Union Cabinet of India has cleared Rs 6,000 crore special package for textile sector to deal with the increasing competition from China’s textile and apparel industry.
The decision was taken at a meeting of the Union Cabinet chaired by Prime Minister Narendra Modi.
According to the government, the new move is expected to attract investments of $11 billion, create 10 million new jobs in three years, and generate $30 billion in exports.
“Over the last few years, apparel manufacturing had shifted to countries like China which had cost advantages. However, China’s cost advantage has been neutralized to some extent because of increase in labor wages,” finance minister Arun Jaitley said while briefing reporters on Wednesday’s Cabinet decisions.
“We have advantages of economies of scale. Therefore, it was decided to take steps to give a boost to the sector. The package will help in realizing the true potential of employment generation in the textile and apparel sector.”
“The Rs 6,000 package will result in additional investments worth $11 billion, creation of one crore additional jobs and increase in exports worth $30.4 billion which will help boost textile and garmenting sector.
Textiles Secretary Rashmi Verma said: “We will overtake Vietnam and Bangladesh in garment exports within next three years if we properly implement the package.”
In the past few months, the government has announced several measures to support textile sector. These include tax/production incentives for job creation in garment manufacturing, flexibility in labor laws to boost productivity, and additional incentives for duty drawback scheme for garments.
The Cabinet has also cleared proposal to increase overtime hours for workers. The overtime hours will not exceed 8 hours per week as per norms of International Labor Organization norms.
The government has also introduced fixed term employment that will consider a fixed term workman on par with permanent workman in terms of wages, working hours, allowances and other statutory dues.
For new employees of garment industry earning less than Rs 15,000 per month, the Central government will bear the employer’s contribution of 12% under the Employers Provident Fund Scheme for first three years. Currently, 8.33% of employer’s contribution is being provided under Pradhan Mantri Rozgar Protsahan Yojana. The government has also decided to make employee provident fund optional for workers earning less than Rs 15,000 per month.
“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,” an official statement said.
The government also believes the majority of new jobs created in textile and garment sector will go to women as the industry employs about 70% women workforce. The package, therefore, would help in empowerment of women in the society.
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