India’s Industrial Future Cannot Be Rented

India’s battery ambitions have run into a hard reality: building a gigafactory is easier than owning the technology and the inputs that make it work.

The recent LFP episode is a warning worth taking seriously. JSW’s proposed ₹400 billion, 50 GWh battery-cell project in Odisha has reportedly been put on hold as it looks for the technology to manufacture LFP cells. In another example, Anant Ambani’s recent remark in his company’s AGM that access to battery technology is being “weaponised” adds another layer to the geopolitical ecosystem.

With Indian businesses willing and increasingly able to put billions of dollars behind industrial capacity, the critical technology sits elsewhere, our factories can become large assets built around someone else’s strategic leverage.

Weaponising whatever one controls, when it becomes a lever of competitiveness or commercial leverage, is hardly a new strategy. Some of our large companies have played this game for years, using scale, capital, distribution, relationships and access to build formidable commercial moats. There is nothing inherently wrong with that.

If our largest industrial houses can use their scale to secure scarce resources, partnerships and policy attention over the decades, why has the same scale not produced greater ownership of the technologies, machinery and intellectual property on which strategic industries depend? Perhaps the deeper failure is that we don’t have a decisive industrial policy for frontier technologies.

There is nothing wrong with capitalism, profit or financial markets. But financialisation cannot outrun industrialisation. India can celebrate deeper capital markets, rising valuations and wider participation, yet the uncomfortable question remains: where is our moat?

Financial capital moves fast. Industrial capability takes years of factories, engineering, skills, technology and supply chains to compound. If we become better at financing and revaluing assets than building the capabilities beneath them, we may look financially sophisticated while remaining strategically dependent. Industrialisation builds sovereignty. Financialisation merely prices it. The test of Indian capitalism is whether our capital builds capabilities that make India harder to hold to ransom.

Price of borrowed capability

For decades, India became exceptionally good at assembling, scaling and deploying. We built large markets and increasingly sophisticated companies, but technological ownership did not keep pace. We may own the factory, employ the people and sell the product while critical technology, machinery, process know-how or intellectual property remains imported.

That asymmetry becomes dangerous when technology itself becomes a strategic instrument. A supplier can influence not merely what India buys, but what it can manufacture, when it can manufacture it and at what cost. Export restrictions, licensing conditions, supply disruptions or a deterioration in geopolitical relations can turn a commercial dependency into an industrial choke point. The country may have the capital and the factory, yet lack the freedom to decide what happens inside it.

This is the harder edge of globalisation. Supply chains create efficiency when politics is stable. When geopolitics hardens, the same dependencies can become leverage. A technology restriction can become a production delay. A licensing decision can become a strategic constraint. A critical component can become a bargaining chip (pun intended).

That is a dangerous position in a world where technology, trade and geopolitics are converging. China’s dominance of LFP is not simply a story of superior manufacturing scale. It is the outcome of years of investment in chemistry, patents, equipment, engineering, suppliers and manufacturing experience. When such a capability is concentrated in one country, access to it can become a strategic variable. Export restrictions, licensing decisions or a geopolitical rupture can affect what another country is able to manufacture, and at what price and pace.

India has faced technology dependence before. There is nothing unusual about acquiring know-how from abroad. Japan, South Korea and China themselves built industrial strength by absorbing external technology and then improving upon it. The critical question is whether India is doing the second part, and if we can use our show of nationalism towards becoming self reliant.

What China did with political will

China’s advantage did not appear overnight. It accumulated manufacturing knowledge over decades through scale, fierce domestic competition, infrastructure, supplier clusters, sustained investment and relentless learning-by-doing. India can absorb its central lesson: industrial capability compounds when a country repeatedly makes, improves and owns what it makes.

China, however, did not arrive at this position by accident or enjoy a free ride. It made industrialisation a strategic national project and pursued it through geopolitical turbulence, trade frictions, technology restrictions and periods of political ostracisation by major global powers and corporations. Its model was hardly cost-free: it involved enormous state intervention, excess capacity, misallocation and other distortions. But whatever one thinks of China’s authoritarian political system, the lesson is difficult to dismiss: political will was converted into industrial work. Capital was directed, infrastructure built, research funded, skills cultivated, domestic demand mobilised and, critically, foreign technology was absorbed and progressively improved. China stayed with the bet for many years. Factories became supply chains; supply chains became expertise; expertise became intellectual property and technological leverage. That is the difference between having an industrial policy and merely having industrial policy announcements.

India’s industrial history followed a different path. The Licence Raj rewarded permissions, capacity controls, protected markets and proximity to the State. Liberalisation dismantled much of that architecture and unleashed entrepreneurship and competition. Yet one is tempted to ask whether the Licence Raj disappeared completely, or whether the instinct for preferential treatment simply acquired a more contemporary vocabulary.

That question matters because industrial policy can easily become industrial privilege when scale, access and policy attention repeatedly converge around the same few entities.

Did we forget mercantilism?

India has a mercantile history, but it also has a manufacturing history that we should be less casual about forgetting. We made steel, textiles, ships and other goods long before the modern factory arrived. Indian textiles travelled across the world, Indian steel was prized for its quality, and Indian shipbuilders served a flourishing maritime trade.

Then the Industrial Revolution changed the terms of the game, and India lost more than markets. Mechanised British production overwhelmed traditional Indian manufacturing, while colonial trade policy increasingly positioned India as a supplier of raw materials and a consumer of manufactured goods. A country with a formidable manufacturing tradition was gradually deindustrialised. That rupture matters because industrial capability is cumulative. When generations stop making, engineering and improving, the knowledge disappears with them.

India rebuilt an industrial base after Independence, but the Licence Raj produced its own distortions. Protection, capacity controls, permissions and proximity to government often mattered more than relentless technological competition. Liberalisation released enormous entrepreneurial energy and made Indian business far more competitive. Yet it may also have left us with an uncomfortable cultural inheritance: we became very good merchants of opportunity. We learnt to identify a market, secure capital, acquire technology, scale quickly and capture demand. The harder industrial habit is to spend years learning something nobody can yet sell you.

That distinction is now becoming strategically expensive.

A mercantile instinct asks, “What can we buy, assemble, distribute or scale?”

An industrial power asks, “What must we learn to make, improve and eventually own?”

China made that transition deliberately and at enormous scale. India has yet to do so consistently. The issue is not whether we can rediscover some romantic manufacturing past. We cannot. It is whether we can recover the harder instinct behind it: the willingness to make, experiment, fail, learn and build technological depth before the returns are obvious. We have spent centuries becoming good at trading with the world. The next few decades require something more demanding: building capabilities the world cannot switch off at will.

Has scale shaped a “few-polies” economy?

This is where I use the term “few-polies”. We understand monopoly, duopoly and oligopoly. A few-polies economy is one in which a small number of large entities increasingly become the principal gateways to capital, technology, talent and industrial capacity.

There are sound reasons why large companies matter. Semiconductor fabs, battery plants, ports, energy systems and other strategic projects require enormous capital, long gestation periods, sophisticated execution and the ability to absorb risk. India needs companies with the balance sheets and appetite to make such bets.

But scale can become self-reinforcing. Large balance sheets attract large projects. Large projects create greater scale. Scale improves access to capital, talent and technology partnerships. The cycle strengthens incumbents.

The concern is therefore if their scale is producing technological depth around them.

The harder question for Indian industrial capital

India’s large industrial houses have demonstrated that they can deploy enormous capital. The harder question is where that capital has gone. Too much of India’s private industrial investment has been directed towards scale, assets and market capture, while the patient, uncertain and expensive work of R&D, process engineering and proprietary technology has received far less attention.

A large balance sheet can buy a factory or acquire technology. It cannot instantly buy the accumulated knowledge required to invent the next generation of technology.

Some of our industrial houses risk behaving like a novice swimmer who, after securing membership of the finest club in town, begins imagining himself the next Michael Phelps. The membership provides access, the equipment provides confidence and the scale provides visibility. None of it substitutes for the hunger to learn, the humility to train or the willingness to experiment. More worrying still, there may be an exceptional swimmer in the next lane, younger, hungrier and learning faster, while the incumbent is too comfortable to notice.

That is the FOMO Indian industry needs. Not fear of missing the next government incentive, large asset or fashionable technology, but fear of being outlearned. If our industrial houses began competing on how quickly they learn, experiment, develop proprietary technology and build capabilities others cannot easily replicate, India’s industrial story would look very different.

The danger is not that we lack access to the best swimming club. It is that we may be mistaking membership for mastery.

In emerging technologies, global relevance requires years of R&D, engineering experimentation and patient bets whose commercial payoff may remain uncertain for a long time.

If Indian private capital wants the privileges and influence that come with industrial scale, it also has to accept the responsibility of building capabilities that serve the country’s strategic interests.

Building the industrial middle

A national champion should therefore become an anchor for an ecosystem, not a substitute for one. Its growth should pull sophisticated suppliers, engineering firms, technology companies and research institutions upwards. Otherwise, India risks creating impressive islands of scale surrounded by a thin industrial middle.

That middle matters enormously. MSMEs cannot remain perpetually dependent subcontractors, operating on thin margins and waiting for large customers to pay. Delayed payments squeeze working capital precisely when smaller firms need to invest in machinery, engineers, quality systems, R&D and product development.

An industrial economy with a handful of giants and millions of fragile small firms can produce impressive aggregate numbers while remaining structurally shallow. The industrial middle is where specialised engineering, supplier capability, incremental innovation and manufacturing resilience are built.

From STEM credentials to industrial capability

India has another paradox. We have no shortage of engineers, scientists and technology professionals. Yet a country can produce millions of STEM graduates without producing enough people who know how to take an idea from a laboratory to a factory floor.

Can an engineer troubleshoot a production process, redesign a component or understand why a system fails? Can a researcher translate laboratory work into a commercially viable product? Can a technician diagnose a machine rather than simply operate it? Can students spend enough time with real industrial systems, materials, equipment and code to understand how things are actually made? 

India needs a 4D industrial ecosystem: discovery, design, development and deployment.

Discovery creates knowledge.

Design converts knowledge into products and processes.

Development takes them through engineering, testing and manufacturing.

Deployment creates customers, procurement and real-world feedback. The weakness is often at the hand-offs.

Our universities, laboratories, companies, financiers and students need to become part of one learning system, where problems travel in both directions between the laboratory and the factory. Deep industrial capability comes from repeated cycles of experimentation, failure, redesign and scale. No subsidy can manufacture that learning overnight.

Capital has to learn to wait

Finance has a role here too. India has become exceptionally good at mobilising capital and scaling businesses. Industrial learning works on a different clock. A supplier may need years to build specialised machinery and quality systems. A deep-tech company may burn capital through several failed prototypes. A research programme may produce little commercial value for years before creating something consequential.

If capital is patient enough to finance the finished factory but impatient with the journey towards technological capability, India will continue to finance capacity faster than it accumulates knowledge.

Nor can a protected domestic market manufacture global competitiveness. Protection can provide breathing space and help an industry reach scale, but ultimately technology, productivity, quality and innovation determine whether an Indian company can compete when the red carpet ends and the world market opens.

China + 1 is an opportunity, not a strategy

This distinction becomes critical as global supply chains shift. China + 1 gives India an extraordinary opening. Companies seeking diversified manufacturing footprints have a large Indian market, a substantial workforce and improving infrastructure to work with.

But India must decide what it wants to capture from this opportunity.

If India becomes another assembly location, it will gain jobs and exports. If it develops the technology, components, engineering and supplier networks around those factories, it gains something far more valuable: bargaining power.

The same test will apply to AI, semiconductors, quantum computing, advanced materials, robotics and energy storage. India’s software services strengths are real. But the AI stack extends into chips, compute, energy, data centres, specialised hardware, foundational research, intellectual property and specialised talent. India could become one of the world’s largest users of AI while remaining dependent on others for the capabilities that determine what AI can actually do.

That would be digital adoption without technological sovereignty.

As the world becomes more explicitly mercantilist, governments are protecting strategic technologies, subsidising domestic manufacturing, restricting exports and reorganising supply chains around geopolitical trust. In such a world, technological dependence can constrain economic choices far beyond the technology sector itself.

What an industrial policy must actually deliver

Industrial policy therefore needs to become more strategic and less transactional. India cannot make everything, nor should it try. But where technology is likely to determine economic power or strategic freedom, there must be a question of national urgency: which capabilities must India be able to understand, adapt, improve and eventually own?

That requires working backwards from the capability India wants a decade from now. Which technologies could become chokepoints? Which components and processes will matter? What research must begin today? Which skills and suppliers will be scarce? Where should India partner with the world, and where would dependence on one external technology source create an unacceptable vulnerability?

Self-reliance should therefore not mean isolation. It should mean freedom of action.

India does not need to produce everything domestically. It needs to ensure that, in strategically important areas, dependence does not become helplessness.

The LFP episode makes that distinction tangible. Dependence remains invisible while supply chains function. It becomes visible when a technology partner says no, export controls change the economics, geopolitics disrupts a relationship or a critical supplier alters the terms of access.

The strategic moat India now needs

India has demonstrated extraordinary capacity to create scale. The next phase of industrialisation must create depth beneath that scale: research that reaches factories, STEM education that produces practitioners, MSMEs that climb the value chain, patient capital that can tolerate industrial learning, and national champions that deepen rather than merely dominate ecosystems.

The world is entering an age of geopolitical supremacy, strategic supply chains and rising protectionism. For India, the disruption is therefore deeper than industrial thinking. The real question is what strategic moat we are prepared to build before the next shock exposes its absence.

That requires an uncomfortable national audit. What exactly is missing from India’s industrial architecture? Do we even have an industrial policy worthy of the paper it is printed on, or have investment announcements, policy slogans, meme-fests and development narratives become substitutes for hard industrial strategy?

India’s national and domestic private capital must now bet on the ecosystem, not merely on the next factory. That means financing research, technology, skills, supplier networks, intellectual property and patient industrial learning. A developed-nation narrative is worthless if the critical technologies powering that nation remain controlled elsewhere.

And this cannot become another exercise in concentrating opportunity among the few-polies. Nation-building means creating industrial capability that lifts productivity, incomes and quality of life across the country. The 21st century will disrupt industries faster and more brutally than the last. Hope cannot be an industrial strategy. Slogans cannot be a strategic moat. And capital cannot keep congratulating itself for building assets while renting the capability that makes them valuable or vulnerable.

India needs an industrial policy that is worthy of the country it seeks to build: one that builds technological sovereignty, reduces strategic volatility and creates broad-based industrial power. The choice is now stark: build capability, or remain dependent on those who do.

The real test of Make in India is therefore not how many factories India can build.

It is whether India can own enough of the technology inside them to retain the freedom to build, improve and compete when the world becomes less willing to share.

That is when manufacturing becomes industrial power, and industrial power becomes economic sovereignty.

This is not to demean India’s industrial houses. They are, after all, for-profit entities and have every right to pursue returns. But profitability cannot become a permanent alibi for remaining traders of opportunity, or worse, modern-day rent seekers who turn political access and proximity into a business moat for partnerships and commercial outcomes. Nor should the political system be satisfied with investment announcements, ribbon-cutting and assembly lines when the deeper value chain remains elsewhere. A nation cannot become industrially sovereign if its largest businesses are content to capture the rents of access rather than invest in the risks of capability. And if anyone believes that citizen memory is short enough to make this distinction irrelevant, there is an older truth worth remembering: in the long run, all of us will be dead. The question is what capability we leave behind.

There is nothing wrong with Indian industrial houses pursuing global scale, market power and very large profits. India needs precisely that ambition. But the bargain should be bigger than the balance sheet. If an industrial house wants to become globally competitive in batteries, semiconductors, defence, energy, AI or advanced manufacturing, its ambition should extend beyond owning the final factory. It should build the engineering firms, component suppliers, specialised talent, research partnerships, process know-how and intellectual property that make the ecosystem harder to displace. That is how private profit can create public economic value. The best conglomerates should compete not merely to become larger companies, but to build deeper Indian capabilities around themselves. Their commercial moat should increasingly come from what India can make, invent and improve because of their investment. That would turn the pursuit of profit into an engine of productivity, skilled employment, domestic value capture and lower strategic vulnerability. The objective is not to ask business to sacrifice returns for the nation. It is to make the smartest route to superior returns also the route to greater industrial capability for India.

We need more Indian companies ambitious enough to dominate globally, but whose success leaves behind an India that is harder for the world to hold to ransom. India needs more companies that become global powers by making India more powerful.