Ten Million People in the export sector will be out of job by March

Ten million people in the export sector will be out of job by March this year, as Indian goods find fewer buyers in the international market which is battling the worst crisis since 1929.

"There will be 10 million job losses by March," Federation of Indian Export Organisations president A Sakthivel said on Tuesday.

Indian exports, which account for just about 20 per cent of the country's gross domestic product, are a highly labour-intensive activity, employing 150 million people. Those in the handicrafts, textiles, knitwear, leather, and gem and jewellery sectors will be the worst affected.

The country's exports, which posted a robust 30.9 per cent growth rate in the first half of fiscal, contracted by 12.1 per cent in October, for the first time in the last five years. The negative trend continued in November, when exports fell to $11.5 billion from $12.7 billion. The data for December are yet to be released.

"I can safely say that negative growth trends will continue in December and in the next couple of months. . . I hope we will end the fiscal with exports of about $175-180 billion," Sakthivel said.

FIEO on Monday had said there was no 'serious consideration' for exporters in the measures announced by the government last week.

The target for the current fiscal is $200 billion while exports totalled about $160 billion in 2007-08.

Europe and North America, which account for 37 per cent of India's merchandise exports, are reeling under recession and slowdown.

The FIEO chief said he did not see positive trends before the fourth quarter of the calendar 2009, 'though a complete U-turn may take a little longer'.

Of the 10 million job losses feared, the maximum brunt will be borne by textile workers. As many as one million workers from textile units will be laid off in the next few months.

About 7.5 lakh (750,000) workers will be impacted in gems and jewellery units and 1.5 lakh (150,000) employed in export-oriented leather units will face the axe.

Sakthivel said exporters have orders only till about the month end. "Generally we have orders for six months," he added.

Expressing disappointment at the stimulus package announced by the government, he said, "We find no serious consideration (of exporters' demands) except the extension of the DEPB scheme".

He demanded additional two per cent interest subsidy over and above what has been given in the package. While the government will bear the interest subsidy, exporters have to pay a minimum of 7 per cent interest.

"Export credit is available to our South Asian competitors at less than 5 per cent," he said.

Exporters have been asking for the abolition of income tax on exporters' profit, a moratorium on term loans, a release of benefits in a time-bound manner, a delinking of export benefits from realisation, and a settlement of losses in derivatives.

He also said that India's overseas sales during 2009-10 may stand at around $160 billion.

"2009 is going to be the worst year for exporters. If the government doesn't consider our demands, the $160 billion export figure for 2009-10 would be difficult to achieve," he added.

The FIEO had earlier expressed its disappointment with second stimulus package announced by the government. FIEO had requested the government to increase 3 per cent in Drawback and DEPB and additional 2 per cent interest subvention.

In addition, the FIEO had demanded income tax holiday for five years and two years' moratorium for terms loan.