India’s Economy, Now With Muscle

India’s rise as the premier destination for information-technology outsourcing has continued apace, since the government’s decision to privatize education ten years ago, marking the beginning of the Indian labor force’s scaling up. However, service-sector advances do not tell the entire Indian success story. Increasingly, manufacturing has become a rapidly growing sector of the economy. Throughout India, new factories provide alternatives to farming, and the jobs do not require an expensive education. Foreign automobile makers in particular look to set up shop in India, due to the abundant, young and cheap labor force. While many provinces still erect massive barriers of red tape preventing foreign investment, others, such as Tamil Nadu, have been trying to eliminate the bureaucratic measures that stifled India’s productivity for decades. As a result, manufacturing clusters have begun form in certain areas of the country that are too rural to attract foreign investment in IT. Buoyed by such agglomerations at its hinterland Chennai, for example, now calls itself “the Detroit of India. If the nation can combine a growing market with a labor force well suited to high-tech work and factory labor, foreign investment should continue to grow by leaps and bounds. Perhaps China should start looking over its shoulder. – YaleGlobal