'Any sufficiently advanced technology is indistinguishable from magic,' Arthur C Clarke had observed. A visit to China's advanced factories can bring that metaphor home. These facilities span heavy engineering, electronics, robotics, EVs, high-speed charging and battery storage.
Robots work with precision and consistency. Some mirror human tasks so closely that the distinction begins to blur - such as a robotic hand picking up a cherry tomato from a salad bowl, which can also play a game of table tennis. These displays signal a deeper shift in how China is thinking about technology and manufacturing.
Ecosystem
In China's business ecosystem, ambition to build globally-competitive manufacturing is deep-rooted. Firms have mastered cost, scale and speed. Mega-factories dominate the landscape spreading like football fields. But these plants don't work in isolation. Entire towns grow around them, built to support suppliers, logistics, talent and housing. This focus helps to make their supply chains domestically strong, and promotes specialisation of the labour pool.
R&D
Regardless of a company's size, R&D is treated as an asset and competitive advantage, instead of an expense. Firms openly track and value innovation. Office walls are lined with patent certificates. Corporate presentations begin not with revenue slides, but with R&D spend, patent numbers and talent statistics. Many firms employ engineers and doctoral researchers drawn from top universities, some of the best in the world.
Companies are trying to achieve balance between healthy Ebitda targets and R&D spends. This reflects how deeply innovation is embedded within organisations.
Involution
China's economy is marked by very intense internal competition - 'involution'. In every segment, there are many players with their own supply chains who compete intensely, which helps Chinese firms arrive in global markets with very lean cost structures. But excess capacity in certain sectors would also mean consolidation through mergers and other measures in future.
Under China's 15th 5-Year Plan, the country aims to secure tech leadership in manufacturing and allied sectors between 2026 and 2030. Targets are clear, with greater focus on green energy, semiconductors, AI, quantum computing, biotechnology, green hydrogen and nuclear fusion.
The state's role in enabling this ecosystem has played a critical role in this transformation. China runs one of the most generous R&D tax incentive regimes in the world. As of 2026, nearly 85% of government support for business R&D flows through tax incentives.
The headline incentive is 'super deduction'. Companies can claim a 200% pre-tax deduction on eligible R&D expenses. Machine tool and semiconductor manufacturers receive an even higher 220% deduction until 2027. Eligible costs include researcher salaries, materials, prototype design, testing, depreciation and maintenance. Businesses are, indeed, leveraging and benefiting from state-sponsored support.
China's also deploying AI at scale. AI is embedded across production lines, warehouses and supply chains. Companies now operate dark warehouses and factories that run entirely on robots and humanoids. What ties all of this together is strong alignment. Central and provincial governments move in step with industry.
What Beijing plans to achieve between 2026 and 2030 will significantly shape the competitive landscape that India must navigate across manufacturing, technology, trade and geopolitical positioning. India aims to become a global manufacturing hub as supply chains diversify. To get there, it needs sharper public-private collaboration in R&D, simpler regulation and faster investment in sunrise sectors.
AI, electronics, semiconductors, biotech and green technology must move from ambition to execution. Achieving scale, with much greater focus on R&D and its fusion with every part of the manufacturing process, adoption of technology, and consistently serving global markets with high quality standards is what will differentiate India going forward.
Innovation can be accelerated and embedded across business models, supported by greater access to tech - whether through partnerships, JVs or in- house R&D. So, leveraging the ₹1 lakh cr RDI Fund under the Anusandhan Foundation will be instrumental to catalysing research-led growth.
GoI and India Inc need to move together. Policy must translate into results on the ground. The race for industrial and technology leadership is already underway. The choices India makes now will define its place in it.
Robots work with precision and consistency. Some mirror human tasks so closely that the distinction begins to blur - such as a robotic hand picking up a cherry tomato from a salad bowl, which can also play a game of table tennis. These displays signal a deeper shift in how China is thinking about technology and manufacturing.
Ecosystem
In China's business ecosystem, ambition to build globally-competitive manufacturing is deep-rooted. Firms have mastered cost, scale and speed. Mega-factories dominate the landscape spreading like football fields. But these plants don't work in isolation. Entire towns grow around them, built to support suppliers, logistics, talent and housing. This focus helps to make their supply chains domestically strong, and promotes specialisation of the labour pool.
R&D
Regardless of a company's size, R&D is treated as an asset and competitive advantage, instead of an expense. Firms openly track and value innovation. Office walls are lined with patent certificates. Corporate presentations begin not with revenue slides, but with R&D spend, patent numbers and talent statistics. Many firms employ engineers and doctoral researchers drawn from top universities, some of the best in the world.
Companies are trying to achieve balance between healthy Ebitda targets and R&D spends. This reflects how deeply innovation is embedded within organisations.
Involution
China's economy is marked by very intense internal competition - 'involution'. In every segment, there are many players with their own supply chains who compete intensely, which helps Chinese firms arrive in global markets with very lean cost structures. But excess capacity in certain sectors would also mean consolidation through mergers and other measures in future.
Under China's 15th 5-Year Plan, the country aims to secure tech leadership in manufacturing and allied sectors between 2026 and 2030. Targets are clear, with greater focus on green energy, semiconductors, AI, quantum computing, biotechnology, green hydrogen and nuclear fusion.
The state's role in enabling this ecosystem has played a critical role in this transformation. China runs one of the most generous R&D tax incentive regimes in the world. As of 2026, nearly 85% of government support for business R&D flows through tax incentives.
The headline incentive is 'super deduction'. Companies can claim a 200% pre-tax deduction on eligible R&D expenses. Machine tool and semiconductor manufacturers receive an even higher 220% deduction until 2027. Eligible costs include researcher salaries, materials, prototype design, testing, depreciation and maintenance. Businesses are, indeed, leveraging and benefiting from state-sponsored support.
China's also deploying AI at scale. AI is embedded across production lines, warehouses and supply chains. Companies now operate dark warehouses and factories that run entirely on robots and humanoids. What ties all of this together is strong alignment. Central and provincial governments move in step with industry.
What Beijing plans to achieve between 2026 and 2030 will significantly shape the competitive landscape that India must navigate across manufacturing, technology, trade and geopolitical positioning. India aims to become a global manufacturing hub as supply chains diversify. To get there, it needs sharper public-private collaboration in R&D, simpler regulation and faster investment in sunrise sectors.
AI, electronics, semiconductors, biotech and green technology must move from ambition to execution. Achieving scale, with much greater focus on R&D and its fusion with every part of the manufacturing process, adoption of technology, and consistently serving global markets with high quality standards is what will differentiate India going forward.
Innovation can be accelerated and embedded across business models, supported by greater access to tech - whether through partnerships, JVs or in- house R&D. So, leveraging the ₹1 lakh cr RDI Fund under the Anusandhan Foundation will be instrumental to catalysing research-led growth.
GoI and India Inc need to move together. Policy must translate into results on the ground. The race for industrial and technology leadership is already underway. The choices India makes now will define its place in it.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
Rajiv Memani
President, CII