I'm not seeing how this is a bad deal for India. India get's more factories setting up shop there to produce products; more jobs, more money staying in the country.
The clothing industry does this all the time — they'll build up a local economy until it's too expensive, and then move on to the next desperate area.
If you're trying to be appealing to industry by racing to the bottom you're essentially fighting an extended battle for last place.
India, unfortunately, has a long record of getting this exactly wrong.
Wait, uh, why is this a bad thing? Isn't that what we want, to build up a local economy, to build up local capital which if the local populace invests wisely would allow their labor force to be eligible for more skilled jobs etc.
I think more likely is that more complex manufacturing will come in as infrastructure and skill set is more in place. Also improved economy leads to better education, supporting service industry.
Clothing industry may have left India and China, but both are better off now.
Where did the factories go? Bangladesh, where workers cost less and are abused more.
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