NITI Aayog report on India’s Hand & Power Tools Sector

Prelims (GS I) – Economic and Social Development.

Mains (GS III) – Employment | Growth & Development | Inclusive Growth.

Why in news?

Recently, NITI Aayog released a report named, Unlocking $25+ Billion Export Potential - India’s Hand & Power Tools Sector.

Objective – To outline a strategic path for the sector to enhance its global competitiveness and capture a significantly larger share of the international market.

Findings of the report

Global market – The worldwide tools market, which was estimated in 2022, is anticipated to be doubled to expand by 2035.
Hand tools and Power tools sector are expected to experience steady growth.
China dominates global exports, holding about 50% of the hand tools market and 40% of the power tools market
Indian market – India has a smaller presence, 1.8% market share in hand tools and 0.7% market share in power tools.
India’s potential – India can reach 10% market share in power tools and 25% in hand tools in exports over the next decade.
It could create approximately 35 lakh jobs.
Challenges in Indian tools market growth – Cost disadvantage compared to China due to higher structural costs and smaller operational scale.
This disadvantage stems from elevated raw material costs, such as steel, plastic, and motors and lower labour productivity.
Higher interest rates and logistics costs for transporting goods from inland states to ports.

Suggested measures by the report

India can solidify the nation’s position as a reliable, high-quality global manufacturing hub by,
- Fostering innovation
- empowering our MSMEs
- Strengthening India’s industrial ecosystem
Developing world-class hand tool clusters under a public-private partnership (PPP) with advanced infrastructure.
Addressing structural cost disadvantages through market reforms such as reducing import duties and reducing penal provisions like interest on defaults.
Providing bridge cost support to offset cost disadvantages to give impetus to growth of the sector.

Quick Facts

Hand tools – These are non-motorized tools that rely on manual effort.
Common examples include screwdrivers, hammers and handsaws.
Power tools – Power tools use external source such as electricity or batteries to work faster and stronger.
Both types are essential in construction, woodworking, automotive repair, and other industries.
Hand and Power tools sector – The tools industry serves as a foundational pillar of the global manufacturing ecosystem.
The Hand and Power Tools sector represents a significant opportunity to realise India’s ambition of becoming a global manufacturing hub.