Why Has India Not Pressured Foreign Firms to Transfer Technology
China, unlike India, has used its market clout to secure transfers of advanced foreign technologies, thereby boosting Chinese companies and reducing imports
(Image: Courtesy Alpha Stock Images.)
May 11, 2025
Over the past ten years, China has largely succeeded in reducing its import dependencies in memory chips, latest medical devices, and other advanced industrial sectors. In fact, Chinese companies have achieved global competitiveness in information and communication equipment, clean technologies, electric vehicles, agricultural equipment, ships, drones, and high-speed rail, as well as in other leading industries. This is in addition to Chinese companies, for decades, being globally competitive on price in many low-tech and mid-tech sectors.
These are the findings of the Rhodium Group, a New York based research firm focused on China’s economy and policy. Rhodium’s report was presented last week by the United States Chamber of Commerce, a Washington DC based business lobby.
The recent rapid growth of China’s advanced industrial capabilities is the result of the country adopting, in 2015, a Made in China 2025 policy. It aimed to reduce the country’s reliance on foreign technology, enhance domestic innovation, and build global competitiveness by backing major companies in strategic industries such as robotics, semiconductors, and new energy vehicles.
The policy “contained aggressive localization targets across 10 advanced industrial sectors,” notes the U.S. Chamber. It “represented a dramatic evolution in China’s approach to industrial development, with the clear intent to advantage domestic companies and technologies to gain a competitive advantage over foreign companies and technologies.”
In 2018, following international criticism, particularly from the Trump administration, the Made in China 2025 policy officially disappeared from public discourse. However, as the Rhodium report notes, “the core objectives of MIC25 have continued under alternative frameworks and initiatives to incentivize localization and provide state support to priority industries.”
China offered tax deductions, subsidies, and other benefits to companies in sectors promoted by the policy. In 2022, for instance, the tax deductions totaled about $185 billion, accounting for more than half of research and development spending by Chinese companies that year.
China, the world’s largest potential market, has a population of 1.4 billion and per capita Gross Domestic Product of $13,700. Foreign companies are eager to sell their goods and services in China. As a condition for continued access to the Chinese market, China pressures foreign firms to localize production and research and thereby reduce its dependencies on imports.
It has also benefitted from large-scale technology transfers by acquiring foreign companies. China still remains highly dependent on foreign companies in many critical sectors, including biomedicine, high-end machine tools and machinery, commercial aircraft, and cutting-edge semiconductors, according to the Rhodium report.
India has a per capita GDP of $2,900, less than a quarter that of China. Yet, given India’s 1.4 billion people, nearly half of whom are below age 25, it is the world’s second largest potential market. Not surprising then that foreign companies from Colgate, Nestle, and Disney to Apple, Microsoft, and Facebook, are aggressively expanding in India.
Foreign companies view India as a key market that can help boost their revenues and profits over the coming decades. So they appear to have no interest in helping create new competitors, by transferring technologies to their local partners or to emerging companies in India.
Given its relatively smaller economy and far lower industrial and technological capabilities, India may not have the same clout as China over foreign companies. Yet, the Indian government ought to be able to pressure foreign companies, which operate in India, to transfer at least some critical technologies. This can help establish major Indian suppliers to reduce imports as well as create millions of much-needed domestic jobs.
So far this has not happened. This, in a way, is reflected in the import export figures. In fiscal year 2023-2024, India’s merchandise trade deficit was $240 billion. In sharp contrast, China’s trade surplus during the same year totaled $1 trillion.
Part of India’s inability to secure advanced technologies from foreign companies may have to do with an apparent lack of interest of major private Indian industrial groups. These groups operate as monopolies or oligopolies in most products and services they sell in the domestic market, enjoying good revenue and profit growth. Hence they may have little interest in adopting new technologies to pursue new business opportunities.
Given this situation, it is not surprising that there is not one major global Indian brand in industrial, technology, consumer, or any other business category. In contrast, there are several Chinese global brands, including Xiaomi in smartphones, BYD in electric vehicles, Huawei in telecommunications equipment, and Haier, in consumer appliances.