The government's ambitious textile package announced with much fanfare is expected to take some more time to be implemented fully. The package was aimed to boost employment and improve investment flows. The Rs 6,000 crores package, announced by the government in July and notified in September, is now expected to kick start production and employment at a later date than earlier estimated, manufacturers say.
Senior textile ministry officials say they do not have any time estimate for implementation. At the same time, the recent Cabinet decision to widen the package beyond apparel manufacturing to cover 'made ups' or home furnishings has its root in the uncertainty. Arguing it's too early to look for benefits from the package, Development Commissioner (Handlooms) explained they would need to wait a few months more for the results to become clearer. Originally envisaged for apparel manufacturing sector, the package has been slow to hit the ground with manufacturers blaming anemic global demand as well as low investment in the sector.
The bulk of the planned capital outlay, an estimated Rs 5,500 crores is expected to be spent on an additional five per cent duty drawback given for garments. The government hopes it will lead to a cumulative increase of exports up to $30 billion. However, one of the major factors expected to boost hiring increased government funding for provident funds of new employees has not started. The government currently bears 8.33 per cent of the employer's contribution. The textile ministry will provide an additional 3.67 per cent amounting to Rs 1,170 crores for first three years for every employee.