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Union Cabinet approves incentives to boost job creation in textile sector

"The Union Cabinet, has approved incentives to boost job creation, manufacturing and exports in the labour-intensive textile sector. The move comes in the backdrop of the package of reforms announced by the government for generation of one crore jobs in the textile and apparel industry over the next three years. It includes a slew of measures that are labour friendly and would promote employment generation, economies of scale and boost exports."

 

Union Cabinet approves incentives to boost job creation in textile sector

The Union Cabinet, has approved incentives to boost job creation, manufacturing and exports in the labour-intensive textile sector. The move comes in the backdrop of the package of reforms announced by the government for generation of one crore jobs in the textile and apparel industry over the next three years. It includes a slew of measures that are labour friendly and would promote employment generation, economies of scale and boost exports. The steps will lead to a cumulative increase of $30 billion in exports and investment of Rs 74,000 crores over the next three years.

What’s more the majority of new jobs are likely to be for women since the garment industry employs nearly 70 per cent women in their workforce. Thus, the package would help in social transformation through women empowerment.

The salient features of the package are:

Union Cabinet approves incentives

EPF scheme reforms: Under this the government will bear the entire 12 per cent employers’ contribution to EPF scheme for new employees of garment industry for first three years who are earning less than Rs 15,000 per month. At present, 8.33 per cent of employer’s contribution is being provided by government under Pradhan Mantri Rozgar Protsahan Yojana (PMRPY). The ministry of textiles will provide additional 3.67 per cent of the employer’s contribution amounting to Rs. 1,170 crores over next three years.

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

Introduction of fixed term employment: With 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.

The package also breaks new ground in moving from input to outcome based incentives by increasing subsidy under amended-TUFS from 15 per cent to 25 per cent 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.

In a first of its kind move, a new scheme will be introduced to refund the state levies which were not refunded earlier. This is expected to cost the exchequer Rs 5,500 crores but will boost competitiveness of Indian exports. Drawback at All Industries Rate to be given for domestic duty paid inputs even when fabrics are imported under Advance Authorization Scheme.

The provision of 240 days under Section 80JJAA of Income Tax Act would be relaxed to 150 days for garment industry.

 
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