The Last Mile of Globalisation: India's Supply Chain Moment Demands More Than Luck

In March 2021, a single container ship got stuck sideways in the Suez Canal for six days. Roughly $9.6 billion of trade a day backed up behind it. The Ever Given became a meme online, but underneath the jokes was something worth taking seriously. The modern economy runs on chains so tightly wound that one 400 metre ship can choke global commerce for a week. Supply chains, built for decades on the idea of pure efficiency, are now being questioned. Resilience is the new watchword. And India happens to be sitting at a genuinely interesting point in this story.

The efficiency trap

Globalisation after the 1990s was built on just in time manufacturing. Keep inventory low, pick single suppliers, put production wherever labour is cheapest. This worked. Costs fell, turnaround got faster, balance sheets got leaner. But there was a catch nobody priced in properly. JIT trades a visible cost, holding inventory, for an invisible one, systemic fragility. COVID made that fragility impossible to ignore. Semiconductor shortages idled car plants from Detroit to Chakan. API and PPE shortages hit hospitals everywhere. Shipping rates went up more than five times at their peak in 2021.

India's pharma sector is a good example of this fragility. India is often called the pharmacy of the world because it supplies a huge share of the world's generic medicines by volume. But there's a catch here too. For years, India sourced most of its bulk drug intermediates and active pharmaceutical ingredients, the actual chemistry that goes into a pill, from China. When Chinese API plants shut down in early 2020, Indian drug makers suddenly faced price spikes and supply gaps. It was a strange position to be in. A country known globally for exporting finished medicines was quietly dependent on one foreign supplier for the raw chemistry underneath.

Policy as a resilience lever

The government's response is worth studying. The Production Linked Incentive scheme for bulk drugs, along with dedicated Bulk Drug Parks in Himachal Pradesh, Gujarat, and Andhra Pradesh, was built specifically to rebuild India's own API capacity for a list of critical intermediates. Something similar is happening in solar. China still controls most of the world's polysilicon and wafer capacity. India's Approved List of Models and Manufacturers, along with the PLI scheme for high efficiency solar modules, is an attempt to move India up the value chain. Right now India is strong in module assembly. It is not yet strong in cell and wafer manufacturing, which is where the real value sits. These policies are essentially the government paying for resilience that the private market would not have chosen to pay for on its own.

Resilience is not the opposite of efficiency

Here is the useful way to think about it. Resilience isn't the enemy of efficiency. It is efficiency measured over a longer time horizon, across more possible outcomes. A company that dual sources a critical input, or keeps a small buffer of extra stock, is paying a small recurring cost to avoid a large occasional one. That is just insurance. It should be judged the way insurance is judged, against the odds and size of the disaster it prevents, not against a single quarter's cost sheet. Toyota is the textbook case here. After the 2011 Tōhoku earthquake, Toyota rebuilt its supply chain with mapped multi tier suppliers and strategic chip inventories. When the global chip shortage hit in 2021, Toyota's losses were far smaller than most of its competitors. That wasn't luck. That was a company that had already decided resilience was worth paying for.

India's opening, and its limits

The China Plus One story has clearly helped India. Apple's growing assembly base in Tamil Nadu and Karnataka, through Foxconn and others, is the most visible sign of it. But assembly is not the same thing as depth. Real advantage means investing in component ecosystems, testing infrastructure, and skilled technical workers, not just final assembly lines that can be picked up and moved somewhere cheaper the moment costs change. The opportunity for India is real. But it will only be captured by companies and policymakers who treat supply chain design as a serious strategic choice, not something left to the procurement team at the end of the process.

The next disruption is coming, whether it's geopolitical, climate related, or something nobody has thought of yet. The question is not if. The companies and countries that plan for that uncertainty now, instead of reacting to it later, will be the ones still shipping when the next ship runs aground.