For three decades, global supply chains were built on a simple premise: efficiency above everything else. Production clustered where costs were lowest, logistics fastest and scale largest. The shocks of the past five years have exposed the limits of that model.
Covid-19 revealed the fragility of concentrated supply chains. The Russia-Ukraine war triggered commodity spikes and energy disruptions, while recent Middle East tensions have unsettled trade routes, energy markets and logistics corridors. Together, they have exposed a fundamental weakness in globalisation’s architecture: efficiency without resilience.
The lesson for governments and corporations is clear. Supply chains are no longer just commercial arrangements; they are strategic assets. Countries are increasingly focused on mitigating supply-chain vulnerabilities and reducing excessive dependence on any single geography. Export controls, sanctions and dominance over critical inputs have turned supply chains into geopolitical tools. China’s near monopoly in critical minerals processing and earlier restrictions on active pharmaceutical ingredients (APIs) illustrate how supply dependencies can become leverage.
For multinational firms, the conclusion is unavoidable: concentration risk is the biggest vulnerability in global production networks. And in that search for diversified supply chains, India is emerging as one of the most credible alternatives.
The geopolitical trigger
Globalisation is not ending, it is fragmenting. The Middle East conflict has renewed fears about disruptions across critical trade corridors. With the Strait of Hormuz effectively halted and Red Sea transits suspended, around 25 per cent of global seaborne oil and 20 per cent of global LNG are at risk.
IMF estimates trade fragmentation could slash global GDP by 7 per cent, equivalent to the combined output of France and Germany. Businesses are therefore pre-emptively redesigning their manufacturing footprint to reduce geopolitical exposure.
This is precisely the window India has been waiting for. India’s supply chain proposition rests on four structural advantages. First, a large domestic market that allows manufacturers to achieve scale before exporting. Second, a young workforce at a time when many Asian economies are ageing. Third, democratic institutions and legal predictability that reduce political risk for investors. And fourth, an expanding network of trade agreements that can provide preferential access to major markets.
The first big breakthrough
Nowhere is India’s supply-chain opportunity more visible than in electronics manufacturing. A decade ago, India was a major importer of mobile phones and components with only two mobile manufacturing units; today, it has over 300. Mobile phone production value has surged from ₹189 billion in 2014-15 to ₹5.5 trillion in 2024-25 (MeitY). Export growth is the new engine, with smartphone exports doubling to $30 billion in FY 2024-25. Global giants like Apple and Samsung are increasingly moving assembly, components, and design to Indian hubs (India Cellular and Electronics Association).
This transformation is not accidental. It reflects a combination of geopolitical shifts and deliberate industrial policy. As multinational electronics firms reassess their heavy dependence on Chinese manufacturing hubs, India is emerging as a credible alternative for final assembly, components and increasingly, design. But electronics is only the first chapter.
The PLI catalyst
A key driver of India’s manufacturing momentum has been the government’s Production Linked Incentive (PLI) scheme. Covering sectors from electronics and pharmaceuticals to solar modules and auto components, the programme links incentives directly to incremental production to rapidly scale manufacturing and integrate India into global value chains.
The results are becoming visible. PLI schemes across 14 sectors have moved from commitment to large-scale execution. As of early 2026, the initiative has generated over ₹20.4 trillion in cumulative production and sales, far exceeding the initial projection of ₹6 trillion (NITI Aayog; Economic Survey 2025–26).
The export multiplier
Industrial policy alone is not enough. Manufacturing ecosystems require access to export markets, and India’s evolving free trade agreement (FTA) strategy is becoming critical.
Recent agreements with Australia, the UAE, the UK and the EU are expanding preferential access for Indian exporters, while negotiations with the US are progressing. Together, these could significantly strengthen competitiveness in textiles, engineering goods, chemicals and electronics.
Combined with supply chain diversification, FTAs can shift India from a consumption-led market to an export manufacturing hub. Logistics efficiency is also improving. Costs, historically at 14-15 per cent of GDP, are gradually declining as freight corridors, modernised ports and multimodal networks expand. The National Logistics Policy and PM Gati Shakti aim to integrate infrastructure planning and bring costs closer to global benchmarks.
Ironically, geopolitical instability in the Middle East may further accelerate India’s manufacturing opportunity. Companies are reassessing supply chain geography in three ways:
Geopolitical neutrality matters more than ever. India’s long-standing strategic autonomy allows it to maintain working relationships across competing blocs.
Large domestic markets are becoming supply chain anchors. With a consumer base of more than 1.4 billion people, India offers scale that few other countries can match.
Resilient manufacturing ecosystems require trusted partners. Democracies with stable institutions and predictable policy frameworks are increasingly attractive production locations.
In that sense, India’s macroeconomic stability and strategic positioning are reinforcing its supply chain appeal.
Scaling the ecosystem
Yet opportunity alone does not guarantee success. Manufacturing competitiveness ultimately depends on ecosystems, not just factories. India must move quickly on several fronts:
Infrastructure remains critical. Continued investments in logistics corridors, ports and industrial clusters will determine whether manufacturers can scale efficiently.
Labour-intensive sectors, from textiles to footwear, need regulatory clarity and export-oriented industrial parks.
Skill development must accelerate to support advanced manufacturing technologies.
Encouragingly, initiatives such as the National Logistics Policy and new semiconductor manufacturing incentives signal that policymakers recognise the scale of the challenge. But the scale of the opportunity demands faster execution.
The world is undergoing a structural reconfiguration of trade and production networks. For India, this disruption is a strategic opening. If India can scale its ecosystems and deepen trade ties now, it will become a defining hub of the next globalisation cycle.
The writer is Executive Director, Pahle India Foundation. With inputs from Kuntala Karkun, Senior Visiting Fellow, Pahle India Foundation
Combined with supply chain diversification,
FTAs can shift India
from a consumption-led market to an export manufacturing hub
BL02_Think_Logistics Ravi_Pokharna bl02-think1-main-kuntala
Published on April 2, 2026