India's FY09 textile exports seen flat - official

A worker hangs yarn dipped in dye to dry at a textile mill in Tripura in this June 8, 2007 file photo.

MUMBAI (Reuters) - India's textile exports for the year ending March 2009 is expected to be flat compared with the previous year, as a falling rupee offset losses in the first six months, a government official said on Thursday.

The rupee fell about 4 percent since the beginning of 2009, bringing some cheer to exporters battling a global downturn.

"We may see a almost flat (growth) ..around $22-23 billion...exports will be more or less in line with what we had last year," J.N. Singh, joint secretary, ministry of textiles, told Reuters in a telephonic interview.

As per government data, India's total textile exports for the fiscal year ended March 2008 stood at $22 billion.

"There has been a 3 percent overall decline in the US textiles and apparel industry," Singh said.

Production of yarn and fabric, key indicators for the health of the textile sector, has fallen between April to December 2008, due to slowing demand.

Yarn output in April-Dec has fallen about 2.3 percent to 2,930 million kilograms, while fabric production fell about 1.4 percent to 40,478 square meters in the same period, Singh said.

"Certainly we are not in a very happy situation," Singh said.

SUPPORT PRICE

The government may not raise the minimum support price (MSP) of cotton for the year ending September 2010, as prices are already fairly high and on expectations of surplus in domestic market as exports may see a sharp decline this year, Singh said.

India raised MSP, the minimum price to be paid to the farmers for cotton purchases, by up to 40 percent for medium staple cotton in September.

The MSP was already quite high compared to market prices, Singh said. Spot prices of popular Shanker VI variety, which touched record highs of about 28,000 rupees per candy last year was currently at about 21,000 rupees, he said.

Exports of raw cotton, which stood at about 10 million bales in 2007/08 due to higher global demand and fall in U.S. acreage, may drop sharply to about 2 million to 2.5 million bales, he said.

India is expected to produce 29 million bales in the year ending September 2009 in an area of 9.73 million hectares. The output is seen lower by 10 percent compared to last year.

The cotton acreage in the upcoming sowing season, starting in June may remain steady this year due to higher MSP, Singh said.

JOB LOSSES

The slowdown in the textile sector has resulted in production cuts and shutdown of loss making units, causing job losses to the tune of 300,000 to 400,000 between October-December of 2008, or a 0.92 percent decline in overall employment on year, he said.

The job loss data came from a survey conducted by the Ministry of Labour of 3,000 textile firms and included workers in both organised and unorganised sector, Singh said.

"The January figures have been slightly optimistic for the garment sector, unemployment may remain at the same level, or can even improve (in January-March)," he added.

The textile industry employs roughly 33 million people.

(1 bale = 170 kg)