Security inseparable from industrial policy

Resilience alone is no longer sufficient; industrial policy must evolve from a protective shield to a springboard for growth & global competitiveness

- MAYANK JAIN SABYASACHI KAR

INDUSTRIAL POLICY IS no longer just about growth; it is now inseparable from national security. From the Covid-19 pandemic to the Russia-Ukraine war, rising trade protectionism, and now the US-Israel-Iran conflict, each has underscored how deeply geopolitics shapes economic outcomes.For India, thevulnerability is stark.

Nearly half of its LPG imports pass through the Strait of Hormuz, a chokepoint exposed to escalating tensions. Brent crude has surged from around $70 a barrel before the conflict to well over $100. Every $10 increase in oil prices adds an estimated $12-15 billion to India’s import bill, widens the current account deficit (CAD), weakens the rupee, and stokes inflation. India’s growth forecasts for 2026 have already been revised downward.

The instinct such shocks trigger in governments is understandable: produce more at home and depend less on the world. In the short run, there are sectors like energy, fertilisers, and critical minerals where meeting demand through domestic production, particularly in renewable energy, is sensible and urgent.The Economic Survey’s idea of “strategic resilience”, which emphasises producing what a country cannot afford to be without, is a sound starting point.

But if strategic resilience is the beginning of India’s industrial response, it cannot be the end. The deeper lesson of the Hormuz crisis is not merely that imports create dependencies, but also that India does not yet earn enough foreign exchange through exports to comfortably absorb external shocks. The real vulnerability is not that India imports too much; it is that it does not export enough to pay for those imports when crises hit.