Paper: GS – III, Subject: Economy, Topic: Infrastructure: Energy, Manufacturing, Issue: Securing India’s Supply Chains.
Context:
India’s manufacturing ecosystem is deeply integrated with global supply chains. Recent geopolitical disruptions, especially in West Asia, have exposed vulnerabilities due to high import dependence. The issue highlights the need for long-term supply chain resilience and reduced external dependence.
Key Takeaways:
Background:
- India relies heavily on imports of raw materials and intermediates across sectors such as energy, electronics, fertilisers and chemicals.
- Globalisation has improved efficiency but increased exposure to external shocks.
- Supply disruptions can quickly transmit into inflation, production losses and economic slowdown.
Present Issue and Content:
Energy vulnerability:
- India imports about 85 percent of crude oil and over 50 percent of gas.
- Price shocks increase production costs, inflation and reduce growth.
- There is a need for renewable expansion, domestic exploration and strategic reserves.
Food and agriculture risks:
- India depends on imports of edible oils, pulses and fertilisers.
- Supply disruptions directly affect inflation and rural livelihoods.
- Measures needed include crop diversification, domestic production and buffer stocks.
Manufacturing dependence:
- India imports critical inputs such as APIs, semiconductors and industrial intermediates.
- Nearly 65 to 70 percent of pharma intermediates come from China.
- Limited domestic capability in high-end machinery constrains competitiveness.
Need for diversification:
- Critical minerals like lithium, cobalt and rare earths are globally concentrated.
- India must diversify supply sources and build domestic manufacturing ecosystems.
- Long-term partnerships and alternative technologies are essential.
Structural reforms:
- Focus should shift from final assembly to strengthening upstream industries.
- Encouraging innovation, alternative materials and efficient production can reduce import intensity.
- An integrated approach involving government, industry and global partners is required.
Conclusion: Supply chain resilience requires diversification, domestic capacity building and strategic planning. A forward-looking and integrated strategy is essential to reduce vulnerability and ensure economic stability.
Source: (The Hindu)
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