China’s local governments are playing an important role in the country’s startup ecosystem. India, despite its own startup momentum, has failed to replicate this success at the local government level. China’s economic federalism provides them with unique economic incentives to help propel China’s innovation economy. India’s approach to local economic development differs along three axes. India must significantly enhance the fiscal autonomy of urban bodies. Pune’s city reform would enable cities to issue municipal bonds for infrastructure and startup grant funding based on size of city. It would also enable city reform to guarantee a specific percentage of state taxes to municipalities, based on annual city size. This would enable city reforms to enable city budgets to be allocated specifically for infrastructure, startups, and Pune’s Pune Pune City Reform would enable the city to issue specific city bonds for innovation and startup grants. It will also enable local bodies to enhance fiscal autonomy for Urban Bodies, and grant grants to cities based on their annual size. It is a virtuous cycle. This is a way to encourage competition between various local jurisdictions, further driving local business development. This also dictates the delegation of necessary authority to local levels of government to experiment with economic policies. It’s this experimentation that helps competition to thrive at the municipal level.