''When I was a boy, we couldn't even make a bicycle in India,'' the middle-aged driver reminisced behind the wheel of an Indian-made Ambassador automobile.
''Now we are making our cars, and trucks, and airplanes, and locomotives.''
Indeed, they are - and atomic reactors, space satellites, air conditioners, field artillery, televisions, machine tools, watches, and a host of other products. India, one-third of the size of the United States but with three times the US population, now counts itself among the 10 largest industrial producers in the world.
No longer do Indian officials traverse the world with begging bowls in hand, soliciting food aid to stave off famine. Several years ago India reached self-sufficiency in food grains, the national dietary staple, in a feat all the more remarkable because the country has twice as many mouths to feed now as it did 35 years ago.
Economic change and growth are transforming India's place in the world. As it hurries to catch up with the industrialized nations, India aims to position itself on tricky terrain - equidistant from East and West diplomatically, centered between North and South economically.
Steadily, it has been racking up a series of third-world firsts. It was the first developing country, other than China, to detonate a nuclear explosion. It was the first to launch its own homemade satellite atop its own launch vehicle. It has landed a research team in the Antarctic and sent pioneering expeditions to mine the deep seabeds. It claims a pool of scientific and technically trained manpower that is the third largest in the world.
Critics decry India's ''firsts'' as costly prestige projects that contribute nothing to improving the lives of its impoverished masses.
This year, for example, India is buying foreign wheat for the second year in a row to maintain its multimillion-ton grain reserves. Although the public granaries are the country's national insurance policy against famines of years past, India cannot provide its population with adequate food. Some 48 percent of the population is still too poor to afford minimum daily calorie standards.
In stark contrast to its enduring poverty, India's achievements remain a source of intense national pride.
Searching for its international role, India sees a potentially starring one in a world often neatly subdivided into the ''North'' (the industrialized nations) - and ''South'' (the developing countries). Its goal is to be the most ''Northern'' nation of the South, the third-world leader in scientific, technical, and industrial development.
There are Latin American and other Asian contenders for the title, of course. There are pitfalls amid the potential - most notably India's failure to lift its masses out of illiteracy, poverty, and a feudal social system and to equip them with the skills and social mobility they need to enter the 20th century.
But the potential is there, and in India's quest for development is the key to its changing relations with the industrialized world, its neighbors, and particularly the two superpowers, the United States and the Soviet Union.
It was the theory of nonalignment, then novel, which was forcefully articulated by the late Prime Minister Jawaharlal Nehru, that thrust India onto the world stage of the 1950s and '60s. Nehru declared that India would not relinquish the freedom it had gained in its epic nonviolent independence struggle by joining either superpower's camp.
Combined with Indian assertions of higher moral rectitude and superior spirituality, the Indian stance infuriated the cold warriors of the day. But it nonetheless won India a prominent international role far beyond its economic or military resources at the time.
Simultaneously, India turned to the industralized world for help in meeting two key goals: heavy industrialization and increased agricultural production. Underlying both was the goal of self-reliance, so that economic dependence would not become de facto political dependence. Socialism was the official economic policy, with the state to control and run basic infrastructure and all vital industries - and keep a leash on private enterprise as well.
Subsequent events then shaped, and continue to color, India's attitudes to the world. When Nehru sought help to set up large public-sector heavy industries , the advice from the US and most of the West was to stick to agricultural and rural development.
US and other Western aid went on to trigger the Green Revolution, helping India achieve its dream of self-sufficiency in food grains. And, as Nehru's daughter, Prime Minister Indira Gandhi, constantly reminds her Western callers, the Russians and their East-bloc allies stepped in with steel plants, oil exploration projects, and the other heavy industrialization that Nehru sought.
It was the start of a relationship that has blossomed over the years, culminating in a 1971 Indo-Soviet friendship treaty at the time the United States was ''tilting,'' in Henry Kissinger's phrase, to Indian archenemy Pakistan on the eve of the Bangladesh war. The net effect of these greatly compacted events shows up in India's political rhetoric of the '80s: The USSR is a faithful friend whose commitments have stood the test of time. The United States is a fickle friend who can't be counted on over the long run.
''There isn't any admiration for the (Soviet) gulag in India,'' a Western diplomat explains. ''There's no attraction in the Soviet way of life. There isn't any grace or intimacy in the relationship with the Soviets. The Indians have decided it's in their interest.''
But that relationship, and India's nonaligned stance, have come under strain in the wake of the Soviet invasion of Afghanistan late in 1979. Initially, India parted company with the West and most of its nonaligned colleagues. Mrs. Gandhi, just then returning to power, said that the Soviets had been invited in and that Western ''interference'' in the region was a provoking factor. Since then, she has voiced disapproval of the presence of foreign troops anywhere, and has increasingly leaned on the Soviets in private to withdraw their forces.
But in public, India abstained in United Nations votes condemning the Soviets and calling on them to withdraw. It also became the first noncommunist nation to recognize the Vietnam-installed, Soviet-supported Heng Samrin regime in Kampuchea (Cambodia). Expecting others to follow, India found itself out on a lonely limb - and increasingly tagged with a ''pro-Soviet'' label.
Painfully self-conscious of its image in the eyes of the world, India has since been trying to project what one diplomat calls a more ''centrist'' posture. On a nine-day trip to the United States this past summer, Mrs. Gandhi sought to improve Indo-American relations badly strained by the US arming of Pakistan in the aftermath of the Afghan invasion.
''Our foreign policy is one of friendship for all,'' she declared. ''We have not allowed one friendship to overshadow another friendship or influence our decisions and actions.''
While the visit brought no substantial change in policies on either side, it helped clear the air between the world's two largest democracies.
Fence mending is also on India's agenda with China, the Asian giant with whom it fought a border war in 1962 (India humiliatingly lost). It is still leery of China, but talks to resolve the long-simmering border disputes and to improve trade and cultural relations have been started.
India and Pakistan, three-time adversaries in war, retain deep suspicions of each other but are sitting down to talk, too. Although both sides quibble about who offered it first, a proposal for a ''no-war pact'' is a key item of discussion.
Western diplomatic observers believe that India is more troubled than it lets on about the presence of 100,000 Soviet troops on the Indian subcontinent.
''The military is apprehensive,'' says a Western military analyst of India's armed forces, fourth largest in the world. ''The Soviet presence in South Asia does not sit well with the Indian military.''
Such Western observers see India's efforts to patch up relations with old adversaries as part of an effort to restore stability to the troubled subcontinent.
The gigantic development tasks that still lie ahead are another key reason for Mrs. Gandhi's American fence mending. Although its economy is taxiing - at 5 percent real growth in gross national product in the last fiscal year - it has yet to reach the takeoff stage. For that, India needs an infusion of outside capital - either private investment or aid - and sees the United States as a prime source of both. It also needs up-to-date technology of a sophistication its East-bloc benefactors are unable to provide.
''India is putting a lot more importance on high technology and good technology, and recognizing the importance of good relations with countries that have that sort of technology,'' says a Western diplomat. ''There's a recognition that there's a better chance of having the economic relations you need if you're perceived as more centrist.''
India recently relaxed its import and investment controls and is openly seeking Western private investment and technical collaboration. For both foreign and domestic entrepreneurs, and for economic development as a whole, there are serious obstacles. Among them are a sluggish bureaucracy, corrupt officials, telephones chronically out of order, erratic electrical supply, poor maintenance standards and quality control, and a heedlessness of time that wreaks havoc with production and delivery schedules.
Nevertheless, the American embassy in New Delhi concluded in a May economic report, ''India is becoming a more attractive place to do business.''The key, a Western expert adds, is patience. ''American firms here for some time say that if you can slug it out, wait it out until you're established, then it's a very good prospect.''
Next: India's crisis of confidence