Indian Economics Thread II

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56860

56860

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henrik said:
How come it costs more in India for each km of highspeed railway, when Indian wages are lower than that of Indonesia?
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People in general heavily overestimate the benefits of lower wage costs.

Why are companies still offshoring to China even though wages are now multiple times that of neighbours like India and Vietnam?

Because worker skill, infrastructure, policy, institutional strength and technology matter way more.

In this case, Chinese HSR tech has clearly surpassed Japanese HSR tech allowing for a superior product at cheaper cost (and faster completion time). Indian bureaucracy clearly didn't help either.
 
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gelgoog

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henrik said:
How come it costs more in India for each km of highspeed railway, when Indian wages are lower than that of Indonesia?
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Having read about these projects on occasion, a major cause in the increase of costs has been land acquisition. In Indonesia there were delays of 1 or 2 years which impacted the construction deadline, but in India the problems with land acquisition have been much, much worse. From what I understand they still have not acquired all the land required for the project yet. After all this time.

China demanded that all the land had to be acquired before construction in Indonesia would start. India started building the railway when only part of the land acquisitions were made, which might mean even more costly delays, as the route needs to be redesigned because they might end up acquiring different pieces of land than originally planned, then there are the delays from having to stop and start the construction teams, and possibly having workers idle while these project changes are made. This is a planning disaster, similar to US' California High Speed Rail project.

Japanese trains would always be more expensive than Chinese ones. But the major cause of the spiraling cost and time overruns is quite clearly the botched up land acquisition process in India.
 
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PeoplesPoster

Junior Member
BlackWindMnt said:
Dam so you get less for twice to triple the costs...
indonesia chinese build HSR was around 8 billion, scanning the indian wikipage i saw initial costs of 14 billion but they now predict it might cost 20~22 billion.

Ooh well gotta hate China man, jaihind...
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Indonesia HSR project actually ran over budget, almost 16 billion in cost at the end. Still lower cost for twice the amount of rail than the Indian/Japan project though.
 
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luminary

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A Curious Business Model​

Implicit in this hurrah for the Micron deal is that India has
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involved in electronic chip making. Even Malaysia is streets ahead of India in this area.
Micron is a major manufacturer of memory chips, and it is this realm of business that has made it one of the world’s leaders in the semiconductor industry. It would have the necessary credentials if it decided to set up a memory fabrication plant in India, unlike the Foxconn-Vedanta fabrication proposal greeted with a lot of fanfare, where
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.

But that is not what Micron is offering. It has offered to set up a plant in Gujarat to only “assemble, package and test” chips that Micron has fabricated elsewhere. Micron has such chip fabrication plants in the United States and also in China, whose products, the chips will be packaged and tested in India. So if chip-making was India’s goal, it would not be delivered through the Micron deal. What we are getting is the lowest end of the chip-making technology, assembling and testing chips that have been made elsewhere. We are not competing with the United States, China, South Korea, and Japan on chip making but with countries like Malaysia. Malaysia is already streets ahead of us in this area, with about
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. Locating such plants in Malaysia and now India would be a part of the de-risking strategy of the U.S. companies, where they shift the low end of the chip production to countries like Malaysia and India while encouraging new high-end chip fabrication to the United States, such as
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in Clay, Washington.
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The total cost of setting up the plant is estimated to be $2.75 billion, with the central government providing a 50 percent subsidy and the Gujarat state government throwing in another 20 percent. Micron is investing only 30 percent of the total capital! In other words, Micron will hold 100 percent ownership in a plant costing $2.75 billion, in which they would have invested would have invested only 0.825 billion! Even industry reports—e.g., eeNews Europe—calls this an “
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.” In other words, to burnish Modi’s image, tarnished by BJP’s loss in Karnataka and the continuing riots in Manipur, this is a part of the public relations exercise that his team is doing. If we look at this deal for getting low-level technology—assembly and testing—we are “subsiding” a leading U.S. manufacturer so that we can assemble and test the chips built in Micron’s high-end plants in the United States and China.
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