India must reassess its approach to technology, exports, and value creation if it aspires to become a resilient global economy, said Vellayan Subbiah, Chairman of Cholamandalam Investment and Finance Co Ltd and Executive Vice-Chairman of Tube Investments of India Ltd.
Speaking at the Madras Management Association (MMA) Annual Convention 2025 on the theme ‘Foundations for Building a Resilient India’, Subbiah underscored the need for India to shift its focus from a predominantly service-based economy to a product-driven one.
“While India accounts for just 2 per cent of global goods trade and 4 per cent of global services trade out of a $32-trillion global market, China has positioned itself as a technology leader, commanding a significant share,” he said.
Key difference
Comparing global market leaders such as Apple, Nvidia and Microsoft with Indian service firms, he pointed out the stark difference in valuation. “Product-based firms dominate the market due to higher margins and intellectual property ownership, while India continues to export skilled labour at a 15-25 per cent markup and import finished products at a 70-100 per cent markup,” he explained.
Despite being a hub for global innovation, India captures minimal economic benefits. Subbiah cited the example of Microsoft and Google, which develop email services in India. However, India gains only through salaries and a small percentage of taxes, while these companies sell their products back at a premium in the Indian market.
The semiconductor sector presents a similar challenge. While India plays a crucial role in designing chips for global firms like NXP, Broadcom, Infineon, Texas Instruments, and Qualcomm, its contribution is restricted to design services, which earn a mere 10 per cent markup. In contrast, finished semiconductors — India’s second-largest import after oil — are purchased at a 75-80 per cent gross margin.
China’s focus
China’s rise as a global economic powerhouse followed a structured three-phase strategy. The first phase focused on making China the world’s factory through large-scale manufacturing, a stage where India still lags. In the second phase, China climbed the value chain by focusing on high-margin industries, increasing its share of global output from 8.4 per cent to 21.9 per cent. The third phase involved developing indigenous technology, giving China a significant edge in global markets.
The current trajectory, reliant on service exports and low-margin labour, is not sustainable for long-term resilience.
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Subbiah also asserted that the path to a resilient India does not begin with policy changes or corporate strategies — it starts at the individual level. For India to evolve into a strong, self-sufficient economy, a critical percentage of its population must recognise the need for self-improvement before organisational and national transformation. “While the West offers technological power and structured growth, India must selectively adopt these innovations while preserving and utilising its own advantages,” he added.
Earlier in the event, Brajendra Navnit, Principal Secretary – IT & Digital Services, Government of Tamil Nadu, underscored the need to rethink traditional economic teachings. He stated that global trade and economic principles are changing, and that businesses, colleges, universities, and faculties must first unlearn what they have been taught.
Navnit pointed out a critical challenge for India: managing surplus. He observed that while India excels in handling scarcity, it struggles when faced with surplus resources. He noted that India has an abundance across multiple sectors — demography, agriculture, services and manufacturing — but often fails to recognise and optimise these resources.