Cotton Threads Textile Ministry is planning to pull in Rs1,750 crore in supplementary grant

Textile Ministry is planning to pull in Rs1,750 crore in supplementary grant

The textile ministry has planned to pull in Rs1,750 crore in supplementary grant from the finance ministry to settle claims of refunds under the new duty drawback scheme which was earlier announced as part of a special package for the garments industry in June. The ministry has so far received claims to the tune of Rs160 crore from garment exporters since the scheme was notified in late September.

The Narendra Modi government has also declared some crucial labour reforms for the garment sector, including the introduction of fixed-term employment, and have thereby worked upon to bear the entire 12% of the employers’ contribution of the Employees’ Provident Fund Scheme for certain categories of employees, up from the current 8.33%.

Back in June  the government announced its decision to refund state levies under the duty drawback scheme to boost the competitiveness of garment exporters. It was the most important decision in terms of financial consequence, which was estimated to cost the government a total of Rs 5,500 crore over a three-year period. This plan was aimed at attracting investments worth US $2.7 billion, boosting exports by US $9.5 billion and creating 9.5 lakh jobs over the next three years.

Through this package with a total estimated cost of Rs 6,000 crore, the government targets to create 10 million new jobs, US$30 billion additional exports (over and above the textile and garment exports of US$40 billion in 2015-16) and investments worth Rs74,000 crore over the next three years.

Elevated logistics costs, high tariff barriers for exports to key market like the EU when some other competitors like Bangladesh enjoy dutyfree access and archaic labour laws have caused Indian garment exports to grow at a much slower rate for years now. So with the government taking in newer initiatives and deciding on bigger policy changes, we can hope for a steady and faster growth in the time to come. 

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