The Union government’s Annual Budget 2026-27 had made a renewed push on the country’s manufacturing sector as it seeks to accelerate and sustain economic growth in a difficult global environment. As much was hinted at by the Economic Survey released on Thursday which put forward a strategic vision that called for India embracing Swadeshi not as blanket protectionism but as what it calls a ‘disciplined strategy.’ The document pointed to East Asian success stories – Japan, South Korea, Taiwan, Singapore, and Vietnam – as models worth studying. Though not explicitly stated, the experience of one country dominated the Survey’s analysis: China, whose trajectory to a manufacturing superpower offers both inspiration and warning.The Survey’s prescription sounds straightforward: telescope import substitution, strategic resilience, and strategic indispensability simultaneously, all while building the ‘state capacity’ that underpinned East Asian industrialisation. The example of China may be at the back of New Delhi’s mind, but India has some way to go before it can emulate its northern neighbour.China’s industrial ascent: A four-decade blueprintChina’s transformation from agricultural backwater to global manufacturing hub rested on three foundations: massive capital deployment, ruthless technology absorption, and centralised state direction. Understanding how these elements interacted reveals both the possibilities and constraints facing India.In the 1950s, Soviet technology transfers jump-started Chinese heavy industry – aircraft, automobiles, petroleum refining, ballistic missiles – with little concern for intellectual property. After the Sino-Soviet rift and Mao’s disastrous Great Leap Forward, Deng Xiaoping’s 1980 reforms reopened the door to foreign capital and expertise. Four Special Economic Zones, led by Shenzhen, became laboratories for market economics within Communist constraints.Japan played a crucial role often overlooked in Western analyses. Between 1977 and 1988, Tokyo became China’s second-largest trade partner after Hong Kong. Over the next three decades, Japanese Overseas Development Assistance to China averaged $1.5 billion annually – roughly 0.25 percent of Japan’s GDP. This assistance, combined with private Japanese investment, modernised China’s infrastructure and transferred critical manufacturing know-how.By 2005, China formalised its approach in the National Medium and Long-Term Science and Technology Development Plan. The strategy was explicit: acquire foreign technology, disseminate it through state and enterprise research centres, then move to what Beijing called ‘re-innovation.’ The 2008 global financial crisis accelerated this trajectory. While developed economies stagnated, China expanded aggressively into seven strategic sectors: new energy vehicles, advanced materials, high-end manufacturing, biotechnology, next-generation IT, and clean energy technology.The mechanics of technology absorptionChina’s industrial policy worked through coercion masked as market access. Foreign firms wanting to sell in China were told: form joint ventures with state-owned enterprises, cede majority ownership, meet stringent local content requirements, and transfer technology – or stay out. Most chose to enter.Beijing Jeep’s partnership with American Motor Corporation and Shanghai Volkswagen’s China operations are an example. Foreign manufacturers taught Chinese suppliers to meet global standards. Once domestic supply chains matured, homegrown companies like Geely, BYD, and Chery emerged. Recognising they could not match Western internal combustion expertise, China pivoted massively to electric vehicles, subsidising production until Chinese EVs dominated global markets. By 2023, China became the world’s largest auto exporter; by 2024, Chinese manufacturers surpassed Japanese companies in total global vehicle sales.High-speed rail followed similar logic. In 2004, China was far behind India in railway technology. Beijing invited Siemens, Alstom, Bombardier, and Kawasaki to bid on massive train orders – but only if they transferred technology. The numbers were irresistible; the manufacturers capitulated. Chinese research institutes absorbed the designs, and by 2008, China inaugurated its first bullet train line. Today, China operates over 50,000 kilometres of high-speed rail, more than the rest of the world combined.Also read: Budget: The Mystery and Mystique of ‘Viksit Bharat 2047’Aviation represents China’s major failure, one that still constrains its ambitions. The Y-10 narrow-body jet flew in 1980 but was canceled in 1982 due to lack of manufacturing capacity. Partnerships with McDonnell Douglas in the 1990s collapsed when Chinese airlines preferred foreign-assembled aircraft and IP transfer stalled. The COMAC C919, finally certified in 2022, still relies on Western CFM engines. A wide-body C929 is promised for the 2030s, but China’s aviation manufacturing sector remains a laggard of sorts.Today, China has reached world-level in AI, semiconductors, robotics, autonomous vehicles, Electrical Vehicles (EVs), Clean technology, biotech and space.India’s divergent pathIndia started with similar ambitions but achieved markedly different results, revealing both institutional constraints and missed opportunities.The Maruti-Suzuki partnership of the 1980s succeeded in developing a robust auto components industry. Unlike China’s coercive joint ventures, Maruti operated more collaboratively, yet still generated significant domestic capability. Today, India is a major auto exporter and component supplier. But the electric vehicle transition now threatens this advantage – India risks becoming a supplier of legacy technology as China dominates EV production and battery manufacturing.In aviation, despite early promises with HAL and a strong aerospace R&D base, India has never produced a commercially viable passenger aircraft. Now plans for collaboration with Russia on a regional jet have been announced recently. The defense sector shows similar patterns: decades of investment, limited domestic capability, continued import dependence.High-speed rail presents perhaps the starkest contrast. India pioneered rail manufacturing in South Asia, yet today the Vande Bharat trains are merely incremental improvements on existing designs. The Mumbai-Ahmedabad high-speed corridor, being built by Japan, may transfer some technology, but there is little evidence of the systematic absorption that characterised China’s railway transformation. Perhaps it will show up in the six high-speed corridors announced by finance minister Nirmala Sitharaman on Sunday.India’s democracy, fragmented federalism, independent judiciary, and free press make Chinese-style dirigisme structurally difficult. Industrial policy must navigate coalition politics, environmental litigation, land acquisition disputes, fiscal discipline enforced by bond markets, and rotation of power between parties with different economic philosophies. These are features of our polity that fundamentally constrain the menu of available industrial strategies.The Economic Survey’s call for simultaneous import substitution and export competitiveness raises a contradiction that China navigated but India may find difficult. China used domestic protection to build scale, then leveraged that scale for export competitiveness – a sequence that took decades and enormous subsidies. The model worked because China’s market size justified the investments, Communist Party of China authoritarian governance sustained political will, and weak intellectual property enforcement allowed rapid technology adoption.Also read: Economic Survey 2025-26: An Ideological Laundry for the Dismantling of Labour RightsIndia’s market, while growing, is smaller and poorer. More importantly, the global trade environment has shifted. What passed as acceptable industrial policy in the 1980s and 1990s now triggers retaliation. The WTO framework, despite its weakening, still constrains overt protectionism. And the technologies that matter most – semiconductors, advanced materials, AI systems – require global supply chains and cutting-edge R&D that import substitution alone cannot generate.There is also the efficiency cost. Import substitution creates vested interests in continued protection, reducing pressure for genuine innovation. India’s earlier import substitution regime produced the Ambassador and Premier Padmini – vehicles that became jokes for technological stagnation. The risk of repeating this pattern in contemporary sectors is real.Beyond wishful thinkingThe Economic Survey’s invocation of disciplined Swadeshi is a welcome corrective to both naive globalisation and knee-jerk protectionism. But discipline requires more than good intentions – it demands institutional capacity, political consistency, and strategic clarity that India has rarely demonstrated.China’s experience shows that catch-up industrialisation is possible but not easily replicable. It required specific conditions – authoritarian governance, massive capital mobilisation, state control of key economic sectors, tolerance for inefficiency and environmental damage. The quality of Chinese political and bureaucratic leadership has been of paramount importance in its industrial transformation. Setting a long-term vision and getting local officials to implement plans has enabled its manufacturing achievement.The relevant question is not whether India can copy China’s script, but whether it can write its own – one that achieves industrial upgrading within democratic constraints and leverages India’s actual strengths rather than compensating for its weaknesses.As of now the prescriptions that we see in the Economic Survey remain aspirational rather than operational. Disciplined strategy requires first being disciplined about what is actually achievable.Manoj Joshi is a distinguished fellow with the Observer Research Organisation.This piece was first published on The India Cable – a premium newsletter from The Wire – and has been updated and republished here. To subscribe to The India Cable, click here.