A large part of this decade thus far has been characterised by uncertainty and volatility. Beginning with the COVID-19 pandemic that disrupted the globe for almost two years, followed by major geopolitical conflicts such as the ongoing Russia-Ukraine war, and more recent shift in trade and economic policies under the Trump administration, the traditional manufacturing, operations and supply chain playbooks stand fundamentally challenged.

Numerous other disruptions of various shapes and forms are not temporary deviations from an otherwise stable global order, they are the new normal. These signal a world increasingly defined by Volatility, Uncertainty, Complexity and Ambiguity, a VUCA environment (Figure 1). In such a world order practices like planning for long cycles, tightly optimised supply chains, and reliance on single sources, become sources of risk rather than strength.

Rather, resilience, adaptability, and the ability to make timely, informed decisions under uncertainty are strategic assets and capabilities which continue to increasingly define competitive advantage in modern manufacturing.  

Figure 1: The VUCA Environment

For India, this shift presents a dual reality to contend with. On one hand, the uncertainty surrounding global manufacturing has laid bare various structural weaknesses within the India manufacturing system, ranging from uneven technological knowhow, fragmented and inadequate supplier networks, skills gap amongst labour forces and regulatory complexities.

On the other hand, the same uncertainty has led to global manufacturing firms to rethink their overly concentrated and overly reliant supply chains. This has led to new trends such as “nearshoring” and “friend-shoring”, giving opportunities to countries which can offer reliability, adaptability, stability and trust. India, among several other countries, occupies a lucrative position.

The essential question therefore is not whether Indian manufacturing can survive the VUCA world, but whether it can grab the opportunities presented, and can learn to adapt and thrive because of it. Here, we examine and understand how recent global disruptions have reshaped the operating environment for global manufacturers and Indian players in particular.

Furthermore, we explore the challenges and opportunities that lie ahead, and go on to outline a strategic roadmap for building adaptable, resilient and future-ready manufacturing systems in India.

Manufacturing at a turning point

Manufacturing, across the globe, is undergoing a fundamental reset, driven by various geopolitical and economic factors, which have aggravated in recent years. The disruptions of the past few years exposed the flaws and vulnerabilities in our manufacturing and supply chains, and even altered and challenged the very assumptions on which these manufacturing and supply chain strategies were built.

The traditional playbook of the yesteryears is now redundant! Geopolitical tensions, trade disputes and policy-driven interventions are now recurring characteristics of the operating environment for manufactures worldwide. Events such as tariff uncertainty, export controls, and sudden supply restrictions, like that of rare earth metals, have demonstrated how localised decisions can trigger global production bottlenecks.

In addition to these global factors, shifting market dynamics add to the complexity. Fast changing consumer preferences, demand patterns and technology adoption cycles are occurring faster than what traditional manufacturing setups can keep up with and handle. To mitigate these challenges, manufacturing firms are moving away from traditional manufacturing models which are optimised for efficiency under relatively stable conditions, and are embracing practices and systems which can absorb shocks, adjust rapidly, are resilient and continue performing effectively under uncertainty.

This transition reflects a shift in manufacturing logic, from efficiency-centric models designed for stable environments, toward resilience-centric systems built to perform reliably under volatility and uncertainty (Figure 2).

Amidst this changing landscape, India occupies a unique enviable position. While the global volatility and uncertainty has exposed structural issues within the Indian manufacturing ecosystem, it has also highlighted some relative sources of strength with significant potential.

In contrast to other regions plagued by persistent political and policy instability, India offers a certain degree of continuity, stability and predictability which global manufacturers have increasingly come to value recently. This relative stability, when combined with scale, market potential, and effective policies, enhances India’s appeal as a potential manufacturing destination for global manufacturing firms.  

Figure 2: From efficiency-centric to resilience-centric manufacturing

However, this opportunity will not materialise automatically and is neither universal. As manufacturing logic and competitiveness shifts, success will depend less on cost advantage and more on the ability to deliver reliably under uncertain conditions. For manufacturers, reliability, responsiveness, adaptability and operational discipline are becoming decisive factors when exploring long-term partnerships.

For the Make in India agenda, this moment represents a clear and decisive inflection point, which could make or break India’s manufacturing’s future and survival. Make in India cannot succeed in a VUCA world by chasing scale and capacity alone. It must be complemented with resilience and strategic flexibility. The next phase and future of India’s manufacturing journey will be defined not only by what it produces, but by how well it performs when the assumptions fail and disruptions become the norm.

The VUCA reality for Indian manufacturers

Globally, volatility does not affect all manufacturers and manufacturing systems equally. Some are more prone to disruption. The impact is often shaped and amplified by domestic structures, institutional constraints, and firm-level capabilities. For the Indian manufacturing ecosystem, the VUCA environment not only leads to external uncertainty, but also persistent operational and strategic challenges, which complicate decision making and execution. Geopolitical tensions, supply chain shocks and a host of other events have become mainstays of the operating environment.

Aggravating these are tariff uncertainty, export controls and logistics volatility which introduce complications to sourcing, pricing and delivery commitments. For Indian firms, these disruptive forces result in continuous planning challenges, where assumptions on various operational factors need to be revised.

These external forces interact with the internal structural constraints of the Indian manufacturing ecosystem. One such glaring constraint is India’s relatively weak integration into global value chains, especially in high-value segments like semiconductors. Dependence on imported intermediaries, coupled with cost and policy constraints over time has confined firms to lower value assembly activities. This is further aggravated by persistent gaps in labour productivity and relatively modest investments in research & development, which thwart Indian manufacturer’s advance up the value chain. Domestic institutional factors further add to the complexity.

Regulatory and compliance requirements across various facets, increase coordination costs and slow expansion decisions. For MSME enterprises, such an environment disincentives those from scaling, trapping them in low-productivity equilibrium and weakening the supplier base of the country. Additional frictions at the firm and market level also persist.

A significant fraction of manufacturers rely heavily on domestic demand. This limits their learning from more demanding global markets. Furthermore, many firms continue to rely on experience driven planning and fragmented data management systems, and lack decision-support tools that can translate information into timely action under uncertainty. Global volatility interacts with domestic manufacturing structural constraints, amplifying operational risk and exposing fragilities across India’s manufacturing ecosystem (Figure 3).

Another challenge for Indian manufacturers which often hinder their access to global markets are the increasing requirement on sustainability compliances. Environmental and social expectations are increasingly embedded in buyer requirements, financing decisions, and export access. For many firms, especially smaller suppliers, adapting to these requirements without compromising cost or quality remains a significant operational challenge.

Figure 3: When VUCA meets structural constraints

Overall, these challenges highlight bitter realities of the VUCA world, especially for the Indian manufacturing ecosystem. For us, the challenge is not uncertainty itself, but the aggravating dalliance between uncertainty and structural limitations. Addressing and mitigating the challenges of this interaction is essential not only for tackling risks, but also to leverage opportunities the VUCA world creates.

Opportunity in uncertainty

Uncertainty is usually viewed as a constraint, a challenge, something which should be minimised or hedged. However, during periods of uncertainty and volatility, we tend to see the redistribution of opportunity. As global manufacturing is reconfigured in response to the uncertainty and volatility it now faces, new windows are opening for countries that can offer not just cost advantage, but also reliability, adaptability and resilience.

Firms are reassessing their long standing manufacturing strategy which have come to be over concentrated or heavily dependent on single sources. The focus is now on diversifying their production footprint to reduce exposure to geopolitical and operational risks. The much discussed “China+1” strategy reflects this shift. This shift is not about relocating low end assembly work, it is a reassessment of how and where value is created. For India, this creates an opportunity, but one that is conditional on numerous factors working right.

In today’s operating environment, relative stability itself becomes a strategic asset. India’s political stability, large domestic market, and recent policy initiatives aligned with industry expansion makes it an attractive candidate for global manufacturers looking to diversify their production. Global buyers are also rethinking what they value in their suppliers. Volatility increasingly rewards firms that can deliver consistently under uncertain conditions. Uncertainty does not favour the lowest-cost producer, but the most reliable one.

This shift in global manufacturing strategy creates learning and upgrading opportunities for Indian manufacturers to move up the global value chain. Greater participation in global value chains exposes firms to more demanding quality standards, tighter delivery commitments, and stronger sustainability expectations. This can be a catalyst which propels many Indian manufacturers from low-value assemblers towards higher-value activities.

The on-going global disruption can encourage the development of new manufacturing models grounded in innovation, resilience and sustainability. However, this transformation is not something that’s automatic; it requires deliberate choices and concentrated actions. Indian manufacturers will have to accelerate adoption of advanced technologies such as Industry 4.0 systems, analytics, and digitisation, to enable smarter, more flexible operations. Furthermore, sustainability can no longer be treated as an external compliance requirement; it must become a cornerstone of manufacturing competitiveness, shaping production processes, supply chain design and market positioning.

For India, the opportunities presented by uncertainty lie not in eyeing short-term gains, but in building long-term capacity and capabilities in resilient manufacturing systems. Doing so requires moving beyond opportunistic responses towards adopting a coherent roadmap, which aligns policy, industry and institutional efforts to enable India to thrive in the VUCA world.

A roadmap for thriving: Building resilience by design

Thriving in a VUCA world requires more than just isolated and localised policy initiatives or just firm-level responses. What it demands is a coordinated strategy in which the government and manufacturing industry play complementary roles. From the institutional and regulatory perspective, policy must create nurturing and enabling conditions for industries to develop resilience, while manufacturing firms must take advantage of these policies and translate them into operational capability and competitive performance.

One without the other is insufficient. Rather than a series of checklists of reforms, the roadmap for Indian manufacturing must be geared towards a capability building journey, unfolding across the ecosystem, firm, and time-horizons. Keeping these objectives in mind, we provide the following roadmap for the institutional and industry stakeholders.

Strengthening the foundation: Policy and ecosystem enablement

The initiating step of the roadmap begins with reducing the systemic, institutional and regulatory frictions which tend to amplify uncertainty. It’s imperative to provide an enabling environment for Indian manufacturers to improve their competitiveness at a global scale.

Trade and regulatory liberalisation, like through focused and calibrated efforts towards reducing tariffs on intermediate inputs, can play a vital role in global value chain integration. Lowering input costs and easing access to components would enable firms to participate deeply in international production markets and move beyond low value markets.

While this may sound like providing subsidies to manufacturers, such initiatives should be accompanied with conditions hedged on time-bound capability building on part of the manufacturers, who should be pushed towards developing self-sufficiency over time. Continued regulatory and compliance simplification is another important institutional aspect which can aid in mitigating uncertainty.

Infrastructure and Technological enablement is another pillar which contributes towards ecosystem readiness. Accelerated and focused investment in logistics, multimodal connectivity, and digitally enabled industrial infrastructure can make India an attractive destination for global manufacturers, and also enable Indian manufacturers.

Recent government initiatives like PM Gati Shakti and development of Dedicated Freight Corridors are steps in the right direction, which have begun yielding dividends. Strategic initiatives around technology transfers, especially in sectors like semiconductors, advanced electronics, aerospace, defence, can support capability upgrading and strategic autonomy. Recent initiatives in this regard show the intent of the government. In a VUCA world, policy effectiveness depends not only on long-term vision, but also on flexible regulatory frameworks supported by rapid feedback loops that allow for corrections during moments of crises.

Industry action for capability building

While institutional efforts and policies can shape the terrain, manufacturing firms must build capabilities that allow them to compete on it. For the manufacturing ecosystem, resilience cannot be built overnight and not a one-shot effort. It must be approached as a phased transformation.

Phase 1: Establishing operational visibility and decision readiness

The immediate priority of manufacturers should be in investing towards systems and processes which offer greater and better operational visibility, like in inventory management, supplier networks. This allows manufacturers to transform complexity into manageable information. Tools like Digital Dashboards, integration of digital twins and AI, and decentralised decision-making structures allow for faster responses when conditions change. Stress testing, scenario planning, and deliberate “red teaming” help firms challenge existing assumptions and prepare for extreme disruptions.

Phase 2: Diversification and workforce upskilling

Once firms have built visibility across their operational networks, they must then address risks that come from concentration. Diversifying suppliers and sourcing locations helps reduce vulnerability to unprecedented shocks and reduced uncertainty. This requires careful identification and vetting of suppliers. Though it may be a time consuming activity, it's nonetheless an important one. Simultaneously, there is a need for sustained investment in workforce upskilling.

Initiatives like the PM Kaushal Vikas Yojana are notable initiatives on part of the government which firms need to capitalise on. The skills that matter in a VUCA world extend beyond technical proficiency. Skills and capabilities like systems thinking, adaptability, and risk literacy, especially in high-technology, data-driven manufacturing environments are becoming increasingly important.

Phase 3: Innovation-led growth and global expansion

In the long run, resilience becomes a catalyst for growth. Firms which would have built flexible operations and strong domestic capabilities would be better positioned to expand into global markets. This phase emphasises continuous innovation, investment and incentives for R&D, quality leadership, and deeper collaboration across industry, academia, and startups. Such initiatives can translate domestic capabilities into sources of sustained global competitiveness.

Figure 4: A roadmap towards competitiveness in a VUCA world 

These policy and industry actions outlined above provide a roadmap for thriving rather than merely surviving. In the VUCA world, the only certainty is that Uncertainty cannot be eliminated. However, we can always try to design systems which can better deal with and mitigate this uncertainty.

Manufacturing systems that combine institutional ecosystem support, decision intelligence, adaptive human-machine capabilities, and integrate sustainability by design, are better suited and equipped to face the global volatility.

For India, the opportunity lies in not replicating past industrial models, but to build a new one that is grounded in resilience, adaptability, innovation and trust. In a world increasingly defined by chaos, preparedness is not just defensive, but also a foundation for long term growth.

About the authors:

Prof Soumyadeep Kundu is an Assistant Professor at T A Pai Management Institute (TAPMI), where he teaches in the area of Operations and Decision Science. An academic specialising in operations management, multi-channel retailing and the sharing economy, he holds a PhD from IIM Kozhikode and a BTech in Electrical & Electronics Engineering from KIIT.

Prof Sagar Ravindra Ghuge is an Assistant Professor at T A Pai Management Institute (TAPMI), teaching in the area of Operations and Decision Science. A dedicated researcher and academic in operations and supply chain management, he has recently submitted his PhD thesis titled ‘Role of Additive Manufacturing in Spare Part Management’ at the Indian Institute of Management (IIM) Mumbai.