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After textiles, NITI Aayog for reforms in other job- intensive sectors

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In the wake of the Cabinet clearing aRs. 6,000- crore package for the textiles sector recently, NITI Aayog is pushing for similar reforms in other labour- intensive sectors such as footwear, electrical and electronics engineering, besides light manufacturing segments such as umbrella, cutlery and furniture to generate mass employment.
A NITI Aayog official said under- employment is a bigger problem for India than unemployment.
Citing a survey on employment by the National Sample Survey Office, he said India’s unemployment rate was around three per cent but under- employment could be much more. He said the problem arises because small- scale industries, which have less than 20 workers, employ 73 per cent of the working population, but contribute only 12 per cent of the total output.
While the package for the textiles sector included duty drawback for the garments subsector, the most notable feature was the introduction of the fixed- term employment. To encourage hiring, the government would contribute to the employees’ provident fund, 12 per cent of basic salary, on behalf of the employers. All new employees in the garments sector earning less than Rs.15,000 a month would benefit from this scheme for three years.
In a recent presentation to the Prime Minister’s Office, the Aayog said much of the demand for these labour- intensive sectors might be lying in export markets. For example, China exported footwear worth $55 billion in 2014, while India’s outbound shipment of footwear stood at merely $ 3 billion. The Aayog official said the $ 18 trillion global export market presented ahuge opportunity for India to increase its share from 1.7 per cent at present.
The official said development of coastal economic zones (CEZs) could help in attracting big players to such sectors. NITI Aayog Vice- Chairman Arvind Panagariya has been pushing for Shenzhen- style CEZs on India’s western and eastern coasts.
“Apart from conventional infrastructure, the zones should create urban spaces to house the workforce. For firms that create certain level of direct employment ( 50,000 jobs), tax holiday for a pre- specified period may be offered. To incentivise early investments in such zones, the tax holiday may be limited to investments made in the first three or four years of the creation of such zones,” Panagariya wrote in his blog.
According to an estimate by Icra, footwear industry holds a crucial place in Indian economy for its employment potential. It can also support the economy through its foreign exchange earnings.
India is the second- largest global producer of footwear after China, accounting for nine per cent of the global annual production of 22 billion pairs, compared with China’s share of 60 per cent.
Business Standard New Delhi,12th July 2016

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