Tooling Up for the Future: India’s Path to $25 Billion in Exports(Source: https://pib.gov.in/PressReleasePage.aspx?PRID=2123437)

Introduction

India is on the brink of a transformative leap in manufacturing exports. The nation’s hand and power tools sector—currently a modest $1 billion export segment—has the potential to explode into a $25+ billion global powerhouse by 2035. This ambitious vision is detailed in the April 2025 report, 'Unlocking $25+ Billion Exports: India’s Hand & Power Tools Sector', jointly released by NITI Aayog and the Foundation for Economic Development.

As global demand for tools accelerates—driven by industrialization, urbanization, and infrastructure development—the stage is set for India to reposition itself as a credible alternative to China in this space.

Global Context and Opportunity

The global hand and power tools market, valued at approximately $100 billion in 2022, is projected to nearly double to $190 billion by 2035. India, however, currently captures only a sliver of this market:

• Hand Tools: $600 million (1.8% of global share)
• Power Tools: $425 million (0.7% of global share)

By 2035, India is targeting a 25% market share in hand tools ($15 billion) and 10% in power tools ($12 billion)—a combined export potential exceeding $25 billion. This growth could generate over 3.5 million new jobs, both direct and indirect, across the country.

India’s Current Export Footprint

Hand Tools: A Strong MSME Backbone

India’s hand tools sector thrives on a robust MSME ecosystem, with major hubs in:

• Punjab: Jalandhar, Ludhiana
• Maharashtra: Mumbai, Nagpur
• Rajasthan: Nagaur

These regions specialize in producing wrenches, screwdrivers, hand saws, and pliers—thanks to labor-intensive, skill-based processes that capitalize on localized supply chains and legacy know-how.

Power Tools: The Need for Technological Depth

While the power tools segment has witnessed export growth, India lacks a comprehensive manufacturing ecosystem for critical components like motors and batteries. Building this capability will be key to achieving the $12 billion export target.

Export Markets and Trade Leverage

• Top Importers: USA and EU, accounting for 55–60% of global imports
• Tariff Advantage: The U.S. currently imposes additional tariffs (7.5–25%) on Chinese tools, creating strategic openings for Indian manufacturers
• Growth Trend: India’s tool exports have grown at 24% year-on-year, highlighting momentum and appetite for expansion

Existing Government Support Mechanisms

1. RoDTEP Scheme
   • Rebates for exported goods
   • Hand Tools: 1.1% of FOB value
   • Power Tools: 0.9% of FOB value
2. Duty Drawback & DFIA Scheme
   • Duty-free import of inputs
   • Duty drawback rates: 1.5–2%
   • Requires minimum 20% value addition and conformity with SION norms

Strategic Roadmap to $25+ Billion

1. Build World-Class Tool Clusters

• Objective: 3–4 mega clusters by 2035 covering ~4000 acres
• Investment: ₹12,000 crore (Govt) + ₹45,000 crore (Private)
• Features:
  • Plug-and-play industrial parks
  • Worker housing, R&D centers, testing labs
  • 24x7 power, logistics support, convention facilities
• Governance: Special Purpose Vehicles (SPVs) in PPP mode, state-level cluster authorities

2. Structural and Regulatory Reforms

• Rationalize Quality Control Orders (QCOs) and reduce import duties
• Modernize Export Promotion Capital Goods (EPCG) scheme
• Align labor laws with global norms (e.g., 300 hrs of quarterly overtime)
• Improve FAR norms, logistics, and guarantee 24x7 affordable electricity
• Invest in domestic R&D and incentivize technology transfers

If these reforms are fully implemented, additional fiscal incentives may not be necessary.

3. Contingent Bridge Support (If Reforms Lag)

• Total Proposed Support: ₹5,800 crore over 5 years
• Breakdown:
  • Hand Tools: ₹3,450 crore
  • Power Tools: ₹2,230 crore
  • Logistics and Capital Subsidy: ₹450 crore + ₹300 crore

This is not a subsidy, but a strategic investment with a projected return of 2–3x in tax revenues.

Conclusion: A Decisive Decade for Indian Manufacturing

The next ten years offer a unique window for India to reposition itself as a global manufacturing hub for hand and power tools. With the right mix of policy reforms, infrastructure investments, and industry collaboration, India can capture a significant share of a fast-growing market while boosting employment and innovation.

The vision outlined in NITI Aayog’s report is not merely aspirational—it’s achievable. The question now is not whether India can unlock this opportunity, but whether it will act decisively to seize it.

Read the full report:
🔗 India Hand & Power Tools Sector Report – April 2025 (PDF)