India wants to become a global factory. NITI Aayog names 12 sectors that can lead the way

India wants a bigger slice of the global manufacturing pie, and NITI Aayog has identified 12 sectors that could help it get there.

In its latest report titled “Key Sectors to Position India as a Global Manufacturing Hub,” Niti Aayog has highlighted the industries where India has the potential to scale up production, attract investment and strengthen its position in global supply chains.

The 12 sectors include electronics, telecom equipment, solar photovoltaic (PV), pharmaceuticals, chemicals, automobiles, defence and drones, among others.

The government think-tank shortlisted these sectors from an initial list of 62, based on factors such as the size and growth potential of domestic and global markets, their ability to create jobs, and their strategic importance for India. These sectors could help India become a global manufacturing hub by 2047, the report said.

“India needs to create profitable investment opportunities and achieve greater economies of scale and scope to emerge as a global manufacturing hub,” said Ashok Kumar Lahiri, the Vice Chairman of NITI Aayog. He mentioned that most investments in India will have to come from the private sector.

THE SECTORS INDIA SHOULD BET ON

NITI Aayog, as the government’s policy think tank, designs long-term plans and strategies for the country’s growth. It acts as the ultimate bridge between the central government and individual states to plan India’s development together.

The newly released report has studied four sectors at length, which are – chemicals, textiles, telecom & network equipment, and solar PV manufacturing. The report showed that these sectors make up a wide range of opportunities in India’s manufacturing space, from job-intensive industries and essential industrial inputs to digital infrastructure and clean-energy technologies.

This manufacturing push is closely linked to India’s ambition of becoming a $30 trillion economy by 2047. Presently, manufacturing contributes merely 17.5% of India’s gross value added (GVA) and supported around 1.85 crore jobs in FY22.

With the potential to create jobs across skill levels, improve productivity and expand formal employment, the sector could play a major role in driving India’s economic growth over the coming decades.

WHERE IS INDIA’S MANUFACTURING HEADING?

As per the report, the chemicals sector is expected to see strong growth in the coming years, with an estimation that consumption will need to grow at 10-11% annually, while production needs to rise by around 14% annually over the next five fiscal years.

This would help India meet rising domestic demand as it expands its presence in the global markets. By 2030, the report sees potential export opportunities of $45 billion in speciality chemicals, $5-10 billion in inorganic chemicals and $26 billion in petrochemicals.

Textiles, meanwhile, stand out for their contribution to employment. The sector accounts for 2% of India’s GDP, 11% of manufacturing GVA and 9% of merchandise exports. In progressive performance, India was noted to export $37.7 billion worth of textile products in FY25, with the industry providing jobs to more than 4.5 crore people.

With nearly 80% of its capacity concentrated in MSME clusters, textiles also have a strong link with smaller businesses and local employment. As a result, India accounted for 4.1% of global textile and apparel exports in 2024, making it the world’s sixth-largest exporter.

However, the report noted that India needs to become more competitive in man-made fibres (MMF) as global demand has increasingly shifted towards these products. To tap this growing market, it recommended making raw materials more cost-competitive, scaling up production, adopting newer technologies and strengthening trade ties with other countries.

On the other hand, the telecom and network equipment sector presents another major opportunity, but India still relies heavily on imports. The domestic market, which is estimated at nearly $25 billion in FY25, is expected to double to around $50 billion by 2032.

Contrarily, exports remained at just $0.6–1 billion a year between 2020 and 2024, while the imports stood at around $4–5 billion. The report showed that the dependence on China is particularly high, with more than 80% of imports of critical components coming from the country.

India has made significant progress in solar PV manufacturing, particularly in modules and cells. Despite the progress, the report points out that the industry remains weaker further up the supply chain, with India still dependent on imports of key inputs such as polysilicon and wafers.

MANUFACTURING MORE, IMPORTING LESS

The report’s findings suggest that India’s manufacturing opportunity is about building stronger and more competitive supply chains. A robust manufacturing base can help the country become more self-reliant, reduce its dependence on imports and increase the value created within India, particularly in critical sectors such as electronics, defence and renewable energy, said the report.

While sectors such as textiles can create millions of jobs and industries such as electronics, telecom and solar can help India crack fast-growing global markets, the gaps in technology, raw materials and imports remain a hurdle for the country.

For India to become a major manufacturing hub by 2047, the focus will therefore need to shift from increasing capacity alone to moving up the value chain. This means developing critical components domestically, improving technology and productivity, attracting investment and expanding exports.

– Ends