On 22 June 2016, the Government of India approved a package for the Textiles and Apparel sector. According to the official press release, these measures are expected to promote "employment generation, economies of scale and boost exports." As per news reports, the package is in excess of INR 6000 crore (~USD 901.883 million*).
- The government will increase its contribution from 8.33% to 12% and thus will bear the entire burden of the employer in the Employers Provident Fund Scheme for new employees in the garment industry, for the first 3 years, who are earning less than INR 15,000 per month
- To promote employment, the Employers Provident Fund Scheme is made optional for employees earning less than INR 15,000 per month
- Subsidy under the Technology Upgradation Fund Scheme has been increased from 15% to 25%. Moreover, the disbursement of the subsidy has been moved from input to output based, in this case reaching the number of expected jobs.
- An additional duty drawback of 5% will be provided. This tax refund package is expected to cost INR 5500 crores
- Considering the seasonality of employment, certain favorable changes have been introduced in the Income Tax Act to accomodate additional wagae payment deductions.
* Rate of conversion at INR 66.53 / USD