Union Cabinet approves special package for Textile and Apparel sector

The Union Cabinet on 22 June 2016 approved a Special Package for employment generation and promotion of exports in Textile and Apparel sector.
The package includes a slew of measures which are labour friendly and would promote employment generation, economies of scale and boost exports.
•    Employee Provident Fund Scheme Reforms: The Union Government shall bear the entire 12 percent of the employers’ contribution of the EPF Scheme for new employees of garment industry for first 3 years who are earning less than 15000 rupees per month.
•    At present, 8.33 percent of employer’s contribution is already being provided by the Government under Pradhan Mantri Rozgar Protsahan Yojana (PMRPY).
•    Ministry of Textiles shall provide additional 3.67 percent of the employer’s contribution amounting to 1170 crore rupees over next 3 years.
•    EPF shall be made optional for employees earning less than 15000 rupees per month so that workers will be left with more money in hands.
•    Increasing overtime caps: Overtime hours for workers will not be exceeded 8 hours per week in line with International Labour Organisation (ILO) norms. This measure will lead to increased earnings for the workers
•    Introduction of fixed term employment: Since the industry of seasonal nature, 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.
•    Additional incentives under ATUFS:  The package breaks new ground in moving from input to outcome based incentives by increasing subsidy under Amended-Technology Up gradation Fund Scheme (TUFS) from 15 percent to 25 percent 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.
•    Enhancing scope of Section 80JJAA of Income Tax Act, 1961: 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.
•    Indian textiles industry contributes about 14 percent to the industrial production, 4 per cent to the gross domestic production (GDP) and 11 percent to the country’s export earnings.
•    The textile sector is the second largest provider of employment after agriculture.
•    The growth in this sector is of significance to achieve the objective of inclusive growth as nearly 70 percent employed are women.