Arindam Bhattacharya (‘Is globality dead?’, April 13) has demolished those who argue the era of the challengers like China and India is over. Those who made this argument used selective data, on wages, for instance, to show that the competitive advantage of the Rapidly Developing Economies (RDEs) was eroding. This has also been the argument of those who say India’s rapidly-rising wages in the IT sector will ensure an early demise for it — but, with the sector constantly reinventing itself, the demise doesn’t seem to be happening. In the case of countries like China, it was argued that global shipping costs were rising so much, it made more sense for developed markets to produce goods in their home countries instead of importing them.
Bhattacharya argues the RDE challengers did not just reach there on the basis of their lower wages, they fundamentally altered the competitive landscape of the industry. Who can argue the Tata’s Nano is a product of just lower wages in Tata Motors versus the high wages in General Motors? There is a very fundamental difference in design and use of new materials that Tata Motors has brought into play, and this will not change even if wage levels at Tata Motors go up another 50 or 100 per cent. Bhattacharya points out that the global supply chain has become so integrated that most manufacturing activity in the OECD countries now depends upon components/parts from the RDEs. It is for this very reason that, at the height of the protectionism battle in the past, top US firms have always come out against restricting the number of visas available for Indian software professionals.
Satyen Das, Kolkata