China’s Tech Grip Threatens India’s Manufacturing Ambitions | Big Take

Added: 2026-05-06

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[00:00:09]Last year, India's largest company, [music] Reliance Industries, quietly sent hundreds of executives and engineers [music] to China. They fanned out across industrial hubs on the mainland, including Shenzhen and Wuxi.

[00:00:23]They were in a race against [music] time. China was about to restrict exports of a range of vital technologies, and Reliance needed to secure critical equipment and tech [music] to build a massive battery factory back home.

[00:00:37]The employees had just over a month to pull it off before those export controls [music] were supposed to kick in.

[00:00:43]And what they're trying to do is just make sure that the machines they need are first manufactured in time, and once they're manufactured, that they actually pass customs and they're put on ships and they are moving towards India.

[00:00:55]Alicia Sachdev is Bloomberg's business reporter based in New [music] Delhi.

[00:00:59]She says the race to secure these machines was just one piece of the puzzle. What they're now after is something beyond equipment. They need access to the know-how that makes those machines [music] actually work. And that's where Reliance is really stuck now is to really be able to have access to technology, even though it has the [music] machinery.

[00:01:20]Reliance needs both equipment and the know-how, expertise that China dominates in the field.

[00:01:27]The problem is China has no plans to share any of it.

[00:01:31]>> minutes, so we've got some announcements from China. They're looking to implement export controls on rare earth items and also ones that are related to tech.

[00:01:40]China's China wants to really ring-fence the dominance that it's built over the last decade. It does not really want to lose its edge that it's built painstakingly in manufacturing sectors.

[00:01:51]And for Indian companies which have ambitions to build out battery plants, for example, time is of the essence.

[00:01:57]The struggle of Reliance and India's battery industry is just one piece of a much bigger story. India has set an ambitious goal to become a global manufacturing powerhouse, an alternative to China. Reliance customer Make in India.

[00:02:14]>> [applause] >> Back in 2014, Prime Minister Narendra Modi launched the Make in India initiative. It promised to grow the country's manufacturing sector and create millions of jobs. And yet, even after billions were invested under the initiative, India's manufacturing in critical sectors is now even more dependent on China.

[00:02:36]What the Reliance example really has shown us is that in key up-and-coming sectors like batteries, like sophisticated electronics manufacturing, China really holds all the choke points.

[00:02:48]Whether it's the supply of raw materials, whether it's critical machinery, whether it's the technology know-how, all of that sits concentrated in China. [music] In the end, thanks to the fast work of its team, Reliance managed to secure more than a billion dollars [music] worth of equipment. But Reliance is India's biggest company. Other firms haven't been so lucky. We are kind of in this race with our hands tied behind our backs. The US, for example, which has a lot of tech expertise, [music] China, which has manufacturing expertise, in India, we kind of have neither at this point in time when it comes to these advanced sectors. So, that's really where our dependence on China kind of holds us back.

[00:03:36]>> [music] >> Welcome to the Big Tech Asia from Bloomberg News. I'm Wan Ha. Every week, we take you inside some of the world's biggest and most powerful [music] economies and the markets, tycoons, and businesses that drive this ever-shifting region.

[00:03:53]Today on the show, India's manufacturing dream and why it can't achieve it without China.

[00:04:01]We look at how [music] corporate India is navigating a complex geopolitical landscape as it searches for alternatives.

[00:04:14]The factory Reliance is building sits in Jamnagar, a city on India's west coast.

[00:04:20]Mukesh Ambani, Reliance's chairman and Asia's richest man, [music] has a bold vision for this place. His company is building a sprawling battery plant here, [music] the foundation of Ambani's green revolution.

[00:04:33]Here's Ambani's youngest son, Anant, Reliance's executive director, talking about it. It will be unmatched globally in size, scale, and integration.

[00:04:42]5 million man-hours of engineering, [music] 44 million square feet of building area, equivalent to four times the size of the Tesla gigafactory.

[00:04:53]>> [music] >> They say this would be capable of producing everything from solar panels to lithium-ion cells and then batteries for energy storage, even green hydrogen and fuel cells.

[00:05:04]Bloomberg's Alicia Sachdev says this vast renewable energy complex [music] is an ambitious plan, but Reliance is running up against a problem as old as global industry itself, technology transfer.

[00:05:19]Quite simply, technology transfer is when a company or when an entity shares the knowledge and the know-how needed to manufacture something. So, it's not just machines, but the processes, the training, the operational ecosystems.

[00:05:33]China understands this well. Back in the 1990s and 2000s, it used mandatory joint ventures as a way to learn from foreign companies in key industries. It required US, European, and Japanese firms to share their technology in exchange for access to the Chinese market. Over time, those partnerships helped Chinese companies absorb, refine, and eventually master know-how in industries like cars, rare earths, and batteries.

[00:06:03]In cold light of day, the supply chain for battery cells sits entirely in China, whether it's raw materials from lithium to cobalt to the technology that, of course, you need to make the cells to the equipment and the tooling you need to make the cells also. So, that's the kind of dependence that we're looking at, and there has been this trajectory of China curbing the transfer of technology.

[00:06:28]In October, China tightened export controls on some parts of the battery supply chain. Some lithium-ion batteries can't leave the country without government approval. These curbs grew out of the tariff war with the US.

[00:06:42]China has since paused its ban on exports of rare earths and other critical materials as part of a broader effort to ease trade tensions. But still, India continues to be largely cut off.

[00:06:55]Now, none of these measures were aimed specifically at India, but Alicia says the spillover has hit India especially hard, and in many ways, the country has emerged as one of the biggest losers.

[00:07:07]And that's because while other manufacturing rivals like a Japan or South Korea, for instance, already have some kind of leg up in manufacturing tech, India is beginning a lot of these industries from scratch, and therefore time is of the essence.

[00:07:23]The more difficulties we face in actually accessing this technology, the gap will [music] keep on widening and it will become harder for us to catch up.

[00:07:33]India has set an ambitious goal for advanced battery [music] cell manufacturing. Over the next five years, Indian companies plan to build a combined 178 gigawatt-hours of [music] capacity.

[00:07:45]That's enough to fully charge nearly 3 million Teslas or to power around 17,000 American homes [music] for a year.

[00:07:54]But Alicia says it's a very distant goal. So, out of that 178 gigawatt-hour that has been announced in India, what we do have at present is only 1 gigawatt-hour. So, it's such a small fraction of the ambition that India has outlined for itself. [music] Almost all the electric vehicles that are sold in India, and there are millions of them >> [music] >> every year, almost all of them bank entirely on imported battery cells.

[00:08:23]And beyond batteries, Alicia, where else does China hold kind of this strategic squeeze that we've been talking about?

[00:08:30]Well, pretty much all of the core industries that India is looking to develop at this point in time. We can take a clue from earlier this year. On February 1, India's Finance Minister Nirmala Sitharaman delivered a speech in the parliament. Scaling up manufacturing in seven strategic and frontier sectors.

[00:08:48]She highlighted seven high-tech areas that will form the frontier of its manufacturing-led growth model. These would include advanced chemistry cells, semiconductors, renewable energy, artificial intelligence, biotech, space tech, and defense manufacturing. Take semiconductors, for example. It's become a big focus for the Indian government.

[00:09:10]The country has committed billions of dollars in incentives and subsidies to kickstart chip-making plants. The problem is it can't do it alone. One example that again illustrates the extent of our dependence is the Tata Group's advanced chip manufacturing plant in Dholera in the western Indian state of Gujarat. This will, by the way, be the first and the biggest fab that India will have in the country. And that itself remains dependent on Chinese raw materials like gallium and high-purity silicon, at least in its initial years.

[00:09:42]Another area where China really dominates in tech is electronics and electronic components. So, the one big success story India has had is with Apple. Now, India makes about a quarter of Apple's iPhones globally, but when you look at what India is actually making, we're largely assembling the iPhones and much of the higher value components in the bill of materials that go into that assembly. And all the specialized production equipment still traces back to Chinese supply chains.

[00:10:12]Alicia says it's not that China refuses to share technology altogether. China does not quite mind sharing technology which is several generations behind what it's already pioneering. Um so that's the kind of access that it is okay to give. It's not like a blanket ban on sharing all kinds of technologies, but the really sophisticated tech is something that it does want to keep close to home.

[00:10:36]It's a serious roadblock for Prime Minister Narendra Modi who wants to boost manufacturing to make up a quarter of India's GDP.

[00:10:44]But instead of climbing, manufacturers have been falling down to just 13% in 2024.

[00:10:51]Coming up, how corporate India is trying to work with and around China, and what time may be running out.

[00:11:13]The relationship between India and China has never been easy. The two countries share a long contested border and a history of clashes that continues to shape their mistrust today.

[00:11:27]Trade between them has grown and while India has come to see China as a vital partner in the region, it also regards it as a strategic rival.

[00:11:37]Bloomberg's Alicia Sachdev says that tensions still guide New Delhi's policies.

[00:11:42]Even smaller things like sourcing windshields or like glass parts from China, India will impose quality control orders on which, you know, justifiably so because these are parts that can be sourced out of India, but companies would prefer to buy them from China because of the lower costs. For many Chinese businesses, India is a very lucrative, large market for end products. Investing in or accessing the Indian market is not exactly something that India has made very easy for those businesses. Even something like obtaining visas for its citizens is quite hard for for the Chinese at this point in time. India hasn't granted visa to the top BYD India executive to come and visit India. So it's been over five or six years that they've been able to even come and see their factories in the south of India. So so that's the kind of impediment that we're really talking about.

[00:12:37]Alicia, I want to ask you something that may seem a little obvious, but the Indian government set these ambitious goals for high-tech manufacturing capacity, right? Didn't they realize from the outset that they'd need Chinese expertise to reach those targets?

[00:12:54]So when India was really just about beginning its Make in India initiative and formulating these various production-linked incentive programs for core industries, I believe it started off with more optimism than was possibly warranted at the time. And at that time, perhaps what India did not quite fully anticipate is that these export controls that China has embarked on now wouldn't fold the way they have. Technology was never going to be very easy to get, but that had really been the order of business for many years.

[00:13:26]In recent weeks, India has eased restrictions on some Chinese investment.

[00:13:31]For the first time in nearly six years, companies where Chinese owners hold stakes of 10% or less will now qualify to receive automatic regulatory approval.

[00:13:42]The hope is that this will help boost local manufacturing and possibly create space for the technology transfer India badly needs.

[00:13:52]But the door is only partly open. Much of the Indian economy remains off-limits and only certain types of Chinese companies need apply. If you look at an auto sector, for instance, where India has a thriving local industry which can be disrupted by giants like BYD, it is far more skeptical and it has actually rejected proposals for investment from a BYD, from a Great Wall Motor. So there is deep strategic mistrust between the two countries and that really keeps both of them sort of, you know, walking on eggshells around each other. In the meantime, Alicia says there are other options for technology transfer from countries like South Korea, Japan, and the West, but they come with big tradeoffs.

[00:14:37]If you go to a South Korea, which many companies in India do currently source from, they come at about a 20-25% higher cost than China. That is also technology that which may not be very suitable to the Indian condition. If we're talking about NMC cells or nickel manganese cobalt cells, these are very high energy efficiency and with temperature soaring in India, there's always a risk of thermal runaway incidents, particularly in electric vehicles. So the suitability of tech is one aspect. The scalability of tech is another aspect. And of course, what it all comes down to is cost because we are a very highly price and value conscious market, too.

[00:15:17]And all of those things point us back to China.

[00:15:20]For now, Indian corporates have developed an approach to work with and around China, flying low on the government radar and operating [music] in the gray area. One thing that we've actually seen happens a lot these days is that deals between Indian and Chinese companies [music] take place in third countries. So companies would largely just avoid large red flags by meeting in third countries like a Singapore and Sri Lanka or Hong Kong or even Thailand to conduct their business to get around the difficulty of obtaining visas. What's also taking place is that sometimes you don't want to appear very high-profile in your procurement out of China. So large companies will really bank on uh very small suppliers to go the small shipment route. And then of course, the last thing is that they are able to lobby the government that working with China is really an imperative. It's not something that [music] you can close your eyes to.

[00:16:16]So as a result of those negotiations, companies have been able to actually secure some amendments to the very harsh investment screening criteria that India had put in place five or six years ago.

[00:16:29]So a bunch of workarounds are enabling that business sort of does continue to happen even in these sort of really fraught times.

[00:16:39]And are these workarounds, I mean, are they the key to really solve India's China problem? The workarounds do help, but they don't fully solve the extent of the problem that we are seeing because large-scale manufacturing and the kind of large-scale tech transfer that we're talking about cannot be on the point remain low profile.

[00:16:58]And the bind is really that Chinese companies can end up having very little say in the face of government directives. If China does want to restrict access to technology, even though its companies would find that it's in their commercial interest to work with certain countries or certain companies, it can kind of hold them back. So it does need a diplomatic breakthrough at some level for this problem to be fully resolved. So what can India then do to break this cycle?

[00:17:31]To break through.

[00:17:33]The only option before India is to really identify the next window and really catch the next generational leap in technology. For many existing industries, the ship may have sailed for India.

[00:17:46]>> [music] >> For example, it could perhaps be physical AI. The advantage India has is >> [music] >> in the vast population that it has and the immense amount of data that it can generate and of course, the vast demand that it has for these advanced [music] technologies. So it does have the potential to offer scale in all of these industries, but it needs to figure out the next window in terms of when it can do that instead of now just trying [music] to perennially catch up to where China has a clear dominance already.

[00:18:24]>> [music] >> This is the Big Take Asia from Bloomberg News. I'm Wan Wa. To get more from the Big Take and unlimited access to all [music] of bloomberg.com, subscribe today at bloomberg.com/podcast offer.

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