‘Difficult times ahead’: Vaishnaw warns of rougher global economy, says India gearing up

Preparing for a rougher global economy means reducing India’s exposure to outside shocks. Vaishnaw identified technology, finance and geopolitics as major sources of risk. India wants an economy that can withstand financial, economic and technological disruptions. The approach requires planning before dependencies become emergencies.

The government is using three time horizons. Short-term goals cover 3–5 years, mid-term goals cover 5–15 years, and long-term goals cover 20–25 years. Vaishnaw said India must identify areas where production or the economy could depend on another country’s policies, then act early. Materials are one major concern in semiconductors.

India is also building domestic capabilities while joining global supply chains. In mobile phones, it moved from assembly to modules and then components. It now says it is self-sufficient in many components and exports them. India has also reduced public debt from 61% to 55% of GDP in five years. However, Vaishnaw warned that external factors could still disrupt 6–8% growth.

AI could change how work is organised and reduce demand for some jobs or services, but the article does not specify which occupations or how many roles could be affected. Its central warning is that AI may disrupt jobs and the services sector. This matters because services are an important part of India’s economic activity and global connections.

Vaishnaw presents AI as one of two possible fronts of disruption, alongside finance. The mechanism described is broad: AI changes technology-based work, while the services sector may face the effects. The article does not provide examples of particular tasks, industries or worker groups that would be most exposed.

India’s response is to prepare for technological shocks rather than depend only on current growth. The government is planning across short-, mid- and long-term horizons. Vaishnaw also wants India to add value in global supply chains and build stronger domestic capabilities. The article gives no estimate of job losses or a timetable for AI’s effects.

The article does not quantify the financial risk. Vaishnaw said an even bigger shock could follow if the debt of rich countries starts to unravel. That warning places sovereign debt problems among the most serious threats facing the global economy, but no projected losses, countries or timeline are provided.

The key mechanism is described as a possible debt shock spreading through the global economy. The article pairs this risk with AI-driven disruption and says difficult times may lie ahead. It does not explain how a debt crisis would affect trade, banks, currencies or India specifically, so those effects cannot be measured from the source.

India is trying to reduce its vulnerability before outside conditions worsen. Vaishnaw said public debt declined from 61% to 55% of GDP over five years. He also said external factors, more than domestic ones, could knock India’s 6–8% growth off course. The stated goal is an economy protected from financial, economic and technological shocks.

Geopolitical dependence means India’s production can be affected by decisions made in another country. If a supplier, partner or important market changes its policy, India may face difficulty obtaining materials or continuing production. Vaishnaw said geopolitics plays a major role, so India must keep adjusting its approach.

The article’s clearest example is the risk of production depending on another country’s policies. Vaishnaw urged India to spot these dependencies early and begin addressing them. Semiconductor materials are described as the biggest concentration and dependence risk in building the India stack. These include gases, substrates and chemicals needed for the sector.

This concern does not mean India intends to leave global supply chains. Vaishnaw said technology has always operated through them, and India wants deep involvement while adding value where it performs best. The goal is to reduce dangerous concentrations and become more resilient. India is applying the same ecosystem-building approach to semiconductors, railways, defence and mobile-phone components.

Semiconductor materials are the inputs used to make and process chips. The article names gases, substrates and chemicals as examples. It does not define their individual technical functions, but it makes clear that they are part of the wider semiconductor value chain. Without dependable access to such inputs, chip production can remain exposed even when fabrication or packaging capacity exists.

Vaishnaw said materials represent India’s biggest dependence and concentration risk. This means supply is concentrated in relatively few places or suppliers, making production vulnerable to foreign policies or disruptions. The government’s first semiconductor phase backed one large company and produced 12 projects, five already making chips. The second phase shifts attention toward materials and other parts of the chain.

Semicon 2.0 was approved with ₹1.27 lakh crore, compared with ₹76,000 crore for the first phase. Its support extends beyond individual fabrication and packaging projects. India is trying to build the full ecosystem faster than countries that took about 20 years to develop theirs.

Semicon 2.0 could give India a broader role in semiconductor production. The policy expands support beyond individual fabrication and packaging projects to cover the entire value chain. That matters because a chip industry needs more than factories. It also needs materials and other capabilities that reduce concentration risks and support reliable production.

The first phase backed one major company and now has 12 projects, five of which are already producing chips. The second phase focuses on materials such as gases, substrates and chemicals. This follows India’s mobile-phone experience, where the sector moved from assembly to modules and then components. India says it is now self-sufficient in many components and exports them.

The Union Cabinet approved Semicon 2.0 with an outlay of ₹1.27 lakh crore, up from ₹76,000 crore. Vaishnaw said other countries needed about 20 years to build such capabilities, but India lacks that luxury. The intended result is a more resilient, trusted partner in global chip supply chains.

Global supply chains divide production and value creation across countries and companies. Vaishnaw said technology has always run on them, and India wants deep participation. The aim is not to make everything alone. It is to contribute strongly in areas where India has useful capabilities while limiting risky dependence on another country’s policies.

Trust matters because buyers judge more than price when choosing products from a country. Vaishnaw said cybersecurity is increasingly important, especially as older chip production from 28nm to 90nm becomes concentrated in a few places. India is positioning itself as a reliable partner. It points to chip design in India for 2nm and 3nm chips linked to Nvidia, Qualcomm and AMD.

Specialized production also helps India move up the value chain. Mobile phones progressed from assembly to modules and components, with exports now reported. The same approach is being applied to semiconductors, railways and defence. Vaishnaw also said global companies have worked in India for 40 years without intellectual-property problems.