Special
Package to create 1 Crore Jobs in 3 Years in Textile and Apparel Sector
Jobs for 1 crore people, mostly women; US$ 30 bn. in
exports; and investment worth Rs. 74,000 crores – all in three years.
These are the expected outcomes of a special package for textile and apparel
sector, approved today by the Union Cabinet under the Chairmanship of Prime
Minister Shri Narendra Modi.
The package is a strategic decision that would strengthen and empower the Indian textile
and apparel sector by improving its cost competitiveness in the global
market. The measures assume significance due also to its potential for social
transformation through women empowerment; since 70% of the workforce in the
garment industry are women, majority of the new jobs created are likely to
go to women.
What’s
in the Package?
The
special package includes a slew of labour-friendly measures that would promote employment
generation, economies of scale and boost exports.
The
salient features of the package are:
A. Employee
Provident Fund Scheme Reforms
· Govt. of India will bear the
entire employer’s contribution of 12% under the Employers Provident Fund
Scheme, for new employees of garment industry earning less than Rs. 15,000 per
month, for the first three years.
This
marks an increase from the present Government provision of 8.33% towards employer’s
contribution, being provided under Pradhan Mantri Rozgar Protsahan Yojana
(PMRPY). With today’s decision, Ministry of Textiles will provide the remaining
3.67% share towards employer’s contribution, amounting to Rs. 1,170 crores over
next 3 years.
·
EPF will be made optional
for employees earning less than Rs. 15,000 per month.
This
will 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
· Considering the seasonal
nature of the industry, fixed term employment will 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 subsidy provided to garmenting
units, under Amended-TUFS, is being increased from 15% to 25%, providing a
boost to employment generation.
The package breaks new
ground in moving from input-based to outcome-based incentives; a unique feature
of the scheme will be to disburse subsidy only after expected jobs have been 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 will greatly boost the competitiveness of Indian exports in foreign
markets and is expected to cost Rs 5500 crores to the exchequer.
·
Drawback at All
Industries Rate will 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.
A
summary of the expected impact of today’s Cabinet decision is given below, in
quantitative terms:
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DJM