Government weaves new textiles package, dials for next spectrum auction

New Delhi: Keeping up the momentum in key economic decisions, India's federal cabinet on Wednesday approved the norms for the next telecom spectrum auction that can fetch over $83 billion to the exchequer and a textiles package to push 10 million new jobs and $30 billion more in exports.

The decisions, along with approvals for a fund of funds for start-ups with a corpus of Rs 10,000-crore and extension of the scheme to assist debt-ridden power distribution companies, were taken at the cabinet meeting presided over by Prime Minister Narendra Modi.

The decisions come just two days after India opened its doors further to foreign investment in nine areas including aviation, single-brand retail, defence and pharmaceuticals. The government hopes the steps will add to the record $53 billion India got as foreign investment last year.

Briefing the media after the cabinet meet, Finance Minister Arun Jaitley and Communications and IT Minister Ravi Shankar Prasad said while airwaves auction norms had been cleared, the matter pertaining to spectrum usage charges had been referred back to the telecom watchdog.

The ministers said the suggestions on spectrum usage charges -- which have evoked strong opinions from stakeholders -- came from the attorney general's office and the Telecom Commission later, the matter was referred back to the Telecom Regulatory Authority of India (TRAI).

The brief for the regulator is just to spell out the quantum of fee -- which it had recommended as 1 per cent of a telecom operator's annual revenue for 2500 MHz band and 3 per cent for the other bands.

More than 2,300 MHz of airwaves will be on the block for telecom operators in seven bands -- 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz. Based on their pan-India reserve price the mop up can be as much as $83 billion against $17-billion the last time.

The previous round had seen 470.75 MHz on the block and as much as after Rs 109,874 crore worth of bids were received from the 115 rounds spread over 19 days. Earlier, 390 MHz was put up for auction in November 2012 and 426 MHz in February 2014.

In the textiles space, the approval was for a package with measures such as tax incentives and relaxation of labour laws -- all aimed at a three-year target of creating 10 million more jobs, $30 billion additional exports and $11 billion fresh investment.

Officials said the meeting also took note of India's falling share in the global textile exports to Bangladesh and Vietnam, yet with the potential to grab the market being ceded by China.

The package includes full burden of provident fund on the government, reduction in the yearly working days for calculation of income tax rebate to 150 days from 240, and additional subsidy for buying machinery under the amended technology upgradation fund scheme.

The package has many labour-friendly measures, including Employee Provident Fund (EPF) scheme reforms, whereby the government will bear the entire employer's contribution of 12 per cent under EPF for new employees of the garment industry earning less than Rs 15,000 per month, for the first three years.

"With today's decision, the Ministry of Textiles will provide the remaining 3.67 per cent share towards employer's contribution, amounting to Rs 1,170 crores over next 3 years," the ministry said in a statement, adding it will apply to employees drawing less than Rs.15,000 per month.

As per official data, the textiles and apparel sector contributes 14 per cent to India's factory output, 4 per cent to its GDP and 13 per cent, or nearly $40 billion, to exports. With 45 million people engaged in it, it is also among the largest sources of employment in the country.

Officials said the new package was mainly aimed at women empowerment since they constitute 70 per cent of the workforce in the garment industry. This apart, the measures are labour-friendly and will create jobs and economies of scale and boost exports, they said.

As regards what is called Uday (Ujwal Discom Assurance Yojana), states have been given time till next March to join the scheme, which allows for the distressed power companies to issue bonds and clean up their balance sheets while agreeing to some conditions.

So far, 19 states have joined the scheme, an official statement here said.