of GDP) and other manufactured goods (6.4 % of GDP).

Textiles and leather products form only 2 % of Indian GDP as we can see from above but Indian production is seven times larger than what Bangladesh produces. India in fact is number two in textiles and leather production(behind China).

Machinery and equipments (3.6% of Indian GDP) include two wheeler and four wheeler automobiles. India is the largest manufacturer as well as market of two wheelers in the world. Indian is the largest market and manufacturer of tractors in the world too.

India is now the second largest manufacturer of mobile phones behind China replacing Vietnam in 2017 and aims to become number one by 2019.

India is the largest provider of generic drugs globally with the Indian generics accounting for 20 per cent of global exports in terms of volume.

The above are just some examples which sadly are not covered by media, who mostly report controversial news that sell. It is aimed to increase the share of manufacturing sector in Indian GDP to 25% by 2025, by which time manufacturing sector will be $1 trillion in size.

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Re: Sri Lankan Average wage vs India

Postby raja » Mon Jun 11, 2018 11:16 am

Paddles wrote:But Bangladesh need to be manufacturing more tech and less textiles. But I am led to believe that the change there is happening as we speak.

Yes, the IT parks of Bangladesh are not as software-skewed as India's IT parks.
Just as manufacturing hardware began moving from Korea/Taiwan to Indonesia/Malaysia, there's a chance it will move to Bangladesh.

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Re: Sri Lankan Average wage vs India

Postby squarecut » Mon Jun 11, 2018 11:23 am

Whatever manufacturing Bangladesh is thinking of entering into is already happening in India and on a big scale too. It is sort of like Cricket. Bangladesh started playing cricket in 2000 while India has been playing it since 1930s. Same is the case when it comes to various sectors of economy.

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Re: Sri Lankan Average wage vs India

Postby bolero » Mon Jun 11, 2018 11:38 am

Even Indian textile manufacturers are outsourcing textiles from Bangladesh because of cost advantage. This was considered unthinkable before.

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Re: Sri Lankan Average wage vs India

Postby Paddles » Mon Jun 11, 2018 11:47 am

raja wrote:
Paddles wrote:But Bangladesh need to be manufacturing more tech and less textiles. But I am led to believe that the change there is happening as we speak.

Yes, the IT parks of Bangladesh are not as software-skewed as India's IT parks.
Just as manufacturing hardware began moving from Korea/Taiwan to Indonesia/Malaysia, there's a chance it will move to Bangladesh.


All that tells me is tech follows after nike and textiles. Which we know already has a pattern.
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Re: Sri Lankan Average wage vs India

Postby Paddles » Mon Jun 11, 2018 11:47 am

squarecut wrote:It is not correct to say that India does not have a manufacturing sector worth mentioning.

Indian manufacturing sector is 16 % of its GDP, which amounts to some $400 billions. This includes machinery and equipments (3.6% of GDP), metal products (2.3% of GDP), textiles and leather products (2% of GDP), Foods and beverages (1.6% of GDP) and other manufactured goods (6.4 % of GDP).

Textiles and leather products form only 2 % of Indian GDP as we can see from above but Indian production is seven times larger than what Bangladesh produces. India in fact is number two in textiles and leather production(behind China).

Machinery and equipments (3.6% of Indian GDP) include two wheeler and four wheeler automobiles. India is the largest manufacturer as well as market of two wheelers in the world. Indian is the largest market and manufacturer of tractors in the world too.

India is now the second largest manufacturer of mobile phones behind China replacing Vietnam in 2017 and aims to become number one by 2019.

India is the largest provider of generic drugs globally with the Indian generics accounting for 20 per cent of global exports in terms of volume.

The above are just some examples which sadly are not covered by media, who mostly report controversial news that sell. It is aimed to increase the share of manufacturing sector in Indian GDP to 25% by 2025, by which time manufacturing sector will be $1 trillion in size.


Cell phones would be great for India but even Vivo is still not mass made in India :( its improving , but atill not there.
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Re: Sri Lankan Average wage vs India

Postby raja » Mon Jun 11, 2018 11:49 am

When I was talking about India missing the manufacturing bus, I was talking mainly in global terms.
When China stepped on the pedal to become the manufacturing superpower it now is, India missed the opportunity at that time.
Sure, India got into services sector - and that has definitey made a huge impact too - but it need not have been at the cost of manufacturing.
For a country of India's size and millions of engineers, it could have been achieved both.

I remember former L&T Chairman AM Naik lamenting, in many interviews, the loss of engineers to the software industry. And it's not like India was producing cutting-edge or state-of-the-art software products.

As one of India's premier high-tech engineering companies, that has executed several export orders of engineering goods, L&T has suffered massively from this.
BHEL (one of India's large public sector undertakings in the engineering industry) has too - I've heard this from senior BHEL managers, who said it is very difficult to execute projects because of lack of skilled engineers coming in. (This was 10 years ago - things might have improved now).

This is not to blame any individual. Anybody will go where there's a market for his skills. If the software market seems more attractive for the individual, obviously he will go there.
But at a country level, it has repercussions. It means your economy runs the risk of lop-sided industrial development.Government policy needs to watch out for this.

In a way when the software market cooled off a bit (in the last few years), I was not too unhappy because it meant other industries would get some attention. Otherwise, Indian economy was too software-skewed.

This is what I meant when I said India missed the manufacturing bus. It chose to focus on software, AT THE COST of manufacturing.

Having said that, in a couple of areas India HAS done well.
Like Atul says, India's share in the 2-wheeer global market is indeed commendable. And in generic drugs too.
But, for a country India's size, its global manufacturing footprint could have been much larger.

Anyway,let's see what happens in the next 10 years. The world is changing so rapidly that it seems unfair to analyse history through today's lenses. Like they say, hindsight is 20/20. :-)

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Re: Sri Lankan Average wage vs India

Postby bolero » Mon Jun 11, 2018 11:51 am

India has the highest no of mobile phones used in the world and we are importing from China. Shame.

Only Micromax is being manufactured I think in Noida, India. Others are imported from China and assembled in India.

Squarecut / Raja can correct me if my information is not fully correct.

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Re: Sri Lankan Average wage vs India

Postby bolero » Mon Jun 11, 2018 11:54 am

In 2 wheeler segment, Pune has become the automative hub, especially of auto ancillaries.

There is one in Gujarat too at Sanand, near the Tata nano plant.

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Re: Sri Lankan Average wage vs India

Postby bolero » Mon Jun 11, 2018 11:55 am

Among the smartphones, Vivo, Oppo, Redmi (MI) and Honor (Huawei) are all Chinese.

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Re: Sri Lankan Average wage vs India

Postby raja » Mon Jun 11, 2018 11:57 am

Comparing Indian economy with Bangladesh economy is a tad unfair, given the sheer size of each country and its GDPs.
Not checked numbers but I won't be surprised if some of India's states have a GSDP close to, or even exceeding, Bangladesh.
Bangladesh has started much later, very disadvantaged at birth itself - its development has to be seen purely in its own context.
Just cannot be compared with India.

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Re: Sri Lankan Average wage vs India

Postby raja » Mon Jun 11, 2018 12:09 pm

It is not surprising if India is the second-largest manufacturer of mobile phones.
It is a massive captive market, so it makes a lot of sense for anyone to set up a factory in India.
As China's cost of production goes up, it might even make sense for Vivo, Redmi etc to manufacture in India and export to China. :-)

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Re: Sri Lankan Average wage vs India

Postby squarecut » Mon Jun 11, 2018 12:31 pm

bolero wrote:Even Indian textile manufacturers are outsourcing textiles from Bangladesh because of cost advantage. This was considered unthinkable before.

Yes they have made a name for themselves in textiles and that is quite creditable for them. In fact a few teams in football world cup will wear jerseys that were manufactured in Bangladesh.