Lok Sabha Question No. 170 (STARRED), answered on 2016-07-28
Subject: Package for Textile Sector
Ministry: TEXTILES
Asked by: GOPALAKRISHNAN CHINNARAJ, VINOD KUMAR BOIANAPALLI

## LOK SABHA STARRED QUESTION NO. *170 TO BE ANSWERED ON 28.07.2016

## PACKAGE FOR TEXTILE SECTOR

## *170  : DR. C. GOPALAKRISHNAN: SHRI B. VINOD KUMAR:

Will the Minister of TEXTILES वस्त्र मंरी be pleased to state:

- (a) whether  the  Government  has  recently  announced  a  package  for  the textile  and  apparel  sector,  and  if  so,  the  details  and  objectives  thereof indicating  quantum  of  the  package  and the  share  of  handloom,  power loom and textile mill sector in the package;
- (b) the benefits likely to accrue to various sectors of textiles particularly to handloom weavers; and
- (c) the steps taken by the Government to boost competitiveness of Indian garments exported to foreign countries and to increase country's share in global market?

## उत्तर

## ANSWER

## वस्त्र मंरी ( )

MINISTER OF TEXTILES (SMT. SMRITI ZUBIN IRANI)

- (a) to (c): A statement is laid on the Table of House.

## STATEMENT REFERRED TO IN REPLY TO PARTS (a) to (c) OF THE LOK SABHA STARRED QUESTION NO.*170 for 28.07.2016 REGARDING PACKAGE FOR TEXTILE SECTOR ASKED BY DR. C. GOPALAKRISHNAN AND SHRI B. VINOD KUMAR.

(a): Yes Madam, Government has recently announced a package for apparel sector. The details of package are given in Annexure I.

(b): The  textile  package  is  expected  to  benefit  all  sectors  i.e.  spinning, weaving, knitting processing of textile value chain including handloom sector. The package has envisaged substantial investment in apparel sector in next three years. With increase in investment, demand for raw materials like fabric, yarn etc. will increase which will ultimately boost growth in entire textile value chain including handloom sector.

(c): Apart from the announcement of package for apparel sector, Government has launched various schemes to boost the competitiveness of Indian garment exported to foreign countries and to increase country's share in global market. The details of schemes are given in Annexure II.

## A. Objective of the package

## 1. Tapping the Employment Generation Potential

Textile and apparel sector in India employs about 4.5 crore people directly and about 6 crore people in the allied sectors. In textiles, every one crore rupees of investment generates an average of 30 jobs whereas in the  apparel  segment  a  minimum  of  70 jobs  are  generated.  Hence,  this  sector  holds  the maximum employment generation potential.

## 2. Restore Competitiveness of  Indian apparel in International Markets and to reform labour laws

The  Indian  apparel  products  are  costing  higher  in  export  markets  as  compared  to  the  competing countries due to lower import duty paid by competing nations in EU and higher input costs towards interest and power tariff.

The  package  of  reforms  announced  for  apparel  sector  addresses  these  concerns  to  enhance competitiveness and promote exports.

## B. Details of the package

## 1. Labour Law Reforms

- a) Government to bear 3.67% of employer's Employee Provident Fund (EPF) contribution for new workmen in addition to existing reimbursement of 8.33% employer contribution under Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) for 3 years.
- b) EPF  will  be  made  optional  for  employees  earning  less  than  Rs.  15,000  per  month;  thus, leaving more money in the hands of the workers.
- c) Overtime cap will be raised from 50 hours per quarter to 100 hours per quarter leading to increased earnings of workers.
- d) 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, allowances and other statutory dues.

## 2. Additional incentives under ATUFS

-  The subsidy provided to garmenting units,  under  Amended-TUFS, is  being increased  from 15% to 25%, providing a boost to employment generation.
-  The package breaks new ground in moving from input-based to outcome-based incentives; a unique feature of the scheme will be to disburse subsidy only after expected jobs have been created.

## 3. Enhanced duty drawback coverage

-  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
-  Drawback  at  All  Industries  Rate  will  be  given  for  domestic  duty  paid  inputs  even  when fabrics are imported under Advance Authorization Scheme.

## 4. 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.

## C. Quantum of the package

The Government has approved a package of Rs 6,000 crores for boosting the employment generation and export potential of the Textile and Apparel Sector.

Govt. of India has launched various schemes to boost competitiveness of Indian garment exported to foreign countries and to increase country's share in global markets. The details of the schemes are:

- i. Merchandize Exports from India Scheme (MEIS): Rewards for export are payable as percentage of realized FOB value to all the countries.  The reward rates are given below:

| Eligible Products                                            | Reward Rate   |
|--------------------------------------------------------------|---------------|
| Textile and Apparel Products (HS Code 50-63: eligible lines) | 2%            |
| All handloom and handicraft items                            | 5%            |
| All jute, ramie and coir based items                         | 5%            |

The  duty  reward  is  available  to  textile  and  garment  exporters  in  any  country  globally.  Also, Government has withdrawn the requirement of Landing Certificate to avail the benefit of MEIS. This removal of requirement of landing certificate is a major step in ease of doing business.

- ii. Interest  Equalization  Scheme:  Pre  and  post  shipment  rupee  export  credit  of  3%  is  given  to Handicrafts, Carpet, Handlooms, Small & Medium Enterprises, Readymade Garments, Madeups, Fabrics, Coir & Coir Products, Jute & Jute Products.
- iii. Duty Drawback: Duty drawback rates for textile items are given below:

|                 | When CENVAT is not availed   | When CENVAT is availed   |
|-----------------|------------------------------|--------------------------|
| Cotton yarn     | 2.5-4.5                      | 1.2-1.4                  |
| Cotton fabric   | 4.3-7.3                      | 1.4-2.0                  |
| Man-made fabric | 6.6-11.5                     | 1.9-2.4                  |
| Apparel         | 7.2-10.5                     | 2.0-3.5                  |
| Home textiles   | 5.0-10.7                     | 1.9-8.9                  |

## iv. Market Access Initiative (MAI):

-  Financial assistance for carrying out marketing projects abroad
-  Assistance for building capacity for exporters, export promotion organizations, etc.
-  Assistance on reimbursement basis to individual exporters for charges/fees paid by them for fulfilling the statutory requirements in the buyer country
-  Assistance for conducting studies
-  Assistance in developing projects leading to substantial improvement in market access

## v. Market Development Assistance (MDA):

-  Financial support to exporters registered with Export Promotion Councils
-  For  participation  in  Trade  Fairs/Exhibitions,  assistance  would  be  permissible  on  travel expenses by air in economy class and/or charges of the built up furnished stall, subject to an upper ceiling as given below:
- o Focus Latin American Countries (LAC) - Rs. 250,000
- o Focus Africa, Focus CIS, Focus ASEAN - Rs. 200,000
- o General areas - Rs. 150,000
-  For each region, the exporter can claim benefit once a year
-  Maximum number of permissible participations shall be 5 in an FY.

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