With India and China aiming to build more sophisticated economies, both countries are giving priority to higher education to produce highly educated personnel and high quality research. This paper makes a comparative assessment of the development of the higher education system in the two countries, the challenges being faced and what the future holds for both countries. China has made considerable progress with its top institutions and India has illustrated with the Indian Institutes of Technology and a few other institutions that high standards are possible. Yet, the problem of quality, and the related issues of whether the graduates are qualified for the labour market, remain. It seems that China and India will, at the least, not see significant reform in the overall academic quality of higher education. An effective quality-assurance system can help to ensure standards, but neither country has such a system in place currently capable of overall supervision. The systems will probably become more stratified, with a small number of research universities at the top and very large numbers of fairly unselective colleges and universities at the bottom.