Shares of four textile companies fell 0.37% to 3.69% and four stocks rose 0.23% to 2.66% at 10:00 IST on BSE after the Union Cabinet approved a special package for textile and apparel sector for employment generation and promotion of exports.
The announcement was made after market hours yesterday, 22 June 2016.Meanwhile, the S&P BSE Sensex was up 12.01 points or 0.04% at 26,779.94.
Arvind (down 0.37%), Alok Industries (down 3.69%), Century Textiles & Industries (down 0.96%) and Nitin Spinners (down 2.5%) declined. Gokaldas Exports (up 2.66%), Raymond (up 0.23%), Bombay Dyeing Manufacturing Company (up 0.86%), and Vardhman Textiles ((up 1.17%) gained.
The Union Cabinet under the Chairmanship of Prime Minister Narendra Modi has given approval yesterday, 22 June 2016 for a special package for employment generation and promotion of exports in textile and apparel sector. The move comes in the backdrop of the package of reforms announced by the Government for generation of one crore jobs in the textile and apparel industry over next 3 years. The package includes a slew of measures which are labour friendly and would promote employment generation, economies of scale and boost exports. The steps will lead to a cumulative increase of $30 billion in exports and investment of Rs 74000 crore over next 3 years.
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.
Under the package, reforms were announced in employee provident fund scheme. Government of India shall bear the entire 12% of the employers' contribution of the employers provident fund 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 (PMRPY). Ministry of Textiles shall provide additional 3.67% of the employer's contribution amounting to Rs 1170 crore over next 3 years. EPF shall be made optional for employees earning less than Rs 15,000 per month This shall leave more money in the hands of the workers and also promote employment in the formal sector.
The government has also increased cap on overtime. This shall lead to increased earnings for the workers. Overtime hours for workers not to exceed 8 hours per week in line with ILO norms. The government has also introduced fixed term employment. Looking to the seasonal nature of the industry, 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, allowances and other statutory dues. The package also breaks new ground in moving from input to outcome based incentives by increasing subsidy under Amended-Technology Upgradation Fund Scheme (TUFS) 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.
Additionally, 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 is expected to cost the exchequer Rs 5500 crore but will greatly boost the competitiveness of Indian exports in foreign markets. Drawback at All Industries Rate to be given for domestic duty paid inputs even when fabrics are imported under Advance Authorization Scheme. Further, 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.
Powered by Capital Market - Live News
