Beijing: India has the potential to match and even overtake China in terms of foreign trade if the country modifies its strategies and encourages the manufacturing sector in a big way, former Power Minister Suresh Prabhu has said.

"Contrary to the pessimism in India that China is surging ahead of India, we definitely feel India can not only catch up with China, but also improve over China. We are cent per cent confident," Prabhu, head of a study team of the India Trade Promotion Organisation (ITPO), said.

He noted that India has undergone a decade of reforms. "If we compare India's first decade of reforms (1991-2001), we have done far better than what China did under its first decade (1978-88) of reforms," he said.

Prabhu, also a Member of Parliament (MP) and chairman of taskforce for interlinking of rivers, is currently on a visit to China, studying China's trade regime and exchanging views with senior trade policy officials and research scholars.

While expressing optimism on India's future, Prabhu acknowledged that the country has a long way to go to catch up with China, especially on the manufacturing front where the dragon has forged ahead and created a brand equity world-wide.

Prabhu noted that China had managed to woo foreign investors in a big way by offering huge manufacturing bases with a condition – they should export their products globally.

This, he said, has enabled China to transform its manufacturing industry into a world-class one, generate employment, earn foreign exchange and create a brand equity nearly free of cost.

While India is trying hard to create a brand equity for itself, in China's case it was the foreign investors who created the brand equity as Chinese products were purchased by millions of people across the world, Prabhu noted.

The booming manufacturing industry in China also created a tremendous downstream support for the components and raw materials industry, he said.

"We have a lot to learn from China's experience," he said while stressing that India had the potentials.

"But unless there are strategies to tap the potential, it will remain only a potential and after some time the potential will also disappear. Therefore, the purpose of the (ITPO) study is to find out how can we tap into that potential," Prabhu said.

He said the government must take necessary steps to woo foreign investors to start manufacturing bases in India for cent per cent exports in sectors like footwear, toys, leather and garments.

Prabhu noted that manufacturing sector accounts for more than 80 per cent of China's exports.

"This is a unique feature of China," he said while giving credit to China's domestic policies, which have enabled the manufacturing sector to perform well.

But Prabhu said India's domestic foreign direct investment (FDI) policy did not lack much. "What needs to be done is to drastically improve domestic policy initiatives, which will enable a better business environment to enable more manufacturing," he said.

The ITPO study essentially focuses on various aspects of China's trade policies, its domestic policies, which aid China's trade policies.

PTI