For many corporations, India and China are two sides of the same coin. This is understandable. After all, India’s economic potential and the challenges it faces do look very much like those of China. And just as there was a fashion for China among multinational corporations, so India looks set to be the next flavor of the month.

But there the resemblance ends. Such is the weight of their economic histories that each country goes its own way when it comes to the practical matters of government policy and business opportunities.

Similar, but different

Comparing and contrasting India and China in terms of their size, past growth, political stability, bureaucratic barriers, and economic freedom has become commonplace. True, the two countries do face similar macroeconomic challenges, but their ways of responding to them are very different. Even their apparent convergence on the same model of economic development—deregulation and a greater openness to trade, foreign capital, and imported technologies—stops short at the level of policy implementation.

For multinational corporations, this means that treating India and China as similar entities with shared opportunities and pitfalls is a recipe for disaster. No generalization...