Trade Reforms and Smooth Labour Market Adjustments in India?

There is a growing concern among economists that the trade policy reforms resulting from India's growing participation in various multilateral and bilateral agreements has not benefitted all workers engaged in the manufacturing sector. As per existing literature, reform-led reallocation of workers from contracting to expanding sectors will be relatively less costly, if intra-industry trade prevails. Empirical data indicate a mismatch in the number of workers leaving and joining major trade deficit and surplus sectors, which are involved in intra-industry trade. However, due to lack of data availability, no information could be obtained about the ‘origin' sectors from which the workers are reallocating themselves. This renders the computation of the exact loss (i.e., adjustment costs of trade) difficult. It is also difficult to draw similar insight on entry pattern of new entrants to the industrial workforce, particularly after launch of the ‘Make-in-India' Scheme (2014) and ‘Skill India Mission' (2015).