Govt to pump in Rs 6000 crore to regain turf in apparel export

In a big push to the garment industry, the government on Wednesday approved Rs 6,000 crore special package for textiles and apparel sector. According to Textile Secretary Rashmi Verma, the decision will help in creating one crore new jobs in three years in the textile sector and it will also attract investments to the tune of USD 11 billion and generate USD 30 billion in exports.

While briefing the media about cabinet decision, Verma said that the textile industry has huge potential in creating employment opportunities compared to other sectors like steel and automobile. “When a new garment unit comes up with an investment of Rs 1 crore, it employs 70 people, while a new automobile unit creates job opportunities for 25 people and a new steel unit employs just 10 people,” Verma said.

The approved measures include additional incentives for duty drawback scheme for garments, flexibility in labour laws to increase productivity, as well as tax and production incentives for job creation in garment manufacturing.

“Over the last few years, apparel manufacturing had shifted to countries like China which had cost advantages. However, China’s cost advantage has been neutralised to some extent because of increase in labour wages. We have advantages of economies of scale. Therefore, it was decided to take steps to give a boost to the sector,” said Finance Minister Arun Jaitley while announcing the Cabinet decision.

“The package will help in realising the true potential of employment generation in the textile and apparel sector,” Jaitley added. Pinning hope on the special package, Verma said, “We will overtake Vietnam and Bangladesh in garment exports within next three years if we properly implement the package.”

Relying on India’s huge potential in the textile industry, Verma said, “We accept the fact that country’s textile industry is in poor state, but at the same we are confident that with the policy support India would again regain its position in next 3 years. India was the clear leader from 1995 to 2000, but in 2003 Bangladesh’s apparel export exceeded that of India’s, and Vietnam’s in 2011.”

Verma further added that unlike other two countries, India has its raw material for garment, which is not the case with other two countries. “It’s a fact that India is the smallest apparel exporter among the three, but the country would soon surpass the two and become a top garment exporter. The revised wage norms in China has affected the industry, which is creating space for Indian garments across the global,” Verma said.

A unique feature of the scheme will be to disburse the subsidy only after the expected jobs are created. The majority of new jobs are likely to go to women since the garment industry employs nearly 70 percent women workforce. Thus, the package would also help in social transformation through women empowerment.

“The package breaks new ground in moving from input to outcome based incentives by increasing subsidy under Amended Technology Upgradation Funds Scheme from 15 per cent to 25 per cent for the garment sector as a boost to employment generation,” an official said. Welcoming the initiative, including labour reforms, industry bodies have said that the sector has huge potential for job creation.