There are many reasons to be optimistic about India's economic future: A vast potential consumer market; a large and growing middle class; many well-educated and motivated workers; and the widespread use of English, the lingua franca of global commerce.

Why, then, is India still not quite as big a rising star as China? Ranan Tata, chairman and chief executive of Tata Group, the diversified Indian conglomerate, offers some insight on where his country is going, and what it must change to realize its potential.



PORTFOLIO.COM: Do you believe that India is headed toward economic superstar status?

RATAN TATA: "Economic superstar" is perhaps too strong a term to use for India, even looking to the future. While India's already large economy will certainly grow faster than the more mature economies, and take its place among the 3 or 4 largest economies in the next two to three decades, this will happen due to our population, demographics and resources.

I think to be an economic superstar would mean growing at, or close to, our full potential. This would require much deeper and broader economic reforms on the one hand and effective government intervention in areas such as health, literacy, and infrastructure, especially in rural areas, on the other hand.

PORTFOLIO.COM: What do you see as the investment possibilities in India, especially in the various sectors in which Tata is involved, and in infrastructure elements such as airports?

RATAN TATA: India has tremendous investment potential across a very wide variety of sectors, due to our relatively early stage of economic development. If you look at the per capita consumption practically of any item, there is potential for large increases over the next few decades as the economy grows and per capita incomes increase.

You see this potential reflected in the investment plans of many Tata companies -- we plan to expand capacity many-fold in sectors ranging from auto, steel to hotels and power.

Regarding infrastructure sectors, we actually have a large deficit in almost every infrastructure sector whether airports, power, roads, etc. This is an area that needs large amounts of investment, perhaps two, or may be even, three times the amount that is being currently invested each year. Many of the impediments in infrastructure investments are being addressed and India now has telecom as a success story; ports and roads have seen major investment, while airports is an opportunity area and so is power -- though there are still major issues in the power sector that need to be tackled.