Minimalist IAS
2017 GS Paper III

UPSC CSE (Main) 2017 · GS Paper III · Question 2

Account for the failure of manufacturing sector in achieving the goal of labour-intensive exports. Suggest…

Syllabus line: Liberalisation & industrial policy — “Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.”

GS Paper III 2017 · Q2

10 marks · 150 words Liberalisation & industrial policy

Account for the failure of manufacturing sector in achieving the goal of labour-intensive exports. Suggest measures for more labour-intensive rather than capital-intensive exports.

Approach · directive: “account for / suggest”

What it asks · Explain why Indian manufacturing has not become a large exporter of labour-intensive goods, and propose steps to tilt exports towards labour-intensive products.

The question has 2 parts — answer each

  1. Account for: why Indian manufacturing has failed to deliver labour-intensive exports
  2. Suggest measures for labour-intensive rather than capital-intensive exports

Open with · India's export basket leans towards capital- and skill-intensive goods, while apparel, footwear, toys and leather, which could employ millions, have lost ground to Bangladesh, Vietnam and China.

Cover

  • Labour market rigidities: strict rules on hiring and retrenchment for larger firms push producers to stay small or to use machines instead of workers.
  • Small scale: fragmented, sub-scale units cannot meet large export orders, adopt modern technology or absorb compliance costs.
  • Infrastructure and logistics: unreliable power, congested ports and high transaction costs make delivery slower and dearer than in competitor countries.
  • Skills and finance: a low-skilled workforce and costly credit for small firms limit quality and productivity.
  • Trade environment: fewer trade agreements than rivals, inverted duties and a strong rupee erode price competitiveness.
  • Measures: simpler labour and land laws, fixed-term employment, apparel and leather packages, cluster and SEZ infrastructure, skill training and cheap credit.
  • Measures: FTAs and trade facilitation, tax refunds on time, technology upgradation, and support for women-employing sectors such as garments.

Close with · Labour-intensive exports need flexible labour rules, world-class logistics and a skilled workforce, so that jobs and exports grow together.

Add value (verified)

  • The 2016 special package for the textile and apparel sector introduced fixed-term employment for garment units, along with EPF support for workers earning under Rs 15,000 a month. Year End Review 2016: Ministry of Textiles — PIB ↗“Introduction of fixed term employment: Considering the seasonal nature of the industry, fixed term employment will be introduced for the garment sector.”

Question: UPSC's CS (Main) 2017, GS Paper III — paper ↗. Approach: Minimalist IAS, checked 30 Sept 2026 (how we verify) — UPSC publishes no model answers. ·

Model answer · 237 words (UPSC limit 150) · Minimalist IAS

India exports mostly capital- and skill-intensive goods, while apparel, footwear, leather and toys, which could employ millions, have lost ground to Bangladesh, Vietnam and China.

Why labour-intensive exports failed

  • Labour rules: Chapter V-B of the Industrial Disputes Act, 1947 needs government permission for retrenchment and closure in units of 100 or more workers, so firms stay small or mechanise.
  • Scale: fragmented, sub-scale units cannot fill large orders, adopt modern technology or absorb compliance costs.
  • Logistics: unreliable power, congested ports and high transaction costs make delivery slower and dearer than in competitor countries.
  • Skills and credit: low skills and costly finance cap quality and productivity.
  • Trade terms: fewer trade agreements than rivals, inverted duties and a strong rupee erode price competitiveness; Bangladesh, a least developed country, enjoys duty-free access to the EU.

Measures for labour-intensive exports

  • Labour flexibility: the June 2016 apparel package brought fixed-term employment, higher overtime caps and government payment of the employer's EPF share for new low-wage workers; extend it to leather, footwear and toys.
  • Scale: plug-and-play parks and common facilities for apparel and leather clusters, plus cheaper credit for small units.
  • Trade: FTAs with major markets, timely refund of state levies, corrected inverted duties and faster customs.
  • Skills and women: sector training, plus hostels and transport for women, who form the bulk of garment workers.

Labour-intensive exports need flexible labour rules, world-class logistics and a skilled workforce, so that jobs and exports grow together.

Written by Minimalist IAS from facts checked at source (how we verify) — a little fuller than exam length, so every part of the question is covered; in the hall, keep the structure and trim the detail. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.

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