Everyone nowadays seems obsessed about the question as to whether or not Islam can be reconciled with modernization. In discussing this issue, what constitutes modernization is often confused with westernization. Understanding the difference is vital.
India's encounter with the West over the past three centuries underscores the distinction between the two processes - modernization and Westernization - that are often assumed to be synonymous. In fact, modernization does not entail Westernization, as the example of contemporary Japan demonstrates. Whereas modernization entails a change in belief about the way the material world operates, Westernization entails a change in cosmological beliefs about the way that one should live.
Like China and unlike Japan, India resisted changes in its ancient beliefs about the way the world works (and should work) which modernization entails. Instead, like many Islamic countries today, India wrongly believed Gandhi's doctrine that modernization necessarily means Westernization. Fitfully, and under the influence of the British Raj, parts of the economy and society were modernized during the second half of the 19 th century of laissez-faire and free trade. Some of the traditional literary castes also embraced Westernization.
British policy turned India into a pioneer of Third World industrialization, with an economy increasingly based on domestic capital and entrepreneurship combined with imported technology. But modernization stalled when protectionist pressures from Lancashire and the exigencies of Imperial finance led the British to abandon free trade and laissez faire . At the same time, Westernization fueled the rise of a nationalist movement.