Is access to cheap labour a sufficient advantage against global competition?

In a fierce market competition, the competitor who enters second wins the race by achieving maximum reward because it had the time to think on the shortcomings of the first one. Nothing is unfair here and this absolutely suits the market dynamics. India has this comparative advantage where it can learn lessons from already developing and developed economies which were in a similar phase some years ago. 

China provides cheapest labour in certain sectors in the world. Nothing can outbeat it except itself. This has boomeranged the Chinese economy recently where there has been a public outrage on cheap labour issues and worker exploitation. This did cause productivity issues in Chinese economy recently. Indian economy has been growing fast and it has been said that it will be the fastest growing economy surpassing China by 2015. This is nice to hear, however, we should not be in the same boat as China is today. There is a lot of social unrest within the country. The outer world doesn't get to know about it due to the very basic nature of difference in modus operandi of Chinese government that they are monarch in nature. We are the democrats and we will continue to be so. 

One of the major factors India needs to focus is on building expertise and skilled labour on the innovation technologies. India's expenditure on the R&D has been meager. It needs to spend more on building worker capability to give better quality product at lower cost compared to other emerging markets in the world today.

We have a strong advantage of being an English speaking nation officially compared to competitors like Vietnam, etc. We should exploit this fact and turn this to our maximum advantage. This is one of the biggest factor which helps us currently but having this as a advantage in the long-term would be a short-sight. Our competitors will easily build this capability. So what next?

Indian currency is not pegged unlike Chinese. The comparative advantage over currency rates will soon diminish. Yes, India needs to focus on something else. 

Quality and innovation. What can bring back a customer to a client are these two factors when combined with cheap labour costs. Let’s take this example:

A standard mobile phone manufactured in India having a guarantee period of 1 year will cost around Rs. 2500. Comparatively, a standard mobile phone manufactured in Chine having no guarantee will cost around Rs. 1500. This is because of cheap labour in China. However, what distinguishes the two phones is the quality where the first manufacturer is confident and promised to pay for the guarantee period. We should really focus on the quality of our products because that will benefit getting customers back in the long run.

Innovation. It was estimated that Japanese company spends more on its research & development (R&D) than all of India put together. There has to be an increased expenditure on developing the research wealth of the nation. One way would be to impose certain regulations on the major government and corporate players to invest in the research capital of the nation. Food for thought?

A democratic nation Empowers everyone

Democracy - "With great opportunity, comes great responsibility". Every citizen of India is empowered to choose the government of the nation. He has the right to cast his vote. I think its high time we should revisit the whole process of voting in a democracy and find out where are the loopholes. Is the responsibility of a citizen just limited to cast his vote. If the citizen is not aware of his action, then aren't we jeopardizing the whole process of voting which should be the most fair process carried out in a nation. So, lets consider how can we make it more fair and relevant. Lets make the voting process a little more informative and inquisitive. How about putting some objective as a reason to be ticked along with the vote for a particular party/person. And for those who are unread and unaware, then let them have the opportunity of listening to the reasons put forward by the parties as reasons to get them elected. Moreover, we can make this process weighted, where if a voter is educated upto minimum required level, then his/her vote carries more weight compared to a voter who is unread. Agreed, unread doesn't necessarliy imply being unaware, but in effect this will put more pressure on the political parties to get the voters educated enough. Will this then not be a win-win situation for the nation and the parties along with keeping the fairness of the whole voting process. Food for thought?

Thoughts for Budget 2010 to FM, India

'Where there is change, there is Opportunity'. Lets not forget this. India is the biggest democracy in the world and second-fastest growing major economy. We should look at our competitors and then strategise how can we convert our weaknesses to our strengths. Agreed, fiscal deficit is a short-term weakness for India. However, we should not overlook what China, our neighbour, is doing to curtail the same. History has witnessed that the most successful companies were not the first one to enter the markets. They followed the ideas of the first entrants and then used the rising opportunities to strategise into a long-lasting success story for centuries. China is strong and deterministic in their stand as a nation. Lets be united and take strong and firm decisions. United States revolutionised their security after 9/11 attacks. Then why didn't India follow suit after 26/11 attacks. Agreed, we have much grave areas to worry upon. However, Mumbai being the financial capital of the country is very vulnerable to such attacks in a developing nation like India. We should be utmost cautious to protect our most important assets which will pave our way to success in future. Moreover, we should join hands with other developing nations to contribute and synergise and build into a much stronger sub-continent. We have a strong talent pool today with world-class education. We should involve the youth of the nation to decision making and make them feel important part of the success story of India. Entreprenuership should be encouraged to a large-scale which will help lower-middle class group to take more risk-free decisions and utilise their savings in a much better way. This is a very good way of giving back to society. Our government is not so strong as UK/US government in providing funds in a financial turmoil which happened last year. We can't afford to let something like that happen in India. We should be very cautious in introducing derivative instruments in our economy. Lets encourage corporates who operate in the same industry to operate in a same area. Lets vanish the concept of metropolitan cities and create a concept of 'Function' cities. This means that let all the growing cities like Pune, Chandigarh, etc have buddy cities like Mumbai, Delhi and then its the duty of the metros to ramp up the growing cities to take the next coming opportunities which will eventually help in metros distributing the load to other cities. This will help the nation to grow more fundamentally. Hope, our finance minister takes some of these thoughts and build upon these.