120 Items for Local Production: A Good Step Forward — But Only If We Go Beyond the List
I read the Times of India piece about the government identifying 120 products for a domestic manufacturing push. My first reaction: Good. This is what I've been advocating for a decade.
My second reaction: But a list is not a movement. Identification is not execution.
Why This Initiative Matters
The DPIIT has applied serious intellectual effort. They've identified chemicals (acetic acid), pharmaceuticals, medical technology, machine tools, aerospace MRO components, and footwear value-chain products. They've also recognized a hard truth: China has weaponized supply chains. When Beijing restricted tunnel-boring machine shipments, it exposed our brutal dependency.
The government's three-pronged intervention plan is sensible:
- Short-term protection — tariffs to shield domestic producers
- Cost-disability management — incentives through PLI-style capital subsidies
- R&D assistance — technology development where capacity doesn't exist
But here's the hard truth: Lists without execution pipelines are just documents.
Where Past Initiatives Have Faltered
In August 2025, I wrote "Retaliate Without Escalating," where I outlined a 10-year-old blueprint I'd circulated to Cabinet Ministers in 2015:
Publish a list of 5,000 imported products. Invite 1,000 manufacturers to pick at least 5 items each. Have them prepare Detailed Project Reports (DPRs).
That was 2015.
Today, we're identifying 120 items. Progress — but a fraction of what's needed.
The Battery Problem: A Case Study in How Lists Fail
India launched manufacturing support for lithium-ion cells. What happened? Companies imported cells from China, assembled them into packs, and called it "local production."
The entire production chain — and the technology — remained in Beijing.
Similarly with solar panels: module assembly moved to India, but wafer and cell manufacturing stayed in China.
This is the trap: A list without ecosystem thinking becomes a list of supply-chain extensions, not substitutes.
The government gets it: the article itself notes: "Support for R&D probably flows from the experience in battery production as companies that have begun 'local production' are essentially importing cells from China and selling battery packs as the entire production chain and technology is controlled by companies across the border."
They've learned the lesson. But knowing the lesson and fixing it are different things.
What the List Misses
MSME Ecosystem Development — Who makes the components feeding the 120 items? If you manufacture tunnel-boring machines, you need bearings, hydraulics, control systems. Where does that supply chain start? A list doesn't answer that.
Raw Material Reality — Acetic acid needs feedstock. Machine tools need specialty alloys and rare-earth magnets. Do we have domestic capacity, or are we just shifting import dependence upstream?
Capital and Timeline Honesty — Setting up manufacturing takes 2–4 years and ₹50–500 crores depending on the product. How many of 120 items will move from "identified" to "operational" in 2 years? Fewer than 20, realistically.
Talent at Scale — I proposed in 2015: Turn engineering graduates into manufacturers, not job-seekers. The government hasn't scaled this systematically. Who trains the supervisors, process engineers, and quality controllers a new factory needs?
My Proposal: Convert the List Into 120 Ecosystem Programs
For each of the 120 items, the government should:
- Map the upstream supply chain — identify every component and critical input
- Identify the bottleneck — usually it's a single input nobody produces
- Assign ecosystem leadership — make a lead company (L&T, BEL, Tata) responsible for vendor development across 30–50 suppliers
- Fund vendor development — not just PLI rebates, but technical assistance, quality labs, tooling finance, and long-term procurement agreements
- Pilot in clusters — concentrate 5–10 items in 3 states (Gujarat, Tamil Nadu, Telangana) before scaling nationally
The "120 Into Thousands" Program
Goal: Convert 120 items into 1,000+ operational MSMEs within 3 years.
How:
- Identify 50–100 upstream components for each product (6,000–12,000 supply-chain nodes)
- Invite engineering graduates to form consortiums targeting 5–10 nodes each
- Government provides: DPR downloads, tax deductions for training, 10-year tax holidays, fast-track approvals
- Industry provides: mentoring, procurement commitments, technical standards
- Banks provide: credit guarantees for DPR-backed loans
- States provide: land, power certainty, single-window clearances
Timeline: DPR to production in 18 months.
Outcome: 120 final products + 1,000+ upstream vendors + 2–3 million manufacturing jobs + a resilient supply-chain network.
That's the difference between a checkbox and a transformation.
Semiconductors and Batteries Are Ecosystems, Not Factories
The article mentions aerospace MRO and semiconductors. Here's my hard-won lesson: A semiconductor fab is not just a factory; it's an ecosystem.
Intel built its ecosystem over 30 years. India wants to do it in 3 years with PLI money. That's a category error.
Similarly, battery manufacturing isn't about importing cells and assembling packs. It's about controlling wafer technology, cell chemistry, thermal management, and systems integration.
Is the government's R&D support deep? Are we funding chip-design centers, battery chemistry labs, and foundry partnerships? Or just issuing grants?
My Call to DPIIT, NITI Aayog, and the Ministry of Commerce:
Take the 120 items. Don't just protect and incentivize. Build ecosystems.
Start with the top 20. For each, map the supply chain, identify bottlenecks, assign ecosystem leadership, fund vendor development, and pilot in clusters.
Publish a national dashboard showing progress — which suppliers are identified, which are operational, which are blocked.
Do this with accountability — name the lead companies, set milestones, report monthly.
Do this with urgency — because while we identify, China innovates and controls.
The 120 is a good start. Now make it real.
Sources
| # | Title | Date | About |
|---|---|---|---|
| 1 | Government identifies 120 items for local production push | 2026-10-28 | Government identifies 120 products for domestic manufacturing to reduce import dependence, with tariff protection, incentives, and R&D support plans. |
| 2 | Retaliate Without Escalating: India's Smart Response to Tariff Threats | 2025-08-07 | Proposes import substitution and MSME-led manufacturing as strategic response to trade wars, with 2015 blueprint for DPR-based startups. |
| 3 | Chips to Ships: Why 'Make in India' Needs More Than a Slogan | 2025-09-25 | Outlines practical requirements for manufacturing ambition: long-horizon capital, raw-material chains, MSME uplift, trade diplomacy, and ecosystem thinking. |
With regards,
Hemen Parekh
No comments:
Post a Comment