Over the last decade, the Indian pharmaceutical and automobile industries have undergone remarkable growth, while building up substantial technological capabilities. The Indian pharmaceutical industry has emerged as the main global supplier of cheap generic drugs, while the Indian automobile industry is home to the world’s cheapest car, the Tata Nano. This chapter tracks the evolution of technological capabilities in these two sectors. It demonstrates the impact of policy shifts on capability development and points out the key role of firm-level factors such as managerial vision and linkages with external knowledge resources. Significantly, the chapter shows that transformation of capabilities requires a deliberate effort by firms to invest in different learning mechanisms.
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