New Delhi, June 22 (IANS) India’s cabinet on Wednesday approved a package for the textiles sector with measures such as tax sops and relaxation of labour laws, with a three-year target of 10 million more jobs, $30 billion additional exports and $11 billion worth fresh investment.
The package was approved at a cabinet meeting presided over by Prime Minister Narendra Modi. It took note of India’s falling share in the global textile exports to Bangladesh and Vietnam, yet with the potential to grab the market being ceded by China.
Briefing reporters later, officials said the package includes full burden of provident fund on the government, reduction in yearly working days for calculation of income tax rebate and additional subsidy for machinery under the amended technology upgradation fund scheme.
As per official data, the textiles and apparel sector already contributes 14 per cent to India’s factory output, 4 per cent to its GDP and 13 per cent, or nearly $40 billion, to exports. With 45 million people engaged in it, it is also among the largest sources of employment in the country.
Officials said the new package was mainly aimed at women empowerment since they constitute 70 per cent of the workforce in the garment industry. This apart, the measures are labour-friendly and will create jobs and economies of scale and boost exports, they said.
The package has many labour-friendly measures, including Employee Provident Fund (EPF) scheme reforms, whereby the government will bear the employer’s entire contribution of 12 per cent under EPF for new employees of the garment industry earning less than Rs 15,000 per month, for the first three years.
“With today’s decision, Ministry of Textiles will provide the remaining 3.67 per cent share towards employer’s contribution, amounting to Rs 1,170 crore over next three years,” it said in a statement here.
Fixed term employment will be introduced for the garments sector, while overtime hours for workers is not to exceed eight hours per week in line with ILO norms, the ministry said.
To boost the competitiveness of Indian exports a new scheme will be introduced to refund the state levies which were not refunded so far. The scheme is expected to cost the exchequer Rs 5,500 crore, the statement said.
Besides, the subsidy incentive to units through the amended Technology Upgradation Fund Scheme (TUFS) will be increased from 15 per cent to 25 per cent, it added.