Foxconn to change labour scenario, up competition: CEA

New Delhi: Presence of Taiwanese technology giant Foxconn in Maharashtra will bring about change in India's labour market and promote competition among states, Chief Economic Advisor (CEA) Arvind Subramanian on Thursday said.

"Supposing the whole Foxconn experiment works in India. Supposing they do come to Maharashtra and start manufacturing, I think there will be impact on other states, it will create competition among states if this is going to work.

"I think the whole manufacturing story is very complicated. Let's see how Foxconn thing is going to work, maybe, for the change in the labour market landscape, I am very excited about that," Subramanian said in his address at International Conference on Jobs for Development.

The conference was organised here by ICRIER with support from the World Bank.

Foxconn has committed a whopping USD 5 billion investment in Maharashtra.

Subramanian felt that there is a need to create incentives so that industries could grow bigger in India.

Referring to the licence raj, he said licensing and protectionism were historical policy blunders.

"I sometimes think that the biggest blunder, the historic policy blunder we made was protectionism... I think it was the licensing again that actually kept Indian industries small."

The policy initiatives later allowed the services sector to grow, which helped create a number of jobs, he said.

"Because of policy, we have this service boom. I think that the one big benefit that did happen because of the services revolution was there was an enormous demand for skill and education, and that was really something good."

He also spoke of collateral benefits such as better secondary schooling and creation of institutions such as IITs, IIMs, BITS Pilani and the like.

Subramanian made a special mention of secondary schooling in India, which has helped create a huge pool of human resource capital.

"Secondary schooling in India is one of the great successes. And I think why happened because the government responded to the middle class pressure. It was a wonderful example of political economy at work," the CEA said.