The need for Resilience and Reinvention- What India Can Learn from China’s Tech Rise
China’s transformation from a low-cost manufacturing hub to a global innovation powerhouse offers valuable lessons for India. The challenge is not to replicate China’s playbook, but to adapt its principles to India’s own strengths and realities.
Two Asian Giants, Two Paths to Power
Few economic transformations in modern history rival China’s rise from an agrarian economy in the 1980s to a global technology leader today. Once known for low-cost exports and imitation products, China now leads the world in AI research, electric vehicles, renewable energy, and advanced manufacturing.
India, meanwhile, has charted a different course — service-led growth, global leadership in IT and digital platforms, and a thriving startup ecosystem. Yet, as the world moves into an era defined by technological self-reliance, supply chain realignment, and green growth, India faces a pressing question: how can it accelerate its own journey from digital strength to industrial and innovation leadership?
China has shown the world what’s possible when industrial policy, infrastructure, and innovation move in lockstep, something India still struggles to achieve.
Building an Integrated Industrial Base
China’s rise was underpinned by decades of coordinated industrial planning. Early on, government protection and investment provided fertile ground for private initiatives, helping companies like Baidu, Alibaba, and Tencent (often collectively referred to as BAT) to tap into China’s burgeoning internet population and adapt foreign technologies for local use. Throughout the 2000s and 2010s, Chinese firms benefited not just from state guidance but also from substantial foreign investment, which fuelled their rapid expansion.
Comprehensive national strategies such as Made in China 2025, the Artificial Intelligence Development Plan, and the Digital China initiative have provided clear roadmaps and massive financial backing to the tech sector. These policies target core technologies, including AI, semiconductors, quantum computing, and next-generation communications, aiming to position China as a world leader and reduce dependency on foreign expertise.
The Made in China 2025 initiative focused on developing the entire value chain — not just final assembly but also components, machinery, materials, and R&D.
- By 2010, China had built over 150 high-tech industrial zones integrating manufacturing, logistics, and talent.
- In 2024, manufacturing accounted for 26% of China’s GDP, compared to around 15% in India.
- Every major tech firm — Huawei, Xiaomi, BYD — grew out of a robust supplier ecosystem of precision component manufacturers and local SMEs.
India has taken early steps through the PLI (Production Linked Incentive) schemes, Gati Shakti logistics platform, and industrial corridors like DMIC and CBIC. However, many sectors remain assembly-driven, with imported inputs dominating cost structures.
To move up the value chain, India must:
- Deepen local component ecosystems, especially in electronics, EVs, and semiconductors.
- Invest in tooling, materials, and process innovation.
- Develop industrial clusters with shared R&D and testing facilities — similar to Shenzhen’s innovation zones.
Speed, Scale, and Execution Discipline
If China’s strength was its industrial base, its competitive edge lay in speed of execution. Infrastructure projects, regulatory approvals, and industrial park development moved in months, not years.
For example:
- The Shenzhen Special Economic Zone, established in 1980, evolved from farmland to a global innovation hub in less than two decades.
- China built 35,000 km of high-speed rail in just 15 years — transforming logistics and regional connectivity.
India’s challenge is not lack of vision, but bureaucratic velocity (or rather the lack of it). Projects under Make in India and Atmanirbhar Bharat must translate from policy to plant faster. Digitization of approvals (through platforms such as National Single Window System) and state-level execution incentives can dramatically reduce friction.
India also needs to foster rapid iteration and prototyping — the “fail fast, fix fast” culture that made Chinese firms like DJI (drones) and BYD (EVs) global leaders.
From Digital Scale to Deep-Tech Strength
China’s technology boom was powered by scale and data. With a domestic market of 1.1 billion internet users, Chinese companies rapidly tested and refined products. AI algorithms trained on vast user datasets gave firms like Baidu, Alibaba, and Tencent a decisive edge.
India has achieved similar scale in digital infrastructure — through the India Stack, UPI, and Aadhaar ecosystem. Over 18-20 billion UPI transactions a month show us what’s possible when government-backed platforms and private innovation align.
The next leap must be from digital enablement to deep-tech capability:
- Encourage innovation in AI, robotics, quantum computing, and energy storage through targeted research missions.
- Strengthen industry–academia linkages and innovation grants (similar to China’s National Innovation Funds).
- Incentivize corporates to invest in applied R&D, not just product assembly.
Aligning Policy, Capital, and Talent
China’s government mobilized capital and talent with precision. Local governments launched venture funds and provided subsidized land, utilities, and tax breaks to startups. The Chinese software and information technology services industry now generates annual revenues exceeding 5.5 trillion yuan ($778 billion), with double-digit year-on-year growth. The sector’s rising revenue, international IPO activity, and investments signal that China’s ambitions in tech will continue to reshape the global landscape.
India’s startup ecosystem is vibrant but skewed toward consumer tech and fintech. To drive industrial transformation, India must nurture patient capital — long-term investors willing to fund hardware innovation cycles that often take 7–10 years to mature.
Strategic steps include:
- Expanding the SIDBI Fund of Funds to support hardware startups.
- Creating Technology Development Boards with venture co-funding from public and private investors.
- Scaling skill alignment programs — combining engineering education with firsthand manufacturing and design exposure.
Collaborate to Compete
Unlike China’s large, vertically integrated conglomerates, India’s innovation DNA lies in collaboration — between startups, corporates, and research institutes. This distributed model can become a competitive advantage if properly institutionalized.
Consider examples:
- The EV ecosystem — where OEMs, battery recyclers, and charging startups are co-developing circular solutions.
- The pharma sector, where contract manufacturing and R&D outsourcing have built global trust and efficiency.
By replicating this model across clean energy, industrial automation, and electronics, India can leapfrog traditional growth stages. At the same time, global partnerships — with Japan, South Korea, the EU, and the U.S. — can accelerate technology transfer and supply chain integration.
Conclusion: Competing Through Capability, Not Comparison
China’s journey offers lessons, not templates. India’s advantage lies in its democratic dynamism, entrepreneurial diversity, and digital-first momentum. But scaling from “potential” to “powerhouse” demands an unwavering focus on execution, depth, and technology-driven industrialization. The future of global innovation will not be decided by who copied better — but by who combines policy, people, and purpose faster.
If China’s story was one of speed and scale, India’s must be one of resilience and reinvention — leveraging openness, trust, and talent to lead the next chapter of Asian innovation.
The author, Prasanth Radhakrishnan, is a Consultant with the Mumbai office of AGR Knowledge Services.
