Brief Context
Context Recent geopolitical disruptions, particularly in West Asia, have highlighted India’s vulnerability to global supply chain shocks and the urgent need for long-term resilience. Why Supply Chain Resilience is Critical for India? Energy Dependence: India imports nearly 85% of its crude oil and more than 50% of its natural gas requirements.
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Syllabus: GS3/ Economy
Context
- Recent geopolitical disruptions, particularly in West Asia, have highlighted India’s vulnerability to global supply chain shocks and the urgent need for long-term resilience.
Why Supply Chain Resilience is Critical for India?
- Energy Dependence: India imports nearly 85% of its crude oil and more than 50% of its natural gas requirements.
- Volatility in global energy markets directly impacts inflation, fiscal stability, and economic growth.
- Food and Fertilizer Imports: India remains heavily dependent on imports of edible oils and pulses, exposing domestic markets to global price fluctuations.
- The fertilizer sector relies significantly on imported phosphatic and potassic inputs, affecting agricultural productivity and food security.
- Pharmaceuticals and APIs: India imports nearly 65–70% of its Active Pharmaceutical Ingredients (APIs), mainly from China.
- This creates vulnerabilities in the healthcare sector despite India’s strength in generic drug manufacturing.
- Critical Minerals and Rare Earths: India depends on imports for lithium, cobalt, copper, and rare earth elements essential for electronics, renewable energy, and electric mobility.
- The global concentration of these resources increases strategic and supply risks.
Initiatives to Secure India’s Supply Chains
- The Supply Chain Resilience Initiative (SCRI) is a trilateral partnership launched in 2021 by India, Japan, and Australia to reduce reliance on single-source suppliers and enhance economic stability in the Indo-Pacific region.
- It focuses on diversifying sourcing, utilizing digital technology, and sharing best practices to combat disruptions.
- Energy Security Initiatives:
- The National Green Hydrogen Mission aims to position India as a global hub for green hydrogen production and export.
- Strategic Petroleum Reserves (SPR): India has established strategic petroleum reserves at key locations to cushion against global supply disruptions.
- Renewable Energy Expansion: India’s total non-fossil fuel capacity reached 266.78 GW by 2025-end.
- Food and Fertilizer Security Initiatives:
- The National Food Security Mission aims to increase the production of pulses, oilseeds, and cereals.
- The National Mission on Edible Oils – Oil Palm (NMEO-OP), launched in 2021 aims to make India self-reliant in palm oil.
- Initiatives to promote nano-fertilizers and bio-fertilizers reduce dependence on imported chemicals.
- India has joined the Pax Silica Initiative to strengthen supply chain resilience in critical silicon-based technologies such as semiconductors and solar components.
- The India Semiconductor Mission (ISM) is a 76,000 crore initiative to establish a robust domestic semiconductor and display manufacturing ecosystem.
- Production Linked Incentive (PLI) Scheme covers sectors such as electronics, semiconductors, telecom, automobiles, and advanced chemistry cells.
- It encourages domestic manufacturing and integration into global value chains.
Way Ahead
- Strategic Diversification of Imports: India must diversify sourcing across geographies such as Africa, Latin America, and Southeast Asia to reduce overdependence on specific regions.
- Long-term supply contracts and strategic partnerships should be prioritised for critical commodities.
- Adoption of AI, IoT, and blockchain should be scaled up for real-time supply chain monitoring and predictive analytics.
- Recycling of critical materials such as lithium-ion batteries and rare earths should be scaled up.
Source: TH