Mao-Tse-Tung established Peoples Republic of China in 1949.  It was backward and far  behind India.  China continued to be behind India till 1979.  The USA opened diplomatic relations with China in 1979.  President Reagan offered friendship and full cooperation to help and develop China.  He sent his Treasury Secretary, Don Regan, former CEO of Merrill Lynch to China to offer investment in building infrastructure and modernizing China in exchange for China opening up and liberalizing its economy.

China gave carte blanche to the U.S.  and allowed the U.S. business to implant capitalistic tools.  The U.S. and China built huge large-scale factories to manufacture consumer and industrial goods for export to the U.S. and other countries. As there was no holds bar, the U.S. private industry was able to establish its presence in China.  China, unmindful of its communist ideology did not hesitate to plant capitalism in China.  This process, in the next twenty years from 1980 to 2000 brought prosperity to China.  China had a comparative advantage with the U.S. resulting in the U.S. closing much of its manufacturing.  The U.S. relied on importing from China everything it wanted at a lower price.

From almost nothing, China became the second global economic superpower, thanks to the U.S.A. and capitalism.    China became the most modern nation.  Everyone who has visited China is highly impressed and pleasantly shocked with the gigantic progress China has made within a short period of two decades.

India’s opportunity

President Trump has made India America’s  closest ally on a par with the U.K.   He has offered 100% transfer of U.S. technology.  He has also made deals for joint military and naval exercises and drills. Because of comparative advantage and oversupply of professional managers, engineers and scientists , the US is eager to set up large scale manufacturing in India to produce military hardware, planes, missiles, etc.

The U.S. is ready and willing to replicate with  India what it did with China.  India does not have to invent a new wheel.   The big question is whether India is willing to open and liberalize its economy as China did?

India needs to set up large scale factories to manufacture consumer, industrial and military goods for export and domestic consumption.   This will create huge employment opportunities.  India needs to find at least 10 million new jobs every year.

Progress and development contribute to democracy.  If India is failing to feed the poor, it is no democracy.  India has a comparative advantage with China now.  Wages in India are much lower than in China.  India is the largest English-speaking country in the world.  It has a large supply of cheap labor and professional engineers and managers.

President Trump is interested in diversifying  US imports from China to India.  There has never been a better opportunity for India.

If the path is well trodden, India can legitimately hope to grow @ 12% for the next decade.

(Ven Parameswaran, MBA, Columbia Business School, was President & CEO, First Asian Securities Corporation, New York; Senior Adviser to Imagindia Institute, a think tank in New Delhi.   He can be reached at vpwaren@gmail.com)