End of Just-in-Time: The Rise of Strategic Stockpiling in Critical Supply Chains

Image Source: Sagar K Chourasia

by Sagar K Chourasia

Geopolitical disruption, with the West Asia conflict, Venezuela’s oil takeover, and the protracted Russia-Ukraine War, has forced governments and firms to rethink critical supply chain frameworks. The shift from lean efficiency to strategic stockpiling is not a temporary correction — it is a structural recalibration with lasting implications for economic statecraft.

In 2022, European Union member states increased their combined strategic gas storage targets from 80 to 90 per cent of capacity — a policy shift that would have been politically unthinkable a decade earlier. That same year, the United States allocated $52 billion through the CHIPS and Science Act to support domestic semiconductor manufacturing, highlighting geographic supply concentration as a national security risk. Japan legislated minimum stockholding requirements for semiconductors, rare earths, and pharmaceuticals. These are not isolated responses to crises. They are data points in a broader structural change: the idea that efficiency and resilience can coexist in a hyper-globalised supply chain has collapsed, and governments are responding with a new operating logic. For three decades, global supply chains operated on Just-in-Time (JIT) principles—minimising inventory, concentrating production, and relentlessly optimising for cost. The model depended on stable geopolitical relationships, predictable logistics, and infrequent systemic shocks. Each of these assumptions has been dismantled over time: first by the COVID-19 pandemic, which revealed the fragility of single-source production networks; then by the weaponisation of trade relationships amid US-China technology rivalry and Russian energy leverage over Europe; and now by ongoing maritime insecurity across the Red Sea and uncertainty around critical chokepoints such as the Strait of Hormuz. What is replacing JIT is a Just-in-Case (JIC) framework –one that treats resilience, redundancy, and strategic reserves as primary objectives rather than residual costs. This brief explores where that shift is most significant, what it requires to succeed, and what it entails for India.

Energy: Reserves as Negotiating Instruments

Strategic petroleum reserves were established following the 1973 oil crisis as emergency buffers. The International Energy Agency’s (IEA) founding mandate required member states to maintain 90 days of net import cover — a threshold designed to blunt producers’ leverage during a supply shock. That function remains unchanged; what has altered is the political interpretation of reserves. The IEA’s coordinated release of 182.5 million barrels in 2022 — the largest in its history — showed that reserves function both as a market signalling tool and a physical supply mechanism. The release stabilised prices not only through its volume effect but also through the credible threat it posed: that consuming nations could collectively absorb a supply disruption without capitulating to producer pricing.

India’s exposure to this dynamic is severe. It imports about 85 per cent of its crude needs and relies heavily on Gulf supply routes. Currently, India has roughly 9.5 days of import cover across its three strategic petroleum reserve facilities – well below the IEA’s 90-day standard for full members. The government’s planned Phase II expansion to 11.83 million metric tonnes would meaningfully improve this position, but implementation remains contingent on financing and site approvals. More immediately, the governance architecture around India’s SPR — release triggers, maintenance standards, and coordination with commercial inventories remains underdeveloped relative to the scale of the ambition. Physical capacity and institutional capacity need to be built in parallel. A reserve that cannot be deployed credibly and quickly is not a strategic asset; it is a storage cost.

A country with substantial reserves holds a credible threat to depress prices by releasing supply. A country without them is an exposed price-taker in every supply disruption.

The OPEC+ relationship complicates this picture without altering the core logic. India has consistently advocated for lower prices in OPEC+ discussions, with limited negotiating power. Strong strategic reserves change that balance: a government capable of managing a supply disruption without immediate economic harm negotiates from a very different position than one that cannot. Reserve expansion is, in this sense, energy diplomacy conducted through infrastructure.

Semiconductors: Stockpiling as a Bridge, Not a Solution

The global semiconductor shortage from 2020 to 2023 cost the automotive sector alone an estimated $210 billion in lost revenue, according to AlixPartners — a result of a production base concentrated in a few East Asian facilities supplying a global economy that had systematically removed inventory buffers. TSMC accounted for over 90 per cent of advanced node production at the crisis’s onset. Automotive manufacturers, which had cancelled chip orders anticipating pandemic-era demand collapse, found themselves at the back of an allocation queue when demand recovered. The absence of buffer inventory did not merely amplify the shock; It distorted the market signals that firms needed to plan a recovery, leading to the overcorrection and inventory glut of 2022 and 2023.

Policy responses have concentrated mainly on domestic manufacturing — the CHIPS and Science Act, the European Chips Act, and similar programmes in Japan and South Korea. This is strategically sound over a decade-long horizon. It does relatively little for the near term, since fabrication facilities take three to five years to reach significant scale. The most immediate actionable intervention is inventory: establishing minimum stockholding requirements for critical components, supported by financial incentives and developed in collaboration with industry. Major firms have already adopted this approach — Apple and other TSMC customers are reportedly transitioning from nearly empty stockpiles to maintaining three to six months of essential component supplies. Government policy in most countries has not yet kept pace with corporate practice.

For India, whose semiconductor ambitions are explicit but whose domestic production capability remains years away, stockpiling functions as a bridge mechanism. The India Semiconductor Mission cannot insulate Indian manufacturers from supply chain volatility during the transition period; a parallel minimum stockholding framework, tailored to automotive, defence electronics, and industrial equipment, can. The institutional design challenge is real — semiconductors are heterogeneous products with short technology lifecycles, unsuitable for centralised procurement. Effective policy requires a public-private architecture: government sets minimum requirements and provides incentives; firms manage operational complexity and ensure technical currency.

Food: The Governance Problem is the Policy Problem

Food reserves differ from energy and semiconductor stockpiles in one key aspect: they are closely tied to domestic political legitimacy. Governments that neglect to protect populations from food price shocks face consequences that are not just economic. India’s public stockholding system — anchored by the Food Corporation of India and the National Food Security Act — has long recognised this. Buffer stocks of rice and wheat provide both a distribution mechanism for welfare programmes and a market stabilisation instrument.

The 2022 global food crisis, triggered by the disruption of Ukrainian wheat exports (Ukraine and Russia together supplied roughly 28 per cent of global wheat trade, according to FAO data), tested this system. India’s domestic reserves provided meaningful insulation from global price spikes. The May 2022 wheat export ban protected domestic consumers but harmed India’s credibility as a dependable supplier — a strategic asset with long-term value as India aims to expand agricultural export markets. The episode revealed a governance gap: the absence of transparent, pre-announced criteria for export restrictions creates uncertainty for partner countries and undermines the trust that underpins stable trade relationships.

The efficiency critique of the FCI system – the Shanta Kumar Committee’s 2015 estimate of 40,000 to 50,000 metric tonnes of annual storage losses and fiscal costs running to tens of thousands of crores – is legitimate and unresolved. But it points to a reform agenda, not an abolition argument. The underlying function of buffer stockholding is essential and, given intensifying climate volatility, likely to become more so. The policy priority is not more storage. It is better storage, cleaner procurement, and transparent governance around the conditions that trigger reserve deployment and export controls.

What Stockpiling Cannot Do

The case for strategic stockpiling rests on specific conditions, not universal logic. The objections are real. Reserves tie up capital and incur significant opportunity costs; governance failures can turn stockpiles into tools for patronage rather than security, as India’s FCI experience partially demonstrates; technology lock-in risk is acute in fast-moving sectors; and reserves treat symptoms rather than causes — they buy time against supply concentration risk but do not eliminate it. The durable solution to concentration risk is diversification of sources and production capability. Stockpiling is a complement to that strategy, not a substitute for it. Where this distinction is lost, reserve accumulation becomes a fiscal liability dressed as strategic policy.

The conditions under which stockpiling is justified are: high disruption probability, low short-term substitutability, adequate governance capacity, and a credible parallel strategy for structural diversification. India meets these conditions clearly in energy; substantially in food (subject to institutional reform); and partially in semiconductors, where the governance architecture for effective stockholding policy remains to be built. Calibrating reserve depth to actual disruption exposure – rather than to political optics or bureaucratic inertia – is the discipline that separates strategic stockpiling from costly accumulation.

Key Metrics Across Strategic Stockpiling Domains

Domain	India’s Current Position	Key Benchmark/Gap	Governance Priority
Energy (SPR)	~9.5 days import cover; 5.33 MMT capacity	IEA 90-day norm; Phase II expansion to 11.83 MMT planned	Release triggers; coordination with commercial stocks
Semiconductors	Minimal domestic production; import-dependent	No national min. stockholding policy; India Semiconductor Mission active	Public-private minimum stockholding framework
Food (FCI)	Holds above buffer stock norms; strong distribution system	40–50k MT annual storage losses (2015 est.); high fiscal cost	Storage modernisation; transparent export restriction triggers

Conclusion

The transition from Just-in-Time to Just-in-Case is structural, not cyclical. It reflects the consolidation of a world in which supply chains are embedded within geopolitical competition – where trade relationships can be weaponised, logistics corridors can be disrupted by state and non-state actors, and climate volatility compounds both risks. In that world, the ability to absorb shocks and sustain continuity is a core attribute of economic power.

India sits at a consequential juncture in this transition. It has the scale to move beyond reactive stockpiling – accumulating reserves to absorb shocks after the fact – toward proactive positioning: using reserve capacity and sourcing relationships as instruments of regional influence and diplomatic leverage. That transition requires deliberate institutional design, not incremental accumulation. Countries that make it deliberately will be better positioned in the disrupted decades ahead. Those that wait for the next crisis to force the issue will find the terms less favourable.

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Data sources: This analysis draws on publicly available data International Energy Agency (2022 coordinated reserve release; 90-day norm); AlixPartners Global Automotive Outlook 2021 (semiconductor cost estimate); Food and Agriculture Organization of the United Nations (Ukraine/Russia wheat export share); Ministry of Petroleum and Natural Gas, Government of India (SPR capacity figures); Shanta Kumar Committee Report on Restructuring of FCI (2015). All figures are as reported in cited sources; readers are encouraged to verify against current official data, as reserve capacities and policy frameworks are subject to ongoing revision.

Sagar K Chourasia, a global affairs scholar and Founder of NITISARA, focused on building sustainable Global value chains. He shares his expertise on Maritime & International Trade, emerging and critical tech. He engages with organisations on product vision and strategic leadership. As a BITS Pilani grad with a science & engineering background, he further specialised with an Executive Master’s in global affairs [law & diplomacy].