Niti Aayog identifies 12 sectors to drive India’s global manufacturing push

India must go beyond expanding domestic production to become a global manufacturing hub by 2047, focusing on value addition, technology, and integration into global supply chains, according to a Niti Aayog report in collaboration with Crisil Intelligence.

The study has identified 12 manufacturing sectors where India can realistically aspire to global leadership. Some of these sectors are electronics, telecom equipment, solar photovoltaic (PV), pharmaceuticals, chemicals, automobiles, defence and drones, among others. The sectors were selected from an initial universe of 62 sectors using a relative-attractiveness framework that considered domestic and global market size, domestic and global growth projections, employment potential and strategic alignment.

The report has put the manufacturing opportunity in the context of India’s ambition to become a $30 trillion economy by 2047. Manufacturing currently accounts for 17.5% of India’s gross value added (GVA) and supported 1.85 crore jobs in FY22, making it an important avenue for absorbing labour across different skill levels, raising productivity and creating formal employment.

India’s share in global manufacturing value added has risen from 1.5% in 1995 to 3.2% in 2023, while China’s share increased from about 5% to nearly 32% over the same period. The report noted that India’s manufacturing share in GVA has remained broadly stable over the past two decades.

The report also highlighted that about 70% of India’s exports are manufactured products, while the remaining 30% comprise primarily or minimally processed goods. It noted that the next phase of industrialisation should therefore involve moving further up the value chain—from raw material and minimally processed exports towards more refined, processed and technologically sophisticated products.

Chemicals and textiles need scale

To be sure, Niti Aayog is the government’s policy think tank, and it suggests policy-level changes to help the government meet its targets across sectors.

As the first volume of the report titled Report on Key Sectors to Position India as a Global Manufacturing Hub, it provided a detailed analysis of chemicals, textiles, telecom and network equipment, and solar PV manufacturing. These four sectors represent different dimensions of India’s manufacturing opportunity, ranging from employment-intensive industries and industrial inputs to digital infrastructure and clean-energy technologies.

In chemicals, the report said that the industry needs a 10-11% consumption CAGR and a 14% production CAGR over the next five fiscals to meet domestic demand and expand exports. By 2030, it sets out potential export targets of $45 billion for speciality chemicals, $5-10 billion for inorganic chemicals and $26 billion for petrochemicals.

Textiles are particularly important for employment. According to the report, the industry accounts for 2% of GDP, 11% of manufacturing GVA, and 9% of merchandise exports. India exported $37.7 billion in textile products in FY25, while the industry employs more than 45 million people. Nearly 80% of industry capacity is concentrated in MSME clusters, and India accounted for 4.1% of global textile and apparel exports in 2024, making it the sixth-largest exporter.

However, the report stated that India needs to improve its competitiveness in man-made fibres (MMF) as global demand shifts towards these products. It recommended improving raw-material competitiveness, expanding scale, strengthening technology adoption and pursuing deeper trade integration.

Telecom and solar need to go upstream

In telecom and network equipment, the domestic market is estimated at nearly $25 billion in FY25 and projected to reach $50 billion by 2032, but exports remained only $0.6-1 billion annually during 2020-24, compared with imports of $4-5 billion. More than 80% of imports of critical components were sourced from China.

The report stated that the PLI scheme has helped boost production, but manufacturing remains largely assembly-led. Localisation is only 4% for 4G/LTE RAN base stations and 5% for 5G RAN base stations. Since private telecom service providers account for 98% of domestic Telecom and Network Equipment sector (Tane) demand, the report recommended a phased localisation framework, technology partnerships, industrial clusters and stronger testing and certification capabilities.

In solar PV, module manufacturing capacity listed in the Approved List of Models and Manufacturers rose to 100GW in August 2025, up from about 2.3GW in 2014, while solar cell manufacturing capacity reached 25GW in March 2025, up from less than 1.2GW in 2014. However, upstream manufacturing remains weak, leaving India dependent on imports of polysilicon and wafers.

The report suggested greater focus on upstream capacity, R&D, specialised manufacturing equipment and skills. It noted that Indian companies’ solar R&D spending is negligible compared with Chinese peers, which spend around 3% of revenue on average.

“Sustained policy consistency, industrial clusters, infrastructure, targeted incentives, technology and skills investment and stronger links with global markets will be necessary to build complete manufacturing ecosystems rather than isolated production capacities,” the report noted.