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

The debate on India’s economic trajectory since 1991 is once again in sharp focus. As global supply chains fragment and economic nationalism resurges, the comparison with China’s industrial rise offers sobering lessons.

India’s Post-1991 Path

The liberalisation era was born out of crisis. India embraced trade openness, deregulation, and global integration. Yet, much of its manufacturing became assembly-driven—dependent on imported components and foreign technology. The result: India emerged as a nation of marketers and assemblers rather than producers, leaving critical sectors vulnerable to external shocks.

China’s Contrasting Strategy

In 1980, India and China stood at similar technological levels. Four decades later, China’s economy has grown 46 times, while India’s has expanded 15 times. China’s per capita income surged 38-fold compared to India’s modest eight-fold rise. This divergence was no accident.

China pursued an aggressive industrial policy—reverse engineering, currency management, and strategic subsidies. It built deep domestic ecosystems, ensuring that integration with global trade strengthened its own productive capacity. Exports became a lever to expand domestic manufacturing, not a substitute for it.

The “Kicking Away the Ladder” Debate

Economist Ha-Joon Chang’s thesis resonates here: advanced economies historically relied on protectionism and state-led industrialisation, only to later champion free trade for others. China’s rise exemplifies how strategic state intervention can coexist with global integration. India, by contrast, leaned heavily on the Washington Consensus—privatisation, deregulation, and minimal state involvement—often at the expense of building robust industrial foundations.

Emerging Limits of Hyper-Globalisation

Today, the cracks in hyper-globalisation are visible. Geopolitical tensions, supply-chain disruptions, and trade restrictions have weakened the old model of seamless global production. Countries are rediscovering industrial policy, prioritising resilience, and protecting strategic sectors. Excessive reliance on exports alone is proving unsustainable.

Lessons for India

India must recalibrate. The path forward requires:

Strengthening Domestic Manufacturing: Develop deep industrial ecosystems rather than relying on imported components.

Boosting Purchasing Power: Rising incomes and stronger domestic demand are essential for sustainable growth.

Creating Dignified Employment: Move beyond gig work to high-quality jobs that enhance skills and productivity.

Raising Rural Incomes: Empowering farmers will broaden the domestic market and stimulate demand.

Adopting Strategic Industrial Policy: The state must actively support sectors with high technological and employment potential.

Conclusion

India’s challenge is not whether to integrate globally, but how to do so while building domestic strength. Hyper-globalisation has reached its limits; resilience and self-reliance must now define industrial growth. China’s experience underscores that globalisation without domestic capability is a fragile strategy. For India, the lesson is clear: the next phase of growth must be rooted in manufacturing depth, dignified employment, and strategic statecraft.