São Paulo

India’s rapid economic ascent and assertive industrial policy have placed it at the centre of global economic debates, offering valuable lessons for countries like Brazil seeking to revive manufacturing and technological capabilities, economist Paulo Gala has said.

In an interview with TV 247, Gala, a professor at Fundação Getulio Vargas, reflected on India’s development model and its implications for Brazil’s policy direction. According to Brasil 247, the discussion followed Brazilian President Luiz Inácio Lula da Silva’s recent visit to India and highlighted sharp contrasts between the two countries’ economic strategies.

Gala underlined India’s long-term commitment to industrialisation through initiatives such as Make in India, backed by state-supported industrial corridors that channel infrastructure, incentives and investment into priority sectors and regions. He noted that India has tripled its per capita income over the past two decades, sustaining annual growth rates of 6–7 per cent — a trajectory he compared, albeit on a smaller scale, to China’s rise.

According to Gala, India’s key strength lies in aligning economic growth with industrial policy. He pointed to the symbolic importance of conglomerates such as Tata Motors expanding globally, arguing that true “national champions” must become international competitors to justify state support.

In contrast, Brazil’s industrial output, estimated at around USD 250 billion, lags behind India’s nearly USD 500 billion, reflecting what Gala described as a prolonged phase of deindustrialisation. He identified high interest rates as Brazil’s “Achilles’ heel”, noting that when financial returns outpace gains from productive investment, capital shifts away from manufacturing toward rent-seeking.

Gala also criticised the structure of Brazil’s long-term credit benchmark linked to loans from BNDES, arguing that market-linked rates undermine reindustrialisation efforts. While supporting targeted subsidies, he stressed they must be tied to innovation, technological advancement and measurable performance outcomes.

On technological sovereignty, Gala emphasised the importance of strong domestic capital and innovation ecosystems, warning that multinational corporations often centralise research and patents at headquarters, leaving subsidiaries dependent on imported technology. This, he said, contributes to Brazil’s persistent services deficit and rising royalty and intellectual property payments.

Addressing artificial intelligence and Brazil’s Redata incentive package for data centres, Gala welcomed regional decentralisation but cautioned against replicating a commodity-export model in digital form. Data infrastructure, he argued, should underpin domestic software and hardware development rather than merely offering cheap energy and water to foreign firms.

Comparing India and China, Gala acknowledged China’s larger industrial scale but observed that India’s perceived geopolitical alignment with Western economies has helped attract supply chain diversification. On AI and employment, he rejected alarmist views, stating that while automation may disrupt some service-sector jobs, technological revolutions historically generate new opportunities.

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Ultimately, Gala said, the decisive factor is a coherent national strategy that ensures research, patents, jobs and income generated by emerging technologies remain anchored within the domestic economy.