NITI Aayog, an analytical center, recommended that India strengthen cluster-based production and develop integrated industrial parks. These parks should feature common utilities, infrastructure, and efficient approval procedures to scale up operations and reduce costs. These recommendations were presented on Thursday with the release of the first volume of a study focused on positioning the country as a global manufacturing hub.
The Apex think tank identified manufacturing as the most effective way to employ India's young workforce, whose median age is around 28 years. According to NITI, 'Manufacturing can absorb large volumes of labor at various skill levels, create stable and formal jobs, and boost productivity by improving processes and adopting technologies.'
The study, titled 'Key Sectors for Positioning India as a Global Manufacturing Center,' highlighted 12 industries where India can aim for world leadership by 2047. These include electronics, telecommunication equipment, solar photovoltaic cells, pharmaceuticals, chemical industry, automotive, defense, drones, steel, capital goods, textiles, food processing, as well as leather and footwear. The first volume details four sectors: chemical industry, textiles, telecommunication and network equipment, and solar photovoltaic cells.
General recommendations from the report for all studied sectors include reducing import dependence through targeted incentives and financing viability gaps, deepening domestic value addition, promoting joint ventures and technology transfer, increasing labor productivity, and diversifying export markets when negotiating balanced free trade agreements.
Regarding the chemical industry, the report emphasized that reducing import dependence will allow India to retain foreign currency, mitigate the impact of global price volatility, and ensure stable supplies of vital chemicals, naming phenol, methanol, and acetic acid as priority products.
Vice Chairman of NITI Aayog, Ashok Lahiri, noted at the report presentation that the goal is not to compete with China's scale. He stressed the importance of both economies of scale and economies of scope. Lahiri also stated that most investment should come from the private sector, and the government's role is to remove all obstacles, as investments will only materialize where there is profit. He added that this is not just about increasing the share of domestic production but about building manufacturing capacity and expanding India's presence in global markets.
Concerning solar energy, where the US accounted for 97 percent of India's solar module exports from the 2020 to 2026 fiscal year, the report recommends moving up the supply chain to include polysilicon and wafers, as well as expanding the export base.
Tejvir Singh, Secretary of the Department of Chemicals and Petrochemicals, speaking at the event, reported that his department is collaborating with other ministries, including the Ministries of Environment and Ports, on establishing chemical parks. He also mentioned that DPIIT is conducting a parallel study on import substitution, examining 'certain high-cost items,' and expressed confidence that some chemical products will be included in the final government decision.
Scale requirements also apply to labor recommendations. Noting that labor productivity in the textile sector remains significantly below the overall manufacturing average, the report calls to 'increase productivity through workforce upskilling, worker welfare measures, and technology adoption.'
For the textile industry, which is urged to strategically shift towards man-made fiber (MMF) based growth to achieve $100 billion in exports by the 2030 fiscal year, proposed measures include apprenticeship training programs and industry-academia partnerships, as well as a 'safe, affordable, and decent housing' scheme for migrant workers near manufacturing clusters, and voluntary certification for firms demonstrating ethical labor practices.
