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ETV Bharat / bharat
By ETV Bharat English Team
Published : August 13, 2026 at 7:27 PM IST
New Delhi: NITI Aayog, India’s apex public policy thinktank, has identified the manufacturing of chemicals, textiles, solar photovoltaic (PV) cells, and telecom and networking equipment as four priority sectors that could help India expand its manufacturing footprint globally, while flagging import dependence, low domestic value addition and productivity gaps as key challenges.
NITI Aayog Vice Chairperson Ashok Kumar Lahiri on Thursday released the first volume of the report, Key Sectors to Position India as a Global Manufacturing Hub, which is part of a larger exercise covering 12 sectors that have been shortlisted from an assessment of 62 sectors, based on their attractiveness, strategic importance, operational and financial viability, and value-chain potential.
India is currently the world’s fifth-largest manufacturer, but accounts for only around 3 per cent of global manufacturing output, estimated at US$ 17.6 trillion. Manufacturing contributed 17.5 per cent of India’s GDP in FY26, while its share of gross value added (GVA) has remained in the 16-18 per cent range for the past two decades.
Telecom: From Production To Value-Addition
In telecom equipment, NITI Aayog said India needs to move beyond simply increasing domestic production and instead focus on local value addition within global value chains.
The report flagged high import dependence for components and limited market access for domestic manufacturers, with localisation particularly low in high-value technologies like 4G and 5G radio access equipment. Nearly 98 per cent of telecom equipment demand comes from private telecom service providers, making their procurement decisions critical for scaling domestic manufacturing.
NITI Aayog recommended incentivising private telecom operators to procure domestically manufactured equipment, particularly radio infrastructure, to help build export capabilities. It also called for support for institute-industry partnerships in VLSI (Very Large Scale Integration) semiconductor and fabless design skills, alongside greater use of joint ventures and intellectual property-led manufacturing.
India, with more than 1.2 billion telecom subscribers, is the world’s second-largest telecommunications market.
Solar PV Cell: China Dependence, Weak R&D Flagged
The report also identified significant opportunities to deepen domestic value addition in solar PV cell manufacturing.
India had 106 GW of installed solar capacity as of March 2025, and needs to add around 174 GW to reach its 2030 target of 280 GW. The domestic PV market, currently estimated at Rs 32,400 crore, is projected to grow at 17-20 per cent annually between FY23 and FY30.
However, NITI Aayog flagged India’s heavy dependence on China for solar manufacturing machinery and equipment. Indian companies also spend less than 1 per cent of revenue on R&D, compared with a global average of around 3 per cent.
The report recommended a dedicated solar R&D fund, greater access to funding under the Anusandhan National Research Foundation, clean-tech clusters and partnerships with countries beyond China.
Chemicals: Imported Feedstock A Vulnerability
For the chemicals sector, NITI Aayog highlighted India’s dependence on imported feedstock and intermediates, which leaves manufacturers exposed to supply disruptions, price volatility and geopolitical risks.
The report also pointed at gaps in specialised port infrastructure and delays in developing petroleum, chemicals and petrochemical investment regions (PCPIRs).
It recommended boosting domestic feedstock production, encouraging backward integration, creating an overarching PCPIR framework and upgrading port infrastructure. It also called for free trade agreements that provide safeguards for domestic chemical manufacturers.
Textiles: Productivity, Scale Remain Challenges
Textiles, one of India’s largest manufacturing and employment-generating sectors, contributes around 2 per cent to GDP, 11 per cent of manufacturing GVA, 9 per cent of merchandise exports, and provides livelihoods to more than 45 million people.
India exported US$ 37.7 billion of textile products in FY25, accounting for 4.1 per cent of global textile and apparel exports and making the country the world’s sixth-largest textile exporter.
However, NITI Aayog said around 80 per cent of the sector comprises MSMEs, with fragmented clusters limiting scale and productivity. Employee productivity is estimated at 7.9 GDP per working hour in India, compared with 15.4 in China and 9.8 in Vietnam.
The report recommended infrastructure and policy support for MSMEs, expanding weaving capacity, improving market access through trade agreements and addressing the inverted duty structure in man-made fibres.
The study was based on consultations with more than 100 stakeholders across the 12 shortlisted sectors. NITI Aayog said common priorities emerging across sectors include policy competitiveness, infrastructure and supply chains, skills and innovation, market access and exports, and stronger execution.
The remaining reports will cover eight more sectors, with NITI Aayog stressing that sustained manufacturing growth will require long-term policy consistency, industrial clusters, investment in technology and skills, stronger global-market linkages and closer coordination between government, industry, academia and financial institutions.
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