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 Governments 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 employers contribution in addition
to 8.33% covered under Pradhan Mantri Rozgar Protsahan Yojana for all new employees
enrolling in Employees 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.

Disclaimer
The investment advice or guidance provided by way of recommendations, reports or other ways are solely the personal views of the research
team. Users are advised to use the data for the purpose of information and rely on their own judgment while making investment decision.
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Article Written by
Tanaya Nath