Reforms Make Textile Sector Attractive For Investments
On Wednesday, 7th Dec’ 2016 the Union Cabinet approved a set of reforms, including simplified labor laws and technology upgradation for the "Made-ups Sector". The interventions are likely to boost employment in the textiles sector and create employment for up to 11 lakh persons, lead to increase in exports and augmented benefits to the workers in the textiles and apparel sector.
Made-ups include products like towels and bed sheets and are the second largest employer in the textiles sector after apparel. The Government will grant production incentive through enhanced Technology Upgradation Fund Scheme (TUFS), subsidy of further 10% for Made-ups similar to what is offered to garments based on additional production and employment after three years.
On labour laws front, the Government increased the allowable overtime up to 100 hours per quarter in Made-ups manufacturing sector in addition to making employees’ contribution to EPF optional for employees earning less than Rs 15,000 per month.
These incentives are element of the Rs 6,006-crore package announced for the Apparel Sector in June. The Textiles industry appreciates the Government’s initiative to support the Made-ups sector. This will facilitate India in creating huge employment, earning foreign exchange and creating footing for the fabrics and yarn sectors.
Binoy Job, Secretary General, Confederation of Indian Textile Industry (CITI) said that since the maximum sourcing for made-up sector is from the domestic industry, it will also help in Make in India plan.
The Government will provide additional 3.67% share of employer’s contribution in addition to 8.33% covered under Pradhan Mantri Rozgar Protsahan Yojana for all new employees enrolling in Employee’s Provided Fund Organization (EPFO) for the first three years of employment as a special incentive to Made-ups sector.
The International touch:
The approval came at a Union Cabinet meeting chaired by PM on the evening of December 7th 2016. The Cabinet also gave its approval to the MoU between India and UK for cooperation in intellectual property (IP) and to support UK in ease of doing business in India.
The MoU in ease of doing business will enable exchange of officials from both Governments to make the sharing of best practices easy, offering technical assistance and improved implementation of reforms. The collaboration will also cover state Governments in its domain.
Movement in the Sector:
Today, on 13th December 2016, Mandhana Industries share price gained almost 20% and traded at the intraday high of Rs. 30.70. The stock price had dropped from Rs. 121 to Rs. 45 on 22nd September after it demerged its retail business of the brand "Being Human" to Madhana Retail Ventures Limited.
Since the announcement, Himatsingka share price has gained over 4% on the NSE. Trident share price has gained over 2% since the announcement and Vardhman Textiles share price has risen over 2%.
Apart from the Mandhana Industries, which is a top 500 performing stock for the quarter, all the other stocks are multibagger stocks for the month recommended by Dynamic Levels.
The reforms in the sector and Make in India have made Textile stocks all the more attractive for investments.