With an aim to make India a global hub for manufacturing, government today gave the in-principle approval to the policy which envisages big initiatives, including creation of mega industrial zones with world class infrastructure.
A high-level committee, chaired by Prime Minister Manmohan Singh, also took on board concerns over environment and labour issues.
Singh directed the commerce and industry ministry to complete the consultation process with other ministries within a month so that the final policy could be brought before the Cabinet soon.
"This will send a positive message to the investing community," a PMO release said.
Aimed at creating 100 million new jobs and taking the share of manufacturing to 25% in the country's GDP by 2025, the draft policy proposed creation of the National Investment and Manufacturing Zones (NIMZs).
Such zones would have facilities like industrial towns and other infrastructure like the ones set up in China which has emerged as the global manufacturing outsource hub.
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Indian automobile and pharma industries have acquired the competence to become global manufacturing hub and such zones could provide a boost to these sectors.
These would be mega investment regions with world class infrastructure and the units therein would have flexibility in the labour laws and environment norms, as per the draft policy.
There were, however, inter-ministerial differences over the proposed changes in these laws.
At present, manufacturing contributes 15-16% to the economy.
The meeting was attended by Finance Minister Pranab Mukherjee, Commerce and Industry Minister Anand Sharma, Environment Minister Jairam Ramesh, Corporate Affairs Minister Murli Deora, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Chairman of PM's Economic Advisory Council C Rangarajan.