Context:
India is focusing on enhancing supply chain resilience to tackle geopolitical disruptions, high import dependence, and global volatility affecting critical sectors like energy, food, and pharmaceuticals.
Key Highlights:
- High Import Dependence:
- 85% crude oil and 50%+ gas imports
- 65–70% pharmaceutical intermediates imported from China
- Only 44% domestic oilseed production meets demand
- Economic Vulnerability:
- $10/barrel rise → $13–14 billion increase in import bill
- Inflation rise by 30–40 basis points
- Strategic Focus Areas:
- Energy security, food security, industrial resilience
- Diversification of supply sources
- Government Initiatives:
- National Green Hydrogen Mission
- Strategic Petroleum Reserves (SPR)
Relevant Prelims Points:
- Supply Chain Resilience:
- Ability of supply systems to withstand, adapt, and recover from disruptions
- Strategic Petroleum Reserves (SPR):
- Emergency crude oil storage to tackle supply shocks
- National Green Hydrogen Mission:
- Aims to promote clean hydrogen production and reduce fossil fuel imports
- Active Pharmaceutical Ingredients (APIs):
- Core components in drug manufacturing
- Import Dependence:
- Reliance on foreign sources for critical goods
Relevant Mains Points:
- Key Challenges to Supply Chains:
- Overdependence on limited geographies (e.g., China)
- Exposure to geopolitical conflicts (West Asia, Russia-Ukraine)
- Weak domestic manufacturing in critical sectors
- Sector-wise Concerns:
- Energy: High fossil fuel imports → fiscal and inflation risks
- Food: Dependence on edible oils, pulses, fertilizers
- Pharma & Tech: Import reliance on APIs, semiconductors
- Strategic Imperatives:
- Diversification: Multiple sourcing countries and trade routes
- Domestic Capacity Building: Boost manufacturing under Make in India
- Technological Transition: Shift to renewables and green hydrogen
- Policy Measures Needed:
- Long-term bilateral supply agreements
- Strengthening logistics and infrastructure
- Incentivizing PLI schemes for critical sectors
- Promoting bio-fertilizers and sustainable agriculture inputs
- Way Forward:
- Develop multi-layered supply chains with redundancy
- Invest in strategic reserves beyond oil (fertilizers, food grains)
- Enhance regional trade partnerships (e.g., Indo-Pacific)
- Promote innovation and R&D in critical technologies
- Strengthen data-driven supply chain monitoring systems
UPSC Relevance:
• GS 3: Economy – Supply chains, energy security, manufacturing
• GS 2: Governance – Strategic policy planning
• Prelims: SPR, Green Hydrogen Mission, APIs