After Narendra Modi govt’s easier labour norms, garment exporters vow to add jobs

By: | Updated: June 29, 2016 12:38 PM

Less than a week after the government announced radical changes to labour laws and offered a Rs 6,000-crore package to the garments sector, exporters are pitching in to do their bit.

Less than a week after the government announced radical changes to labour laws and offered a R6,000-crore package to the garments sector, exporters are pitching in to do their bit.Less than a week after the government announced radical changes to labour laws and offered a Rs 6,000-crore package to the garments sector, exporters are pitching in to do their bit.

Less than a week after the government announced radical changes to labour laws and offered a R6,000-crore package to the garments sector, exporters are pitching in to do their bit. As many as 38 garment exporters — including 13 small and medium enterprises with a turnover of under R5 crore each — have pledged to hire 37,720 more people and invest R710 crore over a period of one to three years, according to a list prepared by the Apparel Export Promotion Council (AEPC) and exporters FE spoke to.

Sudhir Dhingra, chairman of one of India’s largest garment companies, Orient Craft, told FE his company will add 4,000 people to its existing workforce of 32,000 over the next three years.

Apart from replacing a small unit in Noida with a bigger one, Orient will set up one more facility in the city, he said.

Richa Global, another large exporter, will add 3,000 people within a year to its existing employee base of 11,000 people, said its chairman Virender Uppal. Narendra Kumar Goenka of Texport said his company is looking to hire 4,500 people over the next three years, recording a sharp increase over the current workforce of 1,000 people.

The number of exporters willing to create jobs is only going to rise, as many of them are awaiting fine prints to get to the bottom of the package announced, according to Ashok G Rajani, the chairman of AEPC. Rajani, also the chairman of Midas Touch Exports, has pledged to invest Rs 75 crore and hire 650 people in response to the package.

The pledges by so many SMEs show the government’s move will help inclusive growth, he added. This is important, as roughly 80% of the labour-intensive garment sector is dominated by small-scale industries. Overall, the companies have pledged to hire people in the range of 50-4,500.

The government last week announced a raft of measures, including the introduction of fixed-term employment, optional contribution to the Employees’ Provident Fund by workers earning less than Rs 15,000 a month, the refund of employers’ contribution of the EPF, additional incentives under the Amended Technology Upgradation Fund Scheme, enhanced duty drawback and some income tax relief, to boost the garment sector.

Through the package, the Narendra Modi government is aiming to create 10 million additional jobs, $30-billion additional exports and investments worth Rs 74,000 crore in the textile and garment sector. The steps will also encourage the consolidation of garments units under fewer roofs and more units may come under the organised sector. At present, close to 32 million people are employed in the textiles and garments sector, which is the largest jobs provider after agriculture and accounts for roughly 15% of the country’s exports. The country’s textile and garment exports stood almost flat at $40 billion in the last fiscal, with clothing accounting for $17 billion.

While analysts feel the targets set by the government are ambitious, given stressed balance sheets of most companies, subdued demand and dented cost competitiveness of Indian exporters vis-a-vis Bangladesh’s or Vietnam’s, some industry players believe these are not impossible to realise. Dhingra says if the proposed free trade agreement with the EU and another one with Britain are clinched, all these targets will be easily realised. The EU makes up for 37% of India’s garment exports and Britain alone used to account for roughly one-third of the EU demand. That is because Indian exporters are paying close to 10% duties for supplies to the EU, while key competitor Bangladesh, Pakistan and Cambodia have zero duty access to it.

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