NITI Aayog, the National Institution for Transforming India, has released a visionary report titled ‘Unlocking $25+ Billion Export Potential – India’s Hand & Power Tools Sector’. The report charts a comprehensive roadmap to elevate India’s tools exports to USD 25 billion by 2035, contributing to the broader national goal of Viksit Bharat @2047.

Key Global Trends in the Tools Industry

• The global hand and power tools market, valued at approximately USD 100 billion in 2022, is projected to nearly double to USD 190 billion by 2035.

• Market Segmentation:

  • Hand Tools: Currently at USD 34 billion, expected to grow to USD 60 billion.

  • Power Tools: Valued at USD 63 billion, projected to rise to USD 134 billion.

• China leads global exports, commanding:

  • ~50% of the hand tools market (USD 13 billion).

  • ~40% of the power tools market (USD 22 billion).

India’s Current Standing and Potential

• India’s footprint remains modest:

  • USD 600 million in hand tools exports (1.8% global share).

  • USD 425 million in power tools exports (0.7% global share).

• However, with the right policies and industry support, India can capture:

  • 25% of the global hand tools market.

  • 10% of the power tools market by 2035.

• This transformation could generate 3.5 million jobs, catalyzing economic growth and positioning India as a major global manufacturing hub.

Understanding Hand and Power Tools

• Tool: A handheld device used for tasks such as drilling, cutting, sanding, or polishing.

Hand Tools

• Non-motorized, manually operated tools.

• Examples: wrenches, screwdrivers, pliers, hammers.

• Characteristics: Cost-effective, labor-intensive, and ideal for tasks requiring control and precision.

Power Tools

• Mechanized tools powered by electricity, hydraulics, or pneumatics.

• Examples: drills, saws, grinders, electric screwdrivers.

• Categories:

  • Corded tools – plug-in, continuous power.

  • Cordless tools – battery-operated, portable.

Challenges Hindering India’s Tools Industry

1. Cost Disadvantages

• India faces a 14–17% cost gap with China.

• Restrictive labor laws, unreliable power supply, and expensive generator power (?18/unit) drive up costs.

2. Raw Material Dependency

• Despite being a steel-producing nation, India relies heavily on imported high-quality materials.

• FY25 stainless steel imports may reach 1.3 million tonnes.

• Export duties by China/Vietnam on scrap steel limit access to inputs.

3. Technological Limitations

• Lack of cutting-edge manufacturing technology and R&D infrastructure.

• Dependency on imported high-value components like ratchets for spanners restricts domestic value capture.

4. High Machinery Costs

• Precision machinery like CNC machines faces import duties and surcharges, deterring adoption.

5. Scaling Bottlenecks

• Land scarcity and high costs (?3–5 crore/acre in Punjab).

• Inland location drives logistics costs up.

• Dominance of small-scale units hinders economies of scale.

• Rigid FAR norms limit vertical expansion of industrial space.

6. Inadequate Policy Support

• Rebates under RoDTEP:

  • Hand tools: 1.1% of FOB value.

  • Power tools: 0.9% – insufficient given a 15% cost disadvantage.

• High tax burdens: India (34%) vs China (25%) and Vietnam (20%).

• No dedicated R&D tax incentives, making India less attractive for manufacturers.

Government Initiatives to Support the Sector

• RoDTEP: Offers limited duty rebates on exports.

• Duty-Free Import Authorization (DFIA): Permits duty-free import of essential inputs used in production (excluding Basic Customs Duty).

 Strategic Recommendations for Industry Transformation

1. Establish Specialized Tool Clusters

• Develop 3–4 large-scale hand tool clusters across ~4,000 acres by 2035, including one in Punjab.

• Features: Plug-and-play infrastructure, R&D labs, testing facilities, stable utilities, and worker housing.

• Governance via Public-Private Partnership (PPP) model with SPV-led oversight.

 2. Ease Raw Material Access

• Rationalize Quality Control Orders (QCOs).

• Reduce import duties on essential materials like steel, PVC, and motors.

 3. Simplify Policies and Incentives

• Streamline the EPCG scheme, relax AEO conditions, and reduce penalties for defaults.

• Under the National Manufacturing Mission (2025–26):

  • Ease regulatory hurdles for MSMEs.

  • Set up dedicated R&D councils for innovation.

4. Relax Land Use Regulations

• Ease FAR norms and industrial zoning to make land acquisition more viable.

• Facilitate capacity expansion by MSMEs.

 5. Adopt Advanced Manufacturing Technologies

• Encourage use of 3D printing, CNC precision, and automated production lines to improve quality and reduce costs.

 6. Diversify Product Portfolio

• Target global markets with high-end, battery-powered, precision tools to enhance exports and meet evolving demand.