PMRPY All Set To Be A Major Game Changer In Apparel Industry

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PMRPY All Set To Be A Major Game Changer In Apparel Industry

The Pradhan Mantri Rojgar Prothsahan Yojna (PMRPY) which has earmarked a sum of Rs. 200 crore for paying 8.33 percent of EPF for new employees in the textile sector, whose salaries are Rs. 15,000 or below, will go a long way in creating new job opportunities in this sector.

It should be borne in mind that the Indian textile and apparel sector employs less number of labor per unit as compared to their counterparts in China and Bangladesh. With the advent of this new scheme, adding new employees to the workforce will be incentivized and act as a major reform for the textile sector in India. Also, the scheme would marginally reduce the cost burden on the employers arising out of new employment.

The PMRPY scheme will be a boost in the arm of employers in the micro, small and medium enterprises (MSMEs). For availing this scheme, the establishments have to be registered with the Employees’ Provident Fund Organisation (EPFO) and should also have a Labour Identification Number (LIN) allotted to them under the Shram Suvidha Portal (https://shramsuvidha.gov.in). The LIN will be the primary reference number for all communication to be made under the PMRPY Scheme.

This implies that more and more of the textile industry that currently rests in the unorganized sector will be incentivized to participate and flow into the organized sector and avail the benefits the government is offering under this scheme. Calculations by even a conservative estimate indicate that the 8.33 per cent of EPF per annum would amount to giving the worker or the employee one month’s additional salary every year from the government on behalf of the employer.

Several experts viewed it as one of the ways to bring reform in labor laws and at the same time bring about ease of doing business. In the long run this move is expected to boost the growth of the MSME sector and increase the number of players from the MSME sector graduating into becoming a formal corporate entity.

The scheme entails a 3.67 percent contribution from the employer’s side and also includes a lock-in clause that the employee should be with the same firm for three years to avail the benefit of this government scheme. The lock-in period serves to benefit both the employer and the employee.

The employer can look forward to a stable staffing environment with attrition reduced to the minimum and the employee to will benefit by staying for a longer tenure ushering in career stability and experience to avail of the benefit provided by this government scheme.

This facility provided by the PMRPY scheme will be in effect for the textile sector till the financial year ending 2019-20. There are also some mandatory compliance requirements other than the LIN number. The employee should have a valid Aadhar linked UAN. The units are required to register with the PMRPY portal for availing this benefit. Needless to say, this will put more number of MSME units in the unorganized sector under the government scanner and entail higher revenues from the textile sector that will contribute to the growth in GDP.

In the words of the government spokesperson, “This scheme has a dual benefit, where, on the one hand, the employer is incentivized for increasing the employment base of workers in the establishment, and on the other hand, a large number of workers will find jobs in such establishments. A direct benefit is that these workers will have access to social security benefits of the organized sector.”

In the long run the Yojna is expected to make textile manufacturing units employ more workers and increase textile output which in turn will make Indian textile exports more competitive in the global market. In the current situation, textile units in Bangladesh are on an average employing on a scale of 500 whereas the scale in India ranges up to a maximum of 50. “On this count, things may not change dramatically. However, with sustained inputs and reduction in labor costing Indian MSME units too will adopt a strategy for retention of employees in the off-season period too as more labor reforms are underway from the government,” elaborated a ministry spokesperson.

It may be recalled that the scheme was introduced initially in 2016-17. The scheme is being implemented under the aegis of ministry of labor and employment. The publicity and awareness campaign for this scheme commenced in the previous fiscal year.