Page 21 - Nuvama | IC Report 2023

INDIA: THE 5D ADVANTAGE

Global manufacturing
Policymakers’ focus globally, as argued earlier, is shifting from efficient supply chains to dependable
supply chains. The just-in-time principle of production may be giving way to just-in-case approach. The just-in-
The mantra of efficiency to dependability could mean that offshoring could make way for home- time principle of
shoring and friend-shoring. production may be
giving way to just-
China’s relations with the West have strained, particularly with the Trump’s tariff war, and the pandemic in-case approach;
has only accelerated the global drive towards diversification (China + 1). therein lies an
opportunity for India
Countries found themselves precariously dependent on other countries for production of masks, PPE
kits and semiconductors, among many. JIT production is critical not just for production of automobiles,
but also in production of defence and communication equipment.
The fact that more than 80% of the global semiconductor chips’ production happens in just three
countries – China, Korea and Taiwan – does raise legitimate concerns about national security. The
learning from the last two years is clear—dependability is more critical than efficiency. Therein lies the
opportunity for India.
Energy security

Similarly, the focus is shifting from cheap energy to energy availability and sustainability. Countries
might adopt multiple strategies such as: In renewable
energy, India
l reducing dependence on Russia for fossil fuels; is playing a
l reverting to coal in the short run; and leadership role
l accelerating renewable energy for the long run.

In renewable energy particularly, India is playing a leadership role in defining the global solar regime.
More importantly, unlike fossil fuels, India has large reserves of the ‘sun and sand’, which are key
ingredients for a solar regime.
Defence security

In a de-globalised world, national security is of paramount importance. On this front, India is making
progress to beef up its armed forces. Its new defence policy now lays heavy emphasis on domestic India’s new
production while discouraging imports. Also, the government is setting up defence corridors and defence policy
easing FDI restrictions with the core objective of creating state-of-the-art security systems that not stresses domestic
production
only fulfil domestic needs, but also cater to exports.
over imports

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