NEW DELHI: Ratan Tata-led Investment Commission has suggested a rural industrialisation model based on garmenting business. It said a 10-year tax holiday with a flexible labour law regime for rural apparel units could draw $2-3 billion investment with a potential to generate employment for two million.
The commission has suggested a flexible labour law for rural apparel units without restrictions on hiring and retrenchment. It also suggested relaxation of overtime restrictions for women.
The proposed flexible labour norms for the rural garment units also include extension of working time up to 12 hours — with a maximum limit of 60 hours per week — with payment for overtime. According to the panel, such units should be located at a radius of at least 50 km from a city with population of more than one million.
The government is looking at the possibility of implementing the idea as availability of land and labour in rural areas is not a major problem. “The government is considering its (the commission's) suggestions pertaining to the textile sector. Land and labour, two major factors for developing a garment unit in rural areas, would not be a problem.
Transportation of raw material and finished products is also easy due to the light weight of textile items. The only concern is attracting investors. This too could be worked out,” a textile ministry official said.
Besides specific incentives, the commission is in favour of providing all benefits available to units in apparel parks or special economic zones (SEZ) to the garment units located in the rural areas.
Specifying the tax incentive package, it said income-tax holiday would be available to every unit that employs 1,000 or more workers. For units employing women on a large scale, the proposed limit is 500. To take care of workers, the commission favoured mandatory health insurance and medical benefits to workers.
The panel said the success of the model depends on a coordinated effort by the ministries of textiles, rural development, power and finance. It recommended the government should prioritise road development under the Pradhan Mantri Gram Sadak Yojana to provide better connectivity between rural areas and urban markets. Better infrastructure would help in attracting investors, it said.
Other incentives include subsidised power for export-oriented units. Other units could also be provided relatively cheap power by waiving demand charges and electricity duty levied by states. Such moves would reduce power cost by 15%, it said.
The commission has suggested a flexible labour law for rural apparel units without restrictions on hiring and retrenchment. It also suggested relaxation of overtime restrictions for women.
The proposed flexible labour norms for the rural garment units also include extension of working time up to 12 hours — with a maximum limit of 60 hours per week — with payment for overtime. According to the panel, such units should be located at a radius of at least 50 km from a city with population of more than one million.
The government is looking at the possibility of implementing the idea as availability of land and labour in rural areas is not a major problem. “The government is considering its (the commission's) suggestions pertaining to the textile sector. Land and labour, two major factors for developing a garment unit in rural areas, would not be a problem.
Transportation of raw material and finished products is also easy due to the light weight of textile items. The only concern is attracting investors. This too could be worked out,” a textile ministry official said.
Besides specific incentives, the commission is in favour of providing all benefits available to units in apparel parks or special economic zones (SEZ) to the garment units located in the rural areas.
Specifying the tax incentive package, it said income-tax holiday would be available to every unit that employs 1,000 or more workers. For units employing women on a large scale, the proposed limit is 500. To take care of workers, the commission favoured mandatory health insurance and medical benefits to workers.
The panel said the success of the model depends on a coordinated effort by the ministries of textiles, rural development, power and finance. It recommended the government should prioritise road development under the Pradhan Mantri Gram Sadak Yojana to provide better connectivity between rural areas and urban markets. Better infrastructure would help in attracting investors, it said.
Other incentives include subsidised power for export-oriented units. Other units could also be provided relatively cheap power by waiving demand charges and electricity duty levied by states. Such moves would reduce power cost by 15%, it said.
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