Cabinet clears Rs 6,000 cr package for textiles, apparel; aims 10 million new jobs in 3 years

New Delhi: Government on Wednesday approved a Rs 6,000 crore special package for textiles and apparel sector that aims at creating one crore new jobs in 3 years and attract investments of USD 11 billion while eyeing USD 30 billion in exports.

The measures approved include additional incentives for duty drawback scheme for garments, flexibility in labour laws to increase productivity as well as tax and production incentives for job creation in garment manufacturing.

"Over the last few years, apparel manufacturing had shifted to countries like China which had cost advantages. However, China's cost advantage has been neutralised to some extent because of increase in labour wages. We have advantages of economies of scale. Therefore, it was decided to take steps to give a boost to the sector.

"The package will help in realising the true potential of employment generation in the textile and apparel sector," Finance Minister Arun Jaitley told reporters here.

The decision was taken at a meeting of the Union Cabinet chaired by Prime Minister Narendra Modi.

"The Rs 6,000 package will result in additonal investments worth USD 11 billion, creation of one crore additional jobs and increase in exports worth USD 30.4 billion which will help boost textile and garmenting sector.

"We will overtake Vietnam and Bangladesh in garment exports within next three years if we properly implement the package," Textiles Secretary Rashmi Verma told reporters here.

Among the measures to usher in flexibility in labour laws are increasing overtime hours for workers which are not to exceed 8 hours per week in line with ILO norms and introduction of fixed term employment looking at the seasonal nature of 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 breaks new ground in moving from input to outcome based incentives by increasing subsidy under Amended-TUFS from 15 percent to 25 percent for the garment sector as a boost to employment generation," an official statement said.

A unique feature of the scheme will be to disburse the subsidy only after the expected jobs are created.

The majority of new jobs are likely to go to women since the garment industry employs nearly 70% women workforce. Thus, the package would help in social transformation through women empowerment.

Industry bodies welcomed the initiatives, including labour reforms, saying that the sector has huge potential for job creation. Some said however that support for R&D was missing.