India’s manufacturing shift: Import dependence drops in critical sectors amid global volatility

A new Bank of Baroda report reveals that domestic industrial resilience is strengthening as key sectors reduce reliance on foreign inputs, shielding the economy from external supply shocks.

The "Make in India" initiative is beginning to yield measurable dividends in the country's industrial backbone. According to a recent report by the Bank of Baroda, while the aggregate import-to-net-sales ratio for Indian firms has remained largely stable, a deep dive into sector-level data reveals a calculated move toward self-reliance. By analyzing 1,372 non-financial companies, the report shows that the overall ratio stood at 22.3 per cent in FY25, a marginal improvement from 22.9 per cent in FY19.

Targeted gains in electricals and chemicals

The most significant shifts are visible in sectors that have historically been heavy importers. The electricals sector, for instance, saw its import-to-net-sales ratio plummet from 22.7 per cent in FY19 to just 13.7 per cent in FY25. Within this space, cable manufacturing and electronic components have led the charge, with the latter’s import intensity dropping from 31.5 per cent to 25.8 per cent.

Similarly, the chemicals industry has reported a notable reduction in foreign dependency, with the sector ratio falling to 22.5 per cent from 27.5 per cent in FY19. A major driver of this decline is the local production of carbon black—a vital input for tyres, plastics, and batteries—where the import-to-net-sales ratio dropped sharply from 55 per cent to 35.6 per cent over the same period.

A buffer against global uncertainty

This trend toward indigenization provides a strategic cushion for the Indian economy. As geopolitical tensions in West Asia drive up international crude oil prices—up by 31.1 per cent since the start of the crisis—and industrial metal costs fluctuate, the ability to rely on domestic supply chains becomes a critical economic safeguard. The Bank of Baroda report suggests that this ongoing, calibrated reduction in import dependence will help insulate domestic output from the abrupt global supply shocks that often follow international conflicts.

Navigating a complex global landscape

While these improvements in manufacturing provide a layer of protection, the broader economic environment remains challenging. Policymakers and industry leaders are currently navigating a multifaceted risk landscape that includes shifting trade policies, such as proposed foreign tariffs, and the persistent volatility of the rupee.

The ability to maintain a growth trajectory while mitigating input-cost inflation will be a defining feature of the upcoming fiscal cycle. By fostering a stronger domestic manufacturing ecosystem, India is positioning itself to better absorb the pressures of the global market, moving beyond headline numbers to create a more resilient industrial core that can withstand the headwinds of a turbulent global economy.