Economist Rajiv Kumar, former Vice Chairman of NITI Aayog, recently argued that India's export manufacturing is failing not for lack of policy attention, but for an unwillingness to commit to global competitiveness as the overriding objective. The numbers bear him out.

Apparel exports, one of the largest employers in India's micro, small and medium enterprises (MSME) manufacturing base, in FY 2025-26 swung from 8.7% growth in April to a 17.1% contraction by February. Leather followed a similar trajectory. Textiles oscillated around zero for most of the year.

These are not cyclical blips. They reflect a lack of competitiveness in the sectors that have historically absorbed the most workers and generated the most export volume for smaller manufacturers.

Climate tech is an area where India is well-positioned to define global standards. At a per capita income of $3,000 (roughly Rs 2.86 lakh), with 65% of the population living on less than $3 a day (under Rs 290), India cannot afford a growth model that concentrates gains in capital-intensive sectors.

The country needs labour-intensive manufacturing at scale — competing in global markets — to absorb the tens of millions of workers transitioning out of agriculture. ClimateTech, built right, can be that sector.

The specific opportunity lies in emissions monitoring and air quality technology: a sub-sector where India already has engineering depth and a fast-growing global addressable market, but where self-defeating regulation has kept the country a captive importer of Western solutions rather than a competitive exporter of its own. That is the problem this piece is about — and it is more fixable than it looks.

Billion Sector, Hiding in Plain Sight

India's climate technology manufacturing sector — encompassing solar technology, battery systems, energy-efficiency hardware, air-quality monitoring instruments, emissions-control systems, water-quality sensors, and waste technology — currently accounts for between $4 billion and $8 billion in export value annually. Set against India's total manufacturing exports of nearly $400 billion, this is a rounding error. It should not be.

The global market for environmental monitoring and emissions-control technology is growing faster than almost any comparable manufacturing category.

The energy transition is generating demand for monitoring, measurement, and efficiency hardware across Southeast Asia, the Middle East, Sub-Saharan Africa, and Latin America. These are markets where India has geographic proximity, established trade relationships, and demonstrated engineering capability. Yet India's share of this global market remains marginal.

Conservative projections suggest that with the right policy environment, India's climate tech export manufacturing could double to $15 billion or more within this decade. This is not a moonshot number. It is an extrapolation from existing industrial capacity, given a regulatory framework that stops penalising Indian manufacturers for not being Western ones.

Regulation That Imports Dependency

In 2014, the Central Pollution Control Board mandated Continuous Emissions Monitoring Systems (CEMS) for 17 categories of highly polluting industries, namely manufacturing industries related to Automobiles, Cement, Chemicals, Steel, Oil & Gas Refineries ad Thermal Power Plants. The intent was sound: real-time emissions data transmitted directly to regulators, enabling accountability and enforcement.

More than a decade on, the CEMS programme has not delivered on providing the real-time continuous insights on industrial emissions, which was The Core purpose of that regulation — and the primary reason is that the certification and compliance architecture was designed around frameworks developed by the USEPA and EU, agencies operating in economies where the relevant instruments are manufactured domestically.

In November 2022, the CPCB cancelled and effectively banned the procurement of all imported Continuous Ambient Air Quality Monitoring Systems (CAAQMS) from central government funds. While a step in the right direction, the framework needed to empower alternative domestic technologies has not materialised over the past four years.

The consequence, in India, has been the opposite of what was intended. Heavy certification requirements tied to foreign standards have made compliant CEMS equipment prohibitively expensive for most Indian industries, particularly MSMEs.

They have concentrated the market in the hands of a handful of global technology companies whose Indian operations are primarily sales and service functions, not manufacturing. They have produced a monitoring ecosystem where data quality remains poor enough that CEMS readings cannot be used for legal compliance purposes, more than ten years after the mandate came into effect.

Meanwhile, Indian companies that have developed lower-cost, high-accuracy monitoring and emissions-control hardware, instruments genuinely suited to the operating conditions, power infrastructure, and maintenance capabilities of Indian industry, cannot achieve regulatory recognition for their products. The CPCB has acknowledged that a domestic device certification system, analogous to the UK's MCERTS or Europe's EN certification framework, is necessary. It does not yet exist at the required scale or functionality.

This is not a minor procedural gap. It is the structural reason why India is a captive importer of emissions-monitoring technology rather than a competitive manufacturer.

Climate Tech Needs Labour

There is a reasonable objection to the claim that climate tech manufacturing can substitute for the labour intensity of apparel or leather. At the component level, high-precision sensors and analytical instruments are more capital-intensive than garment stitching. This is true.

But manufacturing is not only assembly. The full value chain of emissions and air quality monitoring technology (PCB fabrication, sensor housing, wiring and cabling, calibration, packaging, quality testing, field installation, servicing, and data management) is highly labour-intensive at the system level.

A CEMS installation at a single industrial facility requires dozens of person-days of skilled and semi-skilled labour.

A national rollout across 17 mandated sectors involves tens of thousands of units. Add to this the adjacent demand from municipal air quality monitoring networks, industrial stack monitoring, water quality sensors, and waste-processing control systems, and the employment multiplier from domestic manufacturing is substantial.

The National Skill Development Corporation has been developing a curriculum and skill-development framework to generate one million jobs in the emissions monitoring and control sector alone.

The analogy is not with precision instruments alone. It is with mobile phones. India's PLI scheme for electronics succeeded primarily in the mobile phones sector precisely because the government chose to support domestic manufacturing for a product category with a large, growing market and a labour-intensive production and logistics chain.

CEMS, CAAQMS, and the broader emissions-control hardware ecosystem have the same structural profile, with the added advantage that global demand is accelerating as regulatory standards tighten across emerging markets.

Regulations Must Change

The changes required are not structural reforms with decade-long implementation timelines. They are specific regulatory adjustments that can be designed and implemented within a single policy cycle.

The first is the establishment of an Indian device certification framework for environmental monitoring instruments, a CPCB-anchored system, possibly in collaboration with the National Physical Laboratory, that certifies domestic instruments to performance-based standards rather than requiring replication of USEPA or EU test protocols. Several regulators have already acknowledged this gap. What is needed is a time-bound commitment to close it.

The second is a tiered compliance structure for CEMS that allows lower-cost, Indian-certified monitoring equipment to satisfy regulatory requirements for industries that currently have no monitoring in place, while reserving higher-specification certification requirements for sectors where enforcement and legal compliance are the primary objectives.

A small industry unable to afford a certified European analyser is currently contributing to unmonitored pollution. A domestic instrument at a tenth of the cost, providing real-time indicative data to a state pollution control board, is categorically preferable to the status quo.

The third is an explicit export promotion framework for hardware in climate tech, equivalent to what has been done for solar panels or electronics, that identifies global market opportunities, de-risks first-mover exports, and deploys Indian embassies and trade bodies in the role they played for pharmaceuticals in the 1990s and 2000s. India's manufacturers already have the technological capability. They need market access, brand positioning, and financial instruments suited to export cycles.

The Side Effect Is The Point

There is one more argument for this approach that deserves explicit statement, because it tends to get lost in the economics.

The expansion of affordable, domestically manufactured emissions and air quality monitoring technology is not a side-effect of export growth. It is simultaneously the objective of environmental policy in India.

The NCAP has set targets for reducing particulate pollution across 131 cities. Industrial emissions account for between 23% and 37% of PM10 across India's urban airshed. The fastest path to meaningful monitoring coverage, across MSMEs, across mid-tier industrial clusters, across the peri-urban areas where monitoring infrastructure is weakest, is affordable domestic technology.

India currently imports the instruments it uses to measure its own pollution. That dependency is a policy choice, embedded in a certification architecture designed elsewhere, for conditions that do not exist here. Reversing it does not require a confrontation with global standards bodies or a retreat from environmental ambition.

It requires the same thing that is missing from India's manufacturing policy more broadly: a clear-eyed decision to compete, rather than a comfortable accommodation with being a large domestic market for other people's products.

The country that builds the instruments used to monitor and reduce industrial emissions across the Global South will not have arrived there by accident. It will have made a deliberate choice — in regulation, in industrial policy, and in the confidence to back its own engineers. India has all three prerequisites. The choice remains.