DPIIT’s 100-items indigenisation initiative

DPIIT’s 100-Item Indigenisation Initiative aims to strengthen India’s manufacturing and supply-chain resilience. Read here to learn more.

The Department for Promotion of Industry and Internal Trade (DPIIT) is spearheading an initiative to identify and promote domestic manufacturing of 100 critical industrial intermediates and capital goods, with the objective of reducing import dependence, strengthening domestic value addition and improving India’s supply-chain resilience.

The initiative assumes particular significance amid reported Chinese export-control measures affecting specialised industrial equipment and upstream solar manufacturing technologies.

It also reflects a broader shift in India’s industrial strategy, from promoting the domestic assembly of finished products to developing the technologies, components, materials and machinery required to manufacture them.

What Is Indigenisation of Capital Goods?

Indigenisation refers to developing domestic capabilities to design, manufacture and maintain products, components and technologies that were previously imported.

• Capital goods: Machinery and equipment used to produce other goods or services, such as tunnel boring machines, industrial robots and semiconductor manufacturing equipment.
• Intermediate goods: Materials and components used as inputs in further production, such as polymers, industrial chemicals and electronic components.
• Upstream manufacturing: Production of foundational materials, machinery and components.
• Downstream manufacturing: Processing, assembly and production of finished goods.

Indigenisation goes beyond replacing imports with domestically assembled products. Its long-term objective is to increase indigenous technological capability, intellectual property ownership and domestic value addition.

What Is Driving DPIIT’s Indigenisation Initiative?

1. Rising Geopolitical Risks and Supply-Chain Vulnerabilities

China’s growing use of export controls on strategically important materials, equipment and technologies has raised concerns about the reliability of concentrated global supply chains.

• Critical mineral restrictions: China’s export controls on gallium, germanium and graphite since 2023 demonstrated how supply concentration can affect semiconductor, battery and clean-energy industries.
• Capital goods restrictions: In October 2026, China announced new export controls on specified tunnel boring machines and related equipment, effective 18 November 2026.
• Infrastructure vulnerability: Dependence on imported machinery can expose metro rail, hydropower, high-speed rail and strategic infrastructure projects to procurement delays and higher costs.

Importantly, China’s TBM measures involve differentiated licensing and registration requirements rather than a universal prohibition on exports. Their impact on India will depend on implementation and individual transactions.

2. Widening India-China Trade Imbalance

India’s large merchandise trade deficit with China highlights its dependence on imported industrial inputs, electronics, machinery and chemicals.

• The bilateral trade deficit exceeded USD 100 billion in FY 2025-26, according to the figures cited in the current policy discussion.
• Import dependence in strategically important sectors increases exposure to exchange-rate fluctuations, supply disruptions and external policy decisions.
• Domestic manufacturing of high-value intermediates could reduce structural dependence while generating employment and technological capabilities.

However, a bilateral trade deficit does not automatically represent an equivalent depletion of foreign-exchange reserves.

The objective should be to improve competitiveness and domestic value addition rather than pursue import substitution irrespective of cost.

3. Moving Beyond the Assembly-Led Manufacturing Model

India has significantly expanded domestic manufacturing in sectors such as smartphones and consumer electronics.

Nevertheless, important upstream components, production equipment and specialised materials continue to be imported.

This creates an assembly trap, where final production takes place domestically but much of the technological value and intellectual property remains concentrated abroad.

The 100-item initiative seeks to strengthen the complete manufacturing ecosystem, including:

• Indigenous design and engineering
• Production of critical components and raw materials
• Domestic machinery manufacturing
• Process innovation and technological know-how
• Maintenance, repair and upgrading capabilities

4. Leveraging the China Plus One Strategy

• The China Plus One strategy refers to multinational companies diversifying production and sourcing beyond China to reduce concentration risks.
• India can benefit by positioning itself as a competitive manufacturing destination through improved infrastructure, skilled labour, technology partnerships and predictable industrial policies.
• However, attracting assembly operations alone will not guarantee strategic autonomy unless domestic suppliers progressively move into higher-value production.

Which Sectors Are Targeted?

The initiative involves inter-ministerial coordination across six broad sectoral groups.

Sector	Priority areas	Strategic importance
Pharmaceuticals, biotechnology and medical devices	Active pharmaceutical intermediates, specialised chemicals and medical equipment	Healthcare security and reduced import dependence
Chemicals, petrochemicals, textiles and footwear	Polymers, industrial chemicals and manufacturing inputs	Stronger downstream industrial supply chains
Capital goods, automobiles and EVs	Precision machinery, automotive components and EV manufacturing equipment	Industrial productivity and technological upgrading
Energy	Solar cells, ingots, wafers and manufacturing equipment	Renewable-energy security
Construction equipment and infrastructure	Tunnel boring machines and specialised construction machinery	Infrastructure resilience
Defence, aerospace and electronics	Dual-use industrial components, electronics and precision equipment	Strategic and technological capabilities

Solar Manufacturing: Addressing the Upstream Gap

India has rapidly expanded solar module manufacturing capacity, but domestic capacity is unevenly distributed across the photovoltaic value chain.

The figures cited in the current policy discussion indicate approximately:

• 233 GW of solar module manufacturing capacity.
• 30 GW of solar cell capacity.
• 2 GW of ingot and wafer capacity.

These figures refer to different stages of manufacturing and should be treated as reported capacity estimates rather than actual annual production.

The solar manufacturing value chain consists of Polysilicon, Ingots, Wafers, Solar Cells, and Solar Modules.

While module assembly has expanded considerably, dependence on imported wafers, ingots and production machinery remains a major vulnerability.

The proposed indigenisation measures could encourage upstream investment, while solar-panel recycling and recovery of valuable materials could supplement primary raw-material supplies.

Tunnel Boring Machines: Building Domestic Engineering Capacity

• Tunnel boring machines are used for underground excavation in metro networks, railway tunnels, hydropower projects and strategic infrastructure.
• India’s dependence on imported TBMs and specialised components can create procurement and maintenance vulnerabilities.
• A TBM manufacturing facility has reportedly been established in Tamil Nadu, with production expected to commence. This should be distinguished from a facility already operating at commercial scale.
• Domestic capability would require not only machine assembly but also indigenous expertise in cutterheads, drives, control systems, geological adaptation and servicing.

Petrochemicals and Industrial Chemicals

The initiative also focuses on reducing dependence on imported industrial chemicals and polymers, including:

• Polyvinyl chloride (PVC)
• Polyethylene and polypropylene
• Polystyrene and acrylonitrile butadiene styrene (ABS)
• Phosphoric acid, ammonia, acetic acid and toluene

These materials support pharmaceuticals, packaging, agriculture, textiles, automobiles and infrastructure.

Expanding domestic production could improve supply security, although environmental compliance, energy costs and feedstock availability will remain important determinants of competitiveness.

What Are the Major Challenges?

1. Higher Capital Expenditure

• Alternative machinery and technology suppliers in Japan, South Korea, and Europe may cost more to procure.
• Industry representatives have estimated that shifting away from Chinese solar manufacturing equipment could increase capital costs by 20-40% in some cases.
• Higher capital expenditure can weaken project viability and raise the prices of domestically manufactured products.

2. Technological Dependence

Building factories does not automatically create indigenous technological capabilities.

India must address gaps in:

• Precision engineering and industrial automation
• Proprietary manufacturing processes
• High-yield production technologies
• Industrial research and intellectual property
• Skilled technical manpower

3. Risk of Protectionism and Higher Input Costs

• Import restrictions, minimum import prices and high tariffs can protect domestic producers but may also increase costs for downstream industries.
• For example, higher PVC prices can affect MSMEs that manufacture pipes, packaging, and other plastic products.
• Industrial policy must therefore balance the interests of upstream manufacturers and downstream consumers.

4. Long Gestation Periods

• Capital-intensive manufacturing facilities often require several years for construction, technology integration, testing and commercial stabilisation.
• During this transition, industries may remain exposed to external supply disruptions.

5. Critical Mineral and Raw-Material Dependence

• Indigenising machinery does not eliminate dependence on imported minerals, speciality metals and industrial feedstocks.
• Without secure raw-material supply chains, import dependence may merely shift from finished equipment to upstream materials.

6. Environmental and Financial Constraints

• Petrochemical manufacturing, metal processing and heavy engineering can be energy-intensive and environmentally demanding.
• At the same time, uncertain demand and long payback periods may discourage private investment in advanced manufacturing.

What Measures Can Strengthen India’s Indigenisation Strategy?

1. Establish a Coordinated National Capital Goods Mission

India could establish a dedicated mission, building on existing capital-goods programmes and the institutional experience of the India Semiconductor Mission.

Its responsibilities could include:

• Prioritising strategically important imports.
• Coordinating ministries and industrial clusters.
• Supporting indigenous equipment development.
• Establishing testing and certification facilities.
• Monitoring domestic value addition and technological progress.

2. Strengthen Critical Mineral Partnerships

India should expand resource-security partnerships through:

• Khanij Bidesh India Ltd. (KABIL) for overseas mineral opportunities.
• The Minerals Security Partnership (MSP) for critical mineral supply-chain cooperation.
• The Quad for technology and strategic supply-chain collaboration.
• The Indo-Pacific Economic Framework (IPEF), particularly its supply-chain pillar.
• The Supply Chain Resilience Initiative (SCRI) with Japan and Australia.

Overseas mineral investments should be accompanied by domestic refining, processing and recycling capacity.

3. Rationalise the Inverted Duty Structure

• An inverted duty structure arises when imported raw materials or components attract higher tariffs than finished products.
• This can discourage domestic manufacturing.
• Customs duties should be rationalised to ensure that domestic manufacturers can access competitive inputs while maintaining appropriate, time-bound support for emerging industries.

4. Reform Industrial Infrastructure and SEZs

The proposed Development of Enterprise and Service Hubs (DESH) Bill, 2022, offers a policy framework for reconsidering the Special Economic Zones regime.

Relevant reforms could include:

• Plug-and-play industrial infrastructure.
• Reliable and affordable electricity.
• Efficient logistics and customs procedures.
• Shared testing and research facilities.
• Regulatory simplification and predictable taxation.

The DESH Bill remains a proposed reform framework; it should not be presented as enacted legislation.

5. Promote Industry-Academia Research and Development

• The Anusandhan National Research Foundation (ANRF) can support collaborative research involving universities, public laboratories, startups and manufacturing enterprises.
• Priority areas should include precision engineering, advanced materials, industrial automation, energy-efficient processes and indigenous equipment design.
• Technology licensing, joint ventures and overseas acquisitions may complement domestic research where appropriate.

6. Expand Long-Term Industrial Financing

• Advanced manufacturing requires patient capital because commercial returns may take several years to materialise.
• Possible instruments include development-finance institutions, targeted credit guarantees, blended finance and long-tenor project loans.
• NaBFID may support eligible infrastructure-linked financing, while sovereign green bond proceeds should remain restricted to qualifying green expenditures rather than being treated as a general financing source for all capital-goods projects.

7. Integrate Circular Economy Principles

Resource efficiency should be built into industrial policy through:

• Extended Producer Responsibility (EPR).
• Solar module recycling.
• Recovery of metals and critical minerals.
• Industrial waste utilisation.
• Energy-efficient production processes.

This would reduce dependence on primary resources while limiting environmental damage.

8. Adopt a Phased and Competitive Indigenisation Strategy

• India should distinguish between goods requiring urgent strategic localisation and those that can be sourced competitively from diversified international suppliers.
• A phased approach could combine temporary industrial support with measurable performance conditions, including domestic value addition, export competitiveness, product quality and technological upgrading.
• This would reduce the risk of creating permanently protected but globally uncompetitive industries.

Conclusion

DPIIT’s 100-item indigenisation initiative reflects an important shift from assembly-led manufacturing towards deeper industrial and technological capabilities.

Its success will depend not simply on replacing imports, but on developing competitive domestic production, indigenous intellectual property, secure raw-material supplies and resilient industrial ecosystems.

Atmanirbhar Bharat should therefore be understood as building the capacity to compete globally while reducing strategically dangerous dependencies, not as eliminating international trade.

Possible Mains Question

India’s industrial self-reliance requires moving beyond downstream assembly towards indigenous capital goods and upstream manufacturing capabilities. Discuss the opportunities and challenges associated with this transition. (250 words)