What Make in India should quickly learn from Made in China

On September 15, the NITI Aayog published a paper analysing the remarkable success of the “Made in China (MIC) 2025” initiative, launched in 2015, in steering technological innovations and breakthroughs to list six “strategic lessons” for India.

It didn’t mention the “Make in India” mission launched in 2014, a year earlier than the MIC 2025, but stressed on “an urgent need” to “reimagine India’s R&D ambition and impact”.

The Aayog announced an expert group to craft a “Vision for India in 2035” and lay out a roadmap for achieving “global leadership in key technologies”.

Two aspects overlooked

It may seem farfetched for India to aim for global leadership in technology but it is a step in the right direction. For decades, the only technological breakthrough India could boast of was in space technologies, provided by the Indian Space Research Organisation (ISRO), set up way back in 1962 — called Indian National Committee for Space Research (INCOSPAR) then, before it got its current name in 1969.

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The Aayog, however, skipped two other key aspects of the MIC 2025 – consolidating China’s position as the global hub for manufacturing and exports. In sharp contrast, the Make in India mission of 2014 (MII 2014) has no claim to fame. Had it done so, the Aayog could have listed many more “strategic lessons” from the MIC 2025, to boost manufacturing and exports.

But first, what the Aayog found.

Innovations and breakthroughs

The Aayog found “significant divergence” in the R&D ecosystems of both countries “in scale, focus and integration”, leading to “notably different outcomes”.

One significant divergence is the way R&D is treated:

• China raised funding of 2.7 per cent of GDP ($496 billion) in 2024, against India’s “historical” low of 0.7 per cent, which continued in 2024 (less than $100 billion)

• China’s R&D is “increasingly private-led”, against India’s government-led

• China’s “strong emphasis” on applied research with commercial outcomes, against India’s “basic research with fewer commercial allocations”

• China focuses on 10 strategic industries forming “the foundation of future technological leadership”, against India’s “more dispersed across multiple sectors”

• China set up 40 “dedicated R&D centres and national laboratories, which act as convergence points to “solve complex technological challenges”. The Aayog couldn’t find one name from India to list

• China “actively promotes” an integrated model – “triple-helix” approach, in which three different institutions work together: Academic institutions, state-owned enterprises (SoEs) and private technology firms. This creates “feedback loops”, facilitating quick transitions from research to applications (more of it later). In contrast, the academic-industry gaps “remains wider” in India with “fewer structured pathways” for commercialising research.

It listed 7 of the 10 strategic sectors for technological innovations and breakthroughs: Electric vehicles, renewable energy, telecommunications, quantum computing, semiconductor technology, high-speed rail (HSR) and robotics and automation.

China’s edge, India’s lessons

It also listed 13 such innovations and breakthroughs the MIC 2025 provided in five years between 2020 and 2025 alone. Among them were biotechnology, AI, renewable energy, quantum computing, semiconductors, space exploration, high-speed rail, advanced materials and infrastructure. In contrast, it found none to list against India.

As a result of these, the Aayog listed four remarkable changes:

1. China’s patents grew to 4.76 million by 2024, against India’s “a fraction” of that;

2. China captured “dominant global market” in EVs (its BYD surpassed Tesla), solar panels (95 per cent of global production) and telecommunications equipment. India has achieved similar dominance “only in select legacy niches” like generic drugs (without revealing that 68 per cent of its APIs for drugs and 90 per cent of APIs for some life-saving antibiotics are imported from China and the dependency is “growing” ) and IT services.

3. China “significantly reduced dependency” on foreign technology while India continues to “heavily import technology”, particularly in electronics, advanced materials and precision manufacturing.

4. China built comprehensive supply chains in strategic industries, while “India remains dependent on imported components and materials for high-tech products”.

Key takeaways for India

Finally, the Aayog lists six “strategic learning” for India:

1. Strategic sectoral focus with clear commercial roadmap

2. Robust R&D investment

3. Integrated innovation ecosystem

4. Performance tracking and measurement

5. Policy continuity and long-term vision

6. Rigorous accountability

More factors would emerge as the MIC 2025’s successes with manufacturing and exports are examined.

MIC 2025: Intelligent manufacturing

Unlike India’s MII 2014, China’s MIC 2025 is a widely researched subject because of its remarkable achievements and also the anxieties it caused in the US and the EU in particular.

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These studies say, the MIC 2025 is a “comprehensive strategy” focusing on 10 high-tech strategic manufacturing sectors to establish China as a global hub of “intelligent manufacturing” and reducing dependence on foreign technology through technological innovations and breakthroughs. To achieve this, China made domestic firms fully integrated into global manufacturing value chains and compete globally.

These 10 high-tech manufacturing sectors are: Next-gen information technology, automated machine tools, aerospace equipment, high-tech ships, railway equipment, energy saving, new materials, medical devices, agricultural machinery and power equipment.

How MIC 2025 boosted manufacturing

Here are the findings of a study commissioned by the US Chamber of Commerce, published on May 5, 2025. Two caveats here.

Caveat 1: The US was the most vocal critics of the MIC 2025 as it feared unfair competition from China’s heavy subsidies, forced technology transfers, intellectual property theft etc.

Caveat 2: The findings of several other such studies are on similar lines.

This study evaluated MIC 2025 on four parameters and found the following:

1. Reducing import dependencies: China has “largely succeeded” by leveraging foreign firms. It pursued strategies “requiring or pressuring foreign firms” to localise high-tech production and research as precondition for continued access to the market and “acquiring foreign companies” to enable large-scale technology transfers. It worked in sectors like memory chips and some medical devices and equipment. Overall, its import vulnerabilities are more limited, though they persist in a few key areas in which foreign firms kept their most advanced technologies outside China.

2. Dependencies on foreign firms: Newer Chinese firms “gained market share” at the expense of established foreign companies “in all targeted sectors”. Stringent restrictions on foreign participation boosted industrial cloud services, new energy vehicles and components and power generation equipment. They led new products, replacing foreign firms, like remote sensing technology (LiDAR), automotive sensors and high-speed rail brakes. But China still remains highly dependent in areas of biomedicine drugs, high-end machine tools and machinery, commercial aircraft, and cutting-edge semiconductors. Though the market share of domestic companies is “poised to increase significantly”, the most bleeding-edge technologies will remain a challenge to localise.

3. Competitiveness: Chinese firms are globally competitive “on price” in many low- and mid-tech sectors and they have achieved global competitiveness in some “high-tech” areas including ITC equipment, REs, EVs, agricultural equipment, ships, drones and high-speed rail. They had greatest technological advancement and market share growth when they had one or more of these three factors: (i) high capital intensity (ii) large (often state-supported) demand market and (iii) emerging industries without an established global leader. In most MIC 2025 sectors, Chinese companies generally lag in global revenue, market share and cutting-edge technologies. In some areas where firms have achieved significant self-sufficiency, like auto antennas and telematics, it has not yet translated into global competitiveness.

4. Technological leadership: Chinese companies have made “significant strides” in closing the gap and advancing toward the technological frontier, with several sectors already demonstrating signs of “parity or even leadership”. Their share of global patents has risen across most industries, with notable gains in electric vehicles, new materials, electronics and robotics. In basic research, China’s output is equally remarkable, with its share of global top publications increasing by average of 18 percentage points between 2015 and 2023. Yet, Chinese firms have yet to achieve parity in many MIC 2025 sectors. But 62 per cent foreign firms surveyed predict that China would catch up within 5 to 10 years. Key gaps remain in advanced semiconductors.

China's rise and challenges

It concluded that MIC 2025 has driven “substantial progress” in building large industrial sectors and it has successfully created “reverse dependencies” (the world relies on Chinese production). The reverse dependencies have spread from low- and mid-tech sectors to high-tech ones like electric vehicles, solar energy and telecommunications and reshaping competitive dynamics in industries ranging from clean technologies to robotics. In addition, overlapping technological achievements across sectors have arguably created a “reinforcing effect” that will amplify China’s progress and grip over global supply chains in the years to come.

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These achievements can be seen in the following graph, which maps China’s progress, along with the US (number two) and India, at global stage.

However, China’s global shares in manufacturing and exports have been hit in the past few years (see the graph). This is because of both endogenous and exogenous factors. Its “zero-Covid” policy saw unusual stringent lockdowns in 2020, 2021 and 2022, disrupting supply chains. Its real estate is facing a crisis for several years. The pandemic global shift towards services reduced goods exports.

Geopolitical and trade tensions, like the US’s trade war started in 2018, led to MNCs adopting China+ strategy (shifting their manufacturing bases away from China).

Coming soon: How China secured its place as global manufacturing and exports hub