New Delhi: NITI Aayog has recommended cluster-based manufacturing, integrated industrial parks, shared infrastructure and lower production costs as key strategies to make India a global manufacturing hub by 2047.
The first volume of its study, “Key Sectors to Position India as a Global Manufacturing Hub,” focuses on four sectors: chemicals, textiles, telecommunications and network equipment, and solar photovoltaic (PV).
12 Sectors Identified for Global Leadership
NITI Aayog has identified 12 sectors where India could aspire to achieve global leadership by 2047:
- Electronics
- Telecom equipment
- Solar photovoltaic
- Pharmaceuticals
- Chemicals
- Automotive
- Defence and drones
- Steel
- Capital goods
- Textiles
- Food processing
- Leather and footwear
The objective is not simply to increase domestic production but to build globally competitive manufacturing capacity and expand India’s export presence.
Why Manufacturing Clusters Matter
NITI Aayog has recommended developing integrated industrial parks and manufacturing clusters where companies can share common infrastructure and services.
These could include:
- Power and water utilities
- Logistics and transportation infrastructure
- Testing and R&D facilities
- Warehousing
- Common treatment facilities
- Faster regulatory approvals
- Skilled workforce
Such clusters can reduce individual companies’ infrastructure costs and help businesses benefit from economies of scale and scope.
NITI Aayog Vice-Chairman Ashok Lahiri stressed that India should focus on achieving scale and scope rather than simply trying to replicate China’s manufacturing model.
Manufacturing as an Employment Engine
The report describes manufacturing as one of India’s most effective ways to create productive employment for its young population.
With India’s median age around 28, manufacturing can generate jobs across different skill levels while improving productivity through technology and better processes.
The broader economic cycle could be:
Manufacturing → Formal employment → Higher productivity → Higher incomes → Stronger domestic demand
Reducing Import Dependence
The report recommends reducing India’s dependence on imports in strategically important sectors.
In chemicals, products such as phenol, methanol and acetic acid have been identified as priorities.
Greater domestic production could:
- Save foreign exchange
- Reduce exposure to global price volatility
- Improve supply-chain security
- Increase domestic value addition
However, the strategy is not limited to import substitution. India also needs to become more competitive in global export markets.
Technology Transfer and Joint Ventures
NITI Aayog has recommended greater use of:
- Joint ventures
- Technology-transfer arrangements
- R&D partnerships
- Advanced manufacturing technologies
The objective is to help Indian companies move higher up the global value chain, rather than simply attracting foreign companies to manufacture products in India.
Solar PV: Moving Beyond Module Manufacturing
India has significantly expanded its solar-module manufacturing capabilities, but the report highlights gaps in the upstream value chain.
According to the study, the US accounted for about 97% of India’s solar module exports between 2019-20 and 2025-26.
This creates a significant concentration risk because India remains heavily dependent on a single export market.
NITI Aayog therefore recommends moving further upstream:
Polysilicon → Wafers → Cells → Modules
India also needs to diversify its export destinations.
Textile Sector: Focus on Man-Made Fibres
For the textile industry, NITI Aayog has recommended a strategic shift towards man-made fibre (MMF)-led growth.
The broader objective is to help India move towards $100 billion in textile exports by 2029-30.
The report recommends:
- Apprenticeship-based skill development
- Industry-academia partnerships
- Technology adoption
- Higher labour productivity
- Better labour welfare
- Safe and affordable housing for migrant workers
- Voluntary certification for ethical labour practices
The report notes that labour productivity in India’s textile sector remains significantly below the overall manufacturing average.
Chemical Industry: Building Domestic Capacity
The government is also working on developing chemical parks.
The Department of Chemicals & Petrochemicals is coordinating with other ministries, including those dealing with environment and ports, to strengthen the infrastructure required for chemical manufacturing.
The goal is to create an ecosystem where manufacturers can access:
Infrastructure + Utilities + Logistics + Environmental facilities + Approvals
in an integrated manner.
What Should the Government Do?
According to NITI Aayog, most manufacturing investment should come from the private sector.
The government’s role should primarily be to remove barriers and create a favourable business environment through:
- Better infrastructure
- Faster approvals
- Targeted incentives
- Viability Gap Funding
- Technology-transfer support
- Skill development
- Improved logistics
- Balanced Free Trade Agreements
Ashok Lahiri emphasized that simply increasing manufacturing’s share of GDP is not enough. India needs to build productive capacity and expand its presence in global markets.
What This Means for India
NITI Aayog’s strategy can broadly be understood through three priorities:
1. Lower Costs
Shared infrastructure and large manufacturing clusters can reduce production and operating costs.
2. Greater Scale
Indian manufacturers need to develop the capacity to serve both the domestic and global markets at competitive volumes.
3. Global Competitiveness
India needs to move from being primarily a domestic manufacturing base to becoming a major component of global supply chains.
Conclusion
NITI Aayog’s manufacturing roadmap represents a shift from fragmented industrial development towards large, integrated and globally competitive manufacturing ecosystems.
Starting with chemicals, textiles, telecom equipment and solar PV, the strategy can eventually strengthen India’s position across electronics, pharmaceuticals, automobiles, defence, steel and capital goods.
If infrastructure, logistics, skills, technology and regulatory reforms advance together, manufacturing could become one of India’s biggest engines of employment, exports and long-term economic growth.
