India, July 1 -- Why can't India solve its manufacturing conundrum? It is a policy challenge which continues to test our economic policy. What makes the problem even more confusing is that India tends to do well in capital-intensive manufacturing rather than labour-intensive manufacturing, a phenomenon at odds with our relative advantage in resource endowment.

For decades, India's manufacturing problem has been attributed to rigid labour laws which have not allowed industry to exploit India's cheaply available labour to the full extent. There is merit in the argument as labour laws were an archaic silo-based labyrinth. Hopefully, some of these problems have been solved by the current government's rollout of the four labour codes. Does th...