Part 3 of 4 | India at the Crossroads Series
By Vijay Gaikwad | Senior Journalist & Policy Analyst
If India’s economic question begins with its internal imbalances, it becomes sharper when placed alongside China. Over the past three decades, China has executed one of the most consequential economic transformations in modern history. It did not merely grow — it reorganised how the world produces, trades, and consumes. Today, China is not just another large economy. It is the backbone of global manufacturing. This did not happen by accident.
China’s rise was built on a deliberate strategy that combined scale, state direction, and sustained investment in production capacity. While many economies moved towards services, China doubled down on manufacturing. It built industrial clusters, invested heavily in infrastructure, and integrated itself into global supply chains at a speed and scale few countries have matched. The result is visible across sectors. From electronics and machinery to chemicals and textiles, China dominates global exports. In several categories, its share is not marginal — it is overwhelming. Supply chains across continents are dependent on Chinese manufacturing in ways that are often underestimated until disruptions occur.
One way to understand this model is through what many analysts describe as the “90% principle.” In critical sectors, China has aimed not just for participation, but for dominance — controlling large portions of production capacity, component manufacturing, and supply chain logistics. This creates a form of economic leverage that extends beyond trade into strategic influence. India, by contrast, has remained a partial participant in this system. Despite policy efforts such as “Make in India” and production-linked incentives, India’s manufacturing share has not expanded at the pace required to alter its global position. The country continues to import large volumes of intermediate goods — components that feed into its own production processes — often from China itself.
This dependence is most visible in sectors such as electronics, pharmaceuticals, and renewable energy equipment. Even where India has built capacity, upstream dependencies remain. China’s advantage is not limited to scale. It has also invested systematically in critical minerals, logistics networks, and export ecosystems. Ports, shipping, warehousing, and trade facilitation have been developed as part of an integrated strategy. Manufacturing is not treated as an isolated sector, but as part of a broader economic architecture. The contrast with India is not simply one of policy intent, but of execution continuity.
China’s industrial push has been sustained across political cycles, with clear long-term priorities. India’s approach, in comparison, has often been fragmented — marked by shifts in emphasis, regulatory complexity, and uneven implementation across states. The implications of this gap are now global. As supply chains are reconfigured under the “China-plus-one” strategy, countries are looking for alternatives. India is often presented as a natural candidate — large market, young workforce, geopolitical alignment. But opportunity does not automatically translate into capacity.
The question is whether India can convert this moment into structural advantage. That requires more than incentives. It requires building ecosystems — infrastructure, logistics, skills, and regulatory predictability — at a scale that matches global expectations. It requires moving from selective manufacturing success to system-wide capability. There is also a strategic dimension to this comparison. In an increasingly polarised global environment, economic strength translates into geopolitical influence. Countries that control production networks shape trade flows, set standards, and influence negotiations.
China understood this early. Its economic strategy was also a strategic one. India’s choices in the coming decade will determine whether it remains dependent within global supply chains, or begins to shape them. Because in the global economy, participation is not the same as power.
(Part 4 will examine the reform agenda required for India to avoid the middle-income trap.)
