The government is examining a range of measures, including subsidies and other incentives, to encourage local production across multiple sectors. According to The Times of India, the Ministry of Commerce and Industry is reportedly preparing a list of more than 100 products that could see increased domestic manufacturing, spanning sectors such as electronics, chemicals, essential pharmaceuticals, fertilisers, semiconductors, automobiles and machinery. Key ministries have been asked to identify products where India is still heavily dependent on imports, with the aim to examine whether import substitution via domestic manufacturing is a viable alternative. The government is also working on a Shaktikanta Das-led taskforce developing an import substitution roadmap, with plans to roll out incentives for private and foreign investors as well as capacity expansion by state-owned enterprises through joint ventures.
Earlier this month, the Cabinet cleared two schemes worth ₹1.9 lakh crore for chips and mobile phones, marking a significant commitment to electronics manufacturing ambitions. As reported by The Times of India, Semicon 2.0 with an outlay of ₹1,27,500 crore was cleared and Mobile Phone Manufacturing Scheme (MPMS) with a budget of ₹62,500 crore also received approval. These schemes aim at taking India's electronics manufacturing from beyond assembly lines into semiconductor fabrication, advanced packaging, materials and homegrown mobile phone brands. The move comes as electronics imports are up 43% in the first three months of the current fiscal, highlighting the critical need for domestic manufacturing capabilities.
India's push to reduce external dependence presents a long-term structural investment opportunity for patient investors, according to market experts. As reported by Mint, on 18 June 2026, a research note by Kotak Institutional Equities titled "India's New Independence Movement" highlighted India's high external dependence across four critical areas: capital, defence, energy, and technology. According to the report, rising geopolitical tensions, resource nationalism and tighter technology controls over the past two to three years have made reducing these dependencies a strategic priority for the government. The US-Iran conflict has impacted several industries and thrown fresh light on India's imports-driven supply chain vulnerabilities, with the aim to reduce trade deficit, conserve foreign exchange reserves and position India as an alternative global manufacturing hub to China.
The gains are unlikely to be evenly distributed across sectors, with electronics manufacturing remaining one of the strongest contenders as India expands beyond mobile-phone assembly into components, semiconductors and electronics manufacturing services (EMS). Other likely beneficiaries include defence manufacturing, capital goods, industrial automation, precision engineering, renewable energy equipment, battery manufacturing, energy storage, speciality chemicals and active pharmaceutical ingredients (APIs). According to experts, the common characteristic across these sectors is not merely government support but the ability to increase domestic value addition, improve technological capability and compete globally. Companies should be evaluated based on technological capability, sustainable competitive advantages, strong balance sheets, disciplined capital allocation, consistent earnings growth, scalable business models and management quality.
For retail investors, the challenge is identifying businesses that can successfully convert policy support into sustainable earnings growth, as noted by Kapadia. He cautions that policy announcements alone rarely translate into shareholder returns, and markets reward companies that execute well rather than those operating in fashionable sectors. Singh recommends investing through actively managed equity mutual funds in categories such as flexi-cap, multi-cap and focused funds that provide diversified exposure across sectors while benefiting from professional fund management. Experts emphasize that this represents a structural multi-year opportunity rather than a short-term thematic trade, with experts calling for a nuanced manufacturing strategy that deals with both immediate supply chain bottlenecks and focuses on strategic items for the long term.
