India’s Supply Chains Are Hostage to External Dependencies. A Whole-Chain Sovereign Mission Can Free Them.

Recent geopolitics have turned energy and critical materials into instruments of coercion. India must respond with a unified national mission, private sector leadership, and the institutional discipline to build decadal national champions.

India imports approximately 88% of its crude oil, 60% of its LPG (nearly all from the Middle East), over 90% of its methanol, and 93% of its rare earth magnets from China. When Iran closed the Strait of Hormuz on March 2, 2026, these dependencies ceased to be abstract risk factors. They became operational realities with ripple effects across our economy. Domestic cooking gas prices rose Rs 60 per cylinder within days. Iran’s drone strikes on Qatar’s Ras Laffan complex disrupted gas supply to fertiliser production across the region. India invoked the Essential Commodities Act to ration natural gas distribution, prioritising households over industry. Asian LNG prices surged over 140%. The International Energy Agency called it the largest supply disruption in the history of the global oil market.

Within the same quarter, the United States had intervened militarily in Venezuela, signalling that energy-rich nations aligned with rival powers now face direct intervention risk. These events are not anomalies. They reflect a reality shift in which energy and critical materials function as instruments of coercion. Every major external shock in India’s modern economic history, from the 1991 balance-of-payments crisis through 2008 and 2020 to the present, originates in similar vulnerabilities: concentrated import dependence on chokepoints controlled by others. The question is whether India responds this time with institutional architecture or, as after every previous shock, with reactionary announcements that fade as prices stabilise.

China Built an Industry from Coal. Indian PSUs are Stuck on the Regulatory Carrom-Board.

China has few gas fields, yet it faces this crisis with composure. The reason is simple. China invested in coal gasification as a national strategic objective over decades, persisting through hydrocarbon price cycles without losing focus. It now produces more than 90% of its ammonia from coal gasification. It uses synthetic gas derived from coal to produce 40% of the world’s urea and 54% of the world’s methanol, around 70% of it from coal. Its gasification output stands at approximately 80 million metric tonnes per annum.

India and China started discussing coal gasification around the same time. India’s National Coal Gasification Mission, launched in 2020, targets 100 million tonnes per annum by 2030. Six years in, total production is around 5 million tonnes. Of this, 1.8 million tonnes comes from a single private sector plant: JSPL’s facility at Angul, Odisha. Seven projects worth Rs 64,000 crore have been approved, mostly as public sector joint ventures with Coal India. Almost all are stalled in regulatory purgatory. For instance, the underground coal gasification project at Kasta in Jharkhand’s Jamtara district is caught in a dispute between the coal ministry and the environment ministry over drilling depth: one insists on 300 metres, the other wants 150 to 160 metres, according to ThePrint. India sits on 378 billion tonnes of coal reserves, and limits extraction to opencast mining. China mines three kilometres underground.

The consequences of these delays are direct. Over 30% of all natural gas India produces or imports feeds fertiliser plants. China produces more than 90% of its ammonia domestically through coal gasification; India imports most of its ammonia. As kharif planting approaches, the consequences of a lack of priority implementation by Government officials and PSU operators exposes the nation’s farmers. This is much more than a temporary disruption. It is the downstream result of a 16-to-1 output gap between two countries that identified the same opportunity at roughly the same time.

The divergence is not in resources or technical capability. It is in institutional implementation and the lack of continuity between Government and private industry. India’s policy cycle is driven by commodity prices: when crude is expensive, coal gasification becomes urgent; when prices fall, somebody in a ministry questions the investment’s viability, and private sector enthusiasm dissipates. The Government’s over-reliance on PSUs and the difficulty in meeting overbearing tenders leads to further lack of interest from the private sector. China treated the same objective as a permanent national strategy and delivered results.

The Energy Transition is Introducing New Dependencies

The dependency problem extends beyond hydrocarbons. As the global energy order shifts from petrostates to electrostates, China dominates the supply chains of the new energy economy with the same structural concentration that the Gulf held over oil. India imports nearly 100% of its silicon wafers from China. In the first half of 2025, India’s solar cell imports nearly doubled, accounting for more than half the growth in Chinese cell exports globally. China holds a 94% share of lithium-ion battery imports into India. As of March 2026, one Indian company manufactures lithium-ion cells, with quarterly output of 72,000 cells. The flagship battery manufacturing incentive scheme has delivered 2.8% of its capacity target and disbursed zero incentives.

China supplies 96.6% of India’s portable computers and 87% of its antibiotics APIs. Dependencies are widening into agriculture (combine harvester imports up 180%), construction, and fertiliser blends. Even India’s green transition is structurally underwritten by Chinese supply: solar, electric vehicles, and energy storage all depend on Chinese components and materials. India’s energy import profile is migrating from Middle Eastern oil to Chinese-dominated renewable energy supply chains. This is not diversification. It is the substitution of one concentrated vulnerability for another.

National Champions - The Institutional Implementation Architecture India Needs

No Indian Governmental institution has published a comprehensive whole-chain analysis of the country’s import dependencies across energy, fertilisers, rare earths, semiconductors, batteries, solar components, pharmaceutical APIs, and industrial-grade materials like metals and gases. Individual ministries track individual commodities. The coal ministry manages coal. The petroleum ministry manages gas. The environment ministry manages clearances that determine whether either can act. The National Critical Mineral Mission and the Rare Earth Corridors announced in Budget 2026-27 are useful, but they operate in isolation from energy and fertiliser supply chain planning. Nobody owns the whole chain from resource to finished product.

Japan addressed an analogous problem through its sogo shosha, the general trading companies that control entire value chains from upstream mines to downstream distribution. Mitsubishi, Mitsui, Itochu, Sumitomo, Sojitz, and Marubeni handled 65% of Japan’s imports and 50% of its exports at their peak. They originated in the Meiji era, when the government recognised that it lacked the managerial expertise to run strategic enterprises and instead partnered with private companies that had demonstrated capability. The government set strategic direction. Private enterprise executed. The partnership persisted across decades and led to the creation of National Champions – companies that delivered on critical sovereign priorities.

India attempted something structurally similar when Nandan Nilekani was appointed from the private sector in 2009 to build Aadhaar. He had a one-page directive, cross-departmental authority, direct reporting to the Prime Minister across multiple governments, and delivered the world’s largest biometric identity system to cover 1.4 billion Indians.

India’s sovereign resilience challenge demands a comparable institutional design. A National Supercritical Whole-Chain Mission, led by a private sector leader of demonstrated capability, reporting directly to the Prime Minister’s Office, with authority to cut across ministry boundaries, break interdepartmental deadlocks in real time, end nanny-state overregulation, and infuse cutting-edge market-aligned talent and competence into implementation. The mission should begin with a comprehensive vulnerability audit, then partner with private sector companies, Reliance, Tata, L&T, JSW, JSPL, among many others, that have the capital and engineering capacity to execute projects for the PSUs. The leader must have a fixed term of at least ten years, insulated from political cycles. The commitment must extend to 2047 and survive changes in government and commodity prices.

PSU joint ventures spiralling in regulatory wormholes for decades are not an execution model. They are a symptom of the problem the mission must solve. PSUs must be compelled to distribute projects to National Champions. These Champions must each cultivate their own universe of step down vendors that execute components of each project. Startups can bring innovation and unique IP into these projects and build strategic partnerships with the Champions. Just like DARPA initiated technologies that eventually led to the internet and GPS, entire ecosystems can be built under the irrigation of funding from each PSU.

The Structural Risk of Persistent Hesitation

India has the raw materials for sovereign resilience: 378 billion tonnes of coal reserves, 7.23 million tonnes of rare earth oxides, and a private sector that built Aadhaar, UPI, Jio’s national 4G and 5G network, and the logistics for the world’s largest vaccination drive. Industrial groups with the capital and engineering capacity to execute at scale already exist. What is absent is the institutional architecture to convert these into deliberate and coordinated strategic capacity.

The Iran war will pass. Oil prices will stabilise. India’s consistent pattern after previous shocks has been to announce missions, constitute committees, and allow urgency to dissipate as prices normalise. Norway converted a depleting resource into compounding national wealth through sustained institutional commitment across political cycles. Japan built the sogo shosha over decades of unbroken government-private partnership. India has advantages larger than another oil field and a resource-poor island combined. Whether its leadership builds the institutional architecture to deploy them, or defaults to another cycle of crisis and amnesia, will determine whether the $10 trillion aspiration is a plan or a slogan.

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