New Delhi, Nov. 21: The government today said the textile industry could shed as many as 5 lakh jobs in the next five months.

This estimate of the textile ministry, announced by commerce secretary G.K. Pillai, is the first official admission of the impact of the global financial convulsion on local employment.

However, Planning Commission officials and analysts felt the figure might be inflated. “The rupee is depreciating. Things should start looking better now,” the officials said.

D.K. Nair, secretary-general of the Confederation of Indian Textile Industry, said, “There is a perceptible decline in both the export and domestic sale of textile products in recent months.”

He said around 7 lakh had already lost jobs in the current fiscal and the industry might lay off another 5 lakh, if there was no remedy.

A. Sakthivel, president of the Tirupur Exporters’ Association, said about 30 per cent of the units in the textile hub had reduced shifts and working days.

Export package

The government is working on a package for exporters, according to Pillai.

In the package, to be sent to Prime Minister Manmohan Singh next week, interest rates may be cut and more credit given to exporters.

Though exports had gone down in the last two months, Pillai said, “The worst is yet come.” In October, exports contracted to $12.8 billion against $14.6 billion during the same period last year.

The stimulus package will be for the export sector in general as well as for entities having labour-intensive operations such as gems and jewellery, textiles, leather and marine products.

However, Planning Commission advisers said the textile ministry and the industry had a poor record of funds utilisation.

“The textile sector wants a fresh infusion of Rs 4,500 crore on top of the Rs 2,500 crore allocated to it in the beginning of the year. We doubt the sector will be able to spend the money if we do give it as a stimulus package.”

Sources said the package would also include additional sops on duty drawbacks and incentives to insurance companies.

Inducements may be offered to firms for making a foray into West Asia and Africa, which have been less affected by the global financial crisis.

The government is also working on protecting domestic industry from dumping. “We have initiated anti-dumping investigation in about eight cases and plan to initiate similar investigation in six other cases. We also plan to have some administrative measures to protect domestic industry, which will be disclosed next week,” Pillai said.