A decade of shocks has turned supply-chain maps into political documents. India is emerging as a reliable node—its domestic demand underwrites scale, policy nudges catalyse capacity, and logistics are improving—yet depth, predictability, and standards will decide endurance.
From Risk to Redesign
Efficiency met geopolitics—and production networks changed shape. Export controls, tariff volleys, and wartime chokepoints pushed companies away from single‑country reliance toward diversified portfolios of locations. “China+1” is no longer a slogan; it is the spreadsheet logic of resilience. Firms are placing critical lines in jurisdictions where political risk is manageable and delivery schedules hold. India benefits directly from that calculus. Its diplomatic convergence with major Indo‑Pacific partners—while retaining strategic autonomy—assures buyers that diversification will not become sudden decoupling. That role was formalised when New Delhi was elected Vice‑Chair of the Indo‑Pacific Economic Framework (IPEF) Supply Chain Council after the agreement entered into force in February 2024, creating a permanent mechanism for crisis response, labour standards, and bottleneck coordination among 14 partners.
Demand: The Business Case Begins at Home
India is structurally consumption‑led. The latest national accounts release shows private final consumption expenditure (PFCE) growing strongly in FY 2024–25, keeping consumption comfortably above half of GDP. For global planners, that demand spine is why India is modelled not only as a factory but also as a market: plants can reach utilisation and learning effects even if external demand softens. The breadth shows up in hard numbers. Passenger‑vehicle sales reached a record of roughly 4.3 million in FY 2024–25, with utility vehicles carrying momentum—predictable domestic volumes that also support export platforms. Meanwhile, the auto‑component industry recorded a turnover of about ₹6.73 lakh crore (≈US$80.2 billion) and a trade surplus for a second year, signalling the rising sophistication of sub‑systems that travel well. Electronics and appliances tell a similar story. Government data place electronics production at approximately ₹11.3 lakh crore in 2024–25, nearly six‑fold over a decade. Mobile‑phone exports crossed about ₹2 lakh crore in FY 2024–25 and totalled around US$13.5 billion in April–September 2025 alone, while non‑phone electronics and white goods also scaled on domestic demand, tightening learning curves and drawing component suppliers. Pharmaceuticals—long a pillar—add steady demand and export pull: India’s pharma exports crossed US$30 billion in FY 2024–25, sustaining capacity in APIs and formulations while PLI and bulk‑drug‑park schemes target upstream vulnerabilities.
Policy: Nudges, Not Silver Bullets
New‑era industrial policy is surgical. Production‑Linked Incentive (PLI) programmes across electronics, autos, pharma, and renewables underwrite early volumes and the learning curve. In electronics, the emblem is the iPhone: Apple assembled about US$14 billion worth of devices in India in FY 2023–24—roughly 14 percent of global output—anchoring contract manufacturers and tier‑2/3 suppliers that now also chase export orders. Trade architecture is pragmatic rather than panoramic. India remains outside mega‑regionals like RCEP, but CEPA with the UAE and ECTA with Australia—alongside ongoing EU and UK negotiations—create usable corridors for a hub‑and‑spoke export play into West Asia, Africa, and the Indo‑Pacific. The fine print matters. Sudden import‑policy pivots—for example, on laptops and tablets in 2023–24—explain why firms maintain dual‑sourcing and inventory buffers until rules stabilise. “Trusted” status is partly about predictability—tariffs, data, procurement—and that is a competition India can win with steady execution.
Logistics: Quiet Enablers of Credibility
A decade of ports, highways, and dedicated freight corridors is beginning to show up in the numbers that supply‑chain managers live by. A DPIIT–NCAER assessment pegs logistics costs at about 7.97 percent of GDP in FY 2023–24—a revision from legacy double‑digit estimates, reflecting more granular measurement and early benefits from multimodal investments. On the rails, Dedicated Freight Corridors have diverted heavy freight off passenger lines, lifting average daily freight trains from about 247 to 352 in 2024–25, with peaks above 370; early FY 2025–26 data indicate a continued ramp‑up. High‑frequency signals align: India’s manufacturing PMI printed at cycle highs in mid‑2025, pointing to robust orders and output even as global trade softened.
Sectors: Beyond a Single Poster Child
Autos and EV systems are the clearest example of blended demand: record PV offtake at home, a growing components surplus abroad, and policy attention on clean mobility support deeper local content in castings, electronics, drivetrains, and safety systems. The operating model is phased—start with high‑volume sub‑assemblies, localise on cost curves, then graduate to design‑rich modules. In electronics and broader EMS, phones opened the door; PCs, wearables, TVs, and white goods are marching through it. With output at roughly ₹11.3 lakh crore and exports surging, the next competitiveness step is component depth—PCBs, camera modules, connectors, and power electronics—so India captures margin, not just volume. Pharma and med‑tech can move from cost to capability as R&D and API pushes take hold—if quality systems, data integrity, and regulator engagement keep pace. Renewables equipment is scaling quickly. Industry projections indicate solar module capacity crossing around 165 GW by 2027, with cell lines expanding; in wind, India has signalled around 20 GW of annual equipment capacity. Aerospace sourcing is rising too: Boeing now procures roughly US$1.25 billion per year from 300‑plus Indian suppliers, while Airbus plans to lift annual sourcing toward US$2 billion before 2030.
How Managers Decide
Four variables shape project viability. First, resilience‑adjusted cost: paying a bit more per unit to avoid single‑point shutdowns is now rational. India scores well on the diversification axis for U.S.‑ and EU‑facing chains in electronics, pharma, renewables, and aerospace. Second, transaction costs: reforms such as GST and the Insolvency and Bankruptcy Code have lowered frictions, yet state‑level variance and periodic rule changes still add soft costs. Third, the home‑market effect: a consumption base exceeding half of GDP improves utilisation and supports supplier clustering, which is why autos, appliances, and electronics show both domestic momentum and export lift‑off. Fourth, delivery reliability: Dedicated Freight Corridor throughput, port turnarounds, and multimodal parks are compounding; for buyers who live by on‑time‑in‑full, these quiet gains are the difference between a pilot and a platform.
Risks: A Neutral Accounting
Depth versus breadth remains the central challenge: assembly has scaled fast, but component ecosystems in advanced electronics and EVs must catch up to lock in value‑add and reduce import dependence. Policy predictability is critical; sudden import or localisation pivots can unsettle bills of material and capex timing. Compliance expectations are rising—pharma, med‑devices, and avionics demand world‑class quality assurance and data integrity. Trade-access gaps persist without mega-regional coverage, and macroeconomic cyclicality can still buffet export-heavy plays despite the domestic cushion.
Bottom Line
In a world where supply chains are portfolios, not single bets, India is becoming a necessary node—geopolitically acceptable, operationally improving, and commercially underwritten by domestic demand. The durable playbook is visible across sectors: local scale first, export acceleration next, component depth over time. The opportunity is real; the constraint is execution. Keep the rules steady, press logistics and legal reforms through to ground truth, and deepen supplier capabilities—and India will not replace anyone. It will be the partner you plan around.
“Domestic absorption isn’t a footnote; it is the business case.”
“Local scale first, export acceleration next, component depth over time.”
Selected Sources
• Sectoral notes: Solar module capacity projections to ~165 GW by 2027; wind equipment localisation& capacity.
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