India’s industrial strategy is entering a phase where the factory is no longer the whole story. Competitive strength increasingly depends on the ecosystem around it—reliable power, ports, fibre, cloud and compute, data centres, critical minerals, logistics and specialised semiconductor capabilities. The shift is larger than a change in priorities: industrial policy is moving from subsidising factories to designing ecosystems.
This matters because the nature of production itself has changed. A pharmaceutical plant depends on cold chains, testing laboratories and reliable power; an electronics manufacturer depends on semiconductors, ports, precision logistics and digital connectivity; an AI company depends on computing power, data centres and electricity; a semiconductor fab requires ultrapure water, specialised gases, chemicals, equipment and uninterrupted power. Industrial policy can no longer be confined to what happens within the factory wall.
India’s infrastructure push already reflects this recognition. PM GatiShakti integrates 58 ministries and departments through more than 3,291 data layers, while 396 infrastructure projects worth about ₹18.66 lakh crore had been evaluated through its Network Planning Group by August 2026. The point is not merely to build more roads, railways or ports, but to make infrastructure work as a connected system.
The results are visible. India’s logistics cost has been estimated at 7.9% of GDP in a 2025 DPIIT-NCAER assessment, bringing it broadly in line with advanced economies. Major ports handled a record 915.17 million tonnes of cargo in 2025-26, while port capacity reached 2,818 million tonnes against a 2030 target of 3,500 million tonnes. These are not simply transport statistics. Lower logistics costs and faster cargo movement directly affect whether manufacturing can compete for global supply chains.
{{/usCountry}}The results are visible. India’s logistics cost has been estimated at 7.9% of GDP in a 2025 DPIIT-NCAER assessment, bringing it broadly in line with advanced economies. Major ports handled a record 915.17 million tonnes of cargo in 2025-26, while port capacity reached 2,818 million tonnes against a 2030 target of 3,500 million tonnes. These are not simply transport statistics. Lower logistics costs and faster cargo movement directly affect whether manufacturing can compete for global supply chains.
{{/usCountry}}The next generation of industrial infrastructure is increasingly digital. BharatNet had connected over 2.14 lakh gram panchayats by February 2026, while India had crossed one billion internet subscribers. Fibre is now industrial infrastructure, enabling supply-chain coordination, cloud access, remote work and participation in global production networks. Compute is equally strategic: the IndiaAI Mission had expanded shared capacity beyond 45,000 GPUs by June 2026, with 237 projects accessing subsidised compute by August, while data-centre capacity rose from about 375 MW in 2020 to 1,500 MW in 2025. Industrial capacity means little if the design, simulation, AI and digital services that create higher value remain dependent on facilities elsewhere.
Electricity is equally indispensable. India crossed 300 GW of non-fossil capacity in July 2026, over 54% of total installed capacity. But industrial competitiveness depends not just on generation, but on reliable, predictable and competitively priced power. Data centres, semiconductor fabs, chemical plants and advanced manufacturing cannot tolerate unreliable supply, making grid quality, transmission, storage and power-market design as important as generation.
Semiconductors illustrate this shift. Semicon 2.0, approved in July with ₹1.275 lakh crore, expands support beyond fabs to design, equipment, materials, advanced packaging, R&D and talent. Twelve projects under the earlier programme represent over ₹1.64 lakh crore in commitments, with three already in commercial production. A semiconductor ecosystem can’t be built by fabs alone; its competitiveness rests equally on chemicals, gases, equipment, packaging, research, talent, power and logistics.
Critical minerals reveal the same strategic shift. India has successfully auctioned 56 critical and strategic mineral blocks by June 2026; in July, the government launched an eighth tranche offering another 20 blocks across nine states, covering lithium, graphite, rare earths, gallium, tungsten, vanadium and other inputs vital to clean energy, electronics, defence and advanced manufacturing. Mining alone is not an industrial strategy: Exploration must connect to processing, refining, materials science and manufacturing so value is not lost at the first stage.
This is where infrastructure and industrial policy converge. A port becomes an industrial asset when linked to freight rail, industrial corridors, customs and digital logistics; a power plant becomes productive infrastructure when its grid reliably serves a semiconductor fab; and a data centre becomes an innovation asset when affordable compute connects universities, startups and industry.
The policy consequence should be a move away from isolated project announcements towards ecosystem design. Public investment must increasingly ask not simply whether an asset has been built, but whether it connects complementary assets and lowers the cost, risk and time of production. That means planning industrial clusters around power, water, transport, digital connectivity, skills, housing and suppliers rather than treating each as separate departmental responsibilities.
This also changes what states should compete on. Cheap land and tax incentives may attract an initial investment, but durable industrial competitiveness requires reliable utilities, fast approvals, skilled labour, multimodal connectivity, research institutions and supplier networks. The 272 operational plug-and-play industrial parks and the 100 new parks envisaged under the BHAVYA scheme point towards this more integrated approach. The challenge is to ensure that plug-and-play means more than prepared land: An ecosystem in which a firm can actually produce competitively from day one.
India’s manufacturing sector has grown rapidly, with manufacturing GVA recording a 10.88 per cent CAGR between 2022-23 and 2025-26, even as its share of total GVA remained around 15%. This captures the larger challenge: India has demonstrated that it can build capacity; it must now create the conditions for firms to scale, innovate and deepen domestic value chains.
The old industrial policy asked: Which factory should India subsidise? The new question must be: What ecosystem will make that factory globally competitive?
That requires coordination across Centre and states, public and private capital, infrastructure and industrial policy, universities and firms, energy and digital networks, and ports and production systems. Industrial policy must, therefore, be understood as infrastructure policy in a broader sense—not merely concrete and steel, but the economic architecture that enables production at scale, speed and reliability.
The objective is not to build everything domestically, but to secure the critical infrastructure, capabilities and connections that keep India competitive through global disruptions. The winners of the next decade will not necessarily be countries with the most factories, but those whose factories are embedded in the strongest ecosystems.
India has begun building that foundation. The next task is to make it work as one.
(The views expressed are personal)
This article is authored by Amal Chandra, policy analyst, columnist and senior coordinator, SFL.