Brazil launches new industrial policy with development goals and measures up to 2033

Following extensive dialogue between the government and the productive sector, Brazil has taken a decisive step towards neo-industrialization. This Monday (22), the National Council for Industrial Development (Conselho Nacional de Desenvolvimento Industrial/CNDI) handed over the text of the New Industry Brazil (Nova Indústria Brasil/NIB)—an industrial policy to boost national development up to 2033 through sustainability and innovation—to Brazil’s President Luiz Inácio Lula da Silva.

The new policy is expected to directly improve people's daily lives; to stimulate productive and technological development; to increase the competitiveness of Brazilian industry; to guide investment; to promote better jobs; and to boost the country's qualified presence in the international market.

In all, BRL 300 billion in financing will be available to the new industrial policy until 2026. In addition to the BRL 106 billion announced at the first CNDI meeting in July, another BRL 194 billion were incorporated from different sources and redirected to support the financing of Nova Indústria Brasil priorities (read more about the Mais Produção Plan below).

Nova Indústria Brasil has established goals for each of the six missions that guide efforts until 2033. These goals have been outlined in the 2024-2026 Action Plan, and will be submitted for assessment by the CNDI over the next 90 days. To achieve each goal, priority areas for investment and a set of proposed actions—that involve efforts by all CNDI member ministries and the national productive sector—have been established.

To reverse Brazil’s premature deindustrialization, the new policy foresees the articulation of several State instruments—such as special credit lines; non-refundable resources; and regulatory and intellectual property actions, as well as a public project and procurement policy, with incentives to local content, to stimulate the productive sector towards national development. It means using public resources responsibly to attract private investment.

The policy also uses new financing instruments such as the development credit line (linha de crédito de desenvolvimento/LCD), and a framework of new policies—such as the regulated carbon market and the green taxonomy—to respond to the new global scenario, in which the race towards ecological transformation and technological excellence is imperative.

Along with the policy, the CNDI delivered the action plan for the 2024-2026 period, indicating the priority strategic areas to which resources are to be applied over the next two years.

To Brazil’s Vice-president and Minister of Development, Industry, Commerce and Services Geraldo Alckmin, this is a historic moment that reflects the commitment of President Luiz Inácio Lula da Silva's government to building a competitive, innovative country at the forefront of ecological transformation.

"The new policy places innovation and sustainability at the center of economic development, encouraging research and technology in various different fields, alongside social and environmental responsibility," said Alckmin. "This policy is a vision of the future. A declaration of confidence in our ability to compete and lead strategic areas globally."

The minister recalls that, throughout the process of creating the new industrial policy, a series of measures had already been launched within the scope of Nova Indústria Brasil—such as the Brasil Mais Produtivo program, which allocates BRL 2 billion to the digital transformation of micro, small and medium industries; and Mais Inovação Brasil, which has already started to make part of the BRL 60 billion in credit lines available to finance innovation in Brazilian industry. Or even the programs launched at the end of 2023, such as Mover (Mobilidade Verde e Inovação), which increases sustainability requirements in the automotive chain, and the Depreciação Acelerada for the renewal of Brazil’s industrial parks.

The new policy places innovation and sustainability at the center of economic development, encouraging research and technology in various different fields, alongside social and environmental responsibility
GERALDO ALCKMIN
Brazil’s Vice-President and Minister of Development, Industry, Commerce and Services

GOALS AND PRIORITIES — Nova Indústria Brasil is guided by aspirational goals related to each of the missions, which will be submitted for approval by the CNDI and deliberated over the next 90 days. Below are the suggestions brought by the Action Plan.

Ensuring food and nutritional security for Brazilian citizens involves strengthening agro-industrial chains (mission 1), which should reach 70% of mechanized family farming establishments over the next decade, according to the stipulated target—currently, only 18% are mechanized.

Furthermore, 95% of these machines must be produced nationally. Among the priorities related to this mission are, among others, the manufacturing of equipment for precision agriculture; agricultural machinery for large production; and expanding and optimizing the productive capacity of family farming for the production of healthy food.

In the first six months of the 2023/2024 harvest, BRL 11.8 billion were contracted through the Mais Alimentos Program, distributed across 141,000 operations for the acquisition of this equipment by family farming.

In the field of health (mission 2), the goal is to increase the share of production in Brazil from 42% to 70% of the national demand for medicines, vaccines, equipment and medical devices, among others, which will contribute to strengthening the national Unified Health System (Sistema Único de Saúde/SUS). Health and improving the Brazilian population’s access to healthcare.

The new policy also defined goals for improving the well-being of people in cities (mission 3), involving sustainable infrastructure, sanitation, housing and mobility. Among the goals is help to reduce people's time commuting to work by 20%—currently, this is, on average, 4.8 hours per week in the country, according to IBGE’s National Health Survey (Pesquisa Nacional de Saúde/IBGE).

In the same mission, the policy proposes to increase the participation of Brazilian production in the sustainable public transport industry chain by 25%. Presently, national participation is 59% of the electric bus chain, for example.

The focus, in this mission, will be mainly on electromobility, the battery production chain and the metro rail industry, in addition to investment in digital and low-carbon civil construction.

To make the industry more modern and disruptive, another goal has been established: to digitally transform (mission 4) 90% of all digitized Brazilian industrial companies (currently 23.5%); and to triple the share of national production in new technology segments. In this sense, investment in the 4.0 industry in the development of digital products and in the national production of semiconductors, among others, is a priority.

Among the goals established with a focus on bioeconomy, decarbonization and energy transition and security (mission 5) is to increase the share of biofuels in the transport energy matrix by 50%—currently, green fuels are 21.4% of this matrix. An increase in the use of biodiversity by the industry and a reduction in carbon emissions from national industry by 30% (now 107 million tons of CO2 per trillion dollars produced) are also expected. Towards ecological transformation within the industry, the production of bioenergy and equipment for generating renewable energy are priority areas.

Finally, in the area of defense (mission 6), the aim is to achieve autonomy in the production of 50% of critical technologies in order to strengthen national sovereignty. Priority will be given to actions aimed at developing nuclear energy, communication and sensing systems, propulsion systems and autonomous and remotely controlled vehicles.

FINANCING NEO-INDUSTRIALIZATION — The BRL 300 billion available for financing until 2026 will be managed by BNDES, Finep and Embrapii and made available through specific lines, non-refundable or refundable, and resources through the capital market, in alignment with objectives and priorities of missions to promote national neo-industrialization.

The resources are organized within the Mais Produção Plan, a set of financial solutions that will enable the financing of industrial policy on a continuous basis over the next three years.

This plan includes the following axes: More Productivity - to expand industrial capacity, with the acquisition of machines and equipment; Mais Inovação e Digitalização - research, development and innovation projects; Mais Verde - industry sustainability projects; and More Exportation - incentives for access to the international market.

Some of these initiatives have already begun, such as the Mais Inovação Program (BRL 60 billion), operated by BNDES and Finep, with BRL 40 billion in credit under Referential Rate (TR) +2% conditions. This modality represents the lowest interest rates ever applied to financing innovation in the country.

Within the program, BRL 20 billion are non-refundable resources. In this modality, Finep will launch, at the CNDI meeting, 11 public calls, with a total value of BRL 2.1 billion. There are 10 continuous calls for companies and a notice specifically aimed at Health in Science and Technology Institutes. The objective of the non-refundable resource is for the government to share with companies the costs and risks inherent to research, development and innovation activities, which generate great benefits for society.

PUBLIC PURCHASES — Nova Indústria Brasil is also going to use the potential of public purchases to encourage the development of sectors considered strategic to the Brazilian industry. This Monday, President Lula signed two decrees that pave the way for this strategy.

The first decree defines areas that may be subject to acquisition requirements or have a margin of preference for national products in New PAC bids. Among them, production chains related to energy transition, low-carbon economy and urban mobility.

The next step is the definition, by the Interministerial Commission for Innovations and Acquisitions of the Growth Acceleration Program (Comissão Interministerial de Inovações e Aquisições do Programa de Aceleração do Crescimento/CIIA-PAC), of the manufactured products and services of the chains that will be subject to the decree. To this end, the commission studies the actions of the New PAC aligned with the mission objectives and priorities of NIB, as well as the current capacity and potential of the Brazilian productive sector.

The second decree signed by the president creates the Interministerial Public Procurement Commission for Sustainable Development (Comissão Interministerial de Compras Públicas para o Desenvolvimento Sustentável/CICS) and defines the criteria for applying a margin of preference for national manufactured products and services and for recycled, recyclable or biodegradable goods.

The margin of preference allows the public administration to prioritize, in purchases and contracting, products produced in Brazil, with the aim of increasing employment and income and strengthening innovation and Brazilian industry.

Proposals from public bodies for the use of public purchases as an instrument for socioeconomic and environmental development and for leveraging public policies will be analyzed by CICS.

IMPROVING THE BUSINESS ENVIRONMENT — Another of Nova Indústria Brasil’s horizons is the reduction of bureaucracy so as to improve the business environment. There are 41 projects, 17 of which will be carried out over the next two years by the CNDI. The objective is to face some of the main challenges presented by the productive sector, in a public consultation carried out by the MDIC, to increase the productivity and competitiveness of Brazilian companies and improve the environment for productive investments. According to a study carried out by Movimento Brasil Competitivo (MBC), in partnership with MDIC, the so-called Brazil Cost reaches BRL 1.7 trillion per year.

Preliminary calculations carried out based on the impact of just four of these projects — improvement of the regulatory framework for the expansion of the free energy market, reform of the Lei do Bem, regulation of the legal framework for cabotage and railways — point to a potential for reducing this equivalent cost to BRL 92 billion per year.