India Targets $51B in Critical Imports for Local Output Push

Incentives will follow the production-linked scheme template already used for electronics and pharma, several people familiar with the planning said. The government is offering capital subsidies, tax breaks, and priority clearance for domestic producers that set up capacity for listed items. The first phase is expected to cover about 40 products where existing Indian production is minimal but technically feasible.

The broader aim is to shrink a goods-trade deficit that hit $240 billion last fiscal year, much of it driven by intermediate goods. China alone accounted for roughly $85 billion of India's imports in that period, most of it manufacturing inputs. The domestic push is also intended to secure supply of components identified as vulnerable after Covid-era factory shutdowns and the 2020 Galwan clashes disrupted cross-border shipments.

State-run agencies, including the Department for Promotion of Industry and Internal Trade, will coordinate with industry bodies to identify the first batch of products eligible for subsidies. A formal notification is expected within six months, the people said. The finance ministry has set aside a preliminary allocation of $4 billion for the scheme in the next budget.