India’s Supply Chain Moment: Big Bets & Deals but Import Dependence Still a Weight on Ambition

On the outskirts of Chennai, in Sunguvarchatram, a Foxconn factory employs thousands of workers assembling smartphones destined for Europe and the United States. Nearby in Oragadam, the same firm is developing new units to manufacture display modules and enclosures, expanding the local supply-chain beyond mere assembly.

Such a scene would have been unthinkable a decade ago, yet it now captures a wider shift that policymakers across the world are watching closely. 

A new joint study by the Federation of Indian Chambers of Commerce and Industry (FICCI), India’s apex business chamber, and the Boston Consulting Group (BCG) titled Evolving Landscape of Global Value Chains highlights how India is positioning itself as a pivotal hub in the global realignment of supply chains. 

For almost thirty years world trade revolved around efficiency. East Asian factories produced at scale, multinationals ran long and lean networks and India contributed through services and low-end exports. China’s entry into the World Trade Organisation in 2001 cemented this model. But that era is over. 

According to the FICCI–BCG report, global value chains (GVCs) are no longer being fine-tuned; they are being rebuilt. Pandemic shocks, tariff wars, climate mandates and great-power rivalry have forced a rethink. The old “just-in-time” approach to building supply chains has given way to a “just-in-case” paradigm. Where cost and speed once ruled, resilience, adaptability and sustainability are now the mantra for companies. 

Global Chains Rewired 

In a nutshell, global supply chains are being rebuilt with a different focus. American research firm Gartner highlights that 87% of supply-chain leaders now prioritise resili,ence with three-quarters strengthening supplier ties. The global system that once optimised for the cheapest input is morphing into a multipolar web of buffers, back-up capacity and regional hubs. The FICCI–BCG study calls it a “structural rewiring”. 

This shift, brought on by the volatility of the past few years, reflects the need for companies to manage uncertainty, diversify sourcing and embed sustainability across production networks. Value chains are no longer just a support system. They are now core drivers of growth, innovation and long-term success. 

India’s relatively low export-to-GDP ratio (around 20% versus China’s 30%+) hints at untapped potential to expand its export footprint without undue exposure, the report noted. In other words, India has room to grow globally while remaining cushioned against external shocks, an attractive proposition in an era when supply-chain security is as vital as price and efficiency. 

Policy Push 

At the same time, India’s government has been deliberately greasing the wheels of policy frameworks to ease doing business in the country and attract global manufacturers. A flagship effort is the Production-Linked Incentive (PLI) scheme that offers hefty incentives to firms making everything from mobile phones to solar panels on Indian soil. 

PLI programmes have drawn over $20bn in new investment and are projected to generate $191bn in incremental output across strategic sectors, the FICCI–BCG report noted. The policy is nudging India up the value chain, visible in sectors ranging from buzzing electronics assembly lines to new pharmaceutical plants producing active pharmaceutical ingredients (APIs). 
 
In fact, smartphones have suddenly vaulted into India’s top export earners with shipments of devices surging 55% last year to reach $24.1bn in 2024–25, overtaking traditional export stalwarts like refined petroleum and gems and jewellery. This growth is underpinned by PLI incentives that have attracted global electronics giants to set up assembly and manufacturing facilities in India. 

Meanwhile, to cement its position in global value chains (GVCs), India has pivoted to aggressively chasing trade deals. India’s free trade agreement (FTA) with the four-nation European Free Trade Association (EFTA) bloc comprising Switzerland, Norway, Iceland and Liechtenstein will come into effect on October 1. It marks the first time India has included legally binding provisions on trade and sustainable development within FTA rules. 

It also recently signed FTA terms with the United Kingdom and is negotiating deals actively with the US, the European Union, New Zealand and Oman. 

Tech and Trade 

India closed the last fiscal year with a record-high $825bn in total exports of goods and services, even as foreign investment inflows remain robust. 

A telling example of India’s manufacturing momentum is playing out in the consumer tech industry. Tata group, the storied salt-to-software conglomerate, is the first Indian company to assemble Apple iPhones for both domestic and international markets. 

It is a symbolic breakthrough with the world’s most valuable tech company diversifying its production beyond China and doing so with an Indian partner. In fact, it has also announced plans to manufacture the entire iPhone 17 line-up, launched recently, in India as per reports. 

The pharmaceutical sector, too, highlights India’s evolving role. Long known as the “pharmacy of the world” for its generics, India supplies 20% of global generic drugs and over 60% of worldwide vaccines by volume. 

The Weak Links 

However, India's ambitions are not without hurdles. The same FICCI–BCG report that lauds India’s gains also warns of structural bottlenecks. India remains heavily import-dependent for critical inputs in some sectors. 

"India’s high import dependence of 23–24% of GDP compared with 15–17% in the US and China will require a stronger policy push to localise production," the report notes. 

Vulnerabilities are particularly acute in critical sectors. The pharmaceutical industry still imports nearly 70% of its APIs, the renewables industry depends on foreign supply for more than half of its solar wafers, while electronics producers continue to rely on imported components for mobile phones and semiconductors. 

These dependencies became starkly apparent when global supply snarls hit. For instance, Indian solar installers were left in the lurch as panel supplies from China tightened. 

Recently, the Minister of Commerce and Industry, Piyush Goyal, also admitted that Beijing's strategic curbs on critical rare earth magnets brought the entire auto industry to its knees. He urged every Indian industry to learn the importance of self-reliance from this lesson so that no Indian industry tomorrow dies of "predatory pricing" by another nation. 

Experts note that India’s drive to cement its place in global value chains will not be without challenges. Building world-class infrastructure, simplifying red tape and skilling millions of workers remain pressing tasks if India is to truly rival China as a manufacturing base. Global manufacturers will also watch how consistently India can deliver on promises of policy stability and low costs.