Synopsis
A NITI Aayog report reveals that India could achieve $25 billion in exports from hand and power tools over the next decade, potentially generating 3.5 million jobs. The report outlines strategies to enhance India's global competitiveness in this sector.Key Takeaways
- India can target $25 billion in exports.
- Potential to create 3.5 million jobs.
- Achieving 10% market share in power tools.
- 25% market share in hand tools is possible.
- Public-private partnerships are crucial for infrastructure.
New Delhi, April 15 (NationPress) India holds the potential to significantly increase its share of the global trade market for power and hand tools, aiming for $25 billion in exports in the next decade. This growth could lead to the creation of around 3.5 million jobs by achieving a 10 percent market share in power tools and 25 percent in hand tools, according to a report by NITI Aayog released on Tuesday.
The report emphasizes that by encouraging innovation, empowering MSMEs, and enhancing the industrial ecosystem, India can strengthen its status as a dependable, high-quality global manufacturing hub.
Unveiled by NITI Aayog Vice Chairman Suman Bery, the study outlines a strategic framework for the sector to improve its global competitiveness and capture a more significant share of the international market.
The global trade market for power and hand tools, which is presently valued at around $100 billion, is projected to grow substantially, reaching approximately $190 billion by 2035.
Within this market, hand tools account for $34 billion and are expected to grow to $60 billion by 2035. Meanwhile, power tools, including tool accessories, make up $63 billion and are anticipated to soar to $134 billion, with electrical tools constituting the majority.
Currently, India exports $600 million in hand tools (1.8 percent market share) and $470 million in power tools (0.7 percent market share).
To realize the $25 billion potential in power and hand tool exports over the next decade, the report explored the challenges faced by these sectors and suggests three crucial intervention categories.
“Establishing world-class hand tool clusters with advanced infrastructure is vital, necessitating 3-4 clusters spanning about 4,000 acres. These clusters, functioning under a public-private partnership (PPP) model, would include plug-and-play infrastructure, worker housing, and amenities such as connectivity and convention centers to optimize operations,” the report states.
Addressing structural cost disadvantages through market reforms is essential, including revising Quality Control Order (QCO) restrictions and import duties on key raw materials like steel and machinery, simplifying the Export Promotion Capital Goods (EPCG) scheme by easing Authorised Economic Operator (AEO) requirements, and reducing penal provisions such as interest on defaults.
Moreover, reforms in building regulations and labor laws are necessary to boost competitiveness.
Providing bridge cost support to mitigate cost disadvantages is critical, though no additional support beyond existing initiatives like Remission of Duties and Taxes on Exported Products (RoDTEP) and duty drawbacks is needed if factor market interventions are effectively implemented, according to the report.
However, the report estimates that without these reforms, an extra Rs 8,000 crore in bridge support will be necessary, which should be considered an investment rather than a subsidy, as it is expected to yield 2-3 times its worth in tax revenue over the next five years.
