The union textile ministry estimates that between 300,000 and 500,000 people will lose their jobs in this labour-intensive sector by March 31, due to the ongoing global economic downturn.
The government's estimate is well below the projections of industry lobby groups, which put the number at around 1 million.
The textiles and garments industry is the second-largest employer in India after agriculture. It directly employs 35 million people and indirectly provides livelihood to about 88 million people.
"According to a survey carried out between October 2008 and December 2008, which covered 3,000 units, it was found that 0.92 per cent of workers would lose their jobs," said a senior official of the ministry. Based on this survey, the overall industry job loss was extrapolated.
However, the textile industry contradicts this and projects a much higher figure of 1 million people who would be rendered jobless by the end of the current financial year.
This sector has been badly hit by the ongoing global recession, which has resulted in closing of many units. About 50 per cent of the total production of textiles and garments in India is exported, of which 60 per cent is exported to the United States and the European Union countries. But the recession in the West has hit the demand.
Indian exporters of textiles and garments are facing stiff competition from manufacturers in Bangladesh, China, Vietnam and Sri Lanka, which produce goods at much cheaper rates.
"There would be a drop of 3 per cent in overall production in the industry, which would see a job cut of around 10.5 lakh (or 1.05 million)," said DK Nair of the Confederation of Indian Textile Industry. He added that since many units might retain some workforce for new orders, this number would stand at 1 million.
The ministry official, however, disputed this figure, saying that the number of people losing jobs could not cross 500,000 due to the depreciating Indian rupee, which would have a positive fallout on the entire textile industry.
About 5,000 people were rendered jobless due to closure of 12 mills in the organised sector in the September 2008-January 2009 period, when the situation was at its worst. This, according to Nair, is not a correct indicator because the organised sector contributes to just 3 per cent of total textile production.While 97 per cent of the spinning units are in the organised sector, only 3 per cent of the fabric manufacturing industry is in the organised sector. The entire garment industry comes under the unorganised sector.