Sharp rise in rupee has begun to hurt, with exporters considering lay-offs, which could affect 2.75 lakh jobs, and the government mulling to scale down export target to last year's level of $125 billion from the ambitious $160 billion set in April.

"At the rupee rate of 40 to a dollar, we will just about manage last year's figure....our best bet would be $140 billion," a highly placed official said.

He conceded that slowdown in export may result in loss of employment and "our estimates suggest that it could be in the range of 2.75 lakh by December," he said.

However, if the government announces a liberal package for the exporters, the impact could be reduced, "but job losses is bound to happen," he said.

The commerce ministry is pressing for a package to exporters in terms of higher duty drawbacks and is reconciled to the dollar going below Rs 40. Rupee has appreciated 8.33 per cent against dollar during January-June period.

"The trends show that the rupee will continue to rise," he said.

While export growth in May was 18 per cent in dollar terms, in rupee value it was just about six per cent as realisations went down. Orders till July were contracted before rupee started appreciating.

"Orders have now started receding and the impact would be seen from next month". According to a study by the commerce ministry, the worst hit sectors are labour intensive textile, leather, handicrafts, marine products, engineering, sports goods, toys and agri products.