Patel: India has strong domestic consumption, something that is a real boon now that market jitters have made Western consumers more tightfisted. Will the growth in this area continue? Nath: Yes, with 20 million people entering the middle class, India’s growth is in the domestic market. With more people having greater purchasing power, India is not merely an exporter but a big importer. Our imports are going up 35 percent. India presents a huge market opportunity to other countries.

Many people see India’s growing rich-poor divide as the greatest obstacle to future growth—people could revolt against globalization and free trade. How will you handle this problem? Our government’s prime objective is all-inclusive growth. In a democracy, we cannot leave out any section of society, or any part of the country. This is our biggest challenge; India’s rich-poor divide is an uncomfortable situation. The aspiring poor must feel development and growth touching their lives. I see that happening because it is an absolute priority of our government. We must see that growth is not only urban centric. We have various schemes to promote industrialization in backward areas—a northeast industrial policy, an industrial policy for the hill areas, for our sensitive rural areas. This is creating a big impetus for movement there.

Who do you see as India’s main competition? What’s your strategy for competing with China, in particular? Every country is a competitor. But each one has its own model, its own genius. We have the demographic advantage of a young population; we have a large, skilled work force. We have technology-based manufacturing. And we have a very large trade with China. Three years ago, it was $3 billion. Now it is $2 billion per month. So China is an important trading partner and it’s also a competitor. But competition is good; we will survive it. Our advantage is that India is being recognized as a reliable supplier, a reliable manufacturing base and a major services hub. Now India is also emerging as a major manufacturing hub. The CEO of John Deere, which manufactures tractors in India and exports them to 47 countries, recently said that the best product, the best quality, comes out of India.

Talk about the battle with China over natural resources. What do you think of Chinese politicking in Africa? China is reaching out to secure itself for resources; that’s its strategy. I presume it’s well thought out. It’s for the receiving countries to see the impact it’s making in their process of development. We’re not threatened by that—we’re doing our own thing.

How far up the food chain can the outsourcing phenomenon go? Indian firms are now buying up Western outsourcing firms. What’s the next step? It’s good for both parties, it’s a win-win situation. With such integration, U.S. companies will remain competitive—India is helping generate employment, it is helping the U.S. economy. A report is soon to be released about how many jobs, how much investment, India’s creating in the States. That should be a great centerpiece. India’s trade is not causing injury to U.S. trade and industry. No surges are taking place. Many studies have shown that outsourcing is only helping to sustain and create more jobs in America. Over time, many success stories will dispel the phobia of outsourcing. The next step is the natural process of engaging with the global economy—India is an exporter, an importer and an investor abroad. The equations are changing, this is the new architecture. India and the United States—the largest and oldest democracies—need to look at many more exciting possibilities that can nudge other countries into a process that never existed before.

Indian pharmaceutical companies are now doing more of their own R&D. When will we see the first Indian blockbuster drug? And is the development of a more mature Indian pharmaceutical industry creating more respect for intellectual property rights? We should see a blockbuster Indian drug in five years. India’s not going to be [just] an intellectual property user; it will be an intellectual property producer. We now have laws to protect intellectual property—I brought in legislation for that. It’s been applauded by pharmaceutical companies because we ourselves need to protect intellectual property. There’s more counterfeit stuff here than in India—I’ve seen fake designer handbags on Fifth Avenue—India does not market counterfeit stuff. We respect intellectual property.