Mumbai: The appreciation of the rupee vis-a-vis the US dollar, which is holding the export sector to ransom, may render as many as 20 lakh people jobless, commerce minister Kamal Nath has warned.
Replying to a question in the Lok Sabha, he said 20 lakh people may face unemployment if remedial measures were not taken immediately.
He said while one reason for rupee appreciation is the increase in the flow of dollar and global decline in the value of the US currency, it is also making imports cheaper and exports non-competitive for India.
The government, Kamal Nath said, was considering fresh sops for the export sector and a proposal to this regard may be placed before the cabinet soon.
"We are talking to the finance ministry and may announce some steps soon," he said.
During the 12 months ended October 2007, the rupee has appreciated by 15 per cent against the US dollar, affecting many sectors, especially those which are employment generating, Nath said.
While there is has been overall growth in exports, the rate of growth has declined. However, in certain sector like textiles, leather, marine products and handicraft, there is a net decline in exports which has led to job losses, he said.
Textile sector has been the hardest hit, he pointed out. The target for textile exports for the current year has been fixed at $25.06 billion keeping in view the growth that had taken place in this sector after the termination of Multi Fibre Arrangement (MFA).
In fact, with the termination of MFA in December 2004, exports of textiles and clothing had taken a giant leap in 2005-2006. Exports had reached $17.5 billion in 2005-06, up about 25 per cent from the previous financial year.
However, the momentum could not be maintained in 2006-07 although exports of textiles and clothings still managed to reach $18.73 billion thereby registering a growth of about 7 per cent over the financial year 2005-06.
The appreciation of the rupee has not only had an adverse impact on the textile exports but also led to considerable loss of jobs in the textiles sector.
The worst hit apparel exports segments constitutes about 50 per cent of textile exports and 95 per cent of the apparel manufacturers are in the micro, small and medium enterprises sector and operate on slim margins.
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