India's Supply Chain Vulnerabilities: Strategic Imperatives for Energy and Food Security

The Hindu - Opinion · 30 Mar 2026 · 2 min read
Prelims · Economy Mains · GS3 Economy High relevance

India's heavy reliance on imported raw materials and intermediates exposes its economy to geopolitical shocks, necessitating policy interventions to build resilient supply chains in energy, food, and manufacturing sectors.

Key points

Energy Security: India imports 85% of crude oil and 50% of gas, making it vulnerable to price spikes that can increase inflation by 30-40 bps and reduce GDP growth by 0.2-0.3 percentage points per $10/barrel hike.

Renewable Energy Transition: The National Green Hydrogen Mission and 500 GW non-fossil capacity target by 2030 are critical to reducing oil dependence, but require investments in storage to manage intermittency.

Strategic Petroleum Reserves: Expanding domestic reserves and diversifying import sources can buffer against short-term disruptions, as seen in recent geopolitical tensions.

Food Security: Despite being a net agri-exporter, India imports 56% of edible oils and relies heavily on fertilizer imports, exposing rural livelihoods to supply shocks.

Manufacturing Vulnerabilities: Raw materials (34% of imports) and intermediates (31%) dominate India's import basket, with critical dependencies in APIs (65-70% from China), electronics, and rare earth minerals.

[GS3-Economy] Supply chain disruptions directly impact India's manufacturing competitiveness, requiring policy shifts from final assembly to domestic intermediate production ecosystems.

Diversification Strategy: Long-term supply agreements with Africa/Latin America and industrial process re-engineering can reduce import intensity in pharmaceuticals and electronics.

Way Forward: India should establish strategic reserves for edible oils and fertilizers, accelerate rare earth mining under the Mines and Minerals Act, and create sector-specific PLI schemes for API and semiconductor manufacturing.

Key terms

National Green Hydrogen Mission

A Rs. 19,744 crore initiative launched in 2023 to make India a global hub for green hydrogen production, targeting 5 MMT annual capacity by 2030. It aims to decarbonize energy-intensive sectors like fertilizers and refining while reducing fossil fuel imports.

Strategic Petroleum Reserves

India's emergency oil storage facilities managed by ISPRL under the Ministry of Petroleum, currently holding 5.33 MMT across Visakhapatnam, Mangaluru, and Padur. These buffer against supply shocks as mandated under the International Energy Programme Agreement.

Production Linked Incentive (PLI) Scheme

A performance-linked subsidy scheme under the Atmanirbhar Bharat initiative to boost domestic manufacturing in 14 sectors including semiconductors, pharmaceuticals, and solar PV modules. It addresses import dependence by offering 4-6% incentives on incremental sales.

Rare Earth Minerals

17 metallic elements critical for electronics, defense, and renewable energy technologies. India has 6% of global reserves but processes <1% due to technological gaps, creating strategic vulnerabilities in supply chains for EVs and wind turbines.