Jan. 6 (Bloomberg) -- Indian exporters may fire as many as 10 million workers, a lobby group said, putting pressure on Prime Minister Manmohan Singh to cut taxes and protect the industry from the global recession.

The estimate by the Federation of Indian Export Organisations represent about 7 percent of those involved in overseas sales and about 20 times the Nov. 21 government estimate for job losses. The exporters don’t have orders beyond this month, A. Sakthivel, the lobby group’s president, told reporters today in New Delhi.

Singh’s Congress Party-led government faces an election contest by May as the economy grows at the slowest pace in six years and a record stock-market rout erodes savings. Singh’s top adviser Montek Singh Ahluwalia on Jan. 2 ruled out further aid for the economy after two stimulus packages in a month.

“While exports have significantly turned adverse, the exporters’ group is coercing the government to address their demands favorably in the current environment,” said Shubhada Rao, an economist with Yes Bank Ltd. in Mumbai. “The number is probably overstated.”

India’s commerce ministry, which in November estimated job losses at 500,000, said in response to the group’s estimate today it’s not clear how many jobs would be lost due to the slowdown.

“Job losses are going to be enormous due to the global slowdown,” said Rajiv Jain, official spokesman at the commerce ministry. “Right now, it’s difficult to say what would be the extent of job losses.”

Shrinking Trade

International trade will shrink in 2009 for the first time in more than 25 years as economic growth slows and commodity prices slide, the World Bank said on Dec. 9. World trade volumes will probably contract next year by 2.1 percent, hampered by exchange rate volatility and flagging import demand.

“There’s really nothing the country can do to avoid a further period of economic pain and job losses over the next few months,” said Robert Prior-Wandesforde, an economist at HSBC Group Plc in Singapore.

Exports from India fell for a second month in November and industrial output contracted for the first time in 15 years in October. Output at factories and utilities also shrank in the past two months, according to a survey by ABN Amro Bank NV.

“The year 2009 is going to be the worst year in history” for exporters, Sakthivel said. India may export $175 billion of goods in the fiscal year ending March 31, missing the government’s target of $200 billion, he said.

‘Restore Health’

The government should provide low-interest loans and allow exporters to halt debt repayments, he said. Tax refunds on import duties and a freeze on income taxes will “restore health to the export sector,” Sakthivel said.

“Fresh orders are drying up due to lower demand and buyers are canceling earlier orders or rescheduling the shipments,” Sakthivel said. “If the present trend continues, there will be approximately 10 million job losses.”

Demand for made-in-Asia goods has slumped amid the deepening global slowdown. China’s exports in November fell 2.2 percent, the first drop in seven years. Singapore’s exports posted the biggest contraction in more than six years in the same month.

To spur growth, India’s government on Jan. 2 unveiled a second stimulus package to inject capital into banks and allow overseas investors to double purchases of debt. On the same day, the central bank cut interest rates for the fourth time in less than three months.

The measures are intended to steer Asia’s third-largest economy through the “worst quarter” of the global slump, Ahluwalia, deputy head of India’s planning commission, told Bloomberg News in an interview on Jan. 2.

Slowing Growth

Growth in the $1.2 trillion economy has slowed for two straight quarters, and the government is forecasting 7 percent growth this fiscal year, the slowest since 2003. Economic growth may slow to 6.2 percent in the year starting April 1, HSBC said.

“The slowdown phase will continue for some months,” said N. R. Bhanumurthy, an economist at the Institute for Economic Growth in New Delhi. “Recent monetary and fiscal policies might ensure that industry does not enter a recessionary phase.”

Weakening exports and domestic demand have forced companies including Tata Motors Ltd., India’s biggest truck maker, and Hyundai Motor Co. to reduce output and workers in India.

Hyundai’s unit, India’s biggest car exporter, will miss its output target this year, the company said on Dec. 29. The company, which is cutting temporary staff in India, expects overseas orders to fall in the first quarter from a year earlier.

To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net.

Last Updated: January 6, 2009 09:58 EST