India Unveils Rs 2.5 Lakh Crore 'Future Tech' Policy to Globalise Advanced Manufacturing, Target 1.5 Crore Jobs

Bengaluru, October 26, 2023 – In a monumental push to transform its economic landscape and secure a leading position in the global supply chain, the Union Government today unveiled the “Future Tech Manufacturing and Innovation Policy (FTMIP).” The ambitious policy earmarks a staggering ₹2.5 lakh crore (approximately $30 billion) over the next five years, specifically targeting critical, high-growth sectors such as semiconductor manufacturing, green hydrogen, advanced batteries, quantum computing hardware, and cutting-edge biopharmaceuticals. The initiative aims to generate 1.5 crore new jobs, enhance the manufacturing sector's contribution to GDP, and bolster India's export capabilities by an additional $500 billion.

Key points

* **Massive Investment:** A committed outlay of ₹2.5 lakh crore over five years for R&D, infrastructure, and Production Linked Incentives (PLI). * **Strategic Sectors:** Focus on five advanced technology domains: semiconductors, green hydrogen, advanced batteries, quantum computing hardware, and biopharmaceuticals. * **Future Tech Zones:** Establishment of integrated industrial parks with world-class infrastructure, R&D centres, and skilled labour training facilities. * **PLI Boost:** Enhanced Production Linked Incentive schemes, tax holidays, and simplified regulatory frameworks to attract global and domestic investment. * **Job Creation & Exports:** Projected creation of 1.5 crore direct and indirect jobs and an additional $500 billion in exports over the policy period.

The FTMIP represents a significant escalation of India's 'Make in India' vision, shifting focus from merely manufacturing goods domestically to becoming a global R&D and production hub for future technologies. The policy outlines a multi-pronged approach, including direct financial incentives, infrastructure development, skill enhancement programmes, and a streamlined regulatory environment designed to foster a vibrant ecosystem for innovation and production.

Under the new policy, the government will offer a tiered PLI scheme providing incentives ranging from 4% to 8% on incremental sales for eligible products manufactured within India. Crucially, the policy also includes provisions for capital expenditure support for setting up highly specialised manufacturing units, particularly in capital-intensive sectors like semiconductors and advanced batteries. "This is not just about manufacturing; it's about future-proofing India's economy and securing our strategic autonomy in critical technologies," stated Union Minister for Commerce and Industry, Piyush Goyal, during the policy's launch event in Bengaluru. "We are inviting the world to innovate, manufacture, and grow with India, leveraging our demographic dividend and burgeoning domestic market. Our goal is to move beyond mere assembly and truly develop indigenous capabilities in cutting-edge research and production."

The establishment of 'Future Tech Zones' will be a cornerstone of the FTMIP. These zones, to be developed in collaboration with state governments, will offer plug-and-play infrastructure, uninterrupted power supply, water utilities, and advanced logistics support. They are envisioned as self-contained innovation hubs, complete with dedicated R&D centres, testing facilities, and training institutes to develop a highly skilled workforce in line with the demands of advanced manufacturing. Initial reports suggest several states, including Karnataka, Telangana, Maharashtra, and Tamil Nadu, have expressed keen interest in hosting these zones.

**Sanjay Gupta, President of the Confederation of Indian Industry (CII)**, hailed the announcement as a game-changer. "This policy provides the much-needed impetus and a clear roadmap for Indian industry to scale up and compete globally in sunrise sectors," he remarked. "The long-term commitment of ₹2.5 lakh crore, coupled with focused incentives and infrastructure development, will undoubtedly attract significant domestic and foreign investment. It sends a strong signal of India's intent to lead in the next wave of industrial revolution."

However, **Dr. Meera Sharma, Senior Fellow at the Centre for Policy Research**, offered a note of caution, emphasising the challenges ahead. "While the intent is commendable and the financial outlay substantial, successful implementation will hinge on meticulous execution," she observed. "Factors like consistent policy stability, ease of doing business, rapid skill development at scale, and robust intellectual property protection will be critical to realise the ambitious targets. India must also navigate intense global competition and geopolitical sensitivities in these strategic sectors."

Background

The FTMIP builds upon the foundations laid by previous flagship initiatives like 'Make in India' and the initial rounds of the Production Linked Incentive (PLI) schemes. Launched in 2014, 'Make in India' aimed to boost domestic manufacturing, while the PLI schemes, introduced across 14 key sectors since 2020, have shown promising results in areas like mobile phone manufacturing, pharmaceuticals, and electronics, attracting investments worth over ₹2.25 lakh crore and generating over 7 lakh jobs. The government's renewed focus on advanced technologies is also a strategic response to global supply chain vulnerabilities exposed during the pandemic, and an effort to align India's economic growth with its climate commitments, particularly through the emphasis on green hydrogen and advanced batteries. India currently aims to increase manufacturing's share of GDP from the current 17-18% to 25% by 2025, and this policy is seen as a crucial step towards that objective, particularly in high-value addition segments.

What it means

The FTMIP marks a pivotal shift in India's industrial strategy. It moves beyond traditional manufacturing to embrace high-tech, capital-intensive, and knowledge-driven sectors, positioning India as a key player in the global technology landscape. For businesses, it translates into significant investment opportunities, a supportive policy environment, and access to a rapidly developing ecosystem. For the workforce, it promises a surge in high-skilled jobs, demanding advanced technical expertise and innovative capabilities. Economically, a successful implementation could substantially reduce import dependence, especially in critical components, enhance export revenues, and foster an innovation culture across various industries. However, the policy also means increased competition for domestic players and a demanding timeline for skill upgradation across the nation.

Reactions

The policy announcement has garnered largely positive reactions from industry bodies and various state governments. The Federation of Indian Chambers of Commerce & Industry (FICCI) applauded the initiative, stating it would be a catalyst for technological self-reliance. Several global investors, who were present at the launch, expressed optimism about India's commitment to creating a conducive environment for high-tech manufacturing. On the political front, while the ruling party hailed the policy as visionary, opposition parties have called for greater transparency regarding the allocation of funds and assurances on the equitable distribution of benefits across states. Concerns have also been raised regarding the potential for bureaucratic bottlenecks and the need for robust regulatory oversight to prevent misuse of incentives.

What happens next

The Union Ministry of Commerce and Industry, in coordination with other relevant ministries, is expected to release detailed guidelines for the FTMIP within the next three months. An empowered steering committee, comprising industry experts, government officials, and economists, will be constituted to oversee the policy's implementation and provide strategic direction. The process for identifying and shortlisting locations for the 'Future Tech Zones' will commence shortly, with states invited to submit detailed proposals outlining their infrastructure, land availability, and skilled workforce readiness. Industry roadshows and investor summits, both domestically and internationally, are planned to attract investment and foster collaborations. The first round of applications for Production Linked Incentives under the FTMIP is anticipated to open by early next year, setting the stage for India's ambitious leap into advanced manufacturing.