Bristol-based specialist semiconductor maker Stan Boland has proposed a 10-year tax credit system to achieve government aims to boost the UK's high-value manufacturing sector.
Manufacturing accounted for about 13% of UK output in 2008, down from around 30% in 1970.
In terms of Boland's plan, manufacturers that install new plants would receive a tax credit equivalent to 20% of their investment.
UK business secretary Peter Mandelson has responded positively to the plan, describing it as the kind of thing he would like to take a look at, according to the Financial Times.
In recent months, Mandelson has been setting out a strategy of "industrial activism" to boost high-value manufacturing and stimulate economic growth.
If the government is serious about re-industrialisation, it should commit some resources to making it happen, said Boland.
He believes the UK economy could benefit from having more jobs in the higher-value areas of manufacturing.
Boland's firm, Icera, concentrates on chip design and contracts-out its production to specialist semiconductor foundries, mainly in Taiwan.
Expertise in engineering design work would be helped if the UK did more manufacturing, he said.