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India to Borrow and Spend More in 2010-2011

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Anyone should not invest with Hope and Emotion. Warren buffect did not tell you?

BTW you contradict what you say few post before.

Can you care to answer why there is not a single Mutual fund or ETF pakistan specific?
Do you think people at wall street are missing the opportunities in KSE. May be not smart as you.

Where's the contradiction?

It's clear your ability to comprehend and your knowledge of investing are deficient. It's probably bookish.

Who cares whether there are Pakistan-specific ETFs or not? It makes no difference.

The wall street is not missing the opportunities of investing. Many big wall street firms and fund managers invest in Pakistan.

Haq's Musings: Goldman, Franklin-Templeton Bullish on Pakistan's Economy

Haq's Musings: Merrill Lynch Fund To Invest In Pakistan

Haq's Musings: Pakistan Focused US Mutual Funds
 
Where's the contradiction?

It's clear your ability to comprehend and your knowledge of investing are deficient. It's probably bookish.

Who cares whether there are Pakistan-specific ETFs or not? It makes no difference.

The wall street is not missing the opportunities of investing. Many big wall street firms and fund managers invest in Pakistan.

Haq's Musings: Goldman, Franklin-Templeton Bullish on Pakistan's Economy

Haq's Musings: Merrill Lynch Fund To Invest In Pakistan

Haq's Musings: Pakistan Focused US Mutual Funds

Not you and me who cares. People who invest cares because its their money. If there is any opportunities wall street firms will adv new funds and ETF to attract the money.

I am eager to short any ETF or stock which is KSE specific. Please help me make money. I made killing on shorting NetSol (NTWK) company.
 
Not you and me who cares. People who invest cares because its their money. If there is any opportunities wall street firms will adv new funds and ETF to attract the money.

I am eager to short any ETF or stock which is KSE specific. Please help me make money. I made killing on shorting NetSol (NTWK) company.

Through a whole series of posts here, your agenda has been quite explicit all along.

But let me just warn you that many like you who shorted Pakistan back in 2001 still rue the day.

Pakistan has defied low expectations repeatedly in the past. Let me quote what Mark Bendeich of Reuters wrote on Jan 10, 2008:

"A little more than six years ago, immediately after the Sept. 11 attacks on U.S. cities, few sane investment advisers would have recommended Pakistani stocks.
They should have. Their clients could have made a fortune. Since 2001, the nuclear-armed South Asian country, blamed for spawning generations of Islamic militants and threatening global security, has been making millionaires like newly minted coins.
As Western governments have fretted about Pakistan's nuclear weapons falling into the hands of militants, the Karachi Stock Exchange's main share index has risen more than 10-fold."

Pakistan is just too big to fail. In spite of all of the serious problems it faces today, I remain optimistic that country will not only survive but thrive in the coming decades. With a fairly large educated urban middle class, vibrant media, active civil society, assertive judiciary, many philanthropic organizations, and a spirit of entrepreneurship, the nation has the necessary ingredients to overcome its current difficulties to build a strong economy and a democratic government accountable to its people.

Haq's Musings: Karachi Tops Mumbai in Stock Performance
 
Through a whole series of posts here, your agenda has been quite explicit all along.

But let me just warn you that many like you who shorted Pakistan back in 2001 still rue the day.

Pakistan has defied low expectations repeatedly in the past. Let me quote what Mark Bendeich of Reuters wrote on Jan 10, 2008:

"A little more than six years ago, immediately after the Sept. 11 attacks on U.S. cities, few sane investment advisers would have recommended Pakistani stocks.
They should have. Their clients could have made a fortune. Since 2001, the nuclear-armed South Asian country, blamed for spawning generations of Islamic militants and threatening global security, has been making millionaires like newly minted coins.
As Western governments have fretted about Pakistan's nuclear weapons falling into the hands of militants, the Karachi Stock Exchange's main share index has risen more than 10-fold."

Pakistan is just too big to fail. In spite of all of the serious problems it faces today, I remain optimistic that country will not only survive but thrive in the coming decades. With a fairly large educated urban middle class, vibrant media, active civil society, assertive judiciary, many philanthropic organizations, and a spirit of entrepreneurship, the nation has the necessary ingredients to overcome its current difficulties to build a strong economy and a democratic government accountable to its people.

Haq's Musings: Karachi Tops Mumbai in Stock Performance

As I said earlier you can only find crap blogs or 2-3 min sound bites for pakistan unless issue is terror.
Wall street don't care about Pakistan economy. You have to shed your ego and accept the fact.

We all know what is your intention. You have shown your true color in your previous post "My posts are to cut through the "India Shining" hype"
 
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As I said earlier you can only find crap blogs or 2-3 min sound bites for pakistan unless issue is terror.
Wall street don't care about Pakistan economy. You have to shed your ego and accept the fact.

We all know what is your intention. You have shown your true color in your previous post "My posts are to cut through the "India Shining" hype"

I totally understand your frustration and anger. I don't expect any better from you.

Clearly, any inconvenient truths that challenge your chauvinism are not acceptable to you.
 
Earlier in this thread, I quoted former editor of the Statesman Datta-Ray as saying the following about India's budget priorities, “Well, after they’ve paid for their military and space programmes, there’s very little left for food. Hardly their fault is it you fascist, racist, holocaust denier!”

Today, I saw the following piece:

By: Kavita Chowdhury

India has unofficially become the world's child death capital, with a study claiming that over 5,000 children die in the country every day of "totally preventable causes". According to the study, Child Health Now, by the NGO World Vision, India accounts for the highest number of child deaths (under five years of age) in the world at 1.95 million per year.

The study revealed that the majority of the deaths occur in the child's first year itself. The causes included diarrhoea, pneumonia and neo- natal problems.> Simple life- saving measures such as oral rehydration solutions, basic vaccinations, breastfeeding and using mosquito nets could bring down the dismal number by more than two thirds, the report said.

Nigeria and the Democratic Republic of Congo follow India in the list. Together, the three nations account for 40 per cent of the total child deaths in the world. It was also found that the three countries allocated the least share of funding - less than three per cent - to maternal and child heath in the health sector allocation.

Reni Jacob, the advocacy director for World Vision India, said, "When hundreds die in a disaster, it is considered an emergency. But when 5,000 children die every day, it is not considered one. This is the biggest human rights and child rights violation of all times." The fact that simple interventions can go a long way in preventing child deaths is evident from the disparities that exist within India itself. While states like Orissa have a high infant mortality rate of 10 per cent, in others like Kerala, the rate is just a little over 1 per cent. And that is primarily because of initiatives in child care and maternal health services.

Indeed, the report found that children in states like Uttar Pradesh and Bihar are more vulnerable than those in Kerala and Tamil Nadu. In Bihar, less than one- third infants are breast- fed and 50 per cent of children are stunted because of malnutrition. The state has a high infant mortality rate of 85 deaths per 1,000 live births.

World Vision has launched a five- year campaign in India to address the alarming situation. It has also urged the government to revamp the National Rural Health Mission and widen the focus of the Integrated Child Development Scheme to less than three- year- olds.

Reproduced From Mail Today. Copyright 2010. MTNPL. All rights reserved.

Hi, I'm Greg! - In child death capital India 5,000 die every day
 
Through a whole series of posts here, your agenda has been quite explicit all along.

But let me just warn you that many like you who shorted Pakistan back in 2001 still rue the day.

Pakistan has defied low expectations repeatedly in the past. Let me quote what Mark Bendeich of Reuters wrote on Jan 10, 2008:

"A little more than six years ago, immediately after the Sept. 11 attacks on U.S. cities, few sane investment advisers would have recommended Pakistani stocks.
They should have. Their clients could have made a fortune. Since 2001, the nuclear-armed South Asian country, blamed for spawning generations of Islamic militants and threatening global security, has been making millionaires like newly minted coins.
As Western governments have fretted about Pakistan's nuclear weapons falling into the hands of militants, the Karachi Stock Exchange's main share index has risen more than 10-fold."

Pakistan is just too big to fail. In spite of all of the serious problems it faces today, I remain optimistic that country will not only survive but thrive in the coming decades. With a fairly large educated urban middle class, vibrant media, active civil society, assertive judiciary, many philanthropic organizations, and a spirit of entrepreneurship, the nation has the necessary ingredients to overcome its current difficulties to build a strong economy and a democratic government accountable to its people.

Haq's Musings: Karachi Tops Mumbai in Stock Performance

Lol i have just been reading all your responses. Man you really do not know how to debate, you can never stick to one topic and answer that first, always changing topics. So Pakistan is too big to fail but India isnt ? lol How many times will you use the same article again and again ? You confident that Pakistan will make it but India is just about to collapse lol You again cutting out pieces from articles and trying to somehow make Pakistan look better. The fact on the ground is the FDI into Pakistan has slowed down a lot and will only go lower with the countries collapsing social structure and huge debt issues. Corruption has got worse in Pakistan over the years and ethical business practices basically do not exist. You have to venture out of Karachi to actually see what the country is going through. I did not want to indulge in criticizing Pakistan but as Indian have already been blamed on this thread of Pakistan bashing by our seniors, so why not lol. I don’t know which Pakistan your so bullish about, atleast my company, which by the way is among the 10 biggest defense related companies in the world, does not see Pakistan as a viable investment at all. Regulations and laws are just on paper and the judiciary is among the most corrupt in the world.

Ministers and Landlords run the show and a few scattered malls try to through the image of “Construction boom”. As you had stupidly said before that the KSE is a very small share of Pakistan’s GDP, that is why the fundamental problem comes in. Pakistan’s companies are too insignificant to cause any change in the country. They are still very much a “Baby”, when you compare them with Indian giants such as Reliance or Tata. With the India stock exchanges being valued at almost $3 trillion, it offers India a very strong private base to work on. Indian companies can make a huge impact on India’s growth and their yearly growth transforms into the growth of Indian society, a phenomenon easily seen in the western world.

I hope you understand this time what I mean and you stop your useless rant about India. India is a giant that you cannot even think of in perspective. I read you worked in Intel at some point, maybe you should ask Intel where they would like to invest their money more, India or Pakistan. You will probably get the answer pretty quick and also a laugh to go with it. Facts are facts Riaz Haq learn to accept them like a man.
 
India is shinning buddy, you like it or not. Who kehte nehi hai Kuchh baat hai ki hasti mit-ti nahi hamari, Sadiyon raha hai dushman doure zamaan hamara.

Yunaan o Misr O Romaan sab mit gaye jahaan se, Baaqi magar hai ab tak naamo nishaan hamara.

Saare Jahaan se achcha Hindostaan hamara, Hum Bilbulein hain iski ye Gulsitaan hamara.
 
I totally understand your frustration and anger. I don't expect any better from you.

Clearly, any inconvenient truths that challenge your chauvinism are not acceptable to you.

Who is frustrated? I guess you need to look into mirror.

You are shying away from answering questions. You said KSE is better investment than BSE. You fail to point a single ETF or mutual fund pakistan specific. Do you thing bankers in wall street are dumb?

As I said in my previous post Palestine stock exchange has higher return than pakistan. It has lot of growth potential if (BIG IF) there is peace with Israel. Any lame inverter from US invest unless it is his throwaway or speculative money.

Some post you are quoting from warrent buffet investment philloshopy "Discount any future cash flow(business) in valuation" Again saying Pakistani companies will do better(more bussiness) if (again BIG IF) security situation improves.

All your thesis is on HOPE and emotion. You will loose your shirt if you invest with HOPE.
 
India a giant economy? Yes, by 2035!



For over a century the United States has been the largest economy in the world. Major shifts have, however, been under way since then.

During the last 30 years the weight of the world economy has shifted from the US and the rich countries of Europe to China and India.

These trends will continue in the 21st century, bringing about a historic transformation of the world economy. The global economy will change from a uni-polar to a bi-polar one with the emergence of China.

This will be followed a decade and a half later by the emergence of India, converting the world economy into a tri-polar one.

The rich countries of Europe have seen the greatest decline in global GDP share by 4.9 percentage points, followed by the US and Japan with a decline of about 1 percentage point each.

Within Asia the declining global share of Japan since 1990 has been more than made up by the rising share of China and India.

During the seventies and the eighties, ASEAN countries and during the eighties South Korea, along with China and India, contributed to the rising share of Asia in world GDP.

Between 1975 and 2002, Japan's share of world GDP fell by 1 percentage point while that of South Korea, ASEAN, India and China rose by 1 percentage point, 1.2 percentage points, 2.2 percentage points and 9.2 percentage points, respectively.

Thus, India's gains since 1980 have been much larger than ASEAN's and South Korea's but much less than those of China (Arvind Virmani, 'Economic Performance, Power Potential and Global Governance: Towards a New International Order,' ICRIER Working Paper No. 150, December 2005).

Uni-polar Global Economy: 2002

At the start of the new millennium, the US -- the largest economy -- is almost twice the size of the next largest economy, China, and about three times the third largest economy, Japan.

Thus, the size of the US economy is larger than the next two economies combined, revealing clearly the uni-polar nature of the global economy.

The fourth largest economy, India, is a little over one-quarter the size of the US economy.

The next five positions are taken by the big four of Europe: Germany, the United Kingdom, France and Italy. Brazil and Russia bring up the rear with their joint size less than that of India.

In turn, the size of these three economies together is less than that of China.

Bi-pole China

Within 10 years, the global economy will be transformed from a uni-polar to a bi-polar one. China is projected by us to become the largest economy in the world within 15 years.

Though India, like the rest of the world, has been falling behind China, its share in world GDP will continue to grow. Before the end of the current decade, India's economy will become larger than that of Japan, thus taking it to the third place, behind the US and China.

We measure the incremental impact of an economy on the rest of the world through trade and financial flow by change in GDP at the current exchange rate.

By the end of the decade, China will become a larger driver of global growth than the European Union's six largest economies. Similarly, India will be a larger growth driver than the United Kingdom, the most significant growth pole in the EU.

At this time the combined impact of the three Asian giants (including Japan) will exceed that of the US.

The global impact of other emerging economies is relatively small. In 2015, Canada and Russia are ranked 11th and 12th in terms of impact, which is less than a third of that of India at that time.

The South Korean economy in contrast comes in at the 7th rank with an impact that is half that of India's. Brazil's impact is projected to be much lower than that of Mexico.

India: 3rd Pole & Growth Driver

As the share of the US in world GDP falls (from 21 per cent to 18 per cent) and that of India rises (from 6 per cent to 11 per cent in 2025), the latter emerges as the third pole in the global economy.

By 2025 the Indian economy is projected to be about 60 per cent the size of the US economy. The transformation into a tri-polar economy will be complete by 2035, with the Indian economy only a little smaller than the US economy but larger than that of Western Europe.

China's economy is projected to become 50 per cent larger than the US economy by 2025, and almost double that of the US by 2035. At this point, China's share in the world economy will be equal to the share of the US and Indian economies taken together.

All the other countries that are either currently members of the Security Council or aspire to become so will therefore have relatively small shares.

Japan, the largest among them, will have a share of about 5 per cent while the others (including Russia) will each have 2.5 per cent.

This scenario assumes that China will be able to sustain the "FDI-export" cum "zero capital cost" model of fast growth. The "FDI-export" model transformed ASEAN countries into "miracle" growth economies, but the Asian crises showed that it was heavily dependent on creating and sustaining optimistic expectations.

China's risk is heightened by it combining with "zero capital cost" to producers inputs including infrastructure that bury inefficiencies in the government banking system (implicit fiscal subsidies).

It is however hard to predict what kind of exogenous shock will knock such an economy off the high-growth knife-edge path to more normal sustainable growth rates.

By around 2025, China's impact (in terms of GDP at prevailing exchange rates) on world growth is likely to be larger than that of the US and India's impact larger than that of Japan.

By 2035, India is likely to be a larger growth driver than the six largest countries in the EU, though its impact will be a little over half that of the US.

China's impact will, however, be about 40 per cent more than that of the US.

Conclusion

The projected changes in the relative size of economies will have profound implications for global governance, the global balance of power, and the stability of Asia.

This phenomenal change in relative power poses a major challenge to the economies of Europe, North America, and Asia that very few seem to fully understand or appreciate.

The author is director and chief executive, ICRIER. The views expressed are personal.

India a giant economy? Yes, by 2035!
 
Have you heard of Peter Drucker or is he too smart for you. This is what he says about India -

India an economic giant: Peter Drucker

An eminent American economist, who had predicted in the early fifties how computer technology would one day thoroughly transform business, has said India is becoming a powerhouse very fast.

"The medical school in New Delhi is now perhaps the best in the world. And the technical graduates of the Indian Institute of Information Technology in Bangalore are as good as any in the world. Also India has 150 million people for whom English is their main language. So India is indeed becoming a knowledge centre," said the 94-year-old guru Peter Drucker in an interview to the latest issue of Fortune magazine.

Drucker, who coined the concepts of "privatisation", "knowledge workers" and "management by objective", said the dominance of the United States is already over. "What is emerging is a world economy of blocs represented by NAFTA, the European Union, Asean. There is no one centre in this world economy. India is becoming a powerhouse very fast."

In contrast, he said, the greatest weakness of China is its incredibly small proportion of educated people. China has only 1.5 million college students, out of a total population of over 1.3 billion.

If they had the American proportion, they would have had 12 million or more in college. Those who are educated are well trained, but there are so few of them, he said.

Drucker said in China there was the enormous undeveloped hinterland with excess rural population which meant enormous manufacturing potential. However, the likelihood of the absorption of rural workers into the cities without upheaval seemed very dubious.

"You don't have that problem in India because they have already done an amazing job of absorbing excess rural population into the cities -- its rural population has gone from 90 per cent to 54 per cent without any upheaval," he said.

The eminent economist, who continues to lecture at the management school that bears his name at Claremont Graduate University, said, "Everybody says China has 8 per cent growth and India only 3 per cent, but that is a total misconception. We don't really know. I think India's progress is far more impressive than China's."

On the most important impact of information technology on business, he said: "Information technology forces the processes more logically. The computer can handle only things to which the answer is yes or no. It cannot handle may be. It is not the computersiation that is important; it is the discipline you have to bring to your processes. You have to do your thinking before you computerise it or else the computer simply goes on strike."
 
Now acutally read the article above before your next musing
 
Here read this also from the NY times, I hope you believe them atleast -

An economic giant : India's new leadership role
By Peter Mandelson



NEW DELHI — The 21st century will be an Asian century. Simply by virtue of its breathtaking size and formidable exporting power, China is already transforming the economic map of Asia and the world. Yet China will not be alone in reshaping the global economic order. In India there is an economy with the potential to match it. In its likely impact on the global economy, India is the coming China.

The new India sometimes seems like the world in a single country. It combines first-world capabilities in information technology, pharmaceuticals and biotechnology with third-world levels of poverty. Indians buy 2 million mobile phones a month, but 300 million Indians live on less than a dollar a day.

In Calcutta this week, I addressed the Confederation of Indian Industry, whose members represent one of the most dynamic and entrepreneurial industrial sectors in the world. Not far away, on the Bay of Bengal, some of the world's poorest and most vulnerable people are struggling to rebuild lives that have been washed away by the recent tsunami.

This country of contrasts straddles the developed and the developing world on a continental scale. Not only is India's population more than a billion, but 600 million of them are under the age of 25. By 2030 India will probably have overtaken China as the world's most populous country. It will be the world's largest democracy and the world's third or fourth largest economy.

A country on this scale could easily be tempted to remain inward looking; to rely on domestic production and protect its domestic industry. Indian policy in the past has seemed unpersuaded of the benefits of a more open trade policy. India still has the world's highest average trade tariff levels. But that is changing.

India's newly elected government has an ambitious goal of sustained annual growth of 7 to 8 percent and a doubling of per capita income over the next 10 years. The leadership has made it clear that such targets are dependent on continued internal reform, boosted foreign trade and increased inward investment.

Change in an economy the size of India's must take time, and the needs of the poor and vulnerable must be met, but such an outward-looking strategy is unquestionably the right one. India's effective education system produces one of the most literate and numerate workforces in the developing world. Its entrepreneurialism is rapidly turning to the challenges of global competition. It is hard to imagine a larger reserve of untapped potential. India will be a global trade heavyweight.

A new outward looking Europe needs to build strategic partnerships with India. Last year the European Union and India agreed on a new plan that will pave the way for closer regulatory convergence, improved conditions for inward investment and closer cooperation on shared strategic goals. In trade terms, the European Union wants to engage India in living up to our shared responsibility to see completion in securing agreement on new international trade rules as part of the Doha development round of trade talks, which are aimed at helping the world's poorest by reducing trade barriers.

India's diversity gives it a unique perspective in the ongoing Doha round. The round, badly damaged at Cancún and resurrected last July, urgently needs to make progress this year. That progress will depend on our ability to craft an agreement that meets the needs of developing countries. Developed countries will have to open their markets in agricultural products. But advanced developing countries will have to move on opening trade in services and nonagricultural goods — which is in India's interest as well as the rest of the world's.

With such a share of the world's poor, India is rightly committed to ensuring that the Doha round delivers free and fair trade for the most vulnerable. Developed and developing countries will look to India to play a leadership role in pressing for the needs of the poorest. India's recent experience with liberalization makes the case for more open trade as a key instrument for development. That includes trade in services.

India's past negotiating position on services has been defensive when it does not need to be. The success of India's services sector, particularly its international competitiveness as an IT provider, shows that it can compete formidably with developed countries. An ambitious offer on services from India would send a positive signal for other developing countries and for international investors. It would bring the international trading system a large step closer to agreeing on its new rulebook at Hong Kong in December.

It would also definitively announce India's arrival on the world scene as a global player. Europe stands ready to work in partnership with India to achieve our common goals.

**

Peter Mandelson is the European commissioner for trade.
 
Here one more from NY times -

The Next Industrial Giant Is ... India?

By KEITH BRADSHER


PUNE, India — India's economic advancement no longer rests on telephone call centers and computer programmers.

Among villages with thatch-roofed huts and dirt roads on the outskirts of this city in central India, John Deere and LG Electronics have recently built modern factories turning out tractors and color television sets for sale in India and for export to the United States.

In Hazira, in northwestern India, where some residents still rely on camels to carry traders' goods, the Essar Group is making steel to be used for ventilation shafts in Philadelphia, high-rise structural beams in Chicago and car engine mountings in Detroit.

For decades, India had followed a route to economic development strikingly different from that of countries like Japan, South Korea or China. While its Asian rivals placed their bets on manufacturing and exports, India focused on its domestic economy and grew more slowly with an emphasis on services.

But all that is starting to change.

India's annual growth in manufacturing output, at 9 percent and accelerating, is close to catching growth in services, at 10 percent. Exports of manufactured goods to the United States are now rising faster in percentage terms than China's, although from a much smaller base. More than two-thirds of foreign investment in the last year has gone into manufacturing in India, not services.

"Saying we are a back office and China is a factory is a backhanded compliment," said Kamal Nath, India's minister of commerce and industry. "It's not really correct."

Indeed, in interviews at 18 Indian factories and other businesses in 10 cities and villages scattered across the length and breadth of the nation, the picture that emerges is of a country that is being driven by advances in manufacturing to a much brisker pace of economic growth.

A prime reason India is now developing into the world's next big industrial power is that a number of global manufacturers are already looking ahead to a serious demographic squeeze facing China. Because of China's "one child" policy, family sizes have been shrinking there since the 1980's, so fewer young people will be available soon for factory labor.

India is not expected to pass China in total population until 2030. But India will have more young workers aged 20 to 24 by 2013; the International Labor Organization predicts that by 2020, India will have 116 million workers in this age bracket to China's 94 million.

India's young population will also make it a huge and growing market for years to come, while the engineering skills and English skills of its educated elite will make it competitive across a wide range of industries.

So even though India remains a difficult place to do business, several multinationals have been placing big bets on India this year in hopes of taking advantage of this shifting global dynamic.

General Motors and Motorola are preparing to build plants in western and southern India. Posco of South Korea and Mittal Steel of the Netherlands have each announced plans to erect giant steel mills in eastern India, where Reliance of India will soon construct one of the world's largest coal-fired power plants.

They are finding India's labor force well suited to their goals. When LG set out to fill 458 assembly line jobs at its factory here last year at a starting wage of $90 a month, it required that each applicant have at least 15 years of education usually high school plus a technical college.

Seeking a young work force, the company decided that no more than 1 percent of the workers could have had any prior work experience. Despite the limitation, 55,000 young people met its criteria for interviews.

"In the villages there is little income," said Siddu Matheapattu, 24, in between applying sealant to refrigerator frames. "Here I can earn more."

By contrast, cities in export-oriented Guangdong province in southeastern China raised monthly minimum wages this summer by 18 percent, to $70 to $100 a month, after factories reported that they had 1 million more jobs than workers to fill them. Factories elsewhere in China face fewer labor shortages, but they also are being forced to raise wages.
 
Continued -

As India has deregulated its economy, output has gradually accelerated to a growth rate of 8 percent a year, feeding a national euphoria and a few hopes of someday even beating China's annual growth of more than 10 percent.


Plenty of obstacles remain, however, notably India's weak infrastructure. China invests $7 on roads, ports, electricity and other backbones of a modern economy for every dollar spent by India and it shows. Ports here are struggling to handle rising exports, blackouts are frequent and dirt roads are common even in Bangalore, the center of the country's sophisticated computer programming industry.

Pervasive corruption has slowed many efforts to fix these problems. India's labor laws, little changed since they were enacted just after independence in 1947, also continue to discourage companies from hiring workers, by making it very difficult to lay off employees even if a company's fortunes sour or the economy slows.

Still, a new optimism prevails in India, bordering at times on euphoria.

"The Chinese are very good at copying things, but Indians believe in quality work, we believe in meeting pollution norms," said S.S. Pathania, the assistant general manager of the Hero Honda motorcycle factory in Gurgaon, 30 miles south of New Delhi. "I think India will pass China very soon."

An Unexpected Boom In Manufacturing

Sprawling across more than a square mile next to a gray tidal estuary, the scale of Essar Group's complex in Hazira is already impressive. Essar has its own port to bring in iron ore, its own large, gas-fired power plant for electricity. At the steel mill, giant buckets pour 150 tons of molten metal at a time to form slabs two yards wide and up to 10 yards long.

But the complex is just starting to grow. Essar is quintupling steel production and pushing forward a sevenfold increase in power generation, most of it for sale to a national grid desperately short of electricity.

Growth on that scale, especially in industries like steel and power but also in areas like car parts and household appliances, is what India has long lacked. Industrial production accounts for only a fifth of India's economic output, compared to two-fifths of China's. But this ratio is starting to rise in India as manufacturing, led by exports, grows faster than agriculture and even some service industries.

Until recently, legislation effectively barred companies with more than 100 people from competing in many industries. The laws were intended to protect tiny businesses in villages, often employing women and minorities; high tariffs were placed on imports as well.

But the result was hundreds of thousands of businesses too small to be competitive; India lags behind even impoverished Bangladesh next door in exports of garments, a big creator of jobs for China. The Indian government has responded by narrowing the list of protected industries to 326 categories of goods from 20,000 and has lowered tariffs.

Comparing factories in India to their competitors in China, many of the Indian factories are smaller but some appear more efficient.

India's stronger financial system demands higher interest rates than China's state-owned banks, making it costlier to hold the small mountains of components awaiting assembly that are often seen in Chinese factories. The Confederation of Indian Industry, a national trade group, has also been very successful in pushing companies to adopt the latest Japanese lean manufacturing techniques.

The drawback is that the nation's manufacturing boom, built on higher-quality goods made under more modern conditions than in China, is not likely to create as many factory jobs as India needs.

The Essar steel mill, for example, has been replacing old, labor-intensive equipment with more modern gear. "We were having it all done manually, but because the customers demand very high quality, we have to do it automatically," yelled Rajesh Pandita, an Essar manager, over the roar of a house-sized machine that was stretching a minivan-sized coil of steel back and forth through large rollers until it was little thicker than plastic kitchen wrap.

The Whirlpool factory in Pune uses machines, not people, to fold the steel exteriors of refrigerators. It has some of the highest productivity per worker of any Whirlpool factory in the world, with just 208 line workers producing up to 33,000 refrigerators a month.


Meanwhile, labor laws discourage flexibility. They still ban companies from allowing manufacturing workers to put in more than 54 hours of overtime in a three-month period even if the workers want to earn extra money. Firing workers is very difficult.

"Companies think twice, 10 times before they hire new people," said Sunil Kant Munjal, the chairman of the Hero Group, one of the world's largest manufacturers of inexpensive motorcycles.

Hero in Gurgaon, on the southern outskirts of New Delhi, and its archrival, Lifan Group in Chongqing, a city in western China, produce comparable motorcycles but the similarity ends there. Hero markets heavily to its domestic market, protected from foreign competition by high import tariffs, while Lifan emphasizes exports.

With scant ventilation, Lifan's factories are filled with diesel exhaust as workers test engines and ride finished bikes at breakneck speed out the doors, zigzagging past co-workers. Hero's factory in Gurgaon, where Honda holds a minority stake, has far better safety standards and excellent ventilation.

The Lifan factory pays less than $100 a month. The heavily unionized Hero factory pays $150 a month plus bonuses of up to $370 a month; nearly half the workers earn the top bonus, Mr. Pathania said.

Lifan's labor force is quiescent would-be organizers of independent labor unions face long jail terms or worse in China. Hero's workers staged a successful nonviolent protest last year to call for more contract workers to be eligible for the bonuses as well.

Overcoming Many Obstacles To Infrastructure Growth

But the biggest question mark hanging over the rise of manufacturing in India lies in whether the country has enough roads, ports and electricity generating plants to move huge quantities of goods and power the factories that make them.

Captain Abhay Srivastava, an operations manager at India's busiest port, was on duty on a recent afternoon when a phone call suddenly came in from the docks below. An enormous container ship from Qatar needed to slide 35 feet backward along the privately managed dock at the Nhava Sheva port near Mumbai to allow another large vessel to squeeze into the dock in front of it.

Captain Srivastava grabbed his white hard hat and dashed for the elevator. As soon as he reached the water's edge, a dozen laborers in orange jumpsuits began straining to arrange a cat's cradle of heavy, five-inch-thick ropes that would allow the ship to use its powerful winches to pull itself out of the way.

"They are efficient people; they don't speak a lot," said Captain Srivastava, who has visited most of the world's major ports either as a ship captain or for port training exercises. "You go to some places and they just stand around."

The efficiency of the Nhava Sheva port it approaches West Coast ports in the United States in the number of containers moved per hour shows that India is capable of producing world-class facilities.

But big as it is, Nhava Sheva is too small to handle the crush of traffic. John Deere tractors already wait in a container at the dock for one to four days before being loaded on a ship.

"If this pace of growth continues, we will see more congestion at the port," said Raj Kalathur, the managing director and chief executive of Deere's operations in India.

Similar worries prevail in Chennai, formerly Madras. "Another four or five years, we'll be choked," said M. Rafeeque Ahmed, the chairman of the Farida Group, a 9,000-employee shoe manufacturer in Chennai that needs the port for exports.

Infrastructure improvements are particularly important because manufacturing companies are buying more and more components from far-flung suppliers. Making sure all those parts arrive on time requires a reliable transportation system.
 
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