Textile industry performance in 2016

The Ministry of Textiles rolled out a special package of measures to support the apparel sector and enable it to improve its global competitiveness. 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 the special package, approved by the Union Cabinet, on June 22, 2016.

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.

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:

·         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. Further, EPF will be made optional for employees earning less than Rs. 15,000 per month.

·         Increasing overtime caps: Overtime hours for workers not to exceed 8 hours per week in line with ILO norms.

·         Introduction of fixed term employment: Considering the seasonal nature of the industry, fixed term employment will be introduced for the garment sector.

·         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.

·         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. Drawback at All Industries Rate will be given for domestic duty paid inputs even when fabrics are imported under Advance Authorization Scheme.

·         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.