Labor cost is related to local cost of living. Shanghai and Shenzhen are getting expensive, enough that some of the manufacturing decided to go back to Taiwan or venture to Vietnam. I don't think India is ready yet but Vietnam is catching up fast.
The other thing is the local eco system though. Those low cost manufacturing build up some specialists that actually are better than the 1st world. Some people I know have been working on one thing, only one thing, for 10 years (i.e. adhesive between chips and case, or focusing on light leakage on LED screen). Practice makes perfect so they have been getting even better than the guy who taught them decades ago.