By the late 1970s you say ? Well for that to happen you need a lot of butterflies . To give a brief background on the Indian politics of the late 1970s its a product of the decisions taken by the nehru Gandhi dynasty from 1947 who favoured socialism over capitalism just ask JRD TATA . Plus the country was pretty much brainwashed by socialism , all parties had a socialist tag to them plus socialism had popular support so any moves to dismantle the socialist license raj will have huge consequences, to give an example was the 42 constitutional amendment which put the words socialism to the preamble took place in the late 1970s although the legality of it is questionable besides what many forget is that India openned up the economy because of the collapse of the USSR which caused the loss of its biggest trading partner which in turn caused a balance of payment crises which caused the liberal economic reforms , now having explained the difficulties of a Chinese style reform in India I'll try to give a scenario where it may take place .
Have Nehru be a centrist rather than a socialist say he becomes disappointed with socialism because of Stalinist purge and the red army take over of Europe or say he gets information on the famine and so he looks up in admiration to FDR so he is in favour of market style capitalism but due to the era he grew up in he is more of a statist so the Nehruvian consensus that dominate india will be diffrent that is to say he favours government participating in economy but is not in favour of nationalization of industries , favours domestic capital over foreign capital , favours traiff and non trariff barriers over the license import regime , favours greater government regulation over private sector but not license raj , is repulsed by the soviet union and favours the united States, favours a strong education and health care infrastructure to out right socialist welfare system .
Another way is to have Nehru to be killed by nathuram godse rather than Gandhi although why on earth he would do that is beyond me or say Gandhi favours the right side of the congress party and has falling out with Nehru and as good measure let's say he writes criticise of Nehru in his will and testament for certain reason ( he was a womanizer may be Gandhi can critize that ) so the guy who will be anointed is Sadar vallabha bhai Patel he died in 1950 after him I think power will be transferred to Rajagopalachari and members of congress party on the right side of the party like munshi ,kamraj , Nijalingappa ,Kengal Hanumanthaiya , Neelam sanjeeva reddy and other will dominate the political discourse.
So Nehru or members of congress right will resemble Franklin Roosevelt rather than well nehru , favours state spending , state driven social welfare , capitalism , favours workers rights but respects private property but the economy will still be strangled by government regulation and compliance but the free market will be allowed to operate but with no foreign competition or foreign companies . Economic growth will not be that different from out time line probably the economy may grow at 4.5 percent per year in the 1950s and at 5-6 percent in the 1960s till the oil crisis of 1973 . Oil crisis will force a balance of payment crises and government may have to go to the IMF for loan and IMF will impose certain conditions since it is the IMF causing the gradual liberalisation of the economy .
As for the political events well Kashmir would be very different than in our time line since Nehru adhere to a cease fire of UN but if Sardar Patel was in power he would insist that a lot more land of strategic value should be acquired meaning large part of Pakistan administered Kashmir would be under Indian rule , as for foreign policy I don't see much changes India would be non aligned but post India China war which in this timeline would end in stalemate India might make a switch to the US bloc in this timeline , the reactions of Pakistan would be interesting would they join the bloc of us or soviet , I don't know , probably they may join the soviet bloc in which case there will be a lot of butterflies or India and Pakistan may remain in the same camp which I think is highly unlikely.
Socially it wouldn't Be that different than in our time line .
As for the receipt of outsourcing well it would be depended not upon the Chinese liberalisation but upon the abiItyof Indian education system if it trains workers to do the jobs and tasks required for a manufacturing dominated economy so assuming that they do then a lot of outsourcing contracts would be outsourced to India because of the presence of a legal system that is similar to western system , India apart from receiving industrial outsourcing will also receive service and software outsourcing contracts. As for the economy it would be around 20 trillion dollars in PPP and 11 trillion dollars in exchange rate