Considering this, the Confederation of Indian Textile Industry (CITI) have been holding discussions with its members to avert further job cut.
According to D K Nair, secretary general of CITI, the industry had witnessed job cut of around seven lakhs due to business reduction of two per cent this year as compared to last year.
"While the business has dropped by two per cent so far in textile industry, which led to seven lakh workers losing their jobs, by the end of March 2009 we are expecting it to drop further by 1.5 per cent. Considering this, there could further job cut of around five lakhs," said Nair.
"While nothing can be done about the previous job losses, we are in talks with the government for taking certain measures to avert further reduction in manpower," added Nair.
Sometime back, the textile industry body had also demanded continuance of interest subvention on packing credit across the value chain from the Ministry of Textiles.
The industry which contributes around 17 per cent to total exports had been enjoying a reduction by four per cent rate of interest on packing credit. However, with the Reserve Bank of India (RBI) issuing a notice for a premature termination of the interest subvention from September 30, 2008 onwards, instead of the earlier deadline of March 31, 2009, the exporters will have to access credit at market rates.
Textile exporters get a packing credit (which works as their working capital) on the basis of their order book around 180 days before shipment and 90 days after shipment. According to CITI, the packing credit was allowed at a rate of interest lesser by four per cent under the subvention announced by the RBI.
"The credit was used as a working capital to handle shipment till the final payment is made. With the interest rates rising continually, the exporters will now have to pay rate of interest that prevails in the market," said Nair.Global meltdown: Complete coverage