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?