India's government approved on Oct. 25  a policy to boost the nation's underdeveloped manufacturing sector, aiming to slash red tape and create special zones for firms in a drive to create 100 million jobs.

Manufacturing accounts for just 16% of India's agriculture-dependent economy, which is "a cause of concern," the cabinet said.

Under the new National Manufacturing Policy, the government hopes to cut the regulatory burden around companies, create "manufacturing zones" on unused infertile land and promote "green" technologies.

The over-arching aim of the legislative framework is to create 100 million additional jobs by 2022. "With over 220 million people estimated to join the work force in the next decade, the manufacturing sector will have to create gainful employment for at least half this number," the statement said.

"The basic thrust is to provide an enabling environment for tapping the potential of the private sector and the entrepreneurial skills of the younger population," the statement said.

No specific details were given about how the policy would achieve its objectives, such as improving infrastructure for industry or simplifying business regulations.

Corporate leaders see serious shortcomings in the business environment in India, particularly high inflation, endemic corruption, difficult land acquisition laws and a sclerotic legal system. Transport infrastructure from ports to rail links is also poor, while much of the country suffers from electricity black-outs and water supply problems.

Nevertheless, the Indian economy has grown strongly over the last decade and manufacturing companies from the developed world including mobile phone group Nokia and car companies Ford and General Electric have set up plants.

View article on one page