Challenge behind buying domestic amidst India’s import dependence

By N.S. Venkataraman*

When U.S. President Trump announced a 50% tariff on many goods exported from India, followed by an increase to 100% on branded drugs, heavy trucks, and furniture, concerns arose in India about the impact on exports. It became evident that Indian exports to the U.S. could decline substantially, raising questions about how India might respond. The general consensus that followed was that India should reduce its dependence on exports and strengthen domestic consumption of goods produced within the country.

Prime Minister Narendra Modi responded by urging citizens to buy domestic goods and substitute imports wherever possible. The logic is that increased domestic use could help compensate for a drop in exports. While the principle appears sound and has public support, its feasibility depends on several factors.

A key challenge is that domestic supply has not been keeping pace with growing demand. Over the past eleven years, India has become the fourth-largest economy in the world, with real GDP growth at 6.5% and nominal GDP tripling between 2014–15 and 2024–25. The economy has grown from $2 trillion to $4.3 trillion during this period, driven largely by services and agriculture, supported by policy reforms and infrastructure investment. However, the manufacturing sector’s share of GDP remains around 17%, far below India’s potential. This imbalance has limited job creation and increased dependence on imports.

India continues to import heavily across multiple sectors. Around 50% of Active Pharmaceutical Ingredients (APIs) come from abroad, despite strong performance in formulations. Solar and wind energy capacity has expanded, but components for these projects are largely imported. Electronics, semiconductors, rare earth magnets, crude oil, and bulk chemicals are other areas of significant import dependence. This trend leaves the economy vulnerable to external supply shocks.

Boosting domestic production is essential. The government has emphasized Atmanirbhar Bharat and Make in India, stressing that goods made in India should also use materials produced domestically. However, global competitiveness in quality, price, and sustainability remains critical if Indian products are to replace imports and succeed in export markets.

The question is why manufacturing has not expanded despite India’s advantages in land, resources, demographics, and capital availability. Technology emerges as the key constraint. Many industries continue to rely on foreign technology for even established product lines, with overseas suppliers often charging high fees and imposing tough conditions. This reliance has slowed the growth of indigenous manufacturing capacity.

Government initiatives such as the Production Linked Incentive (PLI) scheme are intended to promote technology development and R&D. Yet, private sector participation in research remains limited. Around 75% of India’s R&D funding comes from the government, unlike developed countries where the private sector leads. Despite significant funding, government-owned research institutions and universities have shown limited results, often without aligning research priorities to market needs.

Strengthening R&D is therefore critical. Successful models, such as China’s policy of encouraging multinational companies to set up R&D in collaboration with domestic firms, highlight the role of joint sector research initiatives. India could benefit from similar approaches, with private sector involvement bringing in capital, accountability, and market-driven innovation. Universities, too, need to align research agendas with industrial and consumer demand, while ensuring accountability for outcomes.

India has made important strides in areas such as space, defense, and nuclear technology, but progress across other industrial sectors remains inadequate. Overcoming the technology constraint is central to reducing import dependence and making the Prime Minister’s call to buy domestic goods feasible. Without a stronger technology base, self-reliance will remain limited, and the goal of substituting imports with domestic products will not be fully realized.

—

*Trustee, Nandini Voice for the Deprived, Chennai

Comments

Modi’s Israel visit strengthened Pakistan’s hand in US–Iran truce: Ex-Indian diplomat

By Jag Jivan M. K. Bhadrakumar , a career diplomat with three decades of service in postings across the former Soviet Union, Pakistan, Iran, Afghanistan, South Korea, Sri Lanka, Germany, and Turkey, has warned that the current truce in the US–Iran war is “fragile and ridden with contradictions.” Writing in his blog India Punchline , Bhadrakumar argues that while Pakistan has emerged as a surprising broker of dialogue, the durability of the ceasefire remains uncertain.

Incarceration of Prof Saibaba 'revives' the question: What is crime, who is criminal?

By Kunal Pant* In 2016, a Supreme Court Judge asked the state of Maharashtra, “Do you want to extract a pound of flesh?” The statement was directed against the state for contesting the bail plea of Delhi University Professor GN Saibaba. Saibaba was arrested in 2014, a justification for which was to prevent him from committing what the police called “anti-national activities.”

Why Indo-Pak relations have been on 'knife’s edge' , hostilities may remain for long

By Utkarsh Bajpai* The past few decades have seen strides being made in all aspects of life – from sticks and stones to weaponry. The extreme case of this phenomenon has been nuclear weapons. The menace caused by nuclear weapons in the past is unforgettable. Images of Hiroshima and Nagasaki from 1945 come to mind, after the United States dropped two atomic bombs on the cities.

Food security? Gujarat govt puts more than 5 lakh ration cards in the 'silent' category

By Pankti Jog* A new statistical report uploaded by the Gujarat government on the national food security portal shows that ensuring food security for the marginalized community is still not a priority of the state. The statistical report, uploaded on December 24, highlights many weaknesses in implementing the National Food Security Act (NFSA) in state.

Manufacturing, services: India's low-skill, middle-skill labour remains underemployed

By Francis Kuriakose* The Indian economy was in a state of deceleration well before Covid-19 made its impact in early 2020. This can be inferred from the declining trends of four important macroeconomic variables that indicate the health of the economy in the last quarter of 2019.

The soundtrack of resistance: How 'Sada Sada Ya Nabi' is fueling the Iran war

By Syed Ali Mujtaba* The Persian track “ Sada Sada Ya Nabi ye ” by Hossein Sotoodeh has taken the world by storm. This viral media has cut across linguistic barriers to achieve cult status, reaching over 10 million views. The electrifying music and passionate rendition by the Iranian singer have resonated across the globe, particularly as the high-intensity military conflict involving Iran entered its second month in March 2026.

Lata Mangeshkar, a Dalit from Devdasi family, 'refused to sing a song' about Ambedkar

By Pramod Ranjan* An artist is known and respected for her art. But she is equally, or even more so known and respected for her social concerns. An artist's social concerns or in other words, her worldview, give a direction and purpose to her art. History remembers only such artists whose social concerns are deep, reasoned and of durable importance. Lata Mangeshkar (28 September 1929 – 6 February 2022) was a celebrated playback singer of the Hindi film industry. She was the uncrowned queen of Indian music for over seven decades. Her popularity was unmatched. Her songs were heard and admired not only in India but also in Pakistan, Bangladesh and many other South Asian countries. In this article, we will focus on her social concerns. Lata lived for 92 long years. Music ran in her blood. Her father also belonged to the world of music. Her two sisters, Asha Bhonsle and Usha Mangeshkar, are well-known singers. Lata might have been born in Indore but the blood of a famous Devdasi family...

'Batteries now cheap enough for solar to meet India's 90% demand': Expert quotes Ember study

By A Representative Shankar Sharma, Power & Climate Policy Analyst, has urged India’s top policymakers to reconsider the financial and ecological implications of the country’s energy transition strategy in light of recent global developments. In a letter dated April 10, 2026, addressed to the Union Ministers of Finance, Power, New & Renewable Energy, Environment, Forest & Climate Change, and the Vice Chair of NITI Aayog, with a copy to the Prime Minister, Sharma highlighted concerns over India’s ambitious plans for coal gasification and the Prototype Fast Breeder Reactor (PFBR).

Labour unrest in Manesar trigger tensions: Recently enacted labour codes blamed

By A Representative A civil rights coalition has expressed concern over recent developments in the industrial hub of Manesar in Haryana, where a series of labour actions and police responses have drawn attention. A statement, released by the Campaign Against State Repression (CASR), said it stood in solidarity with workers in IMT Manesar and other parts of the country, while also alleging instances of police excess during ongoing unrest.

Search This Blog