Spitz, who won seven gold medals at the 1972 Summer Olympics in Munich, said there is lack of competition in India and also socio-economic factors have stopped the country in producing more Olympians.
"I don't think it is the economics it is the lack of competitive level. In America, there is tremendous competitive environment in the colleges and it enhances the abilities of athletes," said Spitz during an interaction with Indian media a day ahead of the Laureus World Sports Award.
"I don't know of any magic wand but I think India you need to change because you have a zillion people and you could have 100,000 great Olympians, unless you bid for the Olympics and inspire people and change the mindset. But you can't change the hundreds of years of traditions," he added.
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Spitz's record of seven golds was only surpassed by USA's Michael Phelps, who won eight golds at the 2008 Summer Olympics in Beijing, and the American legend reckons that his compatriot will leave the stage with a bang in the next edition in Rio de Janerio.
Asked who would be the next big thing in swimming in the 2016 Olympics, Spitz said: "I still think it will be Phelps. He is probably going to make the Olympic team. Australian Grant Hackett too has been pretty successful and I assuming again, he will also probably make the Olympic team if he stays healthy. It is great for the sport.
"I don't think we will see him compete in 8 events but he will swim in 100m and 200m freestyle to make the relay team. He may win the 100m butterfly," said Spitz, who was named World Swimmer of the Year in 1969, 1971 and 1972 by Swimming World Magazine.