The communication, titled Mission Growth: Europe at the Lead of the New Industrial Revolution, urges immediate action to revert the current downward trend and promote the re-industrialisation of Europe.
It sets out a new aspirational goal to increase the industry's share of EU GDP to around 20% by 2020, up from 16% currently.
As EurActiv reported last month, the pillars of the reinforced industrial policy are investment in innovation, better market conditions, access to finance and building human capital and skills.
"We cannot continue to let our industry leave Europe. Our figures are crystal clear: European industry can deliver growth and can create employment," said European Commission Vice President Antonio Tajani, responsible for Industry and Entrepreneurship.
"Today we tabled the conditions for the sustainable industry of the future in Europe, to develop the investments needed in new technologies and to rebuild a climate of confidence and entrepreneurship. By working together and restoring confidence, we can bring back industry to Europe," he said in a statement.
Europe is a world-leader in many strategic sectors such as engineering, automobiles, aeronautics, space, chemicals and pharmaceuticals, argues the Commission, saying it must build on those strengths to re-launch manufacturing.
Industry still accounts for both 80% of Europe's exports, and 80% of private-sector R&D investment also comes from manufacturing.
BusinessEurope, the EU employer's association, hailed the initiative. “The business community is pleased to see efforts by Commission Vice President Tajani to keep industrial policy at the heart of European policymaking. Today’s report is an important step to improve framework conditions for industrial investment and innovation in Europe," Philippe de Buck, director general of BusinessEurope, said in a statement.
New pillars for industrial policy
The communication is calling for short-term, focused investment in key industrial sectors with high growth prospects.
The investments in innovation should focus on six priority areas with bigger potential for growth and jobs creation: Advanced manufacturing technologies for clean production, sustainable industrial and construction policy and raw materials, clean vehicles, bio-based products, key enabling technologies, and smart energy grids.
"Member states as well should play their part and should prioritise investments in these six areas," the Commission states.
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The single market should also be improved with the aim at fostering entrepreneurship with regards to, for example, the the digital single market which is expected to grow by 10% a year up to 2016.
The Commission also wants to improve lending to the real economy by better mobilising and targeting public resources, including those of the EIB. This should allocate between 10-15 billion in additional lending for smaller businesses.
Finally, in the area of human capital and skills, the Commission will further promote cooperation of employers, workers and relevant authorities through the creation of European Sector Skills Councils and of Knowledge and Sectors Skills Alliances.