By: Nagesh Basvanhalli, Founder, Peak 15 Advisors
Industry growth story is increasingly being shaped by manufacturing. From electric mobility and renewable energy to electronics, the country is scaling up production at a remarkable pace. Yet, beneath this momentum lies a structural question. How resilient are the supply chains that support this growth?
The growth story we see, and the dependencies we don’t
Industry’s manufacturing momentum is real. Electric vehicles are scaling up, solar installations are expanding fast, and electronics assembly has grown at an impressive pace. But beneath this visible growth lies a quieter layer of dependence.
In electric mobility, Industry is assembling vehicles, yet most lithium-ion battery cells are still imported, largely from China and East Asia. As noted by the International Energy Agency, China continues to dominate global battery manufacturing capacity. The dependence extends further still. Rare earth magnets used in EV motors, essential for efficiency and performance, are almost entirely sourced from China, which controls most of the global processing.
The pattern shows up again in solar. Industry has built capacity in module manufacturing, but upstream components like polysilicon, wafers, and high-efficiency cells are still heavily import-dependent.
In electronics, the country has emerged as a major assembly hub for smartphones. Yet, semiconductors, display units, and other key components continue to come from global supply chains.
Even energy tells a similar story. India meets roughly 60% of its LPG consumption through imports, with a large share coming from imports routed through geopolitically sensitive regions.
What emerges is a pattern. India is participating in manufacturing, but often at the assembly end, while the higher-value layers remain elsewhere.
Why this model is starting to crack
For decades, this structure worked. Globalisation rewarded efficiency. Countries specialised, supply chains stretched, and costs came down. That balance is now shifting.
At the same time, manufacturing itself is being reshaped by technology. Advances in automation, AI-driven production systems, and digital supply chains, as seen in Industry 4.0, are redefining how and where value is created. In this emerging paradigm, resilience will depend not only on physical capacity, but also on the ability to integrate data, intelligence, and flexibility into manufacturing ecosystems.
Geopolitics is now shaping trade in a far more direct way. Export controls, resource nationalism, and regional conflicts are influencing access to critical inputs. Supply chains are no longer neutral pipelines, they have become strategic tools. When a large part of a country’s critical supplies depends on imports, volatility elsewhere quickly becomes a domestic issue. Extend this to EVs, solar, or electronics. The risks are no longer hypothetical.
The real gap: Depth over scale
Industry manufacturing push has focused, rightly, on scale. But scale alone is not enough. The more critical gap is depth. Most of industry’s current capabilities are concentrated in assembly.
The layers that drive long-term value materials processing, advanced components, and core technologies remain underdeveloped. This distinction matters because, in a constrained world, value accrues to those who control these deeper layers. Assembly can move. Capabilities are harder to replicate.
Choosing where to play, and where to win
The answer is not to build everything domestically. That is neither practical nor efficient.
The real question is where Industry should focus. In electric mobility, the opportunity lies beyond assembling vehicles. Battery ecosystems, cell manufacturing, battery management systems, and recycling are areas where India must reduce dependence and credibly can.
In rare earths, Industry has reserves but limited refining and processing capability. That is where the real leverage lies, not just in extraction. In solar, moving upstream into wafers and cells will determine whether India remains a price-taker or becomes a price-maker. In electronics, the shift has to move from assembly to component ecosystems.
These are not short-term fixes. They require sustained focus and clarity on priorities.
What policy needs to do next
The first phase of Industry manufacturing policy has been about scale, using incentives to attract production and build capacity. That phase has delivered results. The next phase must go deeper.
It requires serious investment in upstream industries, sustained support for materials science research, and the development of integrated manufacturing clusters where different parts of the value chain operate in close sync. It also demands a longer view. Capabilities in areas like semiconductors or advanced materials are built over a decade or more, not through short-term bursts of policy incentives.
Diversification matters just as much. India has begun widening its sources for energy and critical minerals across regions. Yet, without building domestic capacity alongside, this approach risks swapping one dependency for another rather than addressing the core issue.
Resilience will also depend on the partnerships that industry builds. Alongside strengthening capabilities at home, it must deepen ties with countries that offer both resources and technological strength.
This includes working with nations like Australia and regions such as Africa and Latin America to secure critical minerals, while collaborating with advanced economies on technology transfer in areas like battery chemistry, semiconductor manufacturing, and advanced materials.
These partnerships go beyond access. They involve building ecosystems together, sharing risks, and creating supply chains that are not overly dependent on any one geography. As supply chains shift globally, resilience will depend as much on collaboration as on what is built at home.