Textile package to boost job creation

Thankfully, the government has woken up to the ground reality which did not match up to a heady rate of 7.6% growth in GDP, in terms of job creation with the result that a common man would tend to agree with those raising doubts over the data that catapulted India as the fastest growing economy of the world. High decibel flagship programmes like Make in India fancied industries like automobile, defence and telecom which have  also not shown tangible results yet in the backdrop of risk aversion in an environment where corporates in most parts of the world are not able to fully utilise their existing manufacturing capacity. High level of corporate debts and vulnerability of the banking institutions have added to the woes of the industry, impacting its ability to create new employment. Though realisation came a bit late, the government has finally done its part in attempting to revive the country’s textile industry which is considered to be the largest employment creator after agriculture.

The Rs 6,000 crore package cleared by the Cabinet for the textile and apparel sector is likely to lead to additional  10 million jobs, attracting investment of Rs 74,000 crore and a sharp jump of $30 billion in exports in the next three years. The package includes tax incentives, is linked to head-counts in factories as also increased government contribution towards the employers’ share in the Employees Provident Fund (EPF). A welcome impact of the package would be that a 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. But the distinguishing feature of the package is the wide-ranging flexibility in labour laws making EPF optional for employees drawing less than Rs 15,000 a month and fixing a higher ceiling in overtime. Other positive features include allowing the industry to hire people on contract.

Though the targets set out in the official document look ambitious in the given set of global business environment, the policy should reverse some of the setbacks suffered by the textiles industry that has lost its prime position in the export market, ceding ground to smaller countries like Vietnam and Bangladesh which followed policies making their industries globally competitive. On the contrary, the Indian  industry could not  take advantage of the quota –free textile regime in the world trade as it lost competitiveness thanks to rigid labour laws and back-breaking judicial pronouncements relating to pollution and environment laws. Immense damage was suffered by leading textile clusters like Tirupur resulting in closure of units and loss of employment. The industry with a three time more job potential than steel or automobile had not been treated well. At last it is back on the government radar.

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