NITI Aayog released report titled “Key Sectors to Position India as a Global Manufacturing Hub” | Current Affairs | Vision IAS

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In Summary

  • NITI Aayog identified Chemicals, Telecom & Networking Equipments, Textiles, and Solar PV manufacturing as high-potential sectors for India's growth.
  • Challenges include high import dependency in Chemicals and Solar PV, fragmented capacities in Textiles, and low localization in Telecom equipment.
  • Recommendations involve Viability Gap Funding for chemicals, infrastructure support for textiles, localization incentives for telecom, and policy clarity for solar PV.

In Summary

NITI Aayog identified Chemicals, Telecom & Networking Equipments, Textiles and Solar Photo Voltaic (PV) manufacturing as four high-potential sectors that could drive India’s manufacturing growth.

SectorsStatus Challenges Recommendations
Chemicals
  • Accounts for 3-3.5% of the global chemicals market, ranks sixth globally.
  • High import dependency (70-80%) on high-value raw materials like APIs, Methanol ethylene and propylene.
  • Higher logistics cost, slower project execution and lower competitiveness.
  • Implement Viability Gap Funding (VGF) and opex subsidies for critical downstream chemicals.
  • Develop integrated PCPIRs, shared utilities, pipeline grids, common effluent systems and port-linked chemical hubs.
Textiles
  • Contributing around 2% of GDP, 11% of manufacturing GVA and 9% of merchandise exports.
  • Traditional focus remains heavily cotton-reliant (65% of production).
  • Fragmented manufacturing capacities in weaving and processing.
  • Indian exporters continue to face market access disadvantages.
  • Improve raw material competitiveness by addressing MMF feedstock constraints, improving cotton productivity and quality.
  • Infrastructure support for MSMEs, technology upgradation, larger weaving and processing capacities.
  • Deeper trade integration and targeted FTAs.
Telecom and networking equipment
  • India is the world’s 2nd-largest telecom market, with 1.2+ billion subscribers, ~85% telecom penetration, and ~75% internet usage.
  • Low localisation levels particularly in high-value technologies such as 4G and 5G radio access equipment.
  • Nearly 98% of telecom equipment demand originates from private telecom service providers which prefer established global OEMs.
  • Establish localisation-linked incentive framework
  • Promote joint ventures between global OEMs and domestic firms for technology transfer.
  • Develop Industrial Clusters generating scale economies and strengthening innovation networks.
Solar PV
  • India had 106 GW of installed solar capacity by March 2025.
  • Upstream import dependence (100% in polysilicon, >90% in wafer).
  • Limited R&D spend and limited access to machinery and capital goods. 
  • Provide long-term policy clarity; extend ALMM to wafers.
  • Create a dedicated solar R&D fund; Introduce performance-linked R&D incentives.

 

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RELATED TERMS

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ALMM

Approved List of Models and Manufacturers, a list curated by the Ministry of New and Renewable Energy (MNRE) of solar PV modules and manufacturers. Its aim is to ensure quality and reliability of solar PV modules and promote domestic manufacturing.

OEMs

Original Equipment Manufacturers. These are companies that produce goods or components that are then sold to other companies, which then market and sell them under their own brand name.

FTAs

Free Trade Agreements, pacts between two or more nations to reduce barriers to trade and investment, such as tariffs and quotas, promoting economic cooperation.

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