Iron Pillar bets on manufacturing revival, AI disruption amid trade war

Iron Pillar sees manufacturing and AI as India's next big opportunities, citing global trade tensions, supply chain shifts and the need for industrial self-reliance

Indian venture capital firm Iron Pillar is positioning manufacturing as the next big opportunity, betting that global trade tensions and supply chain disruptions will accelerate India's push toward industrial self-reliance.

 

The firm, which has over $500 million in assets under management (AUM), has already invested in few manufacturing companies and expects the sector to become strategically critical in future, according to Managing Partner Anand Prasanna.

 

The strategy reflects a broader bet that India's rise from a $3,000 per capita economy to $15,000 over the next two decades will create massive domestic demand as trade policies favour local production.

 

“We’re facing a bit of a tariff war with the US, and at the heart of it is manufacturing. If you really think about it, this connects India and the world,” Prasanna told Business Standard.

 

“India cannot ignore the critical things you're manufacturing—whether it's electronics, machine components, or critical IP. We recently talked about rare earths— if we don’t get them, we can’t even manufacture automobiles in the country. We need to figure this out internally, or it becomes a critical national security matter,” he said.

 

Iron Pillar recently exited Sedemac, a deeptech company specialising in innovative control systems for small engines, electric vehicles, and e-bikes, with advanced development and manufacturing facilities in Pune.

 

The China Plus One strategy is also accelerating global supply chain diversification by reducing dependence on China. This shift, combined with India’s Make in India initiative focused on boosting domestic manufacturing and attracting investment, is rapidly strengthening India’s manufacturing sector and positioning it as a key global production hub.

 

“If you look at our other portfolio company, ToneTag — they’re now manufacturing within the country. Earlier, they had to import,” said Prasanna. “We’re also looking at other companies doing the same.”

 

ToneTag, a fintech company, has pioneered soundwave-based technology for secure, contactless payments and proximity engagement, enabling transactions even on feature phones without internet. It offers scalable, platform-independent solutions used globally to enhance payment experiences across retail, mobility, and commerce sectors.

 

Iron Pillar is also scouting both AI-native startups and traditional firms adopting AI. Its portfolio includes Uniphore, CoreStack, Ushur, Servify, and Jiffy.ai — companies using AI to power customer engagement, cloud governance, device management, and automation. Iron Pillar has also backed companies like Pando and Fold Health which use AI to optimise supply chain logistics and automate healthcare delivery, respectively. The investment firm’s bets reflect its focus on scaling enterprise and consumer tech businesses transforming industries through AI and machine learning.

 

“Take the example of Pando or Fold Health—they’re going deep into a specific vertical. These were legacy SaaS categories, and now you can actually be an AI-first company that completely changes the dynamic of what the product can do,” said Prasanna.

 

“In software, there's this saying- if you're going to replace the legacy players, your product needs to be 10x better. This is that once-in-a-lifetime opportunity to build a truly 10x better product, thanks to AI.”

 

Iron Pillar has also been actively backing its portfolio companies on the path to successful public listings. The investment firm–backed Vyome Therapeutics, a pharmaceutical company, recently made its Nasdaq debut following a merger with the US-based ReShape Lifesciences. Separately, early investors Iron Pillar and Kalaari Capital offloaded shares worth ₹443 crore in jewellery retailer Bluestone between February and September 2024, according to the company’s draft red herring prospectus.