India has set out its first national manufacturing policy, aimed at accelerating investment and growth in the country over the next decade.

The policy, which was approved by the federal cabinet at the end of last month, intends to increase manufacturing's share of national output to 25% by 2022. It also seeks to create 100m jobs, enhance global competitiveness, and sustain growth.

At its heart is the creation of National Investment and Manufacturing Zones (NIMZs), mega-industrial parks or "industrial townships" that will comply with labour and environmental laws, the government said.

But the policy also intends to improve the country's industrial infrastructure, simplify business regulations, develop new green technologies, and boost the skills of the younger generation.

No subsidies are proposed for individual units or areas, with the industrial parks due to be developed by the private sector. However, there are some fiscal incentives, including an exemption from capital gains tax on plant and machinery purchased for the industrial zones.

"The key is the simplification of administrative procedures and world-class infrastructure facilities that would greatly encourage incremental investment in the manufacturing sector," says Mr B Muthuraman, president of the Confederation of Indian Industry (CII).

India is a young country with over 60% of its population of working age. But with over 220m people set to join the workforce in the next decade, the manufacturing sector is seen as key to creating jobs for at least half this number.

At the moment, just 16% of India's gross domestic product is generated by the manufacturing sector - which is a cause of concern against the rapid growth of other Asian countries.

Of this, the Indian textile and clothing industry contributes 4% to GDP, 14% to industrial production and 12% to foreign exchange earnings. It is the second largest employment generator after agriculture with 33m direct workers and 55m indirect workers. Of these, 7m are involved in garment manufacturing - half of them for export.

Earlier this month the Indian government laid out plans specifically aimed at helping this sector, which it says is "reeling under [global] economic uncertainty" and domestic pressure.

This includes investing INR21bn (US$430.8m) to set up 21 new textile parks over the next 36 months, in a move that will also lead to the creation of around 400,000 jobs. And a new export promotion package features a number of incentives for the six months to 31 March 2012.