China’s Tech Grip Threatens India’s Manufacturing Ambitions

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1:38Alisha Sachdev:Bloomberg Audio Studios. Podcasts. Radio. News. Last year, India's largest company, Reliance Industries, quietly sent hundreds of executives and engineers to China. They fanned out across industrial hubs on the mainland, including Shenzhen and Wuxi. They were in a race against time. China was about to restrict exports of a range of vital technologies. And Reliance needed to secure critical equipment and tech to build a massive battery factory back home. The employees had just over a month to pull it off before those export controls were supposed to kick in.

2:19Oanh Ha: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.

2:31Alisha Sachdev:Alisha Sachdev is Bloomberg's business reporter based in New Delhi. She says the race to secure these machines was just one piece of the puzzle.

2:40Oanh Ha:What they're now after is something beyond equipment. They need access to the know-how that makes those machines 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 machinery.

2:57Alisha Sachdev:Reliance needs both the equipment and the know-how, expertise that China dominates in the field. The problem is China has no plans to share any of it.

3:07Oanh Ha: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. 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. And for Indian companies which have ambitions to build out battery plants, for example, time is of the essence.

3:33Alisha Sachdev: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. Your line customer, make in India. 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.

4:12Oanh Ha: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, 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.

4:34Alisha Sachdev:In the end, thanks to the fast work of its team, Reliance managed to secure more than a billion dollars worth of equipment. But Reliance is India's biggest company. Other firms haven't been so lucky.

4:48Oanh Ha:We are kind of in this race with our hands tied behind our backs. The U.S., for example, which has a lot of tech expertise. 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.

5:16Alisha Sachdev:Welcome to the Big Tick Asia from Bloomberg News. I'm Wan Ha. Every week, we take you inside some of the world's biggest and most powerful economies and the markets, tycoons and businesses that drive this ever-shifting region. Today on the show, India's manufacturing dream and why it can't achieve it without China. We look at how corporate India is navigating a complex geopolitical landscape as it searches for alternatives.

5:50Alisha Sachdev:The factory Reliance's building sits in Jamnagar, a city on India's west coast. Mukesh Ambani, Reliance's chairman and Asia's richest man, has a bold vision for this place. His company is building a sprawling battery plant here, the foundation of Ambani's green revolution. Here's Ambani's youngest son, Anand, Reliance's executive director, talking about it.

6:14Oanh Ha:It will be unmatched globally in size, scale and integration. Five million man-hours of engineering, 44 million square feet of building area, equivalent to four times the size of the Tesla Gigafactory. 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.

6:40Alisha Sachdev:Bloomberg's Alicia Sachdev says this vast renewable energy complex is an ambitious plan. But Reliance is running up against a problem as old as global industry itself, technology transfer.

6:55Oanh Ha: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.

7:09Alisha Sachdev: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 U.S., 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.

7:40Oanh Ha: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.

8:04Alisha Sachdev: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 U.S. 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. 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.

8:43Oanh Ha:And that's because while other manufacturing rivals like 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. The more difficulties we face in actually accessing this technology, the gap will keep on widening and it will become harder for us to catch up.

9:09Alisha Sachdev:India has set an ambitious goal for advanced battery cell manufacturing. Over the next five years, Indian companies plan to build a combined 178 gigawatt hours of capacity. That's enough to fully charge nearly 3 million Teslas, or to power around 17 ,000 American homes for a year. But Alicia says it's a very distant goal.

9:33Oanh Ha:So out of that 178 gigawatt hour that has been announced in India, what we do have at present is only one gigawatt hour. So it's such a small fraction of the ambition that India has outlined for itself. Almost all the electric vehicles that are sold in India, and there are millions of them every year, almost all of them bank entirely on imported battery cells.

9:59Alisha Sachdev:And beyond batteries, Alicia, where else does China hold kind of this strategic squeeze that we've been talking about?

10:06Oanh Ha: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. 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.

10:41Alisha Sachdev:Take semiconductors, for example. It's become a big focus for the Indian government. 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.

10:56Oanh Ha: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. Another area where China really dominates in tech is electronics and electronics components. So the one big success story India has had is with Apple. Now India makes about a quarter of Apple's iPhones globally.

11:32Oanh Ha: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.

11:48Alisha Sachdev:Alicia says it's not that China refuses to share technology altogether.

11:53Oanh Ha:China does not quite mind sharing technology, which is several generations behind what it's already pioneering. So that's the kind of access that it is OK to give. It's not like a blanket ban on sharing all kinds of technologies. But the really sophisticated tech is something that that it does want to keep close to home.

12:12Alisha Sachdev:It's a serious roadblock for Prime Minister Narendra Modi, who wants to boost manufacturing to make up a quarter of India's GDP. But instead of climbing, manufacturers have been falling, down to just 13 % in 2024. Coming up, how corporate India is trying to work with and around China, and why time may be running out.

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15:31Alisha Sachdev: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. 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. Bloomberg's Alicia Sachdev says that tensions still guide New Delhi's policies.

16:00Oanh Ha: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 has 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 the Chinese at this point in time.