It's interesting that even historically, India's economy has been oriented away from manufacturing compared to other countries of the region. In 1975, before China's economic reforms, manufacturing constituted 38% of China's GDP (which is not surprising given the way money was funneled away from rural areas into industry). Manufacturing was 23% of Singapore's GDP, and 22% of Korea's. In comparison, Indian manufacturing was just over 16% of GDP. (World Bank data)

In 2008, manufacturing was still 16% of India's GDP, vs. 34% for China.

India's services sector is very competitive (53% of India's GDP vs. 40% for China), but it is much harder to export services than goods to other Asian countries due to a host of trade barriers. This may be one reason India's economy remains more inwardly-focused than those of other Asian countries, in spite of the government's trade efforts.

India’s trade statistics capture this well: efforts like the “Look East” policy have yielded paltry results, particularly when placed beside China’s numbers, with negligible effects on the economies of other countries as well as India’s. They seem to serve, unsurprisingly, as symbolic political tools on the domestic front—a way for the country to pat itself on the back in its illusory competition with China.

India needs to either fully incorporate aspects of Chinese growth such as the development of a powerful manufacturing base or else stop pretending to catch up to the Chinese in their own game and strike out on an alternative path to growth such as leveraging the crown jewel of its economy, its IT service sector, and possibly circumventing the heavy industry stage of conventional growth like the Singaporeans.

Anyways, great post, Dan. This is Kyle writing from New Delhi.