7 Reasons * Why India Can't Compete China .

7 Reasons Why India Can Not Compete China .

As a rising economic power, India considers itself a challenger to China if not its rival.~

 Yet, it cannot even produce something as small as a figurine  of a god. Indian shops are flooded with figurines of Hindu gods and goddesses made in China. A large number of small merchandise items such as buttons are imported from China because they are cheaper than India-made goods. 

How does China beat India in pricing small items despite duties and transport costs?

In an article in Yale Global, Farok J. Contractor, a professor at Rutgers Business School, lists seven reasons which are reproduced below: 

Scale : Contractor writes that most manufacturing in China is done on a large scale which means that overhead and fixed  costs can be spread over more units of production, thereby reducing cost per unit. Giving an example, he says, an Indian producer might have three plastic injection-molding machines, whereas a Chinese counterpart has more than 70.Mass, Batch or Job production. India hardly goes for mass production, thereby increasing the overheads and burden exorbitantly and products prices shoot up!. 

Productivity:Contractor cites a McKinsey report that says “…workers in India’s manufacturing sector are almost four and five times less productive, on average, than their counterparts in Thailand and China, respectively.” More output per worker gives China a competitive advantage. According to the McKinsey report, Indian factories lag in automated equipment, capacity utilization, supply chains and quality control. In India employee in any sector inherently turns to be labor with very low productivity. NPAs are much more than PAs 

Corruption:Contractor says though India and China both rank 79th out of 176 countries in Transparency International’s Corruption Perceptions Index 2016, their corruption is vastly different. Corruption in China occurs at a higher level, which does not impact daily life and business.

In India, corruption is petty and frequent, making everyday life difficult. He says that's why India’s corruption is more psychologically and economically debilitating than China’s.  For personal petty gains from bottom to top many of us prefer corruption for short cuts. Many defaulters escape and those very very few are booked are hardly punished speedily. We have the cases long pending more than 4 decades.  

Transport: Transport costs favor China. Contractor gives an example to prove this: "The distance from Guangzhou in China to Mumbai is five times greater than that between Delhi and Mumbai. But cargo costs for the 7,300 kilometers by sea are roughly comparable to truck freight for the internal, 1,400 kilometers by road. Assuming 25,000 Hindu  figurines per container, with ocean freight costs averaging $1,000 per .. per container from Guangzhou to Mumbai, the transport cost per unit is around 4 US cents. Assuming two 9-ton capacity trucks needed between Delhi and Mumbai, the cost per unit is also just under 4 cents, for less than one-fifth the distance." We consider transport as obligation and hardly consider it as blood veins of nation.

Electricity: Though electricity costs for industry in India and China are comparable, Indian industry sees more infrequent supply and unannounced power  cuts which play havoc with production schedules.We believe in getting free electric power by any means, we are hardly disturbed to power cuts, etc, rather insensitive. We do not believe power is nation's breathing.

Bureaucracy:Regulatory procedures in India make setting up new businesses cumbersome. Contractors cites the example of land acquisition: "...acquiring land is more difficult in India than in China. Both countries have populations of more than 1 billion, but India has a third of China’s total land mass. Delays and bureaucracy, as much as costs, add impediments to expanding in India. By contrast, government fiat in China is sufficient to immediately displace thousands, if needed." .It's easier to do business in China which, he says, has fewer regulations, lower costs of compliance, shorter times for approvals and better legal recourse. We are still operating as if we are in British Raj and faithfully carrying the British legendary gift in this country. Public servant is a public master! 

Subsidies: Contractor says though both India and China subsidize its industry, China goes many steps ahead."Many of the 50-odd companies in China that produce Hindu figurines attend trade fairs not only in India, but also in Frankfurt and Las Vegas. Besides Hindu deities, they produce Christian and Buddhist figures and other household decorations.  Marketing expenses are tax deductible, sometimes subsidized, and a culture of international marketing savvy extends to even small enterprises ..  We believe in free everything.

To Summarize:

• Elements Scale & productivity are in the domain of and even can be identified by even the second year UG engineering students. 
• Element Corruption is more or less our inborn "Chalata Hai" attitude.
• Elements Transport, Electricity and Subsidy are hardly treated as of national interest and our right to get them free, if available
• Element Bureaucracy is our legendary administrative cult and we treat administrators as owner and not as public servant.Are we not still in a slave state?

How to deal with all these negatives? The elements listed above are the symptoms and not the roots. Then what are the roots that probably the author would not like to refer to? These are:

1. Have national thinking: Nation first.
2. Speedy and harsh punishment to defaulters. Any governing system will be effective if this principle is followed, may be Communism, Socialism, Capitalism, Monarchy, Dictatorship, Democracy, etc.