Shield jobs to get bigger export incentive shield

NEW DELHI: The government may review export-related incentives extended to exporters including tax concessions and duty drawback from the perspective of employment generation. The review exercise, proposed by the labour ministry in its draft national employment policy (NEP), would consider linking export incentives like duty drawback and other tax exemptions given to industry at large to the employment generated by them.

The draft policy, which awaits Cabinet approval, has also proposed that labour-intensive industries like textile, leather, beverages and food products be given special policy support and incentives to help them grow faster and increase exports.

On the issue of allowing FDI in retail trade, the draft suggested that it should be considered only after careful examination of its impact on businesses of small traders and their employee force.

It proposed that a national regulatory mechanism be set up to ensure fairness of competition and sustenance of small traders and vendors, as well as to ensure good conditions of work in the retail stores.

The labour ministry has also raised concern over the inverted duty structure on goods, where the domestic industry ends up paying higher duty for importing raw material, compared to the duty on finished products. Such a structure discourages domestic production and local employment as it is cheaper to import the finished good than intermediate products.

Speaking to ET, labour ministry officials said it was important that concessions given to exporters, SEZ units and the industry be linked to employment generation. The draft NEP suggested that assessment of proposals for investment approval (PIA) should include employment as a criterion, particularly when certain concessions are being given to the project. Also, incentives like tax holidays, tax exemptions and differential duty rates that encourage investment, should calibrate employment generation.

The NEP is being formulated to encourage employment generation in the country. Unemployment rates in India are growing, even as 12.8 million people enter the labour market every year. Labour secretary Sudha Pillai said NEP stems from the need to integrate employment concerns with policy-making.

The labour ministry was obligated to draw a policy on national employment owing to its allegiance to International Labour Organisation. Being one of the first member states in ILO, India needs to comply with the organisation���s conventions to implement national policies on employment.