The document compares manufacturing in India and China. It discusses that India is moving toward high-end manufacturing and its manufacturing sector contributes 16% to GDP. Compensation costs in India are not directly comparable to other countries due to differences in organized vs unorganized sectors. In China, manufacturing contributes 44.1% to GDP and accounts for 11.3% of employment, with electronics, food, and machinery being major industries. A comparison notes factors like lower hourly costs and preferential policies that have led to growth in India, while lower foreign investment and restrictive labor laws have slowed it, and China has even lower hourly costs than most countries.

2. Introduction
The growing manufacturing sectors of India and China
have attracted much interest in recent years. The
large changes in the growth dynamics of the
economies of India and china during the past two
decades have led to a flood of literature on the
competitiveness of the two economies in international
and comparative perspective. Comparison of the basic
statistical material on international comparisons of
hourly compensation costs, labor force, employment
and unemployment rates, and consumer prices
between the two economies are of great importance to
the business sector.

3. Manufacturing In
India

4. India is largely moving toward high-end
manufacturing Industry. India’s
manufacturing sector is a crucial cog in
the wheel of the economic progress.
It’s contribution to Gross Domestic
Product (GDP) being 16%. Post 1990
economic liberalization era, India has
well realized the importance of
manufacturing for the overall industrial
development.

5. Compensation Cost
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Compensation costs for India are not
directly comparable with the data of the
other countries. The following aspects of
India sources data that limit comparability
with estimates of compensation in other
countries:
Data Treatment
Organized Vs. Unorganized Sector
Contract Labor
Hours

6. Sector Level Compensation And Employment
Hourly Compensation Cost:

9. Employment
Employment of non-production and directly employed
production workers has been growing since 2004 which is
one of the underlying reasons for the increasing gap between
production and non-production worker compensation.

10. Industry-level Compensation and
Employment
Hourly Compensation Cost:
In 2010,compensation for industries in the
top quartile was on average about three
times the compensation for industries in
the bottom quartile. Coke and petroleum
products are among the highest paid
industries while wood, leather, textiles
and apparel products are among the
least paid.

12. In India, nearly 40 percent of organized
manufacturing sector employees are in the low
paying food, beverage, and tobacco and the
textiles, leather, and apparel industries.

13. Manufacturing In
China

14. China has become one of the United States
primary trading partners in manufactured goods.
The Chinese manufacturing industry is a highly
important industrial sector in China, producing
44.1% of GDP in 2004 and accounting for 11.3%
of total employment in 2006. The six predominant
industries in the manufacturing industry in china
are petrochemicals, metallurgy, forestry,
medicine, food and machinery. However the
electronics industry, medicine and the food
segments have recently been rapidly gaining
popularity. China is also the world’s biggest sex
toy producer, with 70% of the worldwide sex toys
production, generating about two billion dollars a
year.

15. Legal Aspects In China’s
Manufacturing Industry
There are few laws which governs the
manufacturing industry of china. These
are:
• Clean Production Law
• Safe Production Law
• Manufacturing Contracts For Foreign
Countries

16. Employment
China’s manufacturing employment continued to
grow from a total of 97.91 million at the end of
2007 to 99.01 million at the end of 2008. Data
for formal, urban enterprises are collected and
reported by the Ministry of Human Resources
and Social Security, while data for other
manufacturing units- that is, town and village
enterprise (TVE) data- are compiled and
reported by the Ministry of Agriculture.

22. Comparison Between
India And China

23. Factors Leading To India’s
Growth In Manufacturing
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Hourly Compensation Cost
Preferential Government Policy
Social Insurance Costs
Human Capital
Large Domestic Market
Quality And Trade Standards

24. Factors Slowing India’s Growth
In Manufacturing
• Lower Level of Foreign Investment than
China
• Restrictive Labor Laws

25. Conclusion
• Comparison between India and China with
respect to the manufacturing industry is very
difficult due to widespread unorganized
sectors.
• India’s manufacturing industry is extremely low
cost as compared to rest of the world
• Hourly compensation rates in China are
lower than most of other countries.
• India is more feasible for manufacturing than
China.
• India has lesser Foreign Direct Investment as
compared to what China has.