Union Cabinet approves special package for Textile and Apparel sector

June 23, 2016

The Union Cabinet has given its approval for a special package for employment generation and promotion of exports in Textile and Apparel sector.
Decision in this regard was taken by the Union Cabinet meeting chaired by Prime Minister Narendra Modi in New Delhi.
Key Facts

The package includes a slew of measures which are labour friendly and would promote economies of scale and boost exports and also employment generation.
It will lead to a cumulative increase of US 30 billion dollars in exports and investment of 74,000 crores Rupees over next 3 years.
The package will also play important role in generation of one crore jobs in the textile and apparel industry over next 3 years.
The majority of new jobs are likely to go to women since the garment industry employs nearly 70% women workforce.
Thus, this package will play an important role in the social transformation through women empowerment.

Salient features of the package

Employee Provident Fund (EPF) Scheme Reforms: Union Government will bear entire 12% EPF Scheme contribution of the new employees for first 3 years. Provided they should earn less than 15,000 rupees per month.
In case employees earning less than Rs. 15,000 per month, EPF will be made optional.
Union Ministry of Textiles will provide additional 3.67% of the employer’s contribution to EPF that will amount to Rs. 1,170 crores over next 3 years.
Increasing overtime caps: In line with ILO (International Labour Organisation) norms, overtime hours for workers will not exceed 8 hours per week. It will increase earnings ofthe workers.
Introduction of fixed term employment: Fixed term employment will be introduced as the garment sector is seasonal in nature.
A fixed term workman will be considered in par with permanent workman in terms of wages, working hours, allowanced and other statutory dues.
Additional incentives under ATUFS (Amended Technology Upgradation Fund Scheme (ATUFS): It will increase subsidy under Amended-TUFS from 15% to 25% for the garment sector as a boost to employment generation. The subsidy will be disbursed only after the expected jobs are created.
Enhanced duty drawback coverage: Under this scheme, refund of the state levies which were not refunded so far will be undertaken. This move will greatly help to boost the competitiveness of Indian exports in foreign markets.
Enhancing scope of Section 80JJAA of Income Tax Act: The provision of 240 days under Section 80JJAA of IT Act would be relaxed to 150 days for garment industry owing the seasonal nature of industry.