Close on the heels of the government announcing radical changes in labour rules and an Rs 6,000-crore package for the garments sector, the textile ministry has pitched for the labour reforms extension to to the textile (yarns, fabrics and made-ups) sector. Textile secretary Rashmi Verma has reportedly said that the special package has talked of certain big reforms in labour laws. This is, of course, specific to the garments sector. They are hoping it will be extended to the textile sector as well, at least things such as fixed-term employment and increase in the overtime limit for workers.

Since both the labour-intensive sectors complement each other, extension of labour reforms to the textiles industry including the spinning sector will enable India to better capture the space being ceded by China due to soaring wages costs there, apart from helping create new jobs.

Late last month, the government decided to introduce fixed-term employment and bring in uniformity between contractual and permanent labourers in terms of wages and other incentives. It also raised the overtime work limits for willing workers to 8 hours per week (which will translate into roughly 100 hours a quarter against the current 50 hours per quarter).Thus a garment factory will now have the flexibility to hire contractual workers for a fixed period and get willing workers to do overtime to be able to meet supply commitments, given the highly seasonal nature of export orders.

Last month, the government had also announced that contribution to the Employees’ Provident Fund (EPF) will be optional for the employees of the garment sector earning less than Rs 15,000 per month. Such a move will leave more money in the hands of workers and help boost rural demand. Moreover, the government decided to bear the entire 12% of the employers’ contribution to the EPF scheme for a certain category of employees, up from 8.33% at present.

Now, the government aims at creating 10 million new jobs, $30 billion additional exports (over and above textile and garment exports of $40 billion in 2015-16) and investments of Rs 74,000 crore over the next three years.