Supply chain security fundamental to Make in India 2.0
This article is authored by Parmod Sagar, chairman & CEO, RHI Magnesita India Ltd.
Since its inception, the Make in India programme has been pivotal in elevating India in the global manufacturing landscape. Presently the Make in India 2.0 initiative spans as many as 27 parts of the economy and it is clear that there have been significant accomplishments more vigorous than before, further consolidating India’s role in the global manufacturing ecosystem. The initiative has also supported in receiving $ 81.04 billion FDI during FY 2024-25 and is clearly indicative of India’s attractiveness despite global risk, disruption and decay in the global economy.
From 2014, till date, the world economy continues to evolve. It has become more and more evident in recent years, that the next phase of success of Make-in-India directly depends on trust and resilience of India’s supply chains.
From past to recent disruptions, everything from pandemic-related lockdowns to changing geopolitical tensions and trade wars have highlighted the vulnerable nature of global supply chains. For India, the ability to import raw materials, components, and technology without interruption is not just a manufacturing technicality, it is an economic imperative. The importance of manufacturing to the Indian economy can be seen in its contribution of approximately 12–13% to India’s GDP, which is significant in itself, but also holds potential for more domestic value addition.
In other words, shaping trade strategies to adapt to changing global trade policies require Indian manufacturers to exhibit more flexibility and adaptability. Tariffs and regulatory changes can disrupt competitiveness in an instant. Adaptability in sourcing is now a critical strategy for additional productivity, while avoiding the drawback of potential excess inventories or production delays.
International commerce is supported by global supply chain infrastructure, quietly supporting us to reliably move goods between continents, even when disruptions occur. Flagship transformations such as the proposed $20 billion India-Middle East-Europe Corridor (IMEC), the transformational, multi-pronged network that brings Europe and Asia together through West Asia, will provide new trade routes and strengthen links to manufacturing and key global markets. Advanced technologies, such as AI and digital integration, are transforming logistics in all modes, improving tracking and visibility, and reducing risk within supply chains across geographies. Governments globally are encouraging these transformational business models by continuing to implement policies that embrace sustainability, promote a culture of data, reduce costs while shortening the timeline for new multimodal transport assets, and build out resilient, multimodal transport systems that support new economic development opportunities. Collectively, integrated, technology-driven infrastructures will continue to enable capacity for global supply chains to grow, evolve, and adapt to political or climate disruptions, all while continuing to create economic centrepieces for new areas of growth, benefiting from enhanced efficiencies and reduced logistics costs.
Global manufacturers are feeling greater pressure to reduce their dependence on manufacturing in concentrated geographies. India's improved manufacturing capabilities, talented workforce, and developing infrastructure are driving its attractiveness and viability as an alternative sourcing location. India's overall political and economic stability offers additional reassurance to global supply chain planners who now recognise India as a vital and viable component of their risk management strategies and a long-term growth engine.
Recent disruption in the supply of rare earth minerals presented a major challenge for India's auto industry, as the industry has seen shortages of rare earth magnets, is an example of this.
the Indian government has initiated the National Critical Mineral Mission to accelerate domestic exploration and discovery of critical minerals, to strengthen local capacity and increase the long-term resilience of the industry. As a result, the National Critical Minerals Mission will lead the resilience of critical mineral resources' value chain with a budget of Rs.34,300 crore over the span of 7 years.
The impact of the PLI scheme has been transformational for India's industrial base. PLI scheme beneficiaries have increased capabilities for local production and have indicated by local production of components, , increasing security of supply chains, shortening lead times and increasing quality control. The renewed direction of sourcing domestic materials for key inputs is supporting India's manufacturing climate to adapt more quickly to changing international government regulations and respond to global and regional supply shocks. Overall, the scheme is adding to production capacity, adding auxiliary job creation and therefore working on the economy.
Going forward, for the infrastructure sector, the security of India's supply chain for magnesite, a critical raw material used in the production of refractories for the steel, cement, and glass industries, should be viewed as a strategic priority for the Make in India initiative and for the country's infrastructure development objectives. There are calls for policy reform to diversify sourcing of magnesite and reduce reliance on single source for imports on critical raw materials for refractories.
The importance of investing in diversification of magnesite supply chain is strongly linked to India's current infrastructure development programs and the increase in demand for refractories made from magnesite. By securing a steady supply chain for magnesite, the steel and cement sectors will be able sustain production that supports infrastructure projects. Implementing circular economy principles such as recycling refractories, will help secure supply and reduce the challenges faced with raw material shortages and environmental impacts. These initiatives will advance the Make in India vision while developing a sustainable manufacturing system based on supply chain security and self-reliance in critical materials.
Supply chains, rather than being merely a logistical construct, are strategic enablers of India’s economic potential. Resilience along the value chain, from sourcing to transport, storage, and distribution, is essential. The current state of uncertainty and ongoing disruption gives robust supply-chain security a means to facilitate the success of the next phase of Make in India.
This article is authored by Parmod Sagar, chairman & CEO, RHI Magnesita India Ltd.
