Asia’s rise should not be interpreted as a race between rivals, but as a shared project. Join us on Telegram , Twitter , and VK . Contact us: info@strategic-culture.su Redefining the boundaries of risk In recent years, India has progressively established itself as one of the main alternatives to China in global value chains. This process is taking place within an international context marked by profound transformations: growing geopolitical tensions, trade fragmentation, “de-risking” policies, and a growing focus on supply chain resilience following global shocks such as the 2020 pandemic and energy crises. In this scenario, numerous Western countries have adopted production diversification strategies, summarized by the phrase “China plus one,” with the aim of reducing dependence on a single manufacturing hub.
India appears, at least in theory, to be particularly well-positioned to benefit from this realignment. With a population that has recently surpassed China’s, a vast pool of young labor, a rapidly expanding domestic market, and a growing openness to foreign investment, the country represents an increasingly attractive destination for multinational corporations. Furthermore, reforms promoted in recent years—from regulatory simplification to the digitization of public services—have helped improve the business climate. Initiatives such as “Make in India,” launched in 2014, and the Production-Linked Incentive (PLI) Scheme have aimed to stimulate domestic production and attract international capital in strategic sectors such as electronics, pharmaceuticals, automotive, and renewable energy.
However, the idea that India can quickly replace China as the “world’s factory” appears, upon closer examination, to be overly simplistic. Over decades, China has built a highly integrated industrial ecosystem characterized by advanced infrastructure, efficient supply chains, a skilled workforce, and unprecedented production capacity. This systemic advantage cannot be replicated in the short term. Furthermore, China continues to dominate numerous key segments of global manufacturing, particularly in the upstream stages of supply chains, such as the production of components, intermediate materials, and machinery.
One element often overlooked in the debate concerns the deep interdependence between the Chinese and Indian economies. Despite the narrative of competition, many Indian industrial sectors rely significantly on inputs from China. The pharmaceutical sector is a prime example: although India is one of the world’s leading exporters of generic drugs, a large portion of the active pharmaceutical ingredients (APIs) used in production comes from Chinese suppliers. This dependence stems from cost dynamics and economies of scale that have made China a supplier that is difficult to replace.
Similarly, the Indian electronics sector—which has seen significant growth in recent years, partly due to the presence of major international companies—still relies on components imported from China, including semiconductors, printed circuit boards, and modules. Even in emerging sectors, such as renewable energy, this dependence remains evident: most solar panels installed in India use cells and modules produced in China, which dominates global production thanks to economies of scale and strong state support. From competition to collaboration? This reality highlights how competition between the two countries cannot be interpreted solely in terms of substitution. Rather, it is a complex relationship in which rivalry and complementarity coexist. On the one hand, both countries aspire to strengthen their strategic autonomy and capture larger shares in global value chains; on the other, their economic integration creates incentives for cooperation.
In this context, a purely competitive approach risks being counterproductive. A complete breakdown of supply chains would entail high costs for both economies, slowing industrial growth and raising prices for consumers. For India, a drastic reduction in Chinese imports could hinder the development of key sectors; for China, the loss of the Indian market would represent a significant blow, given the country’s size and growth potential.
On the contrary, there is ample scope for pragmatic cooperation. The economies of China and India, in fact, have complementary characteristics: China excels in large-scale manufacturing, infrastructure, and advanced industrial technologies; India, on the other hand, holds a competitive advantage in terms of labor costs, human capital, and the growth potential of its domestic market. Greater integration could yield mutual benefits, fostering the creation of more resilient and diversified regional supply chains.
Initiatives such as the establishment of joint industrial parks, the development of logistics corridors, and the promotion of technology transfer platforms could help strengthen this synergy. Furthermore, regional trade agreements and greater regulatory harmonization could facilitate trade and reduce barriers to entry for businesses. In an increasingly fragmented global context, Asia could emerge as an integrated manufacturing hub, capable of competing with other economic macro-regions.
Of course, the obstacles to greater cooperation are not negligible. Relations between China and India have historically been marked by political and territorial tensions, as evidenced by conflicts along the Line of Actual Control (LAC). Added to this are strategic divergences and growing competition for regional influence, particularly in the Indo-Pacific. However, experience shows that economic interdependence can act as a stabilizer, mitigating political tensions.
Despite moments of diplomatic crisis, trade between the two countries has continued to grow. China remains one of India’s main trading partners, and Chinese investments have contributed to the development of key sectors of the Indian economy, including technology, e-commerce, and telecommunications. At the same time, India represents a strategic market for Chinese companies, both in terms of domestic demand and as an alternative manufacturing hub.
In light of these dynamics, the need for a paradigm shift is becoming increasingly evident. Rather than pursuing a logic of substitution, the two countries should adopt a vision based on strategic interdependence. For India, this implies recognizing that economic self-reliance—often encapsulated in the slogan “Atmanirbhar Bharat”—does not mean isolation, but rather the capacity for selective integration into global supply chains. For China, it means accepting India’s rise as a global economic actor and viewing its ambitions not as a threat, but as an opportunity to build a more balanced and multipolar economic system.
Ultimately, competition between China and India in global value chains represents only part of a broader picture. While it reflects legitimate aspirations for development and autonomy, it also risks overshadowing the opportunities offered by cooperation. In an increasingly interconnected world, the ability to build economic relationships based on trust, dialogue, and complementarity will be crucial to the success of both nations.
The future of global industry—and Asian industry in particular—will not be defined by a logic of unilateral dominance, but by the ability to integrate skills, resources, and markets. China and India, as two of the leading emerging economies, have both the responsibility and the opportunity to lead this process. Only through a balance between competition and cooperation will it be possible to build a more resilient, inclusive, and sustainable economic system.
In this sense, Asia’s rise should not be interpreted as a race between rivals, but as a shared project. And within this project, the relationship between China and India is not merely a bilateral issue, but a key element for the future of the global economy.