India must launch a “new independence movement” aimed at reducing its reliance on foreign capital, defence equipment, energy imports and critical technologies, according to a strategy report by Kotak Institutional Equities, which argues that rising geopolitical rivalries and a wave of global protectionism are reshaping the foundations of the world economy.

The report argued that rising geopolitical conflicts, resource nationalism and tighter controls over technology transfers have narrowed India’s options for relying on imports and external financing, making domestic manufacturing and self-reliance an economic necessity.

“India has been managing its high external dependencies through imports. However, the option of imports is becoming narrower, which necessitates more radical policy actions to reduce external dependencies,” the report, cited by Moneycontrol, observed.

According to the study, India’s trade deficit averaged 6.4 per cent of GDP between FY16-FY26, while the current account deficit averaged 1 per cent during the same period. Analysts warned that the country’s dependence on software exports and overseas remittances could become a vulnerability as artificial intelligence disrupts traditional service industries.

The report recommends a stronger push toward domestic manufacturing, noting that manufacturing contributes only around 13 per cent of India’s GDP, one of the lowest shares among major economies.

Expanding manufacturing capacity and increasing domestic value addition would help reduce dependence on imported goods and strengthen macroeconomic stability, it said.

Energy dependence

The Kotak report observed India’s energy dependence remains another major concern, given that the country imports 85 per cent of its crude oil and half of its natural gas needs, with imported energy accounting for more than half of the trade deficit in recent years.

Kotak analysts argue that renewable energy offers the most viable long-term solution.

The report also called for greater indigenisation of defence production, citing that imports accounted for an average of 38 per cent of its procurement requirements between FY16-24.