Approval granted to special package for employment generation and promotion of exports in Textile and Apparel sector

The Union Cabinet on 22 June 2016 approved a Special Package for employment generation and promotion of exports in Textile and Apparel sector.

The package includes a slew of measures which are labour friendly and would promote employment generation, economies of scale and boost exports.

The following are the expected benefits to the textile and apparel sector in 3 years –
• Cumulative increase of 30 billion US dollars in exports
• Investment of 74000 crore rupees
• Creation of 1 crore jobs

Salient features of the package
• Employee Provident Fund Scheme Reforms: The Union Government shall bear the entire 12 percent of the employers’ contribution of the EPF Scheme for new employees of garment industry for first 3 years who are earning less than 15000 rupees per month.
• At present, 8.33 percent of employer’s contribution is already being provided by the Government under Pradhan Mantri Rozgar Protsahan Yojana (PMRPY).
• Ministry of Textiles shall provide additional 3.67 percent of the employer’s contribution amounting to 1170 crore rupees over next 3 years.
• EPF shall be made optional for employees earning less than 15000 rupees per month so that workers will be left with more money in hands.
• Increasing overtime caps: Overtime hours for workers will not be exceeded 8 hours per week in line with International Labour Organisation (ILO) norms. This measure will lead to increased earnings for the workers
• Introduction of fixed term employment: Since the industry of seasonal nature, fixed term employment shall be introduced for the garment sector. A fixed term workman will be considered at par with permanent workman in terms of working hours, wages, allowanced and other statutory dues.
• Additional incentives under ATUFS: The package breaks new ground in moving from input to outcome based incentives by increasing subsidy under Amended-Technology Up gradation Fund Scheme (TUFS) from 15 percent to 25 percent for the garment sector as a boost to employment generation.
• A unique feature of the scheme will be to disburse the subsidy only after the expected jobs are created.
• Enhancing scope of Section 80JJAA of Income Tax Act, 1961: Looking at the seasonal nature of garment industry, the provision of 240 days under Section 80JJAA of Income Tax Act would be relaxed to 150 days for garment industry.

Importance of the Textile and Apparel sector
• Indian textiles industry contributes about 14 percent to the industrial production, 4 per cent to the gross domestic production (GDP) and 11 percent to the country’s export earnings.
• The textile sector is the second largest provider of employment after agriculture.
• The growth in this sector is of significance to achieve the objective of inclusive growth as nearly 70 percent employed are women.