Over the past couple of days, Prime Minister Narendra Modi has doubled down on a familiar message: buy Indian, build Indian. From “Vocal for Local” to the framing of festivals as opportunities for economic patriotism, the call for greater domestic consumption has become a central plank of his economic messaging. As India eyes a position among the world’s leading economies while grappling with a new and uncertain tariff environment, this renewed emphasis on economic nationalism has struck a chord with a public eager for self-reliance and global stature.

But beneath the slogans lies an uncomfortable asymmetry. The government’s push for Swadeshi is increasingly cast as a consumer movement—a patriotic duty for Indian households. Yet, absent a robust and competitive domestic manufacturing base, the exhortation to “buy Indian” risks becoming a hollow appeal. India cannot consume its way to self-reliance. It must first produce its way there.

Swadeshi, after all, was never just about boycotting foreign goods. In its original incarnation during the freedom struggle, it was a two-pronged strategy: to reject British imports, yes, but more importantly, to rebuild India’s own industrial capacity. Today’s narrative—driven by tariffs, slogans, and marketplace sentiment—risks inverting that logic. By putting consumption ahead of production, it shifts the burden of nation-building from the state to the shopper.

In this article, I argue that a modern, meaningful Swadeshi must begin not with consumption, but with competitiveness. It must prioritize industrial capability over retail patriotism, and it must treat economic resilience not as a temporary wartime impulse but as a sustained, forward-looking strategy. True self-reliance will come not when citizens are urged to buy Indian out of obligation, but when Indian goods stand toe-to-toe with global competitors on quality, innovation, and price. That journey starts on the factory floor—not at the checkout counter.

A tale of two swadeshis

The original Swadeshi movement of the early 20th century was not just about boycotts. It was an economic doctrine rooted in dual imperatives: encouraging domestic consumption and—more importantly—reviving indigenous industry. Swadeshi, in its historical essence, was not isolationist but constructive—it sought to build national industrial strength and resilience through grassroots entrepreneurship, the revival of artisanal crafts, and the localization of production. It fused economic self-sufficiency with the broader goal of political independence.

Today, this philosophy has been reshaped by two key policy thrusts: ‘Make in India’ (2014) and ‘Atmanirbhar Bharat’ (2020). These initiatives reintroduce the Swadeshi impulse in a modern context. Yet the emphasis has increasingly tilted toward demand-side nationalism—encouraging consumers to prefer Indian-made goods. This shift risks reducing Swadeshi to a retail slogan rather than a blueprint for industrial transformation.

There is an important distinction here. In historical Swadeshi, production and consumption were inseparable: one created the conditions for the other. In its modern form, however, consumption is often treated as an end in itself, while the hard work of building competitive domestic supply chains lags behind. For Swadeshi to be more than symbolic, India must first empower its producers—by investing in technology, reducing regulatory frictions, and facilitating access to global markets.

Without this deeper production base, the call to “buy Indian” becomes performative. It risks burdening citizens with the responsibility for national economic performance, while leaving the state and industry insufficiently accountable for the creation of quality, affordable, and innovative domestic goods.

Global Value Chains: The New Arena

The 21st century factory is no longer bounded by national borders. Production is fragmented across Global Value Chains (GVCs), where design, component manufacturing, assembly, and marketing are distributed across multiple countries. Nearly 70% of international trade is now linked to these multi-country production networks.

In such an environment, the idea of self-reliance cannot mean self-containment. Instead, it must be redefined as the ability to insert oneself effectively into these value chains—not just as a low-cost assembler, but as a creator of high-value inputs, proprietary designs, and technological capabilities.

India’s record here is mixed. Its GVC participation rate rose to around 40%, reflecting a growing integration into global commerce. But this masks important differences. India’s backward participation—using imported inputs to produce exports—has increased, especially in sectors like electronics and auto manufacturing. But its forward participation—contributing Indian-made inputs to the exports of others—remains low, especially in manufacturing.

This pattern tells a revealing story. India is increasingly plugged into global supply chains as a consumer of foreign components but not yet as a critical supplier. The country is performing the “last mile” of production—assembly—without embedding itself in the upstream value creation process. As a result, it remains vulnerable to disruptions in external supply and struggles to capture meaningful value.

Services are an exception. In IT and business process outsourcing, India is a world leader, supplying critical intermediate services to the rest of the world. But in manufacturing, it continues to punch below its weight.

The policy implication is clear. Rather than treat imports as inherently problematic, India must distinguish between strategic vulnerabilities and productive interdependence. A transistor or chemical compound sourced from abroad is not a weakness if it allows India to competitively produce and export complex products. Strategic autonomy comes not from eschewing global linkages, but from mastering and upgrading within them.

In this sense, Swadeshi must be less about insulating the domestic economy and more about deepening its participation in global networks—on terms that generate innovation, resilience, and long-term competitiveness.

MSMEs: The Missing Middle

No production strategy in India can succeed without reviving its Micro, Small and Medium Enterprises (MSMEs). These firms generate nearly 30% of GDP, account for close to half of India’s exports, and employ over 23 crore people. But they remain shackled by a host of structural impediments: limited access to formal credit, technological backwardness, inadequate training, and a policy landscape still biased towards larger enterprises.

More than 90% of MSMEs operate informally, often invisible to regulators and financial institutions alike. This informality deprives them of the scale advantages, public support, and capital infusion necessary to modernize. It also makes them highly vulnerable to economic shocks, as seen during the pandemic, when thousands of small enterprises closed shop permanently.

Moreover, MSMEs often face a “missing middle” trap: while India has a vast pool of micro-enterprises and a few large, globally competitive firms, the cohort of mid-sized firms capable of scaling up is perilously thin. This has stunted the development of complex supply chains and limited domestic value addition.

To unlock their potential, MSMEs need more than rhetorical support. What they require is deep ecosystemic reform—digitization, cluster-based infrastructure, supply chain financing, vocational training aligned with Industry 4.0, and a tax and compliance regime that encourages formalization without punitive burdens. India’s industrial renaissance will hinge not on the giants of the stock exchange, but on the dynamism of its smallest producers.

Sectoral Realities

India’s industrial base is a study in contrasts. The country has emerged as a global leader in low-cost pharmaceuticals, generic vaccines, and software services. Its automotive and textile sectors are sizeable, if not dominant, and it now assembles more mobile phones than most countries in the world. Yet these success stories often mask deeper vulnerabilities.

In electronics, for instance, India has made remarkable gains in final assembly. But the high-value components—semiconductors, display panels, sensors—are still overwhelmingly imported, primarily from China and South Korea. This limits value addition and leaves India exposed to supply chain disruptions. Likewise, while the pharmaceutical industry is a global supplier, it relies heavily on imported Active Pharmaceutical Ingredients (APIs), with China accounting for over 70% of its needs.

The automotive sector tells a similar tale. India is the fourth-largest vehicle manufacturer in the world, but it commands less than 3% of the global auto component trade. High-end engine parts, EV batteries, and electronics are still largely imported. Meanwhile, food processing, despite a massive agricultural base, remains chronically underdeveloped, with post-harvest losses among the highest in the world.

These examples illustrate a critical insight: India’s industrial sectors often operate at the wrong end of the value chain. They are strong in scale but weak in depth. Any meaningful Swadeshi strategy must focus not just on expanding output, but on moving up the value ladder—from assembly to design, from volume to value, from imitation to innovation.

Lessons from the past: Brazil, Korea and the License Raj

The world is littered with cautionary tales of protectionist overreach. Brazil’s post-war embrace of Import Substitution Industrialization (ISI) initially spurred rapid growth. But by the 1980s, inefficiency, inflation, and a bloated state-led economy had produced economic stagnation. Shielded from global competition, domestic firms failed to innovate, and consumers were left with overpriced, outdated goods. The “lost decade” of Latin America offers a powerful lesson in how inward-looking industrial policy can backfire.

India’s own pre-liberalization era—the infamous License Raj—was built on similar assumptions. A labyrinth of quotas, permits, and high tariffs insulated the domestic market from global currents. While it did spawn public sector giants and nurtured nascent industries, it also entrenched rent-seeking, stifled innovation, and delivered anaemic economic growth for decades. The 1991 crisis was not just a macroeconomic collapse but a judgment on the economic model itself.

Contrast this with South Korea. Seoul also deployed protection and state intervention, but with one crucial difference: support was tied to performance. Firms that received subsidies had to meet export targets, innovate, and compete globally. This created a culture of disciplined capitalism, where global integration was not an afterthought but the core objective. The result was the rise of globally competitive chaebols like Samsung and Hyundai, built not behind walls, but by climbing them.

These historical lessons are not arguments against industrial policy per se. They are reminders that the ends matter as much as the means. Protection can be justified, but only if it is temporary, conditional, and directed towards global competitiveness. Otherwise, it breeds complacency and corruption.

A Swadeshi that is competitive and without a crisis

To succeed, India’s production story needs a new guiding philosophy—call it ‘Competitive Swadeshi.’ This is not about autarky, but about building resilience and relevance in global markets. It means:

• Prioritizing sectors for strategic autonomy, rather than protecting all industries indiscriminately.

• Moving from final assembly to design, innovation, and IP ownership.

• Empowering MSMEs not through tariffs, but through credit, skills, and formalization.

• Treating imports not as threats, but as potential stepping stones to global competitiveness.

And critically, it means using GVCs as a launchpad, not a lifeline. With the right mix of reform, infrastructure, and openness, India can position itself as a trusted node in global supply chains—a “China + 1” not just in rhetoric, but in reality.

Above all, Swadeshi must outgrow its role as a crisis response. It must become a steady, strategic doctrine of industrial renewal—not something invoked during pandemics, geopolitical tensions, or trade disruptions, but pursued with consistency and ambition.

India’s challenge is not simply to persuade citizens to buy Indian, but to produce goods that people around the world want to buy. True Atmanirbharta will be achieved not when Indian consumers are guilt-tripped into buying local, but when they—and the world—choose Indian products because they are the best on offer.

Swadeshi begins on the factory floor and not at the checkout counter.