Which of the following is not a reason why foreign companies set up production in India because

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There is the availability of cheap labour

The lax enforcement of safety measures

India has more space to set up factories

India has a high unemployment rate

answer is C.

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Detailed Solution

‘India has more space to set up factories’ is not a reason why foreign companies set up production in India.
India is a developing country which opened its economy to liberalisation, privatisation and globalisation in 1991. It has a large population and a high rate of unemployment. High unemployment meant that the workers had lesser bargaining power. Thus, foreign companies could readily find cheap labour by setting up their factories in India. While new laws are set up for the safety of workers and the environment, there is still some negligence in enforcement because India is still a developing country. Strict enforcement of safety measures may affect foreign investment as it dramatically reduces their ease of doing business in the country. However, economic growth should not be at the cost of public and environmental safety.

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