India’s Evolving Supply Chains: Integrating Digital Transformation, Sustainability, and Resilience

Executive Summary

India’s supply chain ecosystem is undergoing a sweeping transformation; one that transcends incremental technological improvements to embrace a multidimensional model centered on integration, inclusivity, and intelligence. Rather than following traditional Western approaches rooted primarily in scale and efficiency, India’s strategy is purpose-built for its socio-economic context, with digital transformation, sustainability, and resilience at its core.

 Central to this evolution is the nation’s ability to leverage its diversity through grassroots innovation, frugal engineering, and vibrant participation from local communities and MSMEs. This inclusive approach accelerates modernization while promoting equitable growth and stakeholder empowerment. With its focus on transparency, collaboration, advanced analytics, and circular economy principles, India is recasting legacy supply chains into agile, adaptive, and value-driven networks.

 This progress is propelled by pioneering government initiatives like the Open Network for Digital Commerce (ONDC), Unified Logistics Interface Platform (ULIP), and Business Responsibility and Sustainability Reporting (BRSR), which collectively enhance transparency, interoperability, and accountability (NITI Aayog, 2022; DPIIT, 2023). The private sector has also been playing a pivotal role by aligning systems with stakeholder needs and driving innovation and agility. Together, these efforts are reshaping global value chains and placing India at the forefront of supply chain leadership.

 Amid shifting macroeconomic realities, including pandemic aftershocks, climate change, and geopolitical shifts, India stands at a crucial inflection point. Overcoming challenges like infrastructure gaps and regulatory complexity will be essential, but with strategic coordination, India is well-positioned to build resilient, sustainable, and digitally empowered supply chains that deliver lasting, inclusive value both nationally and globally.

 1. Introduction

India’s supply chain transformation is distinguished by a strong alignment with its local context, a commitment to inclusive growth, and a tradition of frugal innovation. Moving beyond traditional Western paradigms centered on cost and efficiency, India is embracing agile, integrated supply networks built on digitalization, sustainability, and resilience as core strategic pillars.

Flagship government initiatives such as Make in India, Digital India, Production Linked Incentive (PLI) schemes, and the National Logistics Policy (NLP) are laying the groundwork for a globally competitive logistics ecosystem. This evolution is characterized by the formal integration of micro, small, and medium enterprises (MSMEs) into organized value chains, empowered by digital platforms like ONDC and wider access to ESG-linked financing.

“Govt aims to make India a globally trusted partner in supply chains”              

- Piyush Goyal, Minister of Commerce & Industry, July 6, 2025

Complementing these policy efforts, corporate programs such as Amazon’s Saheli and Flipkart’s green packaging mandates further underscore India’s dedication to environmentally responsible and socially inclusive supply chain practices. Collectively, these measures represent a decisive shift from siloed, cost-centric models to robust, future-ready supply chains designed to generate lasting value for all stakeholders.

2. Drivers of Convergence

India’s supply chain reinvention is shaped by the intersection of multiple drivers. Global shocks like the COVID-19 pandemic exposed the fragility of just-in-time models and triggered a global pivot toward diversification and risk mitigation (World Bank, 2021). Meanwhile, escalating climate risks from floods to extreme heatwaves are disrupting supply continuity, compelling companies to rethink logistics and sourcing strategies (IPCC, 2023).

‘Green growth, energy transition, and digital public infrastructure are the pillars of Amrit Kaal.”                                                                                                                                                                    -  Nirmala Sitharaman, Union Finance Minister (Union Budget, Feb 1, 2023)

Geopolitical dynamics, particularly the emergence of the ‘China Plus One’ strategy, are positioning India as an attractive alternative for global manufacturing and sourcing (McKinsey & Company, 2023). Domestically, innovations such as ULIP, ONDC, and the PM Gati Shakti initiative are integrating digital and physical infrastructure (Ministry of Commerce & Industry, 2023). Simultaneously, regulatory tools like carbon accounting frameworks and sustainability-linked loans are institutionalizing green growth and accountability (SEBI, 2023).

3. Digital Transformation as the Structural Core

Digital technologies are no longer merely enablers; they are becoming the structural core of supply chain modernization. Artificial Intelligence (AI), Internet of Things (IoT), blockchain, and digital twins are enhancing traceability, agility, and predictive intelligence.

“Digital infrastructure is not just about convenience; it is the foundation of inclusive, sustainable commerce.”

-           T. Koshy, CEO, ONDC, ONDC Public Webinar, September 2023

Coming to technologies, there are no limitations and extent to which technological adoption can happen, and this is an iterative and ever-evolving process to stay relevant.

• Tata Steel has piloted blockchain to trace iron ore sourcing, thereby ensuring compliance and improving stakeholder trust (Tata Steel, 2023).
• Delhivery leverages AI for dynamic capacity allocation, which has improved efficiency and reduced emissions during peak seasons (Kidwai, A. G., 2025).
• Ninjacart employs IoT-based sensors in cold chains to reduce spoilage and improve perishable food distribution (Ninjacart, 2023).
• ONDC has onboarded over 150,000 MSMEs, enabling them to digitally access larger markets (ONDC, 2024).

These developments underscore how digital infrastructure is serving as the nervous system of India’s modern supply chain architecture.

An outstanding example of this focus, “Digital Saksham”, has now reached over 3 lakh micro-enterprises across 13 states over 3 years, empowering them through digital tool adoption (CII, 2025).

4. Sustainability as a Strategic Imperative

According to the Centre for Science and Environment's (CSE) State of India’s Environment Report 2022, India is the third-largest emitter of greenhouse gases globally, with the supply chain sector accounting for a significant share of carbon emissions. Transitioning to sustainable supply chains can play a crucial role in reducing these emissions.

Sustainability is rapidly evolving into a strategic imperative. Rather than being a compliance requirement, it now serves as a key value differentiator. Innovations such as digital twins, AI-based optimization, and green hydrogen adoption are being deployed to reduce emissions and enhance resource efficiency.

Government interventions such as the Green Hydrogen Mission and FAME II scheme are incentivizing the shift toward low-emission logistics and electric mobility (MNRE, 2023). Industry leaders like ITC and Mahindra Group are actively pursuing decarbonization initiatives in packaging, logistics, and manufacturing (ITC Limited, 2023; Mahindra, 2023).

Consumer preferences further reinforce this shift. According to a study by NielsenIQ (2023), 77% of Indian consumers prefer environmentally responsible brands. Responding to this, companies like ReNew Power and Flipkart are embedding sustainability into logistics operations, packaging practices, and sourcing models (ReNew Power, 2023; Flipkart, 2023).

While inaugurating the third National Conference on Responsible Business Conduct (NCRBC) 2025, Minister of State Harsh Malhotra emphasized that “responsible business conduct is no longer peripheral to business strategy, but foundational.”

CII’s “Building Climate Resilience for Indian Industry” study introduced the “Physical climate Risk Assessment Framework” to help businesses prioritize adaptation actions across sectors and regions (CII, 2025)

5. Resilience Through Design

In India, supply chain resilience has evolved from a reactive concept to a strategic necessity, shaped by the nation’s geographical diversity, infrastructural challenges, and exposure to frequent disruptions. Resilience here refers to the ability of supply chain systems to anticipate, absorb, adapt to, and recover from shocks, ranging from natural disasters and geopolitical tensions to health crises and market fluctuations, while maintaining operational continuity across the country’s vast and varied terrain.

India’s geographic diversity and infrastructural complexity necessitate resilient supply chains that are decentralized and data-driven. Modern resilience strategies now incorporate real-time coordination, distributed warehousing, and predictive risk planning.

• ITC’s e-Choupal 4.0 integrates climate data to anticipate crop yield variations, enabling proactive procurement (ITC Limited, 2023).
• Gati Shakti logistics hubs from Indian Railways are decongesting freight routes and facilitating market access for rural MSMEs (Indian Railways, 2023).
• ONDC supports cross-regional trade, offering business continuity during local disruptions (ONDC, 2024).
• During Cyclone Michaung, ULIP facilitated real-time coordination across 30+ systems, minimizing delays and enhancing response time (ULIP, 2023).

These examples illustrate how resilience has transitioned from reactive disaster management to proactive design thinking.

6. Fusion Points: Where Digital, Sustainable, and Resilient Systems Meet

In an era defined by climate urgency, rapid technological advancement, and global disruptions, organizations are increasingly recognizing that digital transformation, environmental sustainability, and operational resilience cannot be pursued in isolation. The true value of modern innovation emerges when these three dimensions converge, when digital systems are designed not just for efficiency, but also to reinforce environmental stewardship and build long-term resilience.

Aditya Birla Fashion & Retail (ABFRL) demonstrates this convergence by using blockchain to ensure supplier traceability while simultaneously investing in resilience planning to mitigate disruptions (ABFRL, 2023). Similarly, eNAM (National Agriculture Market) has empowered over 17 million farmers by integrating logistics, mandi data, and weather forecasting tools for informed pricing and planning (eNAM, 2023).

These "fusion points" are not just operational innovations; they are new models for holistic, future-ready supply chain ecosystems.

7. Barriers and Latent Opportunities

While India’s supply chain modernization has made remarkable strides, structural bottlenecks persist not just as isolated issues, but as interconnected system failures that require deeper, design-led interventions:

Behavioural Inertia vs. Adoption by Design: MSMEs, especially in rural clusters, often exhibit resistance to adopting digital or ESG frameworks, not merely due to lack of awareness but due to misalignment with day-to-day business realities (e.g., informal operations, low margins, trust deficits).

Digital Divide as a Structural Inequity: Poor last-mile internet access and lack of reliable digital infrastructure continue to exclude vast segments of MSMEs from platforms like ONDC or ULIP.

Policy Silos vs. Platform Thinking: NLP, ONDC, PLI, and ESG frameworks remain policy islands, each operating on its own logic, timelines, and metrics, resulting in overlap, duplication, and underutilization.

ESG Data Scarcity in the Long Tail: Tier 2 and 3 suppliers lack affordable tools, incentives, or institutional handholding to generate auditable ESG data, resulting in poor traceability and exclusion from green value chains.

To unlock India’s full potential, strategic interventions must focus on:

·       Harmonizing policy and data frameworks across NLP, ULIP, and ONDC

·       Establishing open, interoperable ESG data ecosystems

·       Designing simplified, lightweight compliance protocols for MSMEs (NITI Aayog, 2025)

India’s drive for future-ready supply chains must move beyond technology and environmental targets to give equal weight to the Social pillar of ESG. As S-RM (2024) notes, human rights, labour conditions, supply chain ethics, and community engagement are fast becoming decisive in investor, customer, and regulatory evaluations, yet they remain underrepresented in many corporate ESG strategies.

Viewed through the double materiality lens, these social issues are both impact imperatives and financial risk drivers. With over 60 million MSMEs, many in informal networks, India faces a dual challenge: meeting global due diligence mandates such as the EU CSDDD while leveraging this base for inclusive growth.

Initiatives like ULIP and ONDC are enabling digital traceability, and leaders like Tata Steel, ITC, and Mahindra are setting governance benchmarks. Still, significant gaps remain in social risk integration, local ESG scoring, and regulatory alignment. Closing them is essential not only for compliance but to secure global competitiveness, resilience, and social sustainability in India’s supply chains.

8. Global Benchmarking

India can accelerate progress by learning from international best practices:

• China has adopted AI-driven automation across industrial supply chains (World Economic Forum, 2023)
• Singapore exemplifies seamless public-private logistics interoperability (Singapore Ministry of Transport, 2023)
• The European Union has pioneered ESG disclosure standards and circular economy legislation (European Commission, 2023)
• South Korea has developed disaster-resilient logistics systems tailored to extreme climate variability (OECD, 2023)

These models offer valuable insights for India’s institutional and technological roadmap.

9. Strategic Recommendations: A New Playbook for India’s Supply Chain Leadership

India stands at a defining moment. To lead in a world shaped by digital disruption, climate risk, and shifting geopolitics, India needs more than upgrades; it needs a bold new playbook. This means building supply chains that are digital by design, environment-resilient by necessity, and inclusive by intent.

The strategy is anchored around three core levers - Policy Leadership, Business Collaboration, and Innovation at the Grassroots, supported by a unifying national benchmark.

A. Policy Leadership: A Common Operating Stack for Supply Chains

India’s supply chain systems like ONDC, ULIP, and NLP need to work together as one, not in silos.

• Create a National Supply Chain Systems Council (NSCSC): A single, empowered body to align all major logistics and commerce platforms, define common standards (APIs, ESG metrics), and lead response efforts during disruptions.
• Launch Sector-Based Resilience Ratings: Just like credit ratings, introduce resilience scores for critical sectors—such as food, health, and clean energy—to assess their ability to bounce back from shocks like floods, pandemics, or global shortages.
• Build a Shared ESG & Carbon Data Platform: A simple, government-backed tool that helps companies, especially MSMEs, track and report their carbon footprint and sustainability performance without complex paperwork.

B. Business Collaboration: Turning Competition into Shared Capability

Companies must move beyond optimizing for their own efficiency and start building shared infrastructure that benefits entire industries.

• Industry Traceability Networks: Firms in textiles, agriculture, and electronics should jointly build traceability systems (e.g., blockchain) that help meet global sustainability norms and reduce compliance duplication.
• Incentivize Green and Local Suppliers: Adopt internal carbon pricing and reward sourcing from low-carbon, verified MSMEs, bringing environmental and economic inclusion together.
• Collaborative Digital Twins: Co-create digital simulation models that help predict risks like floods or logistics delays, especially for vulnerable sectors like rural supply chains, food distribution, and healthcare.

C. Innovation at the Grassroots: Tech for Tier 2/3 India

Future-ready supply chains must be built where the need is greatest - India’s smaller cities, rural regions, and informal economies.

• Set Up a National Resilience Innovation Sandbox (NRIS): A testbed where startups and research institutions can pilot technologies like AI, blockchain, and climate tools in real-world rural supply chains with government and CSR support.
• Design Local ESG Scoring Models: Create India-specific sustainability scores that reflect the realities of small enterprises like handloom weavers or tribal produce sellers instead of just importing Western standards.
• Launch MSME Plug-and-Play Toolkits: Build ultra-simple digital tools (e.g., WhatsApp checklists, QR traceability tags, voice-enabled ERPs) that help small businesses join platforms like ONDC in less than three days without needing IT support.

D. National Scorecard: India’s Supply Chain Sovereignty Index

Create an annual public index that tracks how states and sectors perform on three fronts:

·       Digital readiness

·       Sustainability maturity

·       Resilience to disruptions

This scorecard can guide investment, improve transparency, and encourage healthy competition across India’s economic landscape.

 10. Conclusion

India’s rise as a global supply chain leader will not come from replicating legacy models, but from reimagining systems that are smarter, greener, and more inclusive. At this pivotal juncture, the convergence of digital transformation, sustainability, and resilience presents a rare opportunity to architect value chains that are intelligent, climate-ready, and socially embedded.

With cohesive policies, robust institutions, and aligned stakeholder action, India has the potential not just to meet global standards, but to shape them. By championing regenerative, shock-resilient, and equitable supply networks, India can define the next frontier in global commerce.

"With digital innovation at its core, India is redefining supply chains to be smart, sustainable, and shock-proof, creating a new model of development for the Global South."

— Panel Discussion Summary, IICA NCRBC 2025

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