India in the Global Supply Chain

Can Domestic Demand and Technology Skills Help It Catch Up? Special to Little India

By: Knowledge@Wharton

In the global economy of the early 21st century, the division of labor between Asia's giants is clear. China, the world's factory floor, makes things - everything from shoes to computers. India, the world's back office, does things - from fixing software glitches to chasing down credit card debt. India's services sector may be red hot, but the same can't be said for its manufacturing. Hampered by poor infrastructure, bureaucratic red tape and restrictive labor laws, it has failed to make its presence felt globally. Between 1990 and 2005, industry's contribution to the economy remained more or less stagnant, crawling from 25% to 27%. Over the same period, the share of services ballooned from 37% to 52%. According to experts from the Boston Consulting Group, in 2005

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