Cabinet approves special package for employment generation and promotion of exports in Textile and Apparel sector

The Union Cabinet has on 22nd June 2016, approved a special package for employment generation and promotion of exports in Textile and Apparel sector. The package includes measures which are labour friendly and would promote employment generation, economies of scale and boost exports.

Salient features of the package announced are detailed below:

  • Employee Provident Fund Scheme Reforms:
    Government of India shall bear the entire 12% of the employers’ contribution of the Employers Provident Fund (“EPF”)Scheme for new employees of garment industry for first 3 years who are earning less than Rs. 15,000 per month. At present, 8.33% of employer’s contribution is already being provided by Government under Pradhan Mantri Rozgar Protsahan Yojana. Ministry of Textiles shall provide additional 3.67% of the employer’s contribution. EPF shall be made optional for employees earning less than Rs. 15,000 per month.

  • Increasing overtime caps:
    Overtime hours for workers shall not exceed 8 hours per week in line with International Labour Organization norms.

  • Introduction of fixed term employment:
    Fixed term employment to be introduced for the garment sector. A fixed term workman will be considered at par with permanent workman in terms of working hours, wages,allowance 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 from 15% to 25% 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.

  • Enhanced duty drawback coverage:A new scheme will be introduced to refund the state levies which were not refunded so far. Drawback at All Industries Rate to be given for domestic duty paid inputs even when fabrics are imported under Advance Authorization Scheme.

  • Enhancing scope of Section 80JJAA of Income Tax Act: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.

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