CII President R. Mukundan has urged for deeper industrial reforms, advocating for a Production-Linked Incentive (PLI) scheme for chemicals and a diverse energy mix to reduce import reliance. Amid geopolitical risks in West Asia, these measures aim to bolster India’s manufacturing self-reliance and energy security as the economy expands.
What Happened
Confederation of Indian Industry (CII) President R. Mukundan has called for a strategic pivot in India’s industrial and energy policies to navigate global geopolitical risks and secure long-term growth. Speaking on the impact of recent volatility in West Asia, Mukundan emphasized the need for faster exploration of domestic resources and a systemic reduction in import dependence across high-intensity sectors. He highlighted the urgency of implementing foundational and factor-driven reforms to lower the cost of doing business and support the Micro, Small, and Medium Enterprises (MSME) sector.
Why Energy Security Matters
India’s energy security is currently a central economic concern, with nearly 85% of crude oil and significant volumes of natural gas and fertilizer feedstock still sourced through imports. Recent geopolitical tensions in West Asia have exposed the vulnerability of these supply lines, leading to price spikes and operational hurdles for Indian industry. Mukundan argued that for India’s power needs—projected to grow as the economy scales—relying primarily on traditional fossil fuels is no longer sufficient. He emphasized that the country’s energy strategy must evolve beyond standard renewable targets to include a robust mix of nuclear power, hydropower, biomass, and emerging sources like tidal energy.
The Push for PLI in Chemicals
A significant part of the CII leadership's vision involves expanding the Production-Linked Incentive (PLI) framework to cover the chemicals sector, particularly those used in Active Pharmaceutical Ingredients (APIs). While existing PLI schemes across 14 sectors have reportedly generated substantial production and employment by 2026, industry leaders believe the chemical and petrochemical value chain remains an area where India can significantly lower its import bill. By incentivizing domestic manufacturing, the goal is to shift from downstream assembly to creating a more vertically integrated supply chain, similar to the trajectory seen in the electronics manufacturing sector over the past few years.
Diversifying India’s Energy Mix
Beyond renewables, the discussion on energy diversification in 2026 has increasingly focused on nuclear power. With India having recently achieved significant milestones in domestic nuclear technology, including the criticality of new fast breeder reactors, there is a renewed push to integrate nuclear power as a stable baseload supply for industries. The CII leadership has suggested that industry can play a role as an operational partner in financing and deploying these projects. Small Modular Reactors (SMRs) are also being viewed as potential solutions for creating a more distributed and stable industrial power grid.
The Risk of Import Dependence
Despite the push for 'Make in India,' the heavy reliance on imported critical minerals, fertilizers, and chemical intermediates remains a verified material risk. Data from recent quarters shows a significant portion of pharmaceutical ingredients and key chemicals are still sourced from single-source providers, primarily China. This dependency creates supply chain volatility, particularly when global trade lanes are disrupted. Analysts note that while trade remedies and duties are being deployed to support domestic value addition, the transition requires a delicate balance to avoid raising input costs for local manufacturers who rely on these imported raw materials.
What Investors Should Monitor
Investors should track upcoming government announcements regarding the potential expansion of PLI schemes into the chemical and petrochemical sectors. Additionally, the execution of large-scale nuclear power projects and the pace at which state-level grids integrate renewable storage capacity will be critical for long-term industrial stability. The ability of the industry to de-risk its supply chains by sourcing essential minerals and chemical feedstocks from more diverse global markets remains a key factor to watch, as it will directly influence corporate margins and operational continuity.