NITI Aayog’s Report on Hand and Power Tools Sector

Syllabus :GS3/Economy 

In News

• NITI Aayog launched a report on Hand and Power tools sectors – ‘Unlocking $25+ Billion Export Potential – India’s Hand & Power Tools Sector’. 

About the report

• The report underscores the transformative potential of the 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. 
• It outlines a strategic path for the sector to enhance its global competitiveness and capture a significantly larger share of the international market.

 Tools industry 

• The tools industry is a vital component of capital goods. 
• Tools are essential for tasks like drilling, cutting, sanding, and polishing
• They play a critical role in industrial operations and everyday tasks. Key industries such as construction, electronics, automotive, and aerospace rely heavily on tools for manufacturing and operations.
• The global tools market was valued at ~$100 billion in 2022, projected to grow to $190 billion by 2035.
• China dominates the global export market, commanding nearly 50% of the trade with $16 billion in hand tools and $22 billion in power tools exports.
  • This dominance is attributed to its scale of operations, cost efficiencies, and well-established supply chains.

Current Position of India

• India exports $600 million in hand tools (1.8% global market share) and $425 million in power tools (0.7% global market share).
• Major exports include wrenches, pliers, screwdrivers, and drills, with key exporting states being Punjab and Maharashtra.

Export Opportunity

• India has a significant opportunity to increase its export share and establish itself as a competitive player in the global tools sector.
• India can target a 10% market share in power tools and a 25% share in hand tools by 2035.
  • It would enhance India’s global competitiveness, create millions of jobs, and contribute to rural and inclusive development.

Challenges Hindering Growth

• India faces a 14-17% cost disadvantage compared to China, due to high raw material costs, lower labor productivity, and logistical challenges
• Limited access to advanced manufacturing technologies and R&D capabilities.
• Lack of sufficient industrial land for scaling up operations.
• Current financial schemes are limited and inefficient.

Strategic Roadmap and Policy Interventions

• Building World-Class Hand Tool Clusters: Establish 3-4 advanced industrial clusters across 4,000 acres, particularly in Punjab, to reduce setup time, improve infrastructure, and attract labor.
• Addressing Structural Cost Disadvantages: Implement market reforms to reduce import restrictions, lower import duties, simplify export schemes, and reform building and labor regulations to reduce costs by 10-12%.
• Bridge Cost Support: If reforms falter, an additional $700 million investment may be needed over five years, with a projected 2-3x return in tax revenues.
• Coordinated efforts across government, industry, and private stakeholders are required to achieve the export target.

Conclusion and Way Forward 

• The hand and power tools sector is crucial to India’s goal of becoming a global manufacturing hub. 
• The sector will help India enhance its manufacturing capabilities, boost exports, and contribute to economic growth, aligning with the “Make in India” initiative.
• Achieving the $25 billion export target by 2035 is essential for India’s industrial development and its ambition of becoming a developed nation by 2047.

Source :PIB