India

Geopolitical exposure, climate risk and policy continuity intelligence for India-origin supply chains.

Geopolitical conflict

LAC standoffs with China following Galwan Valley 2020 (20 Indian soldiers killed). Pakistan-Kashmir dispute carries periodic escalation risk. Major manufacturing hubs in Gujarat, Tamil Nadu, and Maharashtra are geographically distant from active tension zones.

Supplier concentration

Significant in generic pharmaceuticals (~20% of global generics), IT services, textiles, gems and jewellery. Growing electronics manufacturing. Not globally dominant across categories — concentration risk is sector-specific, not systemic.

Climate & physical risk

Monsoon dependency — annual variability causes agricultural and logistics disruption. Severe flooding in Kerala (2018), Assam, Bihar (recurring). Unprecedented heat waves 2022 and 2023 affecting outdoor worker productivity. Bay of Bengal and Arabian Sea cyclone exposure.

Sanctions exposure

Not subject to US, EU, or UN sanctions. India's continued Russian oil purchases have not triggered secondary sanctions. However, goods containing Russian-origin inputs sourced via India may create supply chain compliance questions for Western buyers.

Policy continuity & property rights

Market capitalism maintained across BJP and Congress governments. No nationalisation risk for foreign supply chain assets. Retrospective tax disputes (Vodafone, Cairn Energy) are documented risk for foreign investors. Some protectionist instincts via PLI schemes and import substitution policy.

Geopolitical Exposure

China border — LAC: The Galwan Valley clash of June 2020 resulted in 20 Indian and at least 4 Chinese soldiers killed — the deadliest border incident between the two countries since 1975. Multiple LAC standoff points remain partially unresolved. India has accelerated infrastructure development along the border and shifted procurement away from Chinese suppliers in response.
Pakistan — Kashmir: The Kashmir dispute is a long-standing nuclear-armed bilateral tension. The 2019 Pulwama-Balakot exchange demonstrated escalation potential. No active full-scale conflict — but periodic escalation risk requires scenario monitoring. Manufacturing zones in northern India are not directly exposed.
Strategic positioning: India is a Quad member (with US, Japan, Australia) and has deepened EU trade and strategic ties. This Western alignment reduces geopolitical risk for EU buyers — India is increasingly positioned as a trusted sourcing alternative to China for strategic goods.
Buyer implication: India's conflict risks are geographically contained — manufacturing hubs in Gujarat, Tamil Nadu, Maharashtra, and Karnataka are distant from the China and Pakistan border zones. Geopolitical exposure is a monitoring issue rather than an acute supply chain risk for most categories.

ACLED India data →

Supply Chain Concentration

Generic pharmaceuticals: India supplies approximately 20% of global generic medicine exports by volume and approximately 50% of global vaccine requirements. Indian API (active pharmaceutical ingredient) manufacturers are themselves partly dependent on Chinese raw material inputs — creating a layered concentration risk.
Growing electronics: Apple has begun manufacturing iPhones in India (Foxconn and Tata facilities in Tamil Nadu and Karnataka). India is the primary candidate for smartphone and electronics assembly diversification away from China, but capacity is currently a fraction of Chinese scale.
IT services: India dominates global IT services outsourcing. This is relevant for supply chain technology, ERP implementation, and digital procurement — disruption to Indian IT services would have a broad indirect supply chain impact for European companies.
Concentration signal: India's D2 score of 4 reflects sector-specific concentration rather than systemic dominance. Buyers in pharmaceuticals face higher India concentration risk than buyers in general manufacturing. Category-level assessment is more relevant than the aggregate index score.

Climate & Physical Risk

Monsoon dependency: India's agricultural economy is heavily dependent on the June–September southwest monsoon. A deficient monsoon causes crop failures, food price inflation, and rural income shocks that affect consumer spending and smallholder supplier capacity. Excess monsoon causes flooding across multiple manufacturing states.
Heat stress: India recorded unprecedented heat wave conditions in April–May 2022 and again in 2023, with temperatures exceeding 45°C in multiple states. Heat stress reduces outdoor worker productivity, increases heat-related illness, and has been linked to coal and power supply disruptions affecting manufacturing.
Flooding: Kerala (2018 — worst floods in a century), Assam, Bihar, and Odisha experience recurring severe flooding. Chennai flooding (2015) disrupted automotive and electronics manufacturing for weeks. These events are becoming more frequent and more severe with climate change.
Cyclone exposure: The Bay of Bengal and Arabian Sea coasts are subject to tropical cyclone activity (October–December and May–June). Andhra Pradesh, Odisha, and Tamil Nadu are most exposed. Cyclones Fani (2019) and Amphan (2020) caused major agricultural and infrastructure damage.

Germanwatch CRI →INFORM Risk Index →

Sanctions & Policy Continuity

Sanctions status: India is not subject to US, EU, or UN sanctions. India's relationship with both the US and EU is broadly positive and deepening — EU-India FTA negotiations are active. Sanctions risk is very low.
Russia relationship: India has continued purchasing discounted Russian crude oil since February 2022 despite Western pressure. This has not triggered secondary sanctions. However, buyers sourcing goods from India should verify that inputs do not contain Russian-origin components that could create compliance exposure under EU sanctions on Russia.
Policy continuity: India has maintained market-oriented economic policy across BJP and Congress-led governments since the 1991 liberalisation. No nationalisation of foreign-owned manufacturing assets has occurred. The risk for foreign investors is administrative and regulatory friction, not expropriation.
Investor risk: India has a documented history of retrospective tax disputes with foreign investors — Vodafone (2012) and Cairn Energy (2014) both faced retrospective tax demands totalling billions of dollars. The Modi government resolved these disputes (2021) and amended the relevant legislation. PLI (Production Linked Incentive) schemes favour domestic manufacturing — relevant context for market access rather than supply chain asset security.

OFAC SDN List →Fraser Institute EFW →

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