SDG 8: Decent Work and Economic Growth | SDG 9: Industry, Innovation and Infrastructure | SDG 17: Partnerships for the Goals
Ministry of Finance | Department for Promotion of Industry and Internal Trade (DPIIT) | NITI Aayog
The Economic Survey 2025-26 proposes a fundamental shift in India’s industrial strategy through the “Disciplined Swadeshi” framework. In a world characterized by geopolitical fragmentation and rapid technological disruption, the Survey argues that Swadeshi is both a defensive and offensive lever to ensure economic sovereignty. However, it cautions that protection without productivity-enhancing investment creates fragility rather than strength. Therefore, India must move away from blanket import substitution toward a calibrated indigenization that builds long-run capability and export orientation.
The Three-Tiered Indigenisation Framework The Survey introduces a strategic methodology for prioritizing indigenization efforts based on strategic urgency and economic feasibility:
Tier 1: Addressing critical vulnerabilities with high strategic urgency where domestic capability is a prerequisite for security and continuity.
Tier 2: Investing in economically feasible capabilities with significant strategic payoffs, where India has a realistic path to global competitiveness.
Tier 3: Managing low-urgency or high-cost substitution where indigenization may not be feasible or desirable in the short term. These tiers are dynamic, evolving as technologies mature and costs decline, with the ultimate goal of transforming indigenization into export capability.
National Input Cost Reduction Strategy A cornerstone of this framework is the treatment of competitiveness as infrastructure. The Survey highlights that elevated input costs act as a diffuse, economy-wide penalty that erodes export potential. Pairwise with indigenization, India must implement a systematic strategy to provide affordable and reliable inputs—ranging from energy and logistics to raw materials—as a foundational requirement for manufacturing and employment.
The Path to Strategic Indispensability The Survey frames a progression from Strategic Resilience (the ability to absorb shocks) toward Strategic Indispensability (the ability to become a source of reliability and value for the world). This transition cannot be achieved through insulation alone; it requires embedding domestic capabilities into global production systems so that the world moves from “thinking about buying Indian” to “buying Indian without thinking”. Achieving this high bar demands a shift toward an entrepreneurial state that acts under uncertainty, structures risk, and learns systematically through “bounded institutional spaces” where experimentation is permitted.
What is the difference between “Strategic Resilience” and “Strategic Indispensability” in the 2025-26 Economic Survey? Strategic Resilience is the ability of the State to anticipate vulnerabilities, coordinate across institutions, and respond to external shocks without disorder—it is essentially about maintaining stability. Strategic Indispensability is a higher-order objective: it is the capacity to build unique, complex capabilities that others depend upon. By becoming an indispensable part of global production systems, India moves from being a mere participant in markets to becoming a source of stability and value that others cannot easily substitute.
Policy Relevance
The “Disciplined Swadeshi” framework marks a transition toward state-led strategic integration.
Institutional State Capacity: The Survey underscores that India’s most consequential constraint is no longer the absence of resources, but the institutional incentive structures that shape decision-making under uncertainty.
Outcome-Oriented Bureaucracy: Successfully navigating this transformation requires “institutional forgiveness” for good-faith errors, allowing bureaucrats to experiment and course-correct—a marks of competence rather than weakness.
Deregulatory Momentum: The ongoing Compliance Reduction and Deregulation Initiative (with 76% of 828 actionable reforms already implemented) is framed not as a retreat of the state, but as a strengthening of it through cross-agency coordination and real-time learning.
Regulatory Modernization: The proposal to establish Schools of Regulatory Studies and enforce strict timelines for approvals aims to eliminate the real economic costs of regulatory delays, ensuring that the “private corporate sector” competes on productivity and quality.
Relevant Question for Policy Stakeholders: How can the Ministry of Finance institutionalize the “Entrepreneurial State” model within the DPIIT to ensure that indigenisation efforts in Tier 1 and Tier 2 sectors are paired with credible withdrawal of support (exit) once global competitiveness is achieved?
Follow the full news here: ECONOMIC SURVEY PROPOSES DISCIPLINED SWADESHI FOR STRATEGIC RESILIENCE