Govt Plans Felxibility in Labour Laws and Launched a Special Package to Create 1 Crore Jobs in Textile & Apparel Sector

The Union Cabinet chaired by Hon’ble Prime Minister Mr. Narendra Modi has announced a set of measures that would bring in more flexibility in labour laws in the textile and apparel sector. These measures form a part of the special package announced by the Government today, for job creation & export promotion in the sector.

Increasing overtime caps

Overtime hours for workers will not be allowed to exceed 8 hours per week in line with ILO norms. This shall lead to increased earnings for the workers.

Introduction of fixed term employment

Considering the seasonal nature of the industry, fixed term employment will 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.

Employee Provident Fund Scheme Reforms

EPF will be made optional for employees earning less than Rs. 15,000 per month. This will leave more money in the hands of the workers and also promote employment in the formal sector.

Impact in Three Years

This is expected to yield the following impact in three years:

• Increase in exports by 1.4 billion US$
• increase in employment by 1.75 lakhs
• increase in investment by 4.2 billion US$

However, it was also decided by the cabinet committee to provide additional incentives for garments under Duty Drawback Scheme. This is one of the various measures that comprise the special package announced by the Government, for job creation & export promotion in the textile and apparel sector.

To implement the decision, in a first-of-its-kind move, a new scheme will be introduced to refund the state levies which were not refunded so far. This move will greatly boost the competitiveness of Indian exports in foreign markets and is expected to cost Rs 5500 crores to the exchequer.

Further, drawback at All Industries Rate will be given for domestic duty paid inputs even when fabrics are imported under Advance Authorization Scheme.

Impact in Three Years

This is expected to yield the following impact in three years:

• Increase in exports by 9.5 billion US$
• Increase in employment by 9.5 lakhs
• Increase in investment by 2.7 billion US$