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Introduction

Three decades after the 1991 reforms, rising geopolitical fragmentation, supply-chain disruptions and India’s widening dependence on Chinese industrial imports have reignited debate on whether openness alone is sufficient or deeper domestic industrial capabilities are now imperative.

India Should Build Domestic Industrial Depth

• Strategic Resilience: Excessive dependence on foreign suppliers exposes critical sectors to geopolitical and supply-chain shocks.
  Eg: China supplies over 30% of India’s industrial goods requirements, including electronics, machinery and chemicals.
• Trade Correction: Strong domestic manufacturing can reduce import dependence and narrow persistent trade deficits.
  Eg: India’s trade deficit with China widened to about $112 billion in FY26 despite rising exports.
• Value Addition: Domestic production of intermediate goods increases value capture within India.
  Eg: Electronics and pharmaceutical exports often rely on imported Chinese components and inputs.
• Industrial Security: Local capabilities in critical sectors strengthen economic sovereignty.
  Eg: The Economic Survey highlighted China’s dominance in critical minerals and manufacturing supply chains.
• Employment Growth: Manufacturing expansion creates large-scale productive jobs beyond agriculture and services.
  Eg: Production-Linked Incentive (PLI) schemes aim to boost manufacturing investments and employment generation.

India Should Not Abandon the 1991 Consensus

• Export Imperative: Sustained growth requires integration with global markets rather than inward-looking protectionism.
  Eg: The 1991 reforms transformed India into a major exporter of services and globally competitive industries.
• Supply Chains: Modern manufacturing depends on global value chains and imported intermediate inputs.
• Cost Efficiency: Access to global inputs lowers production costs and improves competitiveness.
  Eg: Industry bodies have sought easier access to Chinese raw materials used in exports. 
• Investment Flows: Open trade regimes attract foreign investment, technology and innovation.
• Balanced Approach: Complete economic decoupling may harm industries dependent on imported inputs.

Way Forward

• Smart Industrialism: Build domestic capacity in strategic sectors without resorting to blanket protectionism.
  Eg: PLI schemes target electronics, semiconductors, batteries and solar manufacturing.
• Supply Diversification: Reduce overdependence on any single country for critical inputs.
• Technology Upgrading: Focus on innovation, R&D and advanced manufacturing capabilities.
  Eg: India’s semiconductor and electronics missions aim to strengthen technological depth.
• Competitive Exports: Promote manufacturing linked to global markets rather than import-substitution alone.
• Strategic Openness: Combine openness to trade with targeted industrial policy in critical sectors.

Conclusion

India’s future lies in becoming a globally integrated yet strategically resilient economy, leveraging open markets, advanced technology and strong domestic manufacturing capabilities. It aims to emerge as a trusted supply-chain, innovation and industrial powerhouse by 2047.

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