Week 11 (only 1 lesson) Flashcards
India - Challenges and Opportunities
Definition:
India is positioning itself as a major player in global supply chains but faces both opportunities and challenges.
Key Opportunities:
- Alternative to China:
- Growing interest in India as a diversified supply chain hub alongside Vietnam and Mexico.
- Resource-Rich:
- Abundant raw materials and potential to develop a local supply chain.
Challenges:
- Insufficient Scale: Lack of large-scale production capacity.
- Dependence on China: Reliance on upstream inputs from Chinese supply chains.
Key Takeaway:
India has the potential to become a manufacturing powerhouse but must overcome significant scaling and supply chain hurdles.
India’s Demographic Dividend
Definition:
India’s growing population and youthful workforce present a demographic advantage but come with challenges.
Key Features:
- Youthful Population:
- Over 60% of Indians are between 15-59 years old.
- Ratio of children and retirees to working-age adults is low.
- Job Creation Needs:
- 9 million jobs annually are required to provide formal employment for the growing population.
- Challenges:
- Underemployment.
- Stagnant wages and inequality.
Key Takeaway:
India’s demographic dividend offers economic growth potential but demands robust job creation strategies.
Manufacturing Boom and Port Infrastructure
Definition:
India’s manufacturing sector is growing, but port and logistics infrastructure lag behind global competitors.
Key Challenges:
1. Port Limitations:
- Limited capacity for large ships (18,000 containers).
- 25% of container cargo is routed through foreign ports (e.g., Singapore, Dubai).
2. Congestion and Costs:
- Trade involves longer and costlier routes.
Solutions:
- Investments in Ports:
- New deep-water ports for larger ships (24,000 containers).
- Modern technologies like automation.
- Dredging channels to expand port capacity.
Key Takeaway:
Modernizing ports is crucial for India to compete in global maritime trade.
Infrastructure and Logistics (India)
Definition:
India’s logistics infrastructure faces significant bottlenecks but is improving with government investments.
Key Issues:
- Road Congestion:
- Limited rest facilities for drivers and frequent accidents.
- Railways:
- Primarily focused on passengers rather than cargo.
Improvements:
- Expansion of the national highway system.
- Investments in freight corridors and digitized inspection systems.
Key Takeaway:
Improved infrastructure and logistics are critical for reducing trade costs and boosting efficiency.
Gendered Labour Force in India
Definition:
India’s female labour force participation remains low, limiting economic growth potential.
Key Features:
1. Low Participation in Formal Sectors:
- Women are concentrated in housework and informal agriculture.
2. Challenges:
- Limited opportunities and mismatch between demand and supply.
- Tacit discrimination and poor working conditions.
Positive Outcomes of Participation:
- Increased investment in girls’ education.
- Higher household spending and upward mobility.
Key Takeaway:
Encouraging female participation in the formal economy can create a positive feedback loop for economic growth.
Financial Sector and Business Environment (India)
Definition:
India’s financial sector is strengthening but still faces notable challenges.
Key Features of Improvement:
1. Reforms:
- Stable inflation and large foreign-exchange reserves.
- Growth in domestic savings and improved credit access.
2. Business-Friendly Policies:
- Simplified GST system with electronic filing.
- Growth of global capabilities centres (e.g., semiconductor design, R&D).
Remaining Issues:
- High Borrowing Costs: Corporate borrowing costs remain uncompetitive globally.
- Bureaucracy and Red Tape: Legal backlogs and rigid labour laws hamper ease of doing business.
Key Takeaway:
India’s reforms are creating opportunities, but bureaucratic inefficiencies and high costs remain barriers.
