I recently had the opportunity to visit India and gained some insight on what might be the place to grow in Asia. Many companies continue to set up shop in China to enjoy its low cost labor for export and nascent domestic economy that may some day exceed the size of today’s exports.

On the surface China appears more appealing with a plethora of glimmering new high rise towers, airports, superhighways, maglev trains, and Olympic venues prepared for the millions of in country visitors and hundreds of million or billion of television visitors for the 2008 games. The majority of these improvements have been funded by the Chinese government fueled by a national savings rate equal to 40% of gross domestic product.

The Chinese government is one of the biggest uncertainties about locating a business in China. First off, what form of government is it? Well the “party line” is communist. But since the Tieanman Square uprising and acceptance into the WTO, economic policies seem more capitalist than communist. Social capitalism with single party rule and no open elections is perhaps the best description. Local corruption is being addressed as the chief of China’s food and drug agency is sentenced to beheading for accepting bribes in favor of the approval of a drug later found to have deadly side effects. What form the Chinese government takes and how it plans on operating in the future is an unknown.

A Population of 1.1 Billion

India falls 200 million shy of China’s 1.3 billion or 15% fewer Indians than Chinese. Both countries combined represent 36% of the 6.6 billion inhabitants of the earth. Based on population and when fully developed, India’s economy may have the potential of being three times the size of the current U.S. economy.

The Largest Democracy in the World

India’s government is a multiparty democracy with regular open elections. It has three branches, executive, legislative, and judicial and is similar to the British parliamentary system.

A History of Successful Entrepreneurship

India has a long history of successful family businesses that produce a wide variety of materials, products, and services. According to Forbes, there are 36 Indian billionaires that attained their wealth in areas such as real estate, biotech, media, steel, pharmaceuticals, electronics, software, and automotive industries. India now replaces Japan as the Asian country with the largest number of billionaires.

They Speak the Language

Actually they speak quit a few languages. There are 22 “official languages” and another 194 known language/dialects in India. Thanks to the British and a need for a common language different than the 22 “official languages,” English is as common as Hindi particularly in cities and the business world.

Most of us have had the experience of seek technical assistance or placing an airline reservation at one of the many call centers operated in India. These folks are not always the easiest to understand until you get them to slow down. Then all of sudden you realize they can speak English.

Hurray for Bollywood

The Indian movie industry produces more hours of film than any other country in the world. Mumbai, formerly Bombay — hence the Bollywood play on names, is the center for this industry. Having this large movie industry is not the main point. The point is the similarities to a younger United States, and the nations appetite for this form of entertainment and its potential commercial application to drive demand for consumer goods and services.

Growing Consumerism

The middle class in India is growing along with the number of super wealthy. This is fuelling demand for many items once considered luxury items only available to the upper class. This includes laundry and kitchen appliances, electronics, brand and designer clothing, and higher end automobiles.

Tata, India’s largest local manufacturer of cars and trucks, is said to have an interest in the acquisition of Jaguar and/or Land Rover. This demonstrates India’s growing desire for luxury brands. It is also an interesting twist of fate to see Ford Motor Company, the 90-year old inventor of cost-effective mass-produced cars, consider the sale of two luxury auto brands to a little known, except locally, Indian manufacturer so it can help relieve its dire financial conditions.

Near Doubt Digit GDP Growth

During the first quarter of this year India’s economy grew by 9.4% and is expected be 9% for the year with 4% inflation. This growth rate is up from the 6% to 7% experienced in past years. This does not equal the double digit growth in China but is far higher than the growth in any industrialized nation.

Higher, Higher Education

India’s overall literacy rate, at 61%, needs improvement. A United Nations report lists India 145th out of the 176 countries included in the study. However some of its universities are amongst the best in the world. Such as the Indian Institute of Technology which many put on par with M.I.T. Indian engineers are employed all over the world and multinational companies are opening engineering centers in India to take advantage of the large number of qualified engineers that graduate each year.

A Peaceful Nation

The spirit of Gandhi and his teachings of non-violence live on India. Self-defense from its neighbors precipitated membership in the nuclear weapons club and a well-equipped and trained military. With the exception of the writers of American television shows, it is hard to envision India flexing it military muscle.

Proximity to China

India and China are separated by some small countries with big mountains but are not very distant from one another. Some day they could become very powerful trading partners since together they have over one third of the world population — dwarfing NAFTA and the EU.

Conclusion

India and China are similar and different in some important ways. Both have great growth potential. For large multinational companies having a presence in each country is the likely course. For smaller companies that must choose to locate in one or the other, India may be the better long-term choice.