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Modi Needs German Lessons in Manufacturing

The East Asian model may not be the right one for India.
More foreign investment would ramp up India's engineering capacity.

More foreign investment would ramp up India's engineering capacity.

Photographer: Tobias Schwarz/AFP/Getty Images

On his first trip to Germany this Sunday, Indian Prime Minister Narendra Modi will join Chancellor Angela Merkel to inaugurate the world’s largest industrial fair, Hanover Messe. No doubt Modi’s eager to showcase his “Make in India” campaign in the manufacturing powerhouse of Europe. But it’ll take much more than a slick marketing campaign to attract fair participants to set up shop in India. Unlike Germany (or indeed Japan, the U.S. and China) India has never been a leading manufacturing hub -- not during its socialist years, nor since the country shifted to a market economy more than two decades ago.

To this point, Modi’s drawn inspiration and ideas for his program from the East Asian experience, in particular China’s rise as the world’s factory. Much to the dismay of free-market economists, he’s shown quite clearly that while no socialist, he’s no Ronald Reagan or Margaret Thatcher either. He has no plans to replicate the Anglo-Saxon model of aggressive privatization and extensive deregulation of markets. He believes in a role for the state, as have other Asian leaders since the end of World War II.