New Delhi: India’s Tool Trade Targets $25B by 2035, according to a report titled Unlocking $25+ Billion Export Potential: India’s Hand & Power Tools Sector, released today by the NITI Aayog. The report projects that the global trade market for these tools, valued at $100 billion, will grow to $190 billion by 2035. India aims to secure $25 billion in exports over the next decade, generating 35 lakh jobs and establishing itself as a key player in global manufacturing.
Unveiled by Suman Bery, Vice Chairman of NITI Aayog, alongside Dr. V.K. Saraswat, Dr. Arvind Virmani, and BVR Subrahmanyam, the 70-page document draws on insights from industry, policymakers, and experts to chart a path for the sector’s growth. It aligns with initiatives like Make in India and the vision of a developed India by 2047, offering a strategy to enhance competitiveness and expand the nation’s industrial footprint.
The global market for hand and power tools includes products like drills, saws, hammers, screwdrivers, wrenches, and cordless power tools. Hand tools, worth $34 billion, are expected to reach $60 billion by 2035, while power tools, valued at $63 billion, are projected to grow to $134 billion, with electrical tools leading the segment. Demand arises from construction, automotive, aerospace, and do-it-yourself activities, particularly in developing nations where infrastructure projects fuel consumption. India’s exports, growing at 7.5% annually over the past decade, reached $1.2 billion in 2024, with $600 million in hand tools and $470 million in power tools, representing 1.8% and 0.7% of their respective markets. China, by contrast, holds 50% of hand tool exports at $13 billion and 40% of power tool exports at $22 billion. The report targets a 25% share in hand tools and 10% in power tools for India, equating to $25 billion by 2035.
India’s manufacturing base consists of over 2,500 small and medium enterprises and larger firms, concentrated in regions like Punjab, Maharashtra, and Tamil Nadu. Industrial clusters and special economic zones in these areas provide shared infrastructure to facilitate production. Lower labour costs and large-scale production enable firms to offer tools at prices 20-30% below those from China or Western countries. The workforce includes engineers and technicians trained through vocational institutes and programs like Skill India. The domestic market, valued at $3.5 billion in 2024, is driven by infrastructure projects, urbanisation, and do-it-yourself trends. Government policies, including *Make in India*, *Atmanirbhar Bharat*, and the Production Linked Incentive scheme, provide support through investment incentives and promotion of local production.
The report identifies several challenges. Indian brands lack global recognition compared to those from Germany, Japan, or the United States, with many firms operating as original equipment manufacturers for foreign companies, restricting their market identity. Technology adoption lags in areas like Internet of Things-enabled tools and advanced battery systems. Compliance with international standards, such as the EU’s CE marking, involves complex processes that increase costs and cause delays. Logistics costs, at 12-14% of product value compared to China’s 8-10%, result from supply chain inefficiencies and port congestion. A stacked bar graph in the report quantifies a 14-17% cost disadvantage against China, attributed to raw material costs (5%), labour productivity (4%), logistics (3%), and financing costs (2-5%). Higher prices for steel, plastic, and motors, restrictions on overtime hours, elevated overtime wages, and higher interest rates contribute to this gap.
The report proposes a 10-year strategy across three areas. It suggests establishing 3-4 hand tool clusters spanning 4,000 acres, as depicted in a map highlighting potential locations like Ludhiana, Pune, and Chennai. These clusters, under a public-private partnership model, would include plug-and-play infrastructure, worker housing, and facilities like connectivity and convention centres. The report estimates Rs. 12,000 crore for cluster development, to be recovered through leasing fees, with industry contributing Rs. 45,000 crore over the decade. Market reforms are recommended, including rationalising Quality Control Order restrictions and import duties on steel, machinery, and motors, simplifying the Export Promotion Capital Goods scheme by easing Authorised Economic Operator requirements, and reducing penalties like interest on defaults. Labour law and building regulation changes are also proposed to improve operational flexibility, alongside adjustments to wage norms and overtime limits.
The report suggests bridge cost support to address cost disadvantages, noting that existing schemes like Remission of Duties and Taxes on Exported Products are sufficient if reforms are implemented. Without reforms, an additional Rs. 8,000 crore would be required, which the report describes as an investment expected to generate 2-3 times its value in tax revenue over five years. Research investment is proposed to develop tools with smart features or eco-friendly designs, with collaboration between industry and institutions like Indian Institutes of Technology and National Institutes of Technology to establish research centres. Marketing through trade fairs, e-commerce platforms, and a “Made in India” certification is suggested to increase brand visibility. Domestic certification labs and alignment with global standards would simplify compliance. Logistics improvements, including freight corridors, modernised ports, and digital supply chains, are recommended to reduce costs.
Through industry partnerships, workforce training in robotics, automation, and battery technology is proposed to support advanced production. The strategy identifies niches like cordless tools, precision tools for aerospace, and sustainable products, with emerging markets in Africa, Latin America, and Southeast Asia as targets. Free trade agreements with the UAE, Australia, and the EU, incorporating sector-specific provisions, are suggested to ease market access. The report notes that U.S. tariffs on China are a potential opportunity for India to gain market share.
The report estimates that achieving the $25 billion target would contribute to GDP, manufacturing, and foreign exchange reserves. It projects 35 lakh jobs by 2035, with 15 lakh direct roles in manufacturing and 20 lakh indirect roles in logistics and retail, many in small and medium enterprise regions. The report suggests women, who form a significant portion of the manufacturing and assembly workforce, could benefit, and do-it-yourself trends may encourage youth entrepreneurship. It emphasises sustainability, recommending energy-efficient production, recyclable materials, and low-impact tools like renewable-powered cordless models, aligning with India’s 2070 net-zero target and demand in markets like the European Union.
The report calls for collaboration among government, industry, and academia, proposing the *National Hand and Power Tools Mission* to coordinate policy, funding, and partnerships. It acknowledges the role of associations like the Indian Tool Manufacturers Association in supporting innovation and exports, with public-private dialogues to address challenges. The global industry is described as evolving with automation, digitalisation, and sustainability. The report compares India’s potential to its successes in pharmaceuticals and Information Technology, noting China’s scale and Germany’s precision, and suggests India could combine cost and innovation to carve a niche.
The document positions the sector as part of the global manufacturing ecosystem, noting its role in India’s manufacturing hub ambitions. It acknowledges that achieving the $25 billion target depends on addressing challenges and implementing the proposed strategy. The report’s release marks an effort to outline a path for the sector, with its success contingent on the execution of its recommendations and broader economic conditions.
– global bihari bureau
