Because, if we open manufacturing say for eg. In Karnataka, the state govt will demand that 80% of all those jobs goto Kannadigas, then the local kannadiga population will threaten, bully, beat outsiders for coming to their "beautiful" cities. Then the factory owner will have to employ these same illiterate useless kannadigas.
But the kannadigas know they didn't deserve it and were able to bully, best threaten their way into their jobs, so they have no need or desire to work hard or maintain standards. Result? Inferior products being created
Replace this with any state, we are all protectionist, countries within a country, feudal medeival minded subservient people. Not just to foreigners, but rather any godman/fancy dress champion and we will continue on this path forever.