new delhi the governments make in india drive is in trouble it aims to increase the share of manufacturing from 16 of gdp to 25 by 2022 creating 100 million jobs alas industrial growth has been weak in modis three years in office the investment rate has fallen formal employment growth has been miserable and exports have stagnated whats gone wrong i have long held that government attempts to boost this or that sector is a mistake far better is simply to improve the ease of doing business remove constraints in all sectors and then leave entrepreneurs to decide which area should soar which should plod along and which should close in this approach services will probably do better than manufacturing and brainintensive sectors better than labourintensive ones goi needs to build on these strengths rather than hanker for labourintensive areas whose time has gone encroachment on policy the big picture is that india has lost competitiveness thanks to new policies that no party is keen to reverse the recent land acquisition law has made land much more costly than in asean competitors wages have shot up since 2008 thanks in part to mgnrega also read in makeinindia season an indian is setting shop in the us creating an independent monetary policy committee entrusted with a singleminded focus on inflation control is not going to bring down interest rates to asean levels electricity for industry costs twice as much as in asean because high industrial tariffs are used to subsidise farm and domestic consumption in sum many politically popular initiatives of recent years have raised the cost of all industrial inputs land labour capital and electricity no wonder industrial output and exports are struggling yet no political party has an explicit plan to slash these costs now indian entrepreneurship and jugaad can overcome many cost hurdles but in lowtech industries value addition is so low that its difficult to overcome cost hurdles these can more easily be overcome where value addition is high in hitech areas they can also be more easily overcome in service industries which require less land electricity water capital investment or working capital than manufacturing this surely explains why indias service exports have risen so much faster than manufacturing exports and why hitech exports like auto and pharma have done much better than textiles and leather hitech areas do not require political tricky steps to cut land and labour costs yet many experts keep arguing that india is labourabundant and capitalscarce and so must focus on labourintensive sectors that have created millions of jobs and billions in exports for neighbouring asian countries one example is the chapter by c veeramani and garima dhir make what in india in the latest india development report 2017 they show that hitech auto exports grew by an amazing 34 a year during 200015 while labourintensive apparel export growth was only 9 they find india is locked out of global value chains gvcs in which products are assembled from components produced