Over the past several years, American envy of Asia’s manufacturing boom has gone mainstream. Each new factory and infrastructure project in China or India seems to remind Americans of the glory days of U.S. manufacturing.We should be careful what we wish for: A new Reuters report warns that Indian manufacturing capacity may be outpacing demand. With car sales projected to fall in the coming year, companies that invested heavily in factories and infrastructure in general are beginning to worry.An Indian capacity glut would be bad news for everyone. Complaints about jobs lost to offshoring notwithstanding, rising wages and standards of living in Asia will benefit the entire world, opening enormous new markets to American and European exports. The businesses of the future will need new customers to buy their goods; many of those customers will be in India and China. If decades of investment, rising capacity, and increased productivity are leading to excess manufacturing capacity in India, a lot more than just India will be in trouble. A manufacturing bubble could easily be worse than finance or real estate bubbles, undoing years of progress toward stronger economies in the east.It is not yet time to ring the alarm bell, but we’re beginning to see some worrying signs that a manufacturing collapse may be on its way. Via Meadia will be watching this story as it develops.