"India's states must compete, not march in lockstep, if India is to develop its own path to sustainable prosperity," Mahindra wrote in the book 'Reimagining India: Unlocking The Potential of Asia's Next Superpower', edited by global consulting firm McKinsey.
India's 28 states and seven union territories are as different from one another ¿ as varied in language, food, culture, and level of development - as the nations of Europe and "there is no sense in pretending that 'India' is a single investment destination or even a coherent, unified economic entity", he has said.
"For India's economy to expand as rapidly and yet more sustainably than China's, we need to make our differences into virtues rather than vulnerabilities," Mahindra said, adding that "the best way to propel the economy may be to encourage different parts of the country to go their own way."
He noted: "India's sprawling subcontinent can never become a plus-size Singapore. But perhaps we can weave together an urban web that is the equivalent of a thousand Singapores."
When companies make decisions about where to locate their factories or R&D hubs, they look at the tax policies, physical and legal infrastructure, or labour costs in the particular state they're considering and not at some mythical India.
"We should be celebrating and encouraging these differences," he said.
According to Mahindra, Indian states would have to improve their infrastructure and climate for doing business if they want to contend for major projects.
In this way, investment will drive innovation and changes to the system much more efficiently than any edict from Delhi could. "Tata Motors' decision to shift its Nano project from West Bengal to Gujarat illustrates the point," he noted.
"Rather than directing where capital should go, or funding white-elephant infrastructure projects, the central government should set the rules of the game and then step back," Mahindra said and noted that "India is where the future will be made. Let's get it right."
The book has several prominent contributors from India and abroad, McKinsey said.