Source:money.cnn.com

India is overcoming its reputation as an inefficient, low-quality producer and learning how to compete globally. Can it give China a run for the money?

The sleek, clean factory in the Delhi suburb of Noida seems more Taiwan than India. Engineers in white overalls and goggles watch over an automated production line that spits out four billion state-of-the-art DVDs and CDs a year. To get to the factory floor, you have to pass through three air-cleaning passages - a process that makes it clear you’re no longer in crowded, dirty Delhi.

This is not some futuristic vision of India. It’s the main factory of Moser Baer, a 24-year-old Indian company that was one of the first in the world to make high-definition DVDs and is now starting on flash memories and solar panels. And while not typical of most Indian factories, Moser Baer is one of a number of companies utilizing the same brainy ability that fueled the country’s IT boom to remake its manufacturing landscape.

The companies range from Bharat Forge, Bajaj, and Tata in the auto sector to Larsen & Toubro and Godrej & Boyce in specialist engineering, Ballapur Industries in paper, and others in pharmaceuticals and textiles, as well as Moser Baer. And they are showing that India is beginning to shrug off its reputation for appalling quality and reliability, and that it can compete internationally.

India is also emerging as an outsourcing design and production base for manufacturing, as it has been for software, with most of the world’s autos companies - and many others such as Finland’s Nokia (Charts) and Taiwan’s Foxconn in mobile phones - sourcing components and assembling products.

Another example of the future is Tata Technologies, a Tata group design house based in Pune that operates in 12 countries. It has been involved in the design of Tata Motors cars and vans but does 74% of its work for foreign clients, including Chrysler, General Motors (Charts, Fortune 500), Boeing (Charts, Fortune 500), and Airbus.

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