World Bank urges India to boost labour-intensive exports for jobs

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Labourers work at a construction site of the Ahmedabad-Mumbai High Speed Rail corridor in Ahmedabad, India, May 31, 2023. REUTERS/Amit Dave/File Photo

NEW DELHI (Reuters) -India should focus on labor-intensive exports to boost employment, The World Bank said on Tuesday, noting that the country’s manufacturing industry has not fully seized opportunities from China’s exit from these sectors.

“India should also try to conquer less advanced markets,” said Auguste Tano Kouame, World Bank country director, during the release of the “India Development Update” report.

He said there was a lot of untapped demand for Indian goods, such as textiles and footwear in Africa and Latin America.

India’s high-tech exports, including mobiles and services, have grown significantly over the past decade but the country has lost ground in low-skilled sectors like apparel, leather, and textiles to Bangladesh and Vietnam, which benefited from China’s withdrawal from labor-intensive manufacturing, the report said.

“With rising costs of production and declining productivity, India’s share in global apparel exports has declined from 4% in 2018 to 3% in 2022,” the report said.

India has emerged as the world’s fastest-growing major economy, expanding 6.7% year-on-year in the April-June quarter but faces a challenge in job creation and more inclusive growth.

The World Bank said the urban unemployment rate remains high at an average of 17%.

Kouame suggested that India could attract investors by offering concessions under its Production Linked Incentive policy, to boost low-skilled manufacturing exports, which have higher job potential for young workers.

The report also recommended that India reduce import tariffs and integrate into global value chains to help increase its exports.

India’s total goods and services exports for the fiscal year 2023/24, which ended in March, surpassed $776 billion, government data showed. Imports for the same period were nearly $855 billion.

The World Bank also raised its economic growth forecast for India to 7% for the current fiscal year, from an earlier estimate of 6.6%, helped by government spending on infrastructure.

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