India has to learn four crucial lessons from the Chinese to give a thrust to its economy, said Arun Shourie, Minister of Divestment, Telecommunications and Information Technology, at the inaugural of the 15th International Engineering and Technology Fair organised by the Confederation of Indian Industry.
China is the partner country for this fair.
The first lesson that India needs to learn from China is to have policies that focussed on higher growth, said Shourie.
The second is to learn how to complement the policies with impeccable execution, he said.
The third lesson is to pay due importance to the scale of operations, and the fourth lesson is to learn how to attract greater foreign investments by facilitating the relocation of industries from around the world in India.
Shourie lavished fulsome praise on China, which, he said, had captured world attention in making giant strides in industry and enterprise.
"We must learn from China how to get others to relocate industry into India."
Contending that China had mastered the intricacies of competition in the world market, he pointed out that India was faced with a changing world had to adapt fast to the requirements of global competition.
In this context, he emphasised that in global competition, one could not be smug with any degree of success. "I hope this is remembered."
He cited the example of a leading captain of industry recently saying that if India was to compete with China, it had to better the Chinese industrial capacity, not only now but in the future too.
The minister caused amusement among the strong Chinese delegation present when he told them that during parliamentary debates, he always cited China's example how it was emerging as a world player while India was weighed down by bureaucratic snafus.
He also drew attention to the states and said much greater work regarding reforms was needed with them.
He pointed out that bureaucratic red-tape confronted anybody wishing to set up an industry in the state. For instance, there were as many as 27 inspectors whose green signal was necessary.
Similarly, a large number of forms had to be filled and this discouraged potential industrialists from moving to the states.
"My plea to the Union finance minister will be to incentivise those states which initiate (economic) reforms," Shourie said.
He said that while China had modernised its textile industry, India had lagged behind with nothing much being done during the last 15 years.
"So it is not going to be easy to keep up with that (competing with China) effort. China has succeeded in even relocating Taiwanese firms on computer hardware into China," the minister pointed out.
"Unless we outdo others in these issues, we will be in for a great surprise," he warned.
Shourie pointed out that the Indian economy had in the past exhibited its resilience by continuing to post strong economic growth despite external shocks.
India was today in a position of strength because of factors such as large foreign exchange reserves and stocks of food grains, he said.
However, he cautioned that there were three prerequisites for propelling the economy towards higher growth rates.
First, there was a need to constantly innovate and build new areas of competitive advantage. Second there was a need to shift the focus of the reform programmes to the state level.
While the first phase of reforms had succeeded in streamlining regulations and removing restrictions in most areas at the Centre, there was still a large number of regulations at the state level that impeded the smooth implementation of economic activities, he elucidated.
The third prerequisite for higher growth was to free locked up government expenditure in areas such as interest payments, subsidies and providing aid to sick industries so that more of the government resources could be utilised for pro-growth activities such as infrastructure development.
Providing an insight on the extent of the government's funds locked up, Shourie stated that up to 70 per cent of the government's tax revenue was spent on making interest payments, Rs 30,000-40,000 crore (Rs 300-400 billion) was spent annually on subsidies and an almost a equal amount was spent on the restructuring of sick industries without actually turning them around.
Earlier the Chinese Ambassador Hua Junduo expressed happiness that his country had been invited to participate in the 15th IETF and gave the assurance that China would do everything to enhance Sino-Indian bilateral trade, including investment opportunities for Indian companies in China.