News: The India versus China race

(TV18 23/03/2006) Mumbai - Tarun Khanna, a professor at Harvard Business School, made news three years ago when he co-authored a paper arguing that the Indian economy could overtake China, thanks to a more helpful domestic environment. Today, China still holds a 10 to 1 advantage over India in foreign direct investment, but Khanna says that's unlikely to hold India back.

He says, "First a lot of money is going to India in alternative ways such as portfolio and capital remittances. Second, the FDI in China is substituting to some extent for domestic entrepreneurship, and to the extent that we have much more domestic entrepreneurship- indigenous private sector domestic entrepreneurship -in India, it makes it less of an issue. That said, it would be great if we could double or triple the amount of FDI going into India, I don't have any issues with that."

At the recent India Conference at Harvard Business School, speakers like Desh Deshpande, a Boston-based entrepreneur with operations in India as well as China, said both countries offered different advantages to investors.

Chairman at Sycamore & Tejas Networks, Desh Deshpande said, "China does well in manufacturing, they already have the infrastructure there. India has sort of started off with the service sector, but over the course of time they will pick up manufacturing. Tejas develops a lot of their products in India but these are a little bit higher end, they don't need that much of infrastructure. But over the course of time I think China will pick up service sector and India will pick up manufacturing. So it's not India or China, it's India and China."

This is one debate that's sure to keep economic experts engaged for many years. India versus China, that's a race that increasingly interests many in America. Experts believe that India has the legs to stay in the race and catch up with China.