The Cabinet on Thursday approved a national policy on software products that aims to position India as a hub for software products development and creating 65 lakh jobs by 2025.

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"India's IT revenue is $168 billion but most of it is services. Software product component is less, it is just $7.1 billion. Most of the software products are imported. The software product policy is designed to make India a big centre of software products by 2025," IT Minister Ravi Shankar Prasad said after the Cabinet briefing.

This policy has a scope of giving employment to nearly 65 lakh people and will have enormous revenue benefit, he added.

The nod to the software products policy comes just days after the Cabinet cleared a new national electronics policy, and underscores India's aggressive attempts to position itself as a global player in the tech domain that is gearing up for Artificial Intelligence, big data, Internet of Things and robotics.

The minister said the new policy seeks to nurture 10,000 technology start-ups working on software products, including 1,000 in tier II and III towns as well as upskilling 10 lakh IT professionals that includes one lakh school and college students.

"A cluster-based ecosystem will be developed in the country, where software products will be developed. For this, Rs 5,000 crore software product development fund (SPDF) will be set up. Indian government will put in Rs 1,000 crore and the remaining will come from the industry," he said.

According to sources, the government expects this policy intervention to help propel the software products industry to grow at a CAGR of about 40 per cent, reaching $70-80 billion by 2025.

The policy, which has been formulated after various stakeholder consultations, aims to provide a level-playing-field to Indian software product companies and facilitate ease of doing business, they added.

The sources said the intent of the policy is to create an enabling environment for innovation, Research and Development (R&D), IP creation and protection, as well as create talent pool for the industry.

Through the policy, the government aims to create a sustainable Indian software products industry, driven by IP, they added.

Besides, the government will also set up a National Software Products Mission with participation from Government, academia and industry to promote India as a global software product hub.

Another programme, evinced under the policy, seeks to promote R&D and innovation for software products that solve societal challenges/problems. The aim of the said programme is to encourage IP driven software product entrepreneurship and has a budgetary outlay of Rs 500 crore, sources said.

The programme will provide financial support to MSMEs and have matching contribution from the government and industry, they added.

The policy will also focus on tapping into emerging technology areas like Internet of Things, Artificial Intelligence, blockchain, smart sensors, big data, and robotics that are being used in smart cities, healthcare, agriculture, fintech, e-learning and transport, amongst other domains, sources said.