India, China and the Limits of Hyper-Globalisation: Lessons for Industrial Growth

4 Jun 2026

The debate revisits India’s post-1991 economic strategy and examines why China has emerged as a far stronger manufacturing and technological power.

India’s Post-1991 Economic Path

Liberalisation and Global Integration: India embraced economic reforms, trade liberalisation, and greater integration with global markets following the Balance of Payments crisis.
Rise of Assembly-Based Manufacturing: Many firms became assemblers and marketers, relying heavily on imported components and technology.

In 1980, both were at similar technological levels.
China used an aggressive industrial strategy, including reverse engineering and currency devaluation, to become a global export powerhouse
India became a nation of “assemblers and marketers,” remaining heavily dependent on China for hardware and electronics.
Since 1991, China’s economy has grown 46 times, while India’s has grown 15 times. China’s per capita income increased 38 times compared to India’s 8-fold increase.

Aggressive Industrial Policy: China combined global trade integration with strong domestic industrial development and technology acquisition.
Manufacturing Ecosystem Development: Focus on domestic production capabilities enabled China to dominate global manufacturing value chains.
Export-Oriented Growth: China leveraged global markets primarily to expand exports while strengthening domestic productive capacity.

Developed Countries and Protectionism: Economist Ha-Joon Chang argues that advanced economies often used protectionist policies during their development but later advocated free trade for others.

Fragmentation of Global Supply Chains: Geopolitical tensions, trade restrictions, and strategic competition have weakened highly integrated global production networks.
Resurgence of Economic Nationalism: Countries increasingly prioritize domestic manufacturing, supply-chain resilience, and strategic industries.
Declining Export Dependence: Excessive reliance on exports alone is becoming less sustainable amid changing global trade patterns.

Market-Centric Approach: The Washington Consensus emphasized privatization, deregulation, trade liberalization, and minimal state intervention.
Changing Global Consensus: Increasingly, governments are adopting industrial policies, strategic subsidies, and targeted protection for critical sectors.

Strengthen Domestic Manufacturing: Build deep industrial ecosystems rather than relying primarily on imported components.
Boost Purchasing Power: Sustainable growth requires rising incomes and stronger domestic demand.
Create Dignified Employment: Promote high-quality jobs that enhance skills, productivity, and long-term economic mobility.
Increase Rural Incomes: Enhancing farmers’ earnings can stimulate rural demand and broaden the domestic market.
Adopt Strategic Industrial Policy: The State should actively support sectors with high technological and employment potential while maintaining competitiveness.
Focus on dignified employment (“Earn and Learn” models) rather than just the gig economy.