Budget 2018: The Rs 6,000 crore package for the apparel sector, implemented in November 2016, has helped exports of ready-made garments (RMGs) made of man-made fibres (MMFs) to increase by 16% over the comparable groups in less than a year, the economic survey said, adding that “the impact of the package increased over time and did not show any signs of attenuation.” Taking the “difference-in-difference” approach, which essentially tends to find the gap between the clothing and comparable group, it said, “the impact on MMF-RMGs increased gradually over time; by September 2017, the cumulative impact was about 16% over the comparable groups.” The survey, though, is silent on the number of jobs created since the time it was implemented. The government had targeted to create one crore additional jobs and investments of Rs 74,000 crore and extra exports of $30 billion (over and above the textile and garment exports of $40 billion in 2015-16) over a three-year-period. However, as reported earlier by FE, just 655 units have availed themselves of the benefit till recently and the number of beneficiaries stood at 1,55,564, according to labour ministry data. And not all are new employment.
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AEPC chairman Ashok G Rajani recently said that though the package helped them a lot and the government made some landmark announcements, but before the industry reaped the full benefits, incentives under the RoSL and the duty drawback schemes were cut under the GST regime. The cabinet approved the package in June 2016 to help the textiles and apparels sector grab the tremendous growth opportunity for exports and creating employment. Major components of the scheme included enhanced subsidy under Amended Technology Upgradation Fund Scheme for concessional import of machinery, implementation of rebates on state levies (RoSL) for state levies which were not refunded through duty draw-back earlier. “Prior to the package, duty-drawbacks were between 7.5% – 9.8% for apparels. After the package, the RoSL increased export incentives by between 2.8-3.9%,” the survey said.
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Apart from these incentives, the government also introduced fixed-term employment for the industry to hire more in times of need to cater for the seasonal nature of order flows and committed to bear the entire 12% employer’s contribution to the employees provident fund for the first three years (against 8.33% earlier under a scheme).
“This hit us hard. As such, we have been handicapped by the duty disadvantage against our competitors like Bangladesh and Vietnam in biggest markets · the EU and the US,” Rajani told FE.