Aiming to reduce dependence on imports and overseas supplies, India is looking to give a fresh push to its domestic manufacturing plans. The government is preparing to strengthen domestic manufacturing for products which currently account for imports worth $51 billion, according to sources quoted in a Reuters report. The country imported goods worth $775 billion during the 12 months ended March 2026. An internal government assessment found that imports of $398 billion could potentially be substituted through local manufacturing, the first source said.
Critical imports identified for domestic manufacturing
The renewed focus on expanding domestic production comes as India faces heightened supply-chain risks arising from geopolitical tensions. At the same time, the government is seeking to lower its dependence on China while reducing the country’s trade deficit.Also Read | India eyes $1 trillion exports milestone: Amid global turmoil, which sectors will drive growth? DecodedWithin this broader opportunity, imports worth around $51 billion have been identified as strategically important for manufacturing products ranging from textiles to solar panels, the source added. Around 100 items have been shortlisted for immediate action.According to one of the sources, the identified products cover a wide range of industries, including footwear, textiles, electric vehicles and solar panels.“The identification is based on the fact that these are critical for economic resilience, cutting reliance on suppliers such as China, and to achieve cost competitiveness through incentives and subsidies,” another government source told Reuters.The government has in the past introduced several initiatives to strengthen domestic manufacturing, including the ‘Make in India‘ programme launched in 2014 and the more recent Production Linked Incentive (PLI) scheme.While these initiatives delivered positive results in sectors such as mobile phones and consumer electronics, they did not significantly reduce the country’s overall import dependence.Also Read | Not so ‘treasured’ anymore! Why India, China are stacking up gold and trimming US Treasuries exposure
Reducing dependence on China
During FY2025-26, India’s imports from China reached nearly $132 billion, making it the country’s largest source of imports. These purchases include machinery and industrial inputs that are essential for the operation of Indian manufacturing facilities.As an example, the government found that footwear sole moulds, for which India imported about $483 million worth last year, require nearly two weeks to manufacture domestically, compared with just three to five days in China.According to the first source, the government intends to narrow this gap by offering incentives to attract investment and encouraging joint ventures with companies from Taiwan, South Korea, Germany and Italy.The source added that in the renewable energy sector, imports of solar photovoltaic cells worth $3 billion are placing domestic manufacturers under pressure, as lower-cost Chinese supplies continue to undercut local prices. According to the source, these cells have the potential to be manufactured within India.A second government source said the Centre is also encouraging state-owned enterprises to participate in the latest initiative aimed at expanding domestic production.Also Read | Export boost, cheaper cars & whisky: India-UK trade deal comes into effect from July 15 – How India & Indians will benefit
