EDC’s Vice President and Chief Economist Peter Hall does a Weekly Commentary on subjects that are of significance to Canada’s businesses, commerce and economic well-being. Maybe not just Canada’s well-being but the world’s. Earlier this year he went on this whirlwind 20 plus city tour of Canada as EDC’s one-man rock band or our own modern-day Oracle of Delphi, giving his insightful analysis & views on the Economy and where it was headed. But that’s not the reason why today’s blog at Rmagine headlines Peter Hall. Peter’s observations in today’s weekly commentary is closer home to Rmagine’s core- India.
This week’s analysis of global issues for Canadian exporters and businesses featured Peter Hall delivering a tribute, a word of caution and a great promise of things to come- all on India. Titled ‘In India’s Perennial Problem, A Solution’, he has this to say [and I am paraphrasing]:
- India’s modern-day growth path is the envy of most nations- annual GDP growth this year and the next to average 8.4% versus the much envied 6.4%, which is its past ten-year average.
- Key inhibitors to growth: Infrastructure and soon, qualified labor.
- Labor- the inhibitor and potentially, the key to further growth as well. While China’s labour force will soon peak, India will still be adding well over 100 million new workers each decade.
- The bulk of India’s labor force is agricultural- 60%. And a great chasm..[exists] between these workers’ skills and the ample office-tower opportunities that exist. Painfully aware of this mismatch, the government is pulling out all the stops, vastly increasing education funding, expanding the number of educational institutions and partnering with international educators, in a determined race to stay ahead of the economy.
- In the meantime….a wage inflation… could quickly erode or even eliminate India’s competitive edge.
- The rest of the world may have a remedy. Many nations have a crying need for lower-skilled labour. Most fully developed nations have aging populations, and face desperate labour shortages in the next growth cycle. Until now, they have been able to rely on China, but it too faces imminent aging problems. India is among a very few nations with the potential to meet this chronic near-term global shortage.
- And this is being addressed [by the Indian government], with a multi-year, US $1 trillion spending program that among other things may unlock India’s vast, and as-yet largely untapped, manufacturing potential.
And the final word from the Oracle: “The bottom line? India may well be on the verge of expanding in a new direction as the world seeks new means to keep its production machine functioning well. Strategists, pay attention.”
Peter Hall, in my opinion, is spot on. And the building blocks are all in place already for India to become a global engineering research and manufacturing hub. Of the global $200 billion engineering services outsourcing projected for 2020, India will have a 25% or a $40 billion share. And it is projected that another $45 billion will be the value of R&D work that will be done by global majors in India by 2020. Another indicator is that auto component manufacturers in India are expected to produce between $20 to 25 billion worth of components for global auto companies by 2015.
And all this, much before the 100 million strong workforce becomes available after 2020, to prove Peter Hall right. I see his ‘Strategists, pay attention’ is really a call to Canada’s businesses to take note of the world of possibilities and plan their entry into India.
Going deeper into Peter Hall’s prescient outlook on India’s role in the global workforce of tomorrow is what India’s think tank of industry leaders label India’s New Opportunity– the opportunity to provide a skilled workforce and a band of knowledge workers to match the shortages that the western world will face. By 2020, it is predicted that US will face a net shortfall ranging from 8.2 to 14.3 million in its workforce! The net shortfall figure for Canada is expected to be between 1.1 and 2.8 million!
Going by these trends, in the future, countries from around the globe will be beating a path to India’s shores not just to do business there but to woo its knowledge workers as well.
If you’d like to listen to Peter Hall’s complete weekly commentary or read it: