India and China, the world's two most populated countries, are competitive in the manufacturing sector. India, with its lower labour cost, attracts an increasing number of investors to install the plants in its territory. However, the manufacturing transfer is not as quick as it should be. What are the limits of manufacturing in India?
First, the power supply is not very stable in India. Electricity is not always available and this limits the capacity of production in the manufacturing industry.
Secondly, the transports are not well developed. Inside India, transportation by roads is hindered by the poor conditions of roads. It's well known that time is money, especially for business.
Thirdly, the productivity of labour is far from being satisfactory. Even though the cost of labour is relatively low, the productivity of labour in India can't compete with that in China.
Fourth, the bureaucracy impedes the investments in India. The official procedure to establish a plan is costly in time and money and without doubt, this discourages the investors.
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