Here’s why India lags 15 years to China in the manufacturing sector

When it comes to manufacturing wages, India has some of the lowest in the world. The average manufacturing labour cost in India in 2014 was just $0.92 per hour, as opposed to $3.52 per hour in China. India’s relatively low cost of labour is one of the strongest incentives for setting up a plant there.According to a 2012 article published by McKinsey & Company, “Indian manufacturers lag behind their global peers in production planning, supply chain management, quality, and maintenance—areas that contribute to their lower productivity.” According to the database of the World Bank, China’s per capita GDP in 2014 was $12,609, adjusted for PPP. This figure is more than double India’s equivalent, $5,565. It’s important to note, however, India’s manufacturing sector accounted for about 17 percent of the country’s GDP, while China’s represented about 31 percent of their GDP, as of 2014.The availability of labour is a third factor to examine when considering manufacturing in India. China and India represent the two largest national populations in the world. India’s labour force amounted to about 502 million people in 2014, while China’s was approaching 802 million.The World Bank publishes a Logistical Performance Index (LPI) every two years, ranking countries according to several criteria like Quality of infrastructure, Ease of arranging shipments at competitive prices, Competence and quality of logical services etc.India's spend on logistics activities – equivalent to 13 percent of its GDP is higher than that of the developed nations due to relatively higher level of inefficiencies in the system, with lower average trucking speeds, higher turnaround time at ports and high cost of administrative delays.

Here’s why India lags 15 years to China in the manufacturing sector

Manufacturing Wages

Productivity

Availability of Labour

Logistics

Cost of Logistics