Context: 

India can target $ 25 billion exports in the next 10 years and generate 35 lakh jobs, according to NITI Aayog’s report on “Unlocking $25+ Billion Exports: India’s Hand & Power Tools Sector.”

Key Findings of the Report

About the NITI Aayog (National Institution for Transforming India) 

• On January 1, 2015, the NITI Aayog was, established as the successor to
• the Planning Commission, created by an executive resolution from the Government of India (Union Cabinet).
• It is a non-constitutional (not created by the Constitution) and non-statutory (not created by an Act of Parliament) body.
• NITI Aayog's composition includes the Prime Minister as Chairperson, a Vice-Chairperson appointed by the Prime Minister, a Governing Council comprising Chief Ministers of all states and Lieutenant Governors of Union Territories, Regional Councils, and other key members.

The report underscores the transformative potential of hand and power tools industry for India’s economic growth, delving into the challenges, policy headwinds, and necessary interventions vital for strengthening the Indian hand and power tool ecosystem.

Global Market Overview and Trends:

• The global tools industry was valued at ~$100 billion in 2022, projected to reach $190 billion by 2035.
• Hand tools segment: $34 billion in 2025 → $60 billion by 2035.
• Power tools segment (including accessories): $63 billion in 2025 → $134 billion by 2035.
• Growth is driven by industrialization, infrastructure development, and advancements in electrification and automation.
• China leads the global market with nearly 50% export share—$13 billion in hand tools and $22 billion in power tools.

India’s Current Position:

• India is a minor player globally:
• Hand tools: $600 million in exports (1.8% share).
• Power tools: $470 million in exports (0.7% share).
• Primary exports include wrenches, pliers, screwdrivers, and drills.
• Exporters are mainly concentrated in Punjab and Maharashtra.
• Despite advantages like low-cost labour and a growing manufacturing base, India struggles due to inefficiencies and a lack of scale.

The $25+ Billion Export Opportunity:

• India can target a 10% global share in power tools and a 25% share in hand tools.
• Achieving these targets could result in an export potential of over $25 billion by 2035.
• This growth has the potential to generate approximately 35 lakh jobs across the country.
• India is well-positioned to benefit from China’s declining cost advantage due to tariffs and rising labour costs, as well as its proximity to key markets and new trade agreements.

Strategic Importance:

• The tools sector is a key pillar of the global manufacturing ecosystem.
• Essential for India's Make in India drive and goal of becoming Viksit Bharat @ 2047.
• Positioned to boost both domestic manufacturing and export capabilities.

Challenges Facing the Tools Industry

• Cost Competitiveness: India’s 14-17% cost disadvantage compared to China is a significant barrier. Higher raw material costs, exacerbated by import restrictions like Quality Control Orders (QCOs), increase production expenses. Labour productivity is hampered by overtime wage requirements and limits, while high interest rates and inland logistics costs further erode competitiveness.
• Technical Know-How: The industry suffers from limited access to advanced manufacturing technologies and research and development (R&D) capabilities, constraining innovation and quality improvements.
• Limited Availability of Land: The lack of sufficient land for industrial cluster expansion restricts scalability, a critical factor in competing with China’s large-scale operations.
• Government Schemes: Existing support mechanisms, such as the Remission of Duties and Taxes on Exported Products (RoDTEP) and duty drawback schemes, are limited in scope and disbursement efficiency, leaving gaps in financial assistance.

Strategic Roadmap and Policy Interventions

Building World-Class Hand Tool Clusters:

• The strategy proposes establishing 3-4 industrial clusters totaling 4,000 acres, featuring plug-and-play infrastructure, affordable worker housing, and improved connectivity, developed under a Public-Private Partnership model, with governance structures and R&D centers to drive innovation and quality.

Addressing Structural Cost Disadvantages Through Market Reforms:

• Structural reforms should ease import restrictions on raw materials, rationalizing Quality Control Order (QCO) restrictions and import duties, simplify the EPCG scheme, and improve building, reducing penal provisions like interest on defaults and reforming labour and building regulations to lower cost disadvantage.

Bridge Cost Support:

• If factor market interventions and existing incentives like RoDTEP are executed efficiently, no additional support will be needed, but if reforms falter, INR 8000 crores in bridge support will be necessary and should be viewed as an investment with a 2-3x return in tax revenues over next 5 years.