Textiles get a boost with labour reforms

Rs 6,000-crore package aimed to generate $30 billion of exports, create 10 million jobs in three years

The government on Wednesday announced a slew of measures for the textile sector, to generate 10 million jobs, boost exports by a cumulative $30 billion and investments by Rs 74,000 crore over three years.

A special package approved by the Cabinet was estimated to cost Rs 6,000 crore, improve competitiveness, lead to greater production through a string of labour reforms and generate jobs. Currently, an estimated 70 per cent of the workforce in the garment industry are women.

Significant among these was the government's decision to fund the full 12 per cent of the employers' contribution to the Employees' Provident Fund Scheme for new employees in the garment industry if the candidate earned less than Rs 15,000 a month. The scheme, which will run for three years, would cost the textiles ministry Rs 1,170 crore.

The ministry has also taken on textile factory owners by instituting fixed-term employment for garment sector employees. Employees had long demanded they be considered as permanent and their working hours and wages be fixed, as the industry was seasonal.

The ministry has also fixed overtime hours for workers, to not exceed eight hours a week, in line with International Labour Organization norms.

Industry insiders, however, cheered a decision to extend incentives under the amended Technology Upgradation Fund scheme from 15 per cent to 25 per cent. Shishir Jaipuria, chairman, FICCI Textiles Committee, said: "As the Indian textiles and garment industry is facing tough competition in the global market, the refund of state levies comes as a breather and would help them to gain more competitiveness in global markets, where we have to compete with duty-free regimes."

The scheme, amended in December 2015, allows subsidy on capital investment to enterprises in the medium, micro and small sectors subject to a ceiling of Rs 30 crore over five years. Textiles ministry officials said this would allow owners to employ more.

To boost exports, the government extended the duty drawback scheme to a number of state levies. Duty drawback is refund of duties on imported inputs for export items. This move would cost the exchequer Rs 5,500 crore but would greatly boost the competitiveness of Indian exports in foreign markets.

"Industry is gearing up for the $20-bn target set for this year," Ashok G Rajani, Chairman of the Apparel Exports Promotion Council, said. "With exports declining for the last five months in a row, major global markets still recording negative growth and the Brexit uncertainty looming large, the package is timely and gives the industry hope."

However, others have asked for the scope of reforms to be widened. "The entire value chain, including made-ups and fabrics, which are equally import segments of the garments industry, needs to be covered," said R K Dalmia, President, Century Textiles Ltd. Ministry sources said the government was also keeping its fingers crossed on reversing the fall in textile exports by approving a revamped national textiles policy, likely to be taken up by the Cabinet soon.

In the works since last year, the policy aims to aims to achieve $300-billion exports by 2024-25 and to create 35 million jobs by 2024-25. India exported $36.25 billion worth of textiles and related goods in the last financial year, 2.39 per cent drop from 2014-15.