Why “Made in China” Remaining at the Core of the Global Value Chain While “Make in India” Plan failed

 
March 25, 2025 – Recently, news emerged that India’s four-year, $23 billion “Production-Linked Incentive (PLI)” scheme—aimed at replacing “Made in China” with “Make in India”—has failed. Instead of rising, India’s manufacturing sector’s share of GDP dropped from 15.4% to 14.3% under the plan. This not only exposes deep-seated contradictions in India’s industrial upgrading but also underscores the formidable and unshakable position of Chinese manufacturing in the global supply chain. 

  India’s PLI Scheme Trapped in a “Double Bind”

In policy terms, inefficiency and bureaucratic red tape plagued implementation. The PLI scheme targeted 14 key sectors, offering cash incentives to attract companies to expand local production. Yet, among 750 applicants, many projects stalled due to delays in land approvals, environmental permits, and other administrative hurdles. By October 2024, only 37% of projects had been completed, with less than 8% of promised subsidies disbursed. Indian officials admitted that bureaucracy crippled execution. In terms of industrial structure, the plan suffered from imbalanced development and global competition. While India achieved partial success in pharmaceuticals and mobile assembly—which absorbed 94% of subsidies—critical industries like steel, textiles, and renewable energy remained import-dependent. Compared to China’s mature ecosystem, India lags in cost control, supply chain integration, and technological innovation.  

China’s “Invisible Moat” in Manufacturing 

In stark contrast, China’s manufacturing dominance rests on systemic strengths. Its sector accounts for 27–28% of GDP, supported by complete industrial chains and economies of scale. India, meanwhile, remains reliant on low-value-added labor-intensive assembly. Infrastructure and policy coherence further widen the gap: China’s “new infrastructure” strategy has built the world’s largest high-speed rail network, 5G base station, and ultra-high-voltage grids, with logistics costs 40% lower than India’s. By contrast, India’s erratic subsidy payouts under the PLI scheme eroded investor confidence. Digitally, China has forged a closed-loop ecosystem of “smart manufacturing + industrial internet,” with firms like Huawei and BYD achieving global synergy. India’s manufacturing digitization rate, however, languishes below 15%, with scarce homegrown tech platforms. 

Global Supply Chain Lessons
This episode offers critical insights amid supply chain restructuring. First, industrial upgrades require breaking institutional ceilings. As Indian think tanks note, the PLI failure proves “institutional flaws are deadlier than funding gaps.” China’s market-oriented reforms since 1978 created the governance framework for its manufacturing rise. Second, nations must shift from “replacement logic” to “symbiosis logic.” Despite U.S.-led “de-risking” efforts, China still contributed 31% of global manufacturing value-added in 2024 and deepened integration with ASEAN and Latin American supply chains. India risks missing out on technological spillovers if it severs ties with Chinese industrial networks. 

The collapse of India’s PLI scheme underscores how industrialization defies “shortcut thinking.” China’s manufacturing prowess stems from four decades of systemic capacity-building. As global supply chains evolve, “Made in China” has transitioned from cost advantages to technological, institutional, and ecological synergies—a model worthy of study for emerging economies.