BOSTON –- Poor infrastructure, bureaucratic red tape and restrictive labor laws have combined over the years to keep India's manufacturing sector from expanding. But things are changing, and a new report by The Boston Consulting Group and Knowledge@Wharton said India could become a manufacturing "powerhouse" within five to 10 years.

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According to the findings of "What's Next for India: Beyond the Back Office," the emergence of a vast domestic market and relatively low-cost workers with advanced technical skills have driven an increasing number of multinational firms like Ford, Motorola and Nodia to set up manufacturing operations in India.

Other highlights of the study show India is in the midst of the most ambitious infrastructure upgrade in its history. The report concluded that better roads, ports, power and airports could easily push India's annual GDP growth rate up to a sustainable eight percent.

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What's more, said the report, India's "outsourcing providers are moving up the value chain toward knowledge process outsourcing (KPO) services, where specialized expertise, judgment and discretion" are critical.

"Every major company has India on its radar screen," said one analyst. "It's just a matter of timing."

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