Chinese-style, big-ticket projects are part of Gujarat's formula, including refineries and ports, but so are networks of smaller firms and foreign companies which have now achieved critical mass in industries such as cars and pharmaceuticals.

ECONOMIST: Gujarat's economy

In one example, the Finance Ministry and Chinese refiners are deadlocked in negotiations over subsidies to help offset the higher costs of upgrading and operating refineries that produce cleaner diesel fuel, according to Gong Huiming, transportation director at the Energy Foundation, a nonprofit that focuses on U.S.-China energy issues.

WSJ: China's Pollution Fight Faces Resistance