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India should strengthen cluster-based manufacturing and develop integrated industrial parks with shared utilities, infrastructure, and efficient approvals to build scale and lower costs, NITI Aayog recommended on Thursday as it released the first volume of a study on positioning the country as a global manufacturing hub.
The apex think tank positioned manufacturing as India’s most effective route to putting its young workforce — with a median age of around 28 — into productive employment. “Manufacturing can absorb labour at scale across diverse skill levels, create stable and formal jobs, and lift productivity through better processes and technologies,” the Aayog said.
The study, titled ‘Key Sectors to Position India as a Global Manufacturing Hub’, shortlisted 12 sectors in which India can aspire to global leadership by 2047 — electronics, telecommunications (telecom) equipment, solar photovoltaic, pharmaceutical, chemical, automotive, defence and drone, steel, capital goods, textile, food processing, and leather and footwear. This opening volume examines four in depth: chemical, textile, telecom and network equipment, and solar photovoltaic.
Across the sectors examined, the report’s cross-cutting recommendations include reducing import dependency through targeted incentives and viability gap funding, deepening domestic value addition, promoting joint ventures and technology transfer, raising labour productivity, and diversifying export markets while negotiating balanced free trade agreements.
“By reducing its reliance on imports, India can conserve foreign exchange, mitigate the impact of global price volatility, and ensure a stable supply of essential chemicals,” the report said, naming phenol, methanol, and acetic acid as priority products.
“We are not trying to do things which can stand up to the Chinese scale. Economies of scale and scope both are very important to us,” observed NITI Aayog Vice-Chairman Ashok Lahiri at the launch of the report.
Lahiri argued that most investment must come from the private sector and that the government’s job is to remove all impediments, adding that investment will come only when there is profit. “It’s not simply about increasing the share of manufacturing in gross domestic product. It’s about building productive capacity, increasing and expanding India’s presence in the global markets,” he added.
On solar, where the US accounted for 97 per cent of India’s solar module exports between 2019-20 and 2025-26 — a “heavy dependence on one geography” — the report recommends moving upstream into polysilicon and wafers and broadening the export base.
Also speaking at the release, Tejveer Singh, secretary, Department of Chemicals & Petrochemicals, said his department was working with other ministries, including those handling environment and ports, on chemical parks. A parallel study was also under way under the Department for Promotion of Industry and Internal Trade on import substitution, looking at “some of the high-ticket items”.
He said he was confident that some chemical products would form part of “whatever is the final decision taken by the government in that matter”.
The pursuit of scale runs through the labour recommendations too. Flagging that labour productivity in the textile sector remains significantly below the overall manufacturing average, the report calls to “enhance productivity through workforce skilling, labour welfare measures, and technology adoption”.
For textiles — which it urges towards a strategic shift towards man-made fibre-led growth to reach $100 billion in exports by 2029-30 — it proposes skilling through apprenticeships and industry-academia partnerships, a scheme for “safe, affordable, and dignified accommodation” for migrant workers near manufacturing clusters, and voluntary certification for firms that demonstrate ethical labour practices.
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