Can India match China in manufacturing? What it will take

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Can India match China in manufacturing? What it will take

Sanjeev Krishan, Chairperson of PwC India, said that India’s industrial productivity is nearly half that of China’s, noting that the gap extends beyond manufacturing to the services sector as well.

Published by Somesh | January 20, 2026

India still has a long way to go before it can match China’s manufacturing scale and productivity, according to Sanjeev Krishan, Chairperson of PwC India. Speaking to Sidharth Zarabi at the World Economic Forum’s annual meeting in Davos, Krishan said the gap between the two economies is wide and cannot be closed quickly.

He noted that India’s industrial productivity is nearly half of China’s, with the shortfall visible not only in manufacturing but also in services. “On both scale and productivity, we have kilometres to cover, not just a few metres,” Krishan said, underscoring the structural nature of the challenge.

A key reason for the gap, he explained, is India’s relatively low level of automation. Krishan stressed that productivity gains will depend heavily on greater adoption of automation and artificial intelligence on the factory floor. He said AI tools are already available for demand forecasting, preventive maintenance and production planning, and should be deployed more effectively. According to him, AI is no longer a future concept but an essential part of modern industrial operations.

Krishan also cautioned that government subsidies alone will not deliver sustainable manufacturing growth. While scale and policy support are important, he said capital incentives must be backed by productivity improvements. Logistics costs have improved, and power and labour costs are broadly competitive, but efficiency remains a concern.

He emphasised that higher productivity does not mean eliminating workers, but making factories more efficient through better technology and processes. In addition, Krishan highlighted the importance of developing stronger industrial clusters, noting that dispersed supply chains increase costs and reduce the effectiveness of technologies such as AI.

Krishan’s comments coincided with the release of PwC’s 2026 Global CEO Survey at Davos, which points to mounting pressure on business leaders worldwide. The survey shows that just 30% of CEOs are confident about revenue growth in 2026, the lowest level in five years. While many companies are investing in AI, returns remain uneven, with only a small share reporting gains in both costs and revenues.

Despite global uncertainties, interest in India as an investment destination is rising, with the country climbing higher in CEOs’ preferred markets. Together, the survey findings and Krishan’s remarks underline that India’s manufacturing ambitions will hinge on productivity, technology adoption and smarter industrial planning rather than scale and subsidies alone.