India Faces 500,000 Textile Job Losses in Five Months

Textiles represent 20% of India's industrial production and 8% of GDP

The Indian textile industry, the country's second-largest foreign exchange earner, will lose half a million jobs by April 2009 due to the global financial crisis, a government official warned on Nov. 21. The sector is estimated to employ around 38 million workers and accounts for about 8% of the gross domestic product of Asia's third-largest economy.

Commerce Secretary G.K. PillaiPillai said the sector was facing a severe crunch because of deepening problems in the world economy, but stressed that New Delhi was cobbling together a package for the "distressed export sector."

The Federation of Chambers of Commerce and Industries in a recent study said the sector's growth slipped from 8% in 2005 to 0.8% during April-August this year and warned of massive layoffs in the coming months.

The Confederation of Indian Industries (CII) trade lobby also said India's garment exports too dipped by up to 35% during July-September in the current financial year.

The textile sector accounts for 20% of India's industrial production and more than 30% of the country's export earnings. Pillai said the overall export growth rate was likely to slide to 10% in the financial year ending March 31, 2009. "The target of $200 billion will come down," he said.

Indian exports grew by over 30% in the first half of the financial year but demand has slumped amid the global slowdown. The U.S. and the EU account for 65% of India's total garments exports. "In the previous financial year, garment exports were $9 billion, but this year they will be around $7.5 billion on account of a slump in demand from the U.S. and EU countries," CII Secretary General D. K. Nair said.

Finance Minister P. Chidambaram, meanwhile, urged Indian firms to cut prices to ensure job losses are minimized. "The surest way to ensure that you produce and grow is to cut prices but if someone wants to shut down his factory for three days a week then that is a short-sighted approach," Chidambaram said. "Industry must reward its loyal workers... avoid retrenchments and layoffs," he told the NDTV news channel after the government warning about textiles.

Copyright Agence France-Presse, 2008

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