'Unlocking $25+ Billion Export Potential – India’s Hand & Power Tools Sector,' focusing on the hand and power tools industries

The report highlights the significant potential of the hand and power tools industry to drive economic growth in India, examining the challenges, policy obstacles, and necessary actions needed to strengthen the country's hand and power tool ecosystem. It proposes a strategic approach for the sector to improve its global competitiveness and secure a larger share of the international market.

Tools Industry

The tools industry is a crucial part of the capital goods sector, providing essential tools for various tasks such as drilling, cutting, sanding, and polishing. These tools are vital for both industrial processes and everyday activities. Key sectors like construction, electronics, automotive, and aerospace heavily depend on tools for their manufacturing and operational needs. The global tools market was valued at approximately $100 billion in 2022 and is expected to grow to $190 billion by 2035. China currently leads the global export market, accounting for nearly 50% of trade, with $16 billion in hand tools and $22 billion in power tools exports, thanks to its large-scale operations, cost efficiencies, and established supply chains.

India's Current Standing

India's exports amount to $600 million in hand tools (1.8% of the global market) and $425 million in power tools (0.7% of the global market). Major exports include wrenches, pliers, screwdrivers, and drills, with Punjab and Maharashtra being the primary exporting states.

Export Potential

India has a substantial opportunity to boost its export share and position itself as a competitive player in the global tools market. The country aims to achieve a 10% market share in power tools and a 25% share in hand tools by 2035, which would enhance its global competitiveness, create millions of jobs, and promote rural and inclusive development.

Challenges to Growth

India faces a cost disadvantage of 14-17% compared to China, stemming from high raw material costs, lower labor productivity, and logistical issues. There is also limited access to advanced manufacturing technologies and research and development capabilities, along with insufficient industrial land for scaling operations. Current financial schemes are inadequate and inefficient.

Strategic Roadmap and Policy Recommendations

To build world-class hand tool clusters, it is recommended to establish 3-4 advanced industrial clusters over 4,000 acres, particularly in Punjab, to reduce setup time, enhance infrastructure, and attract labor. Addressing structural cost disadvantages requires market reforms to lower import restrictions, reduce import duties, simplify export schemes, and reform building and labor regulations to cut costs by 10-12%. If reforms do not succeed, an additional investment of $700 million may be necessary over five years, with an expected 2-3x return in tax revenues. Coordinated efforts among government, industry, and private stakeholders are essential to meet the export targets.

Conclusion and Future Directions

The hand and power tools sector is vital for India’s ambition to become a global manufacturing hub. It will enhance the country's manufacturing capabilities, increase exports, and contribute to economic growth, aligning with the "Make in India" initiative. Achieving the $25 billion export target by 2035 is crucial for India's industrial development and its goal of becoming a developed nation.