By Indu Shekhar Sinha BBC News, Calcutta

Hindu god from a Chinese factory

Not just the toys and the bicycles - even replicas of Indian gods and goddesses are manufactured there.

"Made in China Ganesh (the Hindu god) always scores on quality and price," says Shabbir, who makes a living selling Chinese goods in Calcutta.

The perception of China as a centre of high technology and cheap labour is shared not just by small traders but also by the bigger Indian entrepreneurs.

Anil Kohli, who ran a successful business in Bangalore, decided to move to China.

As a garment manufacturer, he finds it cheaper and easier to operate out there.

"Chinese labour doesn't need supervision and the government doesn't interfere," he says.

Admiration

There is a huge gap between China and India.

China is the world's factory, producing nearly 50% of the world's refrigerators and television sets and about 30% of its washing machines. India proportion of the world market is tiny by comparison.

One thing that China has been able to do is to deliver things quickly. There is very little bureaucratic hassle Somnath Chatterjee, Indian politician

Although India has a good share in service industries, in manufacturing it needs to go a long way to become a leading player.

Even senior Indian politicians like Somnath Chatterjee make no secret of their admiration for China.

Mr Chatterjee, the speaker of the lower house of the Indian parliament who has also been chairman of West Bengal Industrial Development Corporation, accepts that bureaucratic systems have let India down.

"One thing that China has been able to do is to deliver things quickly. There is very little bureaucratic hassle."

Indian mantra

But eminent Indian economist, Professor Amiya Kumar Bagchi, says India can do as well as the Chinese.

He considers a flourishing democracy as India's biggest strength, adding: "We do have a high proportion of technically qualified people, we also have some very good entrepreneurs who have come up in the IT and engineering sectors."

IT companies are mushrooming in cramped buildings

For many, when it comes to competing with China, or for that matter any other country, IT is the Indian mantra.

GD Gautama, principal secretary for information technology in the West Bengal government, concedes that China is ahead of India in the hardware sector.

However, when it comes to software, Dr Gautama is quite buoyant on India: "We are ahead because of a rich talent pool, ability to write and speak reasonably good English and we enjoy a cost competitiveness."

The exports of Indian software in 2004-05 are estimated to be $17.5bn as against China's $2bn.

India aims to further build upon its strengths by improving its IT infrastructure.

It is not difficult to find posters and pamphlets advertising IT courses.

India produces four million graduates every year who feed the industry.

Thousands of IT companies have mushroomed, not just in swanky offices but even in cramped, run-down buildings with computer workstations squeezed into tiny rooms.