India manufacturing and the supply chain shift

Manufacturing

India launches PLI scheme for polysilicon to cut China imports

India is launching a Production-Linked Incentive (PLI) scheme for domestic polysilicon manufacturing to eliminate its 100% dependence on Chinese imports. Announced by Santosh Kumar Sarangi, Secretary of the Ministry of New and Renewable Energy, the scheme targets over 10 GW of capacity and supports India’s goal of 500 GW of non-fossil power by 2030. It builds on existing PLI investments totaling ₹240 billion ($2.52 billion) and complements current domestic capacity — including 200+ GW of solar panels and 32+ GW of cells — with plans for 80 GW of ingot and wafer capacity by June 2028.

Manufacturing

India accelerates water reforms to power AI, manufacturing, agriculture

India must accelerate water governance reforms to sustain growth in AI infrastructure, manufacturing, and agriculture. UBS economist Tanvee Gupta Jain warns that despite rising infrastructure investment, policy lags threaten $24 billion in AI projects and $100 billion in PLI manufacturing incentives. A 17% national water deficit — projected to reach 21% by 2030 — already disrupts semiconductor fabs in Chennai and delays cold chain development in Gujarat. Rural economic shifts toward high-water-value agri-businesses further strain outdated allocation systems.

South Asia Supply Chain

India launches polysilicon incentive scheme targeting 10 GW capacity

India is launching a new production-linked incentive scheme targeting more than 10 GW of domestic polysilicon capacity to break its 100% reliance on Chinese imports. The move extends ₹240 billion ($2.52 billion) in existing solar manufacturing incentives upstream, complementing over 200 GW of module capacity and a June 2028 target of 80 GW for ingots and wafers. With polysilicon also vital for semiconductors, the policy supports dual industrial goals. However, capital intensity and Chinese scale dominance pose major competitiveness hurdles.

Manufacturing

India Needs $1 Trillion Manufacturing Investment to Create 40M Jobs

Ashish Dhawan, founder of ChrysCapital, argues India must attract $1 trillion in manufacturing investment over the next decade to generate 40–50 million jobs and lift exports from $450 billion to $2 trillion. He highlights critically low manufacturing FDI — just $20–$22 billion annually — versus headline $90 billion FDI figures skewed by short-term private equity. With improved infrastructure, active industrial policy, and geopolitical tailwinds from EU-China trade tensions and new FTAs with the US, EU, and UK, Dhawan asserts India's 'enabling conditions' are stronger than in the past 10–15 years.

Last Mile

India’s B2B Logistics Lags as Quick Commerce Hits 5,000 Dark Stores

India’s last-mile delivery infrastructure has matured, but primary and secondary B2B logistics remain manual and fragmented — hindering scalability despite rapid quick commerce growth. The combined dark store network of Blinkit, Instamart, and Zepto reached over 5,000 locations by May 2026, up nearly 48% year-on-year, while India’s quick commerce market grew 40%. New GST rules mandating e-way bill closure within one day of delivery highlight systemic digital gaps. ClickPost CEO Naman Vijay emphasizes that B2B logistics — processing 50 million+ shipments monthly across 30+ countries — is the decisive layer for supply chain speed and working capital efficiency.

Digital Platforms

Mahindra to IPO Last Mile Mobility in H2 2027, merges truck unit with SML

Mahindra & Mahindra confirmed its Last Mile Mobility electric three-wheeler business remains on track for an IPO in H2 2027. Simultaneously, it merged its Truck and Bus Division into SML Mahindra via a slump sale set for completion in FY27, retaining 59% of the combined entity. Group CEO Anish Shah described the move as part of a 'platform over exit' strategy, aiming to build scalable, listed businesses. Executive Rajesh Jejurikar noted the integration will enhance competitiveness against Tata Motors and Ashok Leyland. The company already operates multiple listed subsidiaries, including Mahindra Logistics and Mahindra Holidays.

Manufacturing

India Launches ₹10,000-Crore Container Manufacturing Scheme

India has launched a ₹10,000 crore national scheme to develop domestic container manufacturing, following a landmark 1,000-unit order from a global shipping line. The first ISO- and CSC-certified prototype was unveiled in Dadri, Uttar Pradesh on 3 July 2026. The initiative aligns with completion of 75 port infrastructure projects worth ₹31,967 crore, lifting Major Ports’ capacity to 1,728 MTPA. India currently imports over 95% of its containers, spending ₹2,400 crore annually — a dependency the new policy seeks to reverse through certified domestic production and integrated manufacturing clusters.

ESG & Regulation

India’s Real-Time Power Prices Fall to 10 Paise Amid Renewable Glut

Real-time electricity prices on India’s Indian Energy Exchange fell to 9 paise per unit on 28 July 2026 — part of 31 sub-₹0.05 events in Q1 FY2026–27. Despite record peak demand of 270.8 GW on 21 May and projected growth to 300 GW by FY28, solar and wind generation (90.09 GW at 1 p.m.) now meets 39% of demand, flooding the grid midday and driving prices toward zero. Discoms are offloading surplus green power well below procurement costs (₹2–₹3+/unit), threatening returns for merchant-exposed projects. Experts cite storage as critical: on 21 May, 1 p.m. power cleared at ₹1.56 versus ₹10.00 at 6:30 p.m. Government and discom BESS tenders are scaling in response.

South Asia Supply Chain

India-US ink $20B critical minerals pact amid China dominance concerns

India and the U.S. signed a critical minerals framework on May 26, 2026, paving the way for a $20 billion Quad-led investment initiative. While India holds vast reserves—including the world’s third-largest ilmenite deposits—it processes less than 5% of its rare earth output domestically. Analysts stress India is unlikely to challenge China’s dominance—accounting for over 60% of global rare earth processing—anytime soon due to infrastructure gaps and regulatory delays averaging 7–10 years for new mining approvals.

Manufacturing

India industrial output rises 7.3% in June, manufacturing up 7.8%

India’s industrial output rose 7.3% year-on-year in June 2026, accelerating from 5.1% in May, according to MoSPI’s Quick Estimates of the Index of Industrial Production (IIP). Manufacturing expanded 7.8%, electricity and gas supply surged 10.6%, and capital goods grew 14.2% — the highest among use-based categories. For April–June 2026–27, IIP growth was 5.8%, though mining contracted 1.4%. The June data reflects an 86.7% response rate; July’s figures are due August 28, 2026.

ESG & Regulation

India’s Industrial Production Rises 7.3% in June

India’s Index of Industrial Production (IIP) rose 7.3% year-on-year in June 2026 — up from 5.1% in May 2026 — driven by 7.8% manufacturing growth and a 10.6% surge in electricity & gas supply. Key contributors included electrical equipment (+34%), motor vehicles (+17.5%), and food products (+10.8%). This marks the third monthly IIP release under the new 2011–12 base-year series. Mining grew 1%, while sewerage & waste management rose 6.1%. The data reflects broad-based industrial momentum and has tangible implications for procurement lead times and energy-intensive supply chains.

Procurement

India’s Cold Chain Gap Hits 23M MT; Pharma Losses Top ₹7,000 Cr

India’s cold chain capacity falls short by 23 million MT against a 60–70 million MT requirement, with over 90% of existing infrastructure limited to single-commodity potato storage. Post-harvest losses reach 15–18% for fruits and vegetables and 30% for fish, while pharma cold chain failures cost ₹7,000–10,000 crore annually. The PLI scheme has allocated ₹10,900 crore for food processing, yet relies on cold chain continuity still absent in Tier II/III regions. Quick commerce players like Blinkit and Zepto now demand 10-minute perishable delivery — accelerating micro-fulfilment infrastructure. IoT monitoring and AI routing are scaling to SMEs, closing invisible gaps in transit temperature control.