Industry Odisha Bureau, Oct 14: A Prosperiti study finds Indian factories slower and costlier than global rivals. Rigid working-hour and overtime rules explain much of the gap, it argues. Reform must also protect workers.
India’s factories struggle to keep pace with Vietnam, a new simulation suggests. The study, by research institution Prosperiti, models a hypothetical 500-worker electronics plant. It must deliver 10,000 devices within three months, on a single shift.
Wages, technology and productivity are assumed identical across 16 countries. Only working-hour rules differ. The Indian factory needs 13.7 weeks, while Vietnam finishes in about 11.1 weeks. That makes India about 23% slower than the fastest performer.
Costs diverge too. The Indian factory pays for 49.3 labour-hours per device, against Vietnam’s 41.7. Indian firms thus pay for more labour, at least 18% above the cost frontier. The Philippines, despite relying on overtime, needs about 46.4 hours.
These are modelled results, not measured factory performance. Still, they show how rules shape delivery speed and cost.
The gap stems largely from scheduling rigidity. India caps regular work at 48 hours a week, with no averaging allowed. China and Vietnam average limits across 52 weeks. Factories there can front-load hours during demand surges and reduce them later.
Indian factories must instead rely on overtime to speed up. Overtime here costs twice the regular wage, the highest premium studied. China and Vietnam pay 1.5 times, while the ILO minimum is 1.25 times. India also caps the workday at 12 hours and overtime at 144 hours a quarter.
In the simulation, 144 of 800 production hours per worker become overtime. Paid labour therefore rises to 985 hours for 800 hours of output. Some manufacturers admit paying informal overtime at 1.5 times, risking fines of ₹2–3 lakh.
Speed matters because buyers prize fast, reliable suppliers. Vector Consulting Group says Indian garment makers deliver 60–80% of orders on time. Global retailers expect reliability in the high 90s. Missed deadlines can cost exporters repeat business.
Electronics firms have raised similar concerns. In 2023, Apple and Foxconn reportedly sought more flexible hours in Karnataka. Foxconn wanted Indian plants to match daily output in China.
Rest rules also bite during festivals. Delhi-NCR’s 2,000 garment factories reported 15% absenteeism after the 2024 festivals, an industry report said. Many migrant workers travel home for Diwali and Chhath. Postponing a rest day in India requires government permission.
Regulation is not the only constraint. India ranks 122nd on labour productivity in an ILO dataset. Skills, technology and infrastructure gaps also weigh on output. Since the simulation assumes equal productivity, the real cost gap may be wider.
Prosperiti proposes averaging hours over at least 17 weeks and a 1.25 times premium. These are research proposals, not enacted policy. The 2025 OSHWC Code already gives states wider authority over working hours.
Flexibility must still protect workers’ rest, pay and safety. Longer schedules do not automatically raise productivity. Balancing both will shape India’s manufacturing ambitions.
