The government has announced a Rs 6,000-crore package for the textiles and apparels sector to help it wrest a bigger share of the global market. The package also provides the sector more flexible labour laws and financial incentives. It hopes the package will create one crore new jobs in three years, attract Rs74,000 crore in investment and generate $30 billion in exports earnings.
“The package will help in realising the true potential of employment generation in the textile and apparel sector,” Finance Minister Arun Jaitley said at a briefing on Cabinet decision. The thrust of the package is to make this labour-intensive industry cost competitive and achieve economies of scale, which can help it corner a bigger share of the global market. “We will overtake Vietnam and Bangladesh in garment exports within next three years if we properly implement the package,” Textiles Secretary Rashmi Verma said.
India’s textiles and apparel exports add up to about $40 billion. India has not been able to take advantage of rising wages in China to get a bigger share of the exports market despite having abundant labour and entire value chain of fibre to fabric.
“We have advantages of economies of scale. Therefore, it was decided to take steps to give a boost to the sector,” the Finance minister said after the Cabinet meeting. Industry welcomed the package. “The industry is very happy, especially because of the labour reforms that have been initiated. Measures like fixed-term employment and seasonal flexbility in labour laws will benefit the garment sector immensely,” Apparel Export Promotion Council Chairman Ashok G Rajani said.
The government will foot the entire 12% of employer’s contribution under the Employers Provident Fund Scheme for new hands hired by the industry and earning less than Rs15,000 a month for the first three years. This is higher than the 8.33% share borne by the government under the Pradhan Mantri Rozgar Protsahan Yojana (PMRPY). This will add up to a benefit of Rs1,170 crore over the next three years for the industry.
In addition, provident fund contribution will be made optional for those earning less than Rs15,000 per month, which will boost in hand salaries of sector workers and thereby lift its employment attractiveness. Overtime hours for workers will be fixed at eight hours per week in line with the ILO norms, which will further increase hiring.
The industry will be allowed to hire workers for fixed-term employment because of its seasonal nature, but such workers will be at par with permanent workmen in terms of working hours, wages, allowances and other statutory dues. The package provides additional duty drawback incentives for garments, flexibility in labour laws to increase productivity as well as tax and production sops for job creation in garment manufacturing.
Source: The Economic Times
