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IndiaPosted at: Oct 31 2020 4:47PM


Industries be built in remote areas: CEA

New Delhi, Oct 31 (UNI) India Inc should set up factories in the country's hinterland to take advantage of the lower labour costs, as the COVID-19 pandemic has removed some restrictions on connectivity, says Chief Economic Adviser Krishnamurthy Subramanian.
"The Covid pandemic illustrates that factories can be set up possibly in the hinterlands.
The reason this should be done is because labour costs will be far lower. Even adjusted for skill, and that skill can be upgraded, labour costs will be lower, so the competitive advantage is even higher," Subramanian said.
He was speaking at a virtual conference organised by industry chamber FICCI here on Friday.
The CEA said the most important aspect of Atmanirbhar Bharat concept enunciated by prime minister is to enable India to tap into its comparative advantages, which is the large labour force that the country has to create demand by enhancing employment opportunities in both the primary and secondary sector.
Another theme of Atmanirbhar Bharat is to nudge industry to focus on products that can be catered to lower income groups where margins are lower but volumes are much higher, he said.
Subramanian said India is the only country that utilised the opportunity provided by the current crisis to unleash second generation reforms.
The reforms signalled the intent of the government to rely on the markets.
"Reforms like IBC, Labour Codes, farm bills require a strong political will to see that the big benefits benefit the majority class. It is also signal from the government to do what is economically right and beneficial in the long run for the country," he said.
It is imperative for India to tap into its comparative advantages including the large market and large labour force to create demand and create employment opportunities in both the primary and the secondary sector. "Tertiary sector has done very well so far, but primary and secondary sector are important for employment generation," he added.
Explaining further the benefit of Atmanirbhar Bharat, he said that focus should be on the volume model under which the products and services are designed to cater to a larger section of the society.
"With small margin and catering to a large scale is the comparative advantage that India provides under the Atmanirbhar Bharat vision. This opportunity has not been tapped to its fullest except by FMCG and micro finance industry. Industry must tap this potential by creating products and services to play this volume game.
He further said that there are enough opportunities for ethical wealth creation to be done in India. "The government has made reforms like labour codes and in agri sector. India Inc now needs to respond."
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