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Italia 4.0 plan calls for €7 bn in public spending on digital manufacturing innovation

by Marzio Bartoloni and Carmine Fotina

The“Italia 4.0” project is ready. Prime Minister Matteo Renzi will likely present it on September 21, together with Economic Development Minister Carlo Calenda and Economy Minister Pier Carlo Padoan.

The plan is expected to attract €10 billion of additional industrial investment, and €7 billion for research and development through tax incentives, support to venture capital, ultra-broadband development, educational training in schools and universities, and state-of-the-art research centers.

Around €7 billion of additional public funds will be paid between 2017 and 2020, adding to €7.5 billion already approved (especially with the ultra-broadband plan ). The “growth-friendly” project goes beyond the industrial sector, with the ambition to make Italy a leading G-7 player in 2017 also in forging alliances with other countries.

According to government estimates, the public injection will multiply by 4.5 times private investment targeted to the industrial sector, expected to rise from €80 billion to €90 billion per year. Also, private spending in R&D innovation is expected to increase by €7 billion to €20 billion from €13 billion.

By 2020, the plan aims to offer ultra-broadband network with 30 megabits per second (Mbps) to 100% of businesses in Italy, with half of them having access to a 100 Mbps network. Also, 8 million students will be involved in the digital school program, with 250,000 alternating school and work under the Industry 4.0 plan.

Innovative investment
The project focuses on four issues: innovative investment, enabling infrastructures, skills and research, awareness e governance. The first measures will be included in next year’s budget law to be unveiled next month.

Regarding innovative investment, the government will invest €3.3 billion over four years, through: extension of the 140% super-amortization plan; hyper-amortization on digital goods (between 200% and 160%) with the possible reduction of the timeframe from seven to five years; recapitalization of the SME Guarantee Fund for €900 million; €100 million of refinancing of the “New Sabatini” law (for investment in machine tools), and a special section of the rotating business fund of the Cassa Depositi e Prestiti.

Until 2020, €2 billion will be used to fund tax credit for investment in R&D.
As for venture capital, the project aims to attract €1.5 billion of early stage private investments.

The target has been set: by 2020, at least 50% Italian businesses will have access to ultra-broadband networks of 100 Mbps, while all businesses will have a network coverage of at least 30 Mbps. But without the “infrastructure ” that makes manufacturing smart, for example through the digitalization of small, medium and large Italian companies, the project risks remaining a dream. This is why the government intends to develop ultra-broadband networks.

The plan exists already and most public resources have been approved: €6.7 billion of national and European funds. Now it's time to serve also the “grey” zones of the country, those overlapping the white areas “at risk of market failure” – where the State is investing €3 billion in areas where it would not make economic sense for the private sector – and the black areas, where competition is possible and private companies are already operating.

In these “grey” areas (“marked by the presence of a single broadband network operator), are 69% businesses. A public investment for €3.7 billion is expected to attract private funds through a series of initiatives that await approval by the European Commission. The plan includes vouchers to activate connectivity services, tax deduction on investments, easier access to credit, and giving private investors the ownership of the infrastructure. The draft plan includes initiatives for cybersecurity.

Skills and research
The Industry 4.0 plan includes a chapter on human capital. It sets ambitious targets, including a school plan on smart manufacturing aimed at involving 8 million students at primary and secondary schools in the national plan for digital education, and an additional 250,000 high school students in an exchange between school and work.

The plan to develop skills useful to find jobs also includes the university, with €70 million on new 4.0 university classes on the same topics to train 200,000 students and 3,000 future managers.

The project also aims to double the number of students of technical institutes, increasing the offer of highly specialized classes in the 4.0 industry.

To improve the exchange between university and businesses, the project will fund 900 specialized PhDs, (including 100 on Big Data), as well as smart manufacturing clusters, and the creation of “competence centers” connected with the best universities – the polytechnic of Milan, Turin, and Bari, the Bologna university and the Sant'Anna School of Advanced Studies – where companies will train and test the new 4.0 technologies.