Business environment of any economy states its potential to attract the foreign direct investment (FDI). FDI is considered to be the tool for putting the economy on a trajectory of higher growth. The paper attempts to review the business environments of the two neighbouring economies viz., India and China. It begins with describing and explaining the economic performance of India and China. The comparison between the macro economic variables are presented to initiate the discussion and for better understanding of the current situation. It also describes the sources of growth of each economy and the various factors which strengthens the business environment and thereby plays a major role in attaining and sustaining higher growth rates. The paper further explains the conduciveness on business environments based on various global reports. Further, the reasons for advancement of China are explained with the help of case study of special economic zones. It concludes with the major differences between Indian and Chinese economy. It also states the lessons which India can learn from China.