Special Package For Employment Generation & Promotion Of Exports In Textile & Apparel Sector

Honourable Prime Minister of India Sh. Narendra Modi has unveiled a package of reforms for generation of 1 crore jobs in the textile and apparel industry over next 3 years. The package includes a slew of measures which are labour friendly and would promote employment generation, economies of scale and boost exports. The steps will lead to a cumulative increase of US$ 30 bn. in exports and investment of Rs. 74,000 crores over next 3 years.

The Majority of new jobs are likely to go to women since the garment industry employs nearly 70% women workforce. Thus, the package would help in social transformation through women empowerment.

Salient Features of The Package Announced Are : -

A ). Employee Provident Fund Scheme Reforms

  • Govt. of India shall bear the entire 12% of the employers’ contribution of the Employers Provident Fund Scheme for new employees of garment industry for first 3 years who are earning less than Rs. 15,000 per month.
  • At present, 8.33% of employer’s contribution is already being provided by Government under Pradhan Mantri Rozgar Protsahan Yojana (PMRPY). Ministry of Textiles shall provide additional 3.67% of the employer’s contribution amounting to Rs. 1,170 crores over next 3 years.
  • EPF shall be made optional for employees earning less than Rs. 15,000 per month.
  • This shall leave more money in the hands of the workers and also promote employment in the formal sector.

B ). Increasing Overtime Caps

  • Overtime hours for workers not to exceed 8 hours per week in line with ILO norms.
  • This shall lead to increased earnings for the workers

C ). Introduction of Fixed Term Employment

  • Looking to the seasonal nature of the industry, 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.

D ). Additional Incentives Under ATUFS

  • The package breaks new ground in moving from input to outcome based incentives by increasing subsidy under Amended-TUFS from 15% to 25% 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.

E ). Enhanced Duty Drawback Coverage

  • In a first of its kind move, a new scheme will be introduced to refund the state levies which were not refunded so far.
  • This move is expected to cost the exchequer Rs 5500 crores but will greatly boost the competitiveness of Indian exports in foreign markets.
  • Drawback at All Industries Rate to be given for domestic duty paid inputs even when fabrics are imported under Advance Authorization Scheme

F ). Enhancing Scope of Section 80JJAA of Income Tax Act

  • 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