GROWTH PROSPECTS OF THRUST AREAS OF INDIAN

EXPORT

Course: - MBA – IB
Batch: - 2009 – 2011
Section: - C

Submitted by: -

Mohit Bansal A1802009221

Sandeep Saxena A1802009254
Swati Sharma A1802009282

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S.no. CONTENTS Page no.

1 Overview 3

2 Production Centres 15

3 Domestic Industry 24

4 Trends in Export 26

5 Major Export Destinations 28

7 Provisions in India’s Foreign Trade Policy 37

8 Problems / Challenges faced by the exporter 41

9 Quality Standards 42

Need of the Moment : IPRs & Branding for Indian

Handicrafts 44
10

SWOT Analysis of the Indian handicrafts industry

11 46

12 Bibliography 47

13 Handbook Of Procedures: Tables 48

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 OVERVIEW

India is one of the important suppliers of handicrafts to the world market.

The Indian handicrafts industry is highly labour intensive cottage based
industry and decentralized, being spread all over the country in rural and
urban areas. Numerous artisans are engaged in crafts work on part-time
basis. The industry provides employment to over six million artisans
(including those in carpet trade), which include a large number of women
and people belonging to the weaker sections of the society.In addition to the
high potential for employment, the sector is economically important from the
point of low capital investment, high ratio of value addition, and high
potential for export and foreign exchange earnings for the country. The
export earnings from Indian handicrafts industry for the period 1998-99
amounted to US$ 1.2 billion.

Although exports of handicrafts appear to be sizeable, India’s share in world

imports is miniscule. It is a sector that is still not completely explored from
the point of view of hidden potential areas. India, a country with 26 states
and 18 languages and more than 1500 dialects offers an enormous range of
handicrafts from each of the states. Major centres in Uttar Pradesh are
Moradabad also known as the "Peetalnagari" (City of Brass), Saharanpur
for its wooden articles, Ferozabad for Glass. The North Western state of
Rajasthan has to offer the famous Jaipuri quilts, Bagru and Sanganer
printed textiles and wooden and wrought iron furniture from Jodhpur.
The coastal state of Gujarat comes with embroidered articles from Kutch.
Narsapur in Andhra Pradesh is famous for its Lace and Lace goods. But
this is only a small part of the total product range. India offers much more.

Handicrafts are classified into two categories:

1. Articles of everyday use

2. Decorative items

The craftsmen use different media to express their originality. The diversity
of the handicrafts is expressed on textiles, metals – precious and semi-
precious, wood, precious and semi-precious stones, ceramic and glass.

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Textile based handicrafts:

Hand printed textiles including block and screen printing, batik, kalamkari
(hand printing by pen) and bandhani (tie and die) are used in products
ranging from bed-covers to sheets, dress material to upholstery and
tapestry. The famous embroidered articles of silk and cotton, often
embellished with mirrors, shells, beads, and metallic pieces are also found in
India. Embroidery is done too on leather, felt and velvet etc. This segment
of the industry accounts for almost half a million strong employment in
addition to a large number of designers, block makers, weavers and packers
involved in the trade.

Clay, Metal and Jewellery:

Brass, copper, bronze, bell metal are used for a variety of wares and in a
variety of finishes. Scintillating ornaments are available in a wide range of
patterns, styles and compositions. Made from precious metals, base metals,
precious and semi-precious stones; these ornaments have traditional as well
as modern styles.

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Woodwork:

Wooden articles in India range from the ornately carved to the absolutely
simple. One can find toys, furniture, decorative articles, etc. bearing the art
and individuality of the craftsman. India is known particularly for its
lacquered wood articles.

Stone Craft:

The intricately carved stoneware made of marble, alabaster or soapstone,

etc., inlaid with semiprecious stones carry on the heritage of Indian stone
crafts.

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Glass and Ceramic:

Glass and ceramic products are a fast upcoming segment in the handicrafts
from India. The age-old production process of mouth-blowing the glass
instills a nostalgic feeling. The varied shapes of ceramic and glass in a
number of colours, would appeal to Western aesthetics while retaining the
Indian touch.

Craft concentration Areas:

A wide range of handicrafts are produced all over Indian artmetalware /

EPNS ware, wood carvings and other wooden artwares, imitation jewellery,

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handprinted textiles, shawls as artwares, embroidered goods, lace and lace
goods, toys, dolls, crafts made of leather, lacquerware, marble crafts etc

Selected crafts pockets for achieving export goal:

Although each crafts pockets has its particular problems, a few selected craft
pockets are identified based on their past performance for immediate
remedial attention to stimulate a quantum in exports of handicrafts in the
coming years.

Moradabad(UP) For Artmetalwares and imitation jewellery

Saharanpur (UP) For Wooden handicrafts & Wrought iron

handicrafts

Jodhpur (Raj.) For Wooden, Wrought Iron and Sea Shell

handicrafts

Narsapur (A.P.) For Lace and Lace goods

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In the changing world scenario, craft products exported to various countries
form a part of lifestyle products in international market. The impact is due
to the changing consumer taste and trends. In view of this it is high time
that the Indian handicraft industry went into the details of changing designs,
patterns, product development, requisite change in production facilities for a
variety of materials, production techniques, related expertise to achieve a
leadership position in the fast growing competitiveness with other countries.

The 6 million craft persons who are the backbone of Indian Handicraft
Industry as provided with inherent skill, technique, traditional craftsmanship
but that is quite sufficient for primary platform. However, in changing world
market these craft persons need an institutional support, at their places i.e.
craft pockets for value addition and for the edge with other competitors like
China, Korea, Thailand etc.

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HANDICRAFTS PRODUCTS AND MARKET SEGMENTS

In this section, textile products, ceramics and pottery, and mosaic products
will be analyzed in terms of major products sold and segmentation of
markets based on feedback from surveying major producers of these three
product categories. Market segments in the handicraft industry tend to vary
with individual products.

The surveys of Jordanian handicraft producers revealed that in general there

are two main target markets for the producers which are the tourists market
and the second market is the local market that includes individual buyers
and corporate and government buyers.

1) Textile Products

The most sold embroidery product is small gift items (coasters, tea cozy
sets, soft toys, make-up bags, etc) which are predominantly sold to tourists
through duty free shops, gift shops at hotels, producers own showrooms,
and retailer’s outlets at tourist’s sites. Other embroidery items that are
popular with tourists are cushion covers, runners, shawls and Table cloths
amongst others.

Examples of the retail price range for small gift items sold by a successful
private business
is 22$ - 25$ for a tea cozy set. Therefore, gift items that are under 30 USD$
are the most sold embroidery product and tourists is the largest buyer
segment.
Besides tourists, embroidery products are also sold to local buyers as
corporate or governmental gifts (embroidered wooden boxes), to hotels
(tablecloths and wall hangings) and to individual local buyers. Export
markets for embroidery products make up 20% of production and sales are
concentrated in the Gulf region and Saudi Arabia.
As for weaving products, the main products are rugs, runners, wall hangings
and pillows. The largest buyers in descending order are governmental gifts,
local buyers, tourists and corporate gifts.

2) Ceramics and Pottery Products

There are two main buyer segments for ceramics and pottery products,
which are tourists and local buyers. The largest buyer segment is the tourist
market, and the most sold ceramics and pottery products for tourists are

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small gift items and ornaments. Products are sold through retail outlets at
tourists sites.
Ceramics that are targeted at the local market are ceramic art ware and the
most sold products in descending order are (salad bowls, nut bowls,
amphorae, plates and pencil holders). In addition ceramics and pottery are
sold as corporate and government gift items.
These products are sold either through the producers own showrooms or
through retailers. Around 70% of ceramics are sold locally and 30% is
exported. Export markets for ceramic and pottery products are concentrated
in the Gulf region and Saudi Arabia.

3) Mosaic Products

According to the retailers, there is a high demand for mosaic products, which
is not being met by local production. In fact, it was mentioned by one of the
large retailers that 80-90% of mosaic sold in Jordan is made in Syria. The
reason for low production in mosaic is because it is very labor intensive and
Jordan lacks the labor pool that will ensure
sustainability of the business for local producers.
The most sold mosaic products is small gift items for tourists (retail price
from 2-45 JDs), floor tiles (500 JDs per square meter), wall to wall artwork
500 JDs per square meter), pictures (45-1000 JDs) and furniture (350-1500
JDs). The largest buyer segments in descending order are tourists, local
buyers, hotels, export orders, corporate and government gift items. Most
mosaics are sold in the local market and around 30% is sold to international
markets including the U.S., France, the U.K. and the
Gulf region.

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EXPORT OF HANDICRAFT

The exports of Handicrafts have shown an increase of Rs. 535.82 crores,

from Rs. 8183.12 to Rs. 8718.94 crores, an increase of 6.55% in rupees
term. In dollar terms, the exports have shown the increase of US $ 32.35
millions i.e. the exports increased by 1.80 % over the similar period in 2008-
2009. .

During the period, the exports of Art Metalware, Wood wares, Hand printed
Textiles & Scarves, Embroidered & Crocheted goods, Shawls as artwares,
Zari & Zari goods, Imitation Jewellery and Misc. Handicrafts showed a
increasing trend of 4.88%, 15.17%, 5.06%, 6.12%, 10.64%, 5.61%,
18.03% and 4.74% in rupees terms respectively and 0.21%, 10.01%,
0.38%, 1.39%, 5.73%, 0.91%, 12.76% and 0.07% in us$ term respectively.
Overall an increase in the rupee term was 6.55% and in the US $ term was
1.80%.

Membership of Council Membership of the Council rose from 35 in year

1985-86 to 6207 in 2009-10.

Indian handicrafts and gifts fair One of the few fairs in world where entry
is only open for the overseas buyers.

India Expo Center & Mart:- It is a mega structure that is truly

international and provide both the buyers and sellers with an excellent
opportunity for transacting business. The facilities are spread in a total
covered area of 2,35,000 sq. mtrs., one can experience a first class business
ambiance with conference halls, business centers, buyers lounge, multi-
cuisine restaurants, bank outlets, 4 gigantic exhibition halls, extensive
parking facilities, logistic centers, warehouse facilities etc. at this state-of-
the-art venue.
Common Facility Center (CFC):- In order to upgrade the photo and
picture framing techniques, the Council with the Assistance of O/o
DC(Handicrafts) and Department of Commerce, Ministry of Commerce &
Industry has set up the CFC at Saharanpur namely “ National Center for
Picture and Photo Framing Technology (NCPPFT)”. In addition to this another
CFC has als o been set up at Jodhpur for seasoning of woods. The machines
for the CFCs have been imported from Italy, Germany and Taiwan and are
installed at the Centers and also the consultancy is being provided by the
reputed international designers at these centers.

National Center for Design & Product Development (NCDPD):- In

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order to upgrade the dynamic designs and product development and to help
the Indian handicrafts exporters and artisans with the development of latest
products and designs in consonance with the changing needs of the
international trade, National Center for Design and Product Development has
been set up by the Council in association with the O/o DC (Handicrafts).

Technology Upgradation Center (TUC):- In order to provide complete

face lift to the Saharanpur Wood Carving Industry. The Council has set up
Technology Upgradation Center at Saharanpur providing the design studio,
seasoning plants, carpentry school and training & marketing facilities for
exporters.

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 PRODUCTION CENTRES

The items, which account for a major share of export turnover, include - art
metal ware, wood ware, hand-printed textiles, hand-knotted and
embroidered textiles, leather goods, stoneware, paintings and sculpture,
jewelry and antique & collectibles.

With 26 states, 18 languages and more than 1500 dialects, the country
offers an enormous range of handicrafts from different states and regions.
Major production centers are, in Uttar Pradesh - Moradabad also known as
the "Peetalnagari" (City of Brass), Saharanpur for its wooden articles,
Ferozabad for Glass. The North-Western state of Rajasthan is known for its
Jaipuri quilts, Bagru and Sanganer printed textiles and wooden and wrought
iron furniture. The coastal state of Gujarat offers famous embroidered
articles from Kutch. Narsapur in Andhra Pradesh is known for its Lace and
Lace goods. But all this is only a small portion of total product range. The
country offers much more.

Art Concentration Areas

A comprehensive range of handicrafts and gifts products is made all over

India. Although it is quite difficult to limit a particular place for a specific
craft, the following places are well known for their unique crafts.

Moradabad, Sambhal, Aligarh, Jodhpur, Jaipur, Delhi,

Art Metalware Rewari, Thanjavur, Madras, Mandap, Beedar, Kerala,
Jagadhari and Jaselmer

Saharanpur, Nagina, Hoshiarpor, Srinagar, Amritsar,

Wooden Artwares Jaipur, Jodhpur, Jagdalpur, Bangalore, Mysore,
Chennapatna, Madras, Kerala & Behrampur (WB)

Hand printed
Amroha, Jodhpur, Jaipur, Farrukhabad, Sagru &
Textiles and
Sanganer
Scarves

Embroidered Kutch (Gujarat), Jaisalmer, Baroda, Lucknow, Jodhpur,

Goods Agra, Amritsar, Kullu, Dharmshala / Chamba & Srinagar

Marble & Stone

Agra, Madras, Baster and Jodhpur
Craft

Terracotta Agra, Madras, Baster, and Jodhpur

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Zari & Zari Goods Rajasthan, Madras and Baster

Papier Machine
Kashmir and Jaipur
Craft

Artistic Leather
lndore, Kolhapur and Shanti Niketan (WB)
Goods

Imitation Jewelry Delhi, Moradabad, Sambhal, Jaipur and Kohima (Tribal)

Coastal Crafts of India

All along the vast coastline of India flourish crafts that are as beautiful, as
variegated as the changing colours of the sea waves. While some of these
handicrafts have been designed fairly recently by creative craftsmen, many
of the handicrafts found in unexpected abundance along the coast of India
are as ancient as the seas. Again, while some of the handicrafts are created
from material provided by the sea (such as conchshells), a many of the
handicrafts are not directly related to the sea.

The state of West Bengal—the northernmost of the states that fringe the Bay
of Bengal—has a heritage of crafts that is based on the resources of the sea
and on land locked traditions. In Calcutta and Midnapore, sankharis or
conchshell workers practice their hereditary, age-old craft. With an expertise
honed to near perfection by long year of experience, they slice glistening
conchshells with simple hand tolls and fashion bangles, bracelets and a
range of ornaments. Ritualistically, conchshell bangles, bracelets and a
range of ornaments. Ritualistically, conchshell bangles, once worn, are to
meant to be discarded by Bengali women during the lifetime or their
husbands. Along with shell articles is produced mother-of-pearl cutlery such
as spoons, forks, knives, small plates, and jewellery.

Better known than its shell products is the high quality leather work of
Calcutta. Originating in relatively recent times at Santiniketan—a name
synonymous with poet laureate Rabindranath Tagore—the handmade leather
goods display a variety of pleasing floral, geometric and figurative motifs.
Sometimes, the designs are filled with colour. The tooled leather patterns
and batik work in leather are strikingly different from the general run of
leather crafts. In addition to handbags, bags, suitcases, wallets, and similar
items, there are cushion and moorah (small handicrafted stool) covers as
well.

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Brass and bell metal craftsman can also be found working in Calcutta, while
around and near Calcutta, a number of crafts have carved a niche for
themselves. At Howrah can be seen craftsmen busy making garlands, dolls,
images of gods and goddesses, decorative fans and other forms out of
sholapith. The raw material is obtained from the porous roots and stems of
an aquatic plant. The extracted bark looks very much like ivory in colour and
texture, and is ideal for carving into a wide spectrum of products.

Hooghly specializes in folk toys, chikan embroidery, cane and bamboo

furniture and bric-a-brac, along with jute articles. Midnapore produces hand-
woven mats, and also preserves one of the oldest crafts in the state—Dhokra
metal casting through the cire perdue (lost wax) process. Animals and birds,
images of a pantheon of gods and goddesses are created with deceptive
ease.

Southward from West Bengal, down the eastern coastline, lies the state of
Orissa. Known for its golden beaches, Orissa has for centuries been home for
craftsmen and artisans skilled in a number of handicrafted folk and art
forms.

In the temple town of Puri reside craftsmen who appear to breathe life into
inanimate objects and transform them into appealing, vibrant creations.
There are the stone carvers at Pathurasahi who, working on sandstone or
soapstone with classical techniques handed down from generation to
generation, chisel an array of exquisitely carved stoneware—statues of gods
and goddesses and utility items to suit the needs of modern patrons of their
craft.

Similarly, the brass icons of Puri still retain pride of place on the shopping
lists of discerning buyers in Puri.

At Khandapara, and elsewhere in Puri, live woodcarvers long famed for their
skill in making wood masks, toys—generally with limbs that are detachable—
and other decorative items in a style distinctively their own. Then there are
the chitrakars (artists) who specialize in making patachitras—the renowned
cloth folk paintings of Orissa which enshrine and reflect the rich socio-
religious history of the region.

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Applique work in rich hues of traditional red, black, white and yellow mixed
with a more recently introduced green embellishes beach umbrellas in Puri,
sarees, cholis (short, tight blouses), bed linen, handbags…

The sholapith craft is also practised vigourously at Puri, with the craftsmen
turning out decorative hangings, images of the gods, garlands, flowers and a
host of other articles. Then there are craftsmen who make papier mache
masks which are in great demand both because of their visual appeal and
the quality of workmanship.

South of Orissa one enters the state of Andhra Pradesh which has a long,
highly refined tradition of coastal crafts. The craft of kalamkari—resist
printed, pen style friezes on cloth—was practiced at Masulipatnam, it is
recorded, even before the Christian era. Faithfully following time honoured
traditions, the kalamkari craftsmen drawn stories from mythology and from
the great epics—the Ramayana and the Mahabharata—outline them with
gold borders and print them on cloth with local vegetable dyes which yield
shades of blue, ochre and a soft rose.

In addition to the rare art of kalamkari, Masulipatnam is the centre for the
prized work of gold covering. Like kalamkari, the gold covering process is an
intricate one. Copper, silver and brass are formed into an alloy. Gold is then
beaten and drawn into fine wires and foils and superimposed on the alloy
ornaments such as bangles and necklaces.

From Andhra Pradesh, one moves down the coast to Tamil Nadu—a state
that has a rich tapestry of crafts that are hoary with age and yet remain as
arresting as they were recorded to be in centuries gone by—and to the tiny
Union Territory of Pondicherry.

Amongst other crafts, it is beautifully crafted dolls and toys made from
terracotta, papier mache and plaster of paris that make the union territory of
Pondicherry almost a byword in the south, for the dolls made in
Pondicherry have become famous in surrounding Tamil Nadu, for
instance, as Puducheri Bommai (dolls from Pondicherry).

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Once ruled by Frenchmen, Pondicherry has a surprising number of striking
crafts in so small a geographical area. The oldest craft in Pondicherry—that
of bronze casting—dates to the 8th century AD. Puja lamps made from five
metals and known as kamatchi villakku are prized items of prayer with a
large number of families in South India. Then there is handloom cloth in
traditional designs, hand-woven carpets, hand-woven woollen pile carpets,
handprinted textiles (both kalamkari and batik), cane furniture, handmade
paper and handrolled incense sticks from the Sri Aurobindo Society.

Chennai, the capital of Tamil Nadu is a multi-craft city—a centre for cane
weaving, hand printed textiles, hand embroidered textiles, horn work,
jewellery, toys, musical instruments, sea shell products.

Mahabalipuram is known for its stone carving, executed by master craftsmen

who craft idols and statues with the classical techniques laid down in the
age-old silpashastras. The craftsmen at Tambaram and Nachiarkol excel in
moulding metalware. Bronze and copper icons are made through the cire
perdue (lost wax) process. Ash trays, bowls, utensils and other items are
made from copper, bell metal, brass and bronze.

At Kanyakumari, women dye palm leaves, weave them into patterns,

occasionally adding aluminium foil to enhance the effect, and make shopping
bags, folding fans, trays, even suitcases. Some craftsmen at Kanyakumari
make dolls and toys.

From Kanyakumari, one rounds the tip of India, through the Indian Ocean
and into the Arabian Sea which runs along the west coast of India. Lush,
green Kerala is the southernmost state on the western coast. Like other
coastal states, the history of Kerala’s handicrafts spans a whole phalanx of
eventful centuries. And as in most places, its handicrafts are fashioned from
material that is locally available and motifs and designs derived from a
combination of religion, history, and natural surroundings.

So it is that in Kerala, once known for its large herds of elephants, ivory
carving is an age old craft. Today, there is a justifiable clamp down on ivory
production and an appreciable reduction in the quantity of ivory available for
carving. Within this setting, Trivandrum is a major centre for ivory carving.
There are ivory rosaries, mythological figures in ivory, figures of Buddha,
figures of Christ, book marks, cigarette holders, pen stands and much else –
a truly amazing collection of ivory carvings. A much sought after speciality of

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the ivory carvers of Kerala is 100 or more teeny weeny ivory elephants
placed in an incredibly small seed shell which has a diameter of only 0.5
centimeters.

Like Cochin, Ernakulam and Trichur, Trivandrum too has a reputation for
wood carving. The craftsmen use sweet smelling sandal wood, cedarwood
and rosewood to make coffee tables, dishes, birds, animals, figures in local
costumes, Kathakali dancers. The sculptural and relief work in wood and the
wood inlay work is illustrative of superb craftsmanship.

Up north from Kerala lies the state of Karnataka. Here in the coastal area
of Karnataka, wood carving is one of the oldest crafts which employs a
variety of motifs to create trays, paper-weights, fans, perforated
lampshades. Honawar and Kumta, where the craftsmen focus on carving the
images of gods and goddesses, are prominent centres of wood carving.
Mangalore is noted for its jewellery, particularly its bangles set with pearls
and its pendants. Together, Mangalore and Udipi produce meticulously
crafted items of brass and copper—lamp shades, furniture, door handles. At
Coorg, craftsmen and women paint toys in bright colours. The women of
Coorg also produce hand embroidered textiles.

Northwards, in the state of Maharashtra, most of the crafts are

concentrated in Mumbai.The painted black pottery and the hand painted
glazed tiles made at Dharavi acquired popularity within a short time. The
cloth dolls, the cushion covers with mirror work, the sisal shopping bags,
mats and other items made from sisal and fibre, articles made from cane
and bamboo are amongst the crafts practised in Bombay.
The traditional craft of Maharashtra—copperware—has its base at Thana
where craftsman produce trays, ashtrays, perforated chandeliers… At Miraj
are produced musical string instruments—the sarangi, the sitar, tampura,
dilruba…

Dadra and Nagar Haveli are tiny Union territories, as are Daman and
Diu. The chief crafts at Dadra and Nagar Haveli are the production of leather
slippers, and the weaving of bamboo mats and baskets. Articles made from
the greenish gold torpe grass are extraordinarily beautiful. Mat weaving is
the dominant craft in Daman, while Diu is known for its tortoise shell and
ivory carving.

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Gujarat, the northernmost state on the west coast of India has an eloquent,
rolific tradition of stylized crafts.Mirror work and embroidery in a variety of

stitches and with different textured threads and motifs thrives as a highly
evolved craft in Bhavnagar and Jamnagar. Silver ornaments, silver flower
vases, plates, silver utensils, enameled articles for those who cannot afford
silver, ivory work, and bandhini—the tie and dye process of resist printing—
are practiced with fervour in Jamnagar.

Large, decorative chests on wheels made from teak wood and tin plates and
known as pataras are made at Bhavnagar and Mahuva. Now regarded as a
collectors item, pataras are now used as bangle boxes, trinket boxes,
makeup boxes, paper storage boxes and so on. Mahuva, along with
Jamnagar, has a tradition of producting toys and bangles as well. Articles
carved out of wood and lacquer work on wood are other crafts practiced at
Mahuva.

Probander is renowned for its Patola weaves. Red, green, yellow, black and
white are the traditional colours used in Patola fabrics. A tie and dye process
is used to ensure identical patterns—geometric designs, flowers, birds—on
both sides of the woven cloth. Preparing a Patola fabric is a long, painstaking
process which is why they are expensive. Patola sarees hand-woven with silk
threads and patterned in the weave—generally with birds and animals—can
cost several thousand rupees. Besides Porbander, a few craftsmen also live
and practice their Patola craft in Patan.

But it is Surat with a tradition of multiple crafts that emerges as the

choicest craft centre on the Gujarat coast. Surat is perhaps the most
important zari manufacturing centre in India. Fine gold and silver threads
used in zari work are made in hundreds of workshops, big and small, in
Surat, as are other items used in the lustrous zari work—kinari, salma, stars
and spangles.

The ivory inlaid boxes of Surat are in demand throughout the year. Plates of
sandalwood are engraved and gummed onto teakwood boxes. Small strips of
ivory are also arranged in patterns and affixed to the teak wood boxes. The
number of ivory inlay craftsmen has dwindled over the years and today less
than a handful still devote themselves to the craft.
Both at Surat and Mahuva, there flourishes a tradition of wood carving,
striking for its consummate workmanship. Table lamps, side tables, animals
are crafted by communities known as Mewara mistris.

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Sadeli or marquetry work is yet another speciality at Surat. Long, thin strips
of wood, tin or ivory are cut and pasted in patterns on boxes and caskets to
create appliquéd goods. Surat also has a rich tradition of silver work.
The Gulf of Cambay has, since ancient times, earned fame for its
exceptionally beautiful hand crafted articles and ornaments of agate, a semi-
precious stone. Besides agate necklaces and other ornaments, there are
agate bowls, trays, tiny stands and other items.

And so, without a break—geographically or traditionally—the vast coastline

of India reveals the remarkable continuity and versatility of dedicated
craftsmen in creating an assortment of vivid crafts and folk idioms that
appeal to a wide cross section of people. Works of art, the crafts of coastal
India reach out to even the most fastidious of buyers and patrons.

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 DOMESTIC INDUSTRY

The handicraft industry stands at "100 billion worldwide and India has 1.2%
of this market. This year the major buyers of Indian handicrafts were US,
Canada, the European and the West Asian countries among which the United
States rule largest import market for Indian handicrafts. The handicrafts
industry in India is spread all over the country employing approximately over
5 million artisans and around 67,000 exporters tapping this market. The
handicraft and handloom sector is a major source of rural employment and
earns substantial foreign exchange.

The Indian handicraft sector this year has shown an annual average growth
rate of 8.5%. Handicrafts, over the last few years have transformed their
utility from mere shelf decorative to daily useable category. It is thus the
primary need of any seller to constantly update, develop & add to his
product profile. As one says that variety is the spice of life, the handicraft
market has really changed over the years and one cannot imagine even
surviving in the market with the same old products. Major items of export
include art like metalware, woodware, handprinted textiles and leather,
wood and cane wares, embroidered and crocheted goods, shawls as artware,
zari goods, laces, and fashion jewelry. Traditional textiles are as popular
abroad as they are within the country.

The major export items include hand-knotted carpets, art metalware, hand-
printed textiles. The enchanting metalware industry Metal is part of the
Indian traditions and availability of different metals and its vulnerable nature
has made it the base for a variety of decorative techniques such as inlay,
metal casting, carving, applique, etc. The scope of art metal is immense.
Some it's specialty are the 'Urli', bell-metal vessel in Kerala, metal based
lamps which are part of the Indian traditions and rituals, metalwork with
coloured enameling and intricate engravings in niello in U.P. Delhi too is an
important centre for art metalwork, metal engravings in on walking sticks,
nutcrackers, cutlery, knives etc in Kashmir. These all are exported as well as
sold in the local markets.

But the constant drawback of this industry is the change in consumer's

demand in favor of stainless steel, plastic, ceramic goods and crockery, also
getting loans from banks remains complicated. To address this problem,
Grameen Bank and other commercial banks have initiated programmes to
improve the difficulties faced by the manufacturers and exporters. Also some
individual states have their own remedial measures and is getting some
financial help. For now this sector needs attention and Indian government is
trying it' best to boost this industry in the global market. Fascinating
Woodcraft Sector Woodcraft industry in India is an export oriented industry

24
and major part of its production is being exported from India. The products
made of the wood locally available are limited to human and animal figures,
fruit bowls, household items, boxes, dragon and other masks, flower vases
and few other decorative items. Different types of wood are used in different
places, for carvings, depending on the local availability, which includes
sesame wood, rose wood, and sandalwood and walnut wood. Besides
carvings, woodwork inlaid with ivory or metal, lacquered woodenwares and
other artistic wood wares are produced in many states. The woodcraft
industry in India is scattered throughout the country with greater
concentration in states like UP (Saharanpur), Jammu & Kashmir (Srinagar),
Karnataka, Kerala and Tamil Nadu. These products have a great market in
the foreign countries and are in great demand over there. The Indian
government also has taken active part to boost this industry and
Government's propaganda of the woodcraft has found a great market for
Indian woodcrafts in the west.

Indian Aroma industry These small little sticks have become very popularly
in the market. Their fragrance is said to lure the world. The sticks come in
variety of fragrances and are made from mixture natural ingredients like
extract of rose and other flowers, sandalwood, other fruity fragrance, spicy
fragrance etc. Incense is said to purify the atmosphere. It is used in many
places of worship, religious functions, festive occasions, weddings etc for
various purposes. Despite its wide usage and popularity, a significant part of
the Indian incense industry is still cottage-oriented. Most of the sticks are
handmade and are mostly carried out by Small Scale Industries. It serves as
a mode of employment in the rural sector. If we have to look at incense stick
or Agarbatti exports seriously, we have to understand international buyer's
needs, what he requires and what not. The size of the incense stick industry
in India is about Rs.1000 crores a year but it is a very price sensitive
segment and hence competition is tough.

Major competitor of India is Japan with ruling more than 50% of the Incense
Industry. India has over 3800 production units and is said to generate
approximately US " 300 million from domestic and export markets. Quality is
the primary importance one needs to follow. Also packaging of this material
is another crucial aspect one needs to concentrate on. Further the right kind
of marketing approach can win you many promising customers thus
flourishing the Indian incense market further at global level. The count of
Indian handicraft product remains infinite and the industry have withstood
competition from machines over the years. Overall the Indian culture is rich
in hand crafted goods but repetition is it's only enemy which cannot quench
the need of this so fast changing market. The manufacturers and exporters
have to be constantly be on their toes and come out with new innovative
ideas that work in the export market.

25
 TRENDS IN EXPORTS

The Indian Handicrafts exporters have finally something to cheer about. The
export figures for handicrafts in August this year have shown a rise of 22
percent to USD 369 million as compared to USD 303 million in August last
year. The rise is attributed to Christmas orders from US and European
markets.

The US and EU together account for 70 per cent of the country's handicraft
exports and with Christmas and New Year approaching, Indian Handicrafts
exporters will see more profits and export orders for their products in the
days to come.

Indian handicrafts exporters have already generated half the target of

$2,200 million during the first two quarters of this financial year. It marks
13.6 per cent growth when compared to handicraft export revenues of Rs
8,718.94 crore in the year 2009-10.

According to the provisional data available the exports of Handicrafts have

shown an increase of 21.71% in dollar terms, during April-August 2010-
2011, over the similar period in 2009-2010. The exports of art metal wares,
wood wares, hand printed textiles & scarves, embroidered goods, zari & zari
goods, imitation jewelry and misc. handicrafts have also shown an increasing
trend.

The Handicrafts sector was hit hard by global recession; there was 30
percent decline in handicraft export orders for India in the last three years.
The sector turned positive in September 2009, registering a growth of over
165 percent. Indian Handicrafts exporters are now hopeful that the positive
trend will continue in the coming months also.

Moradabad, Saharanpur, Jaipur and Jodhpur are the major handicraft hubs
in India, catering to global markets. The sector employs about 1 million
people.

Handlooms and Handicrafts Sector craved for growth since quite a few
years, which has now actually turned prolific. No doubt, India has an edge
against its competitors like China, Philippines, Thailand, Taiwan and Korea
who generally produce machine-made products. Indian handmade products
have a niche market all over the world creating a distinct impact through
exclusive designs, workmanship, finesse, colors and raw material etc. The
sector shows a not so significant growth in the 2009-10 fiscal but grows
substantially in the first half of the 2010-11 fiscal. Keeping in view the trend,
the sector is expected to show phenomenal results by the end of 2011.

26
27
Going along the trend shown in the markets we can very well see in the
under given representation that the handicrafts sector after touching the
Rs.17000 cr. mark in the 2006-07 fiscal started to decline and reached the
much lower Rs.8000 cr. mark in 2008-09 fiscal due to the effect of
recession. From 2009 latter half, it started to grow and the current scenario
indicates to witness the Rs.10000 cr. mark by the end of 2010 (represented
in Blue). India is not only benefited from its major markets in US and Europe
but is also heading towards newer avenues like in Latin America.

After 11 months of retrenchment since October 2008, export from the

handicraft sector turned optimistic in September 2009, registering a growth
of over 160 per cent compared to September 2008. The US and EU together
account for 70 per cent of the country's handicraft exports. The Secretary of
Ministry of Textiles Smt. Rita Menon expressed that the importers of USA,
Europe and Japan now wants to have various social and environmental
compliances to be made by exporters (producers) from India. The exporters
now need to have the basic consciousness and so the norms are being
implied by the concerned National and International Authorities. Since the
measures are taken in view to keep up with the health and hygiene
standards, to produce safe and environment friendly products, and to
prohibit usage of perilous and noxious materials in their manufacturing. She
insisted to comply with the standards so as to meet the needs of the buyers
in qualitative ways, not just focusing on the quantity. The other major
reason is to make smooth and hindrance-free exports in future.

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 MAJOR EXPORTING DESTINATIONS

The Major buyers for Handicrafts (other than carpets) are as under:

Art Metal wares: U.S.A., Germany, U.K.

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Wood Wares: U.S.A., U.K.

30
Hand Printed & Textiles & Scarves: U.S.A., U.K. , Germany & Canada

31
Embroidered & Crocheted Goods: U.S.A., Saudi Arabia, U.K., Germany

32
Shawls as Art wares: Saudi Arabia, U.S.A. Japan & U.K

33
Zari &Zari Goods: USA, UK, Germany, France

34
Imitation Jewelry: USA, UK, Italy, Germany

35
36
 PROVISIONS IN FOREIGN TRADE POLICY

The FTP has identified certain thrust sectors having prospects for export
expansion and potential for employment generation. These thrust sectors
include: (i) Agriculture; (ii) Handlooms & Handicrafts; (iii) Gems & Jewellery;
and (iv) Leather & Footwear. Accordingly, specific policy initiative for these
sectors has been announced.

For the handlooms and handicraft sector:

• Enhancing to 5 per cent of Free On Board (f.o.b) value of exports duty

free import of trimmings and embellishments for handlooms and
handicrafts;
• Exemption of samples from countervailing duty (CVD);
• Authorizing Handicraft Export Promotion Council to import trimmings,
embellishments and samples for small manufacturers; and
• Establishment of a new Handicraft Special Economic Zone.

ANALYSIS OF THE FOREIGN TRADE POLICY 2009- 2014

ANNOUNCED ON 27.08.2009 WITH REFERENCE TO
HANDICRAFTS EXPORTS:

Foreign Trade Policy 2009-2014 was announced by Hon’ble Minister of

Commerce and Industry on 27th August, 2009. The major highlights of the
FTP is placed at Annexure I. A special thrust has been given to labour
intensive handicrafts sector which is witnessing job losses in wake of the
recession. A brief analysis on the provisions made in the new FTP in
particular with the handicraft sector are placed below:

PROVISIONS SPECIFIC TO HANDICRAFTS SECTOR

1. Three handicrafts clusters provided status of ‘Towns of Export

Excellence’(TEE) (New Provision)

Jaipur, Srinagar & Anantnag have been announced as Towns of Export

Excellence for the handicrafts sector. This would enable up gradation of
infrastructure and would provide incentives and focus support.

37
 2. All handicrafts exports to be treated as ‘Special Focus
Products’ and entitled to 5% duty credit scrip as per S. No. 1B
(vi) (g) of the new Foreign Trade Policy. (New Provision
covering all items of handicrafts – however, a limited number
of items were earlier covered under VKGUY)

All handicrafts exports would now be treated as ‘Special Focus Products’ and
entitled to higher incentives as per Sl. No. 3.15.2 . Special Focus Products
covered under Table 2 & Table 5 of Appendix 37D, shall be granted i.e. duty
credit scrip equivalent to 5% of FOB value of exports w.e.f. 27.08.2009.

3. 43 items added to the ‘New Special Focus Products’ list.

EPCH had requested for inclusion of all handicraft for focused promotion by
way of higher incentives. The O/o DGFT under the New Foreign Trade policy
has now included 43 additional items as ‘New Special Focus Products’
including Handicrafts items not elsewhere specified. The efforts have yielded
good results.

These 43 items appears in Table No. 5 of Appendix 37D of the new

Handbook Book of Procedures Vol-I. They shall be entitled to duty credit
scrip @ 5% of fob value.

The handicraft items not elsewhere specified are now also eligible
under “New Special Focus Products’ scheme as per entry No. 43 of
Table 5 of Appendix 37D of Handbook of procedures. Earlier only
selected items were eligible for the same. This entry will cover all
new and innovative handicrafts items.
Export Promotion Council for Handicrafts shall now certify that the
exported product is a handicrafts product, if any doubt arises.

4. EPCG at zero custom duty for Technological Upgradation.

The recommendation of EPCH to reduce the custom duty on EPCG (Export

Promotion Capital Goods) from 3% to 0% has been accepted.

Now EPCG shall be available at 0% custom duty for handicrafts sector .The
export obligation shall be six times of the custom duty saved to be fulfilled in
six years. The scheme shall be in operation till 31.03.2011.

5. Status holder to get duty credit scrip.

38
To accelerate exports and encourage technological upgradation, additional
Duty Credit Scrips shall be given to 3 Status Holders @ 1% of the FOB value
of past exports. The duty credit scrips can be used for procurement of capital
goods with Actual User condition. This facility shall also be available for
handicrafts. This facility shall be available upto31.3.2011.

All status holders will get duty credit scrips at the rate of 1% of the value of
past exports. The duty credit scrips can be used for procurements of capital
goods but subject to actual user condition.

6. Support for Green products and products from North East

Focus Product Scheme benefit extended for export of ‘Green Products’; and
for exports of some products originating from North East.

7. MDA/MAI

Higher allocation for Market Development Assistance (MDA) and Market

Access Initiative (MAI) schemes is being provided. Special funds have been
earmarked for the handicrafts sector.

GENERAL PROVISIONS MADE IN FTP INCLUDING HANDICRAFT

8. Focus Market Scheme

26 new markets have been added under Focus Market Scheme. These
include 16 new markets in Latin America and 10 in Asia-Oceania.

The incentive available under Focus Market Scheme (FMS) has

been raised from 2.5% to 3%.

9. Market Linked Focus Product Scheme (MLFPS)

Market Linked Focus Product Scheme (MLFPS) has been greatly expanded by
inclusion of products classified under as many as 153 ITC (HS) Codes at 4
digit level. Some major products include; Pharmaceuticals, Synthetic textile
fabrics, value added rubber products, value added plastic goods, textile
madeups, knitted and crocheted fabrics, glass products, 4certain iron and
steel products and certain articles of aluminum among others. Benefits to
these products will be provided, if exports are made to 13 identified markets

39
(Algeria, Egypt, Kenya, Nigeria, South Africa, Tanzania, Brazil, Mexico,
Ukraine, Vietnam, Cambodia, Australia and New Zealand).

10. DEPB

To impart stability to the Policy regime, Duty Entitlement Passbook (DEPB)

Scheme is extended beyond 31-12-2009 till 31.12.2010.

DEPB rate shall also include factoring of custom duty component on fuel
where fuel is allowed as a consumable in Standard Input-Output Norms.

11. Import of Samples

To facilitate duty free import of samples by exporters, number of

samples/pieces has been increased from the existing 15 to 50. Customs
clearance of such samples shall be based on declarations given by the
importers with regard to the limit of value and quantity of samples.

12. EDI

To further EDI initiatives, Export Promotion Councils/Commodity Boards

have been advised to issue RCMC through a web based online system. It is
expected that issuance of RCMC would become EDI enabled before the end
of 2009

40
 CHALLENGES FOR EXPORTER

THE incidence of non-tariff barriers in the Western markets is one of the

major constraints facing Indian handicraft exports, according to a study
undertaken by the Exim Bank.

The Exim Bank's latest Occasional Paper on 'Indian handicrafts: A new

direction for exports,' states that European nations are sensitive to toxic
substances such as cadmium and azodyes, which are prohibited.
Though exporters are aware of these barriers, at the supplier level, there
could be a tendency to ignore them.

Exporters also complain of impediments in the form of procedural delays at

customs, disputes in nomenclature and duty drawback calculation.

Other Major Problems are:

• Inspite of having diversified products, some part of Indian market is

still untapped and market is price sensitive.
• Products are high priced in big and metro cities, which are beyond the
reach of people belonging middle and lower middle class.
• Craft producers have to compete on price, quality and delivery for
different segments.
• There is poor promotion for craft products in national market.
• There is lack of awareness about new traditions and among craftsmen
• It is difficult to balance the cultural and commercial value of handicraft
products.
• Inadequate supply chain management and distribution reduces the
sector’s commercial viability and economic sustainability.
• Lack of Technological support and training.
• Lack of Research and development for key handicraft sectors like,
ceramics, paper making etc.
• There is shortage of skilled craftsmen and labor to match the
competition.
• Lack of ability to produce in large scale and create economies of scale.
• Inadequate material testing and performance measurement.
• Inappropriate energy supplies to rural and sub-urban areas.
• Untapped and inaccessible market due to poor transportation
infrastructure.
• There are inadequate training centers to develop skilled craftsmen.

41
 QUALITY STANDARD

InternationalStandards

Asean Handicraft Promotion and Development Association (AHPADA) has a

mission to preserve and improve the status of craftspeople within and
outside the Asia/Pacific region. AHPADA supports the fulfillment of its
objectives through the sharing of ideas, know-how, experiences, resources
and expertise in the region for the preservation and the development of
craftspeople, and in promoting quality craftsmanship. At the same time,
AHPADA supports the development of crafts through different training
initiatives, the establishment of crafts businesses related to cultural tourism,
and the vocational training of youth and handicapped people.

The Seal of Excellence was jointly created in 2001 by UNESCO and the
ASEAN Handicraft Promotion and Development Association in order to
establish standards of quality and to enhance international market
awareness of craft products from the participating countries. Since then, the
SEAL witnessed a continuous increase of submissions and of recognized
products. In the light of this growing interest, UNESCO decided to extend the
SEAL to South Asia and Central Asia. The extension has been carried out so
far in partnership with craft organizations such as CACSA and the World
Crafts Council-Asia

DomesticStandards

Currently, there are no quality standards applicable to handicrafts. This is

not a very healthy situation from the viewpoint of the supplier as well as the
buyer. There could be suppliers who take advantage of the situation and
supply low quality products, thereby tarnishing the image of the country. It
poses a problem for the buyer as well, as it would necessitate personal
inspection of the goods.

To counter this, quality standards need to be imposed in the

following areas:

• Raw Material Usage : For quality as well as quantity/ proportions in

which they may be used. This would involve identifying and
nominating authorized suppliers.

42
 • Process : Standardization of processes, to the extent possible, for
each category. This could be for machinery, place of operation, skill
level of the artisans, etc.

• Production : It is essential to impose a certain degree of

mechanization to achieve certain minimum standardization levels. It
also ensures adequate supplies and helps keep delivery schedules.

• Finish : Quality standards for the finish in handicrafts is one of the

hardest things to impose because the parameters for evaluating the
finish of a product are highly subjective. However, it is also very
critical because ultimately, the buyer evaluates the product based on
its finish. This can be done only after a prototype for each product is
developed, and the finished product is weighed against this prototype
and rated accordingly.

• Packaging : It is essential to stipulate standard packaging material,

per the category, to make the products more presentable and hence,
more competitive.

In view of the variety of handicrafts available, development & imposition of

any kind of standards would be a difficult and lengthy exercise. However, if
India is to compete in the world market, quality standards will have to be set
and maintained.

43
 Need of the Moment : IPRs & Branding for Indian
Handicrafts

Handicrafts sector is extremely significant in Indian context.

Whether it is contribution to exports, employment and income generation for
a huge number of people, or its role in preserving the rich intangible cultural
heritage, handicrafts are a vital component of our rural and national
economy. The whole potential hasn’t been exploited so far. The export and
tourist market for these products cannot be ignored. But, leave alone being
able to make the most of this potential, Handicrafts industry is in dire straits
and most of the artisans & craftspersons are not even able to make both
ends meet. More so in the recent recession scenario resulting in massive fall
in exports and loss of employment for communities involved.

Among the many problems, that of fakes or non-genuine “ethnic Indian

products” flooding the markets is eating into its potential. There’s a huge
array of such machine made fakes, being produced in places other than
India but using the ethnic brand value of the original ‘Indian handmade’
products. The biggest threat comes from China. These duplicate products
are machine made, with copied Indian designs, more attractive and priced
much lower than the original ones. Their quality standard too is higher.

The main drawbacks of the traditional Indian handicrafts products being lack
of any standardized quality, lack of innovation in terms of products, designs
and utilitarian value as per the changing fashion trends, fluctuating customer
tastes and acceptable universal norms. Also lack of awareness and training
on various critical issues at the craftsperson’s level and their inability to
extract premium prices for these products on the USP of being ‘Hand
Crafted’ is worsening things. Absence of an organized structure, focused
approach and coordinated effort for brand promotion of these products is
resulting in lack of motivation on the part of the artisans themselves, as they
too see no future in continuing this practice since they cannot sustain their
families on their crafts.

44
This situation can be dangerous as this sector is very crucial for India not
only in terms of exports or employment but also for conserving the country’s
rich crafts traditions.

One approach to begin with could be the use of the Intellectual Property
mechanism of “Geographical Indications” (GIs) to protect peculiar products
from particular regions. GIs are a very appropriate legal tool protecting
‘regional products’ owing their characteristics & uniqueness to their origin.
Moreover they offer the much needed “collective benefit” by protecting the
community’s rights over their cultural expressions, thus providing the
desired “common branding” to such products. GIs will benefit these
handicrafts as they’ll prevent misuse & exploitation of the ‘regional brand
name’. Whether it’s China or anyone else, they’ll not be able to free ride on
the brand equity of the ethnic product. For instance now they won’t be able
to use the tag of registered and protected GIs such as “Kutch embroidery” or
“Pashmina Shawl” or “Banarasi Silk”.

But along with GI registration one may also look at protecting the overall
brand “India” in international markets. Alongside the regional GI tag, one
can have a ‘Handcrafted in India’ kind of a tag too. This will do two things.
One, provide an authenticity label that the product is genuinely handcrafted
and from the region mentioned and second, it is actually from India and not
China or anywhere else. “Made in Switzerland” brand is an example. Apart
from being fair to the producers of original handicrafts, their rightful rights
and deserving commercial gains, it will also be fair on the unsuspecting
consumers who most often are mislead into buying cheap duplicates.

45
 SWOT Analysis of the Indian handicrafts industry

Strengths
• Abundant and cheap
labour hence can compete
on price
• Low capital investment
and high ratio of value
addition
• Aesthetic and functional
qualities
Opportunities • Wrapped in mist of Threats
antiquity
• Rising appreciation for • Hand made and hence has Decline in India’s
handicrafts by consumers in few competitors share
the developed countries • Variety of products which due to:
• Widespread novelty seeking are unique
• Large discretionary income • Exporters willing to handle Better quality products
at disposal of consumer small orders produced by
from developed countries • Increasing emphasis on competitors
• Growth in search made by product development and from Europe,
retail chains in major design upgradation South Africa,
importing countries for South Asia, etc.
suitable products and Better terms of trade by
reliable suppliers. competing
Opportune for agencies to countries
promote marketing Consistent quality and
activities increasing focus
• Use of e-commerce in direct on R&D by
marketing Weaknesses competing
countries
• Inconsistent quality Better packaging
• Inadequate market study Stricter international
and marketing strategy standards
• Lack of adequate
infrastructure and
communication facilities
• Capacity to handle limited
orders
• Untimely delivery
schedule
• Unawareness of
international standards by

46
 many players in the
market

BIBLIOGRAPHY

EPCH, Export Promotion Council for Handicrafts (HEPC).About us,

http://www.epch.in/Default.aspx, Accessed on 20th dec 2010.

Highlights of the Annual Supplement 2010-11 to the Foreign Trade

Policy 2009-14, (updated in 2010) ,http://www.exim-
policy.com/new_eximpolicy_highlight.html

Indian handicraft export, http://business.mapsofindia.com/rural-

economy/handicraft-industries/

http://www.epch.in/Circulars/Circulars/EPCH_Annual_Report_200
9-10.pdf

Provisions in Foreign Trade Policy,

http://www.epch.in/Circulars/Policies/AnalysisCircular.pdf,
Accessed on 17th Jan 2011

47
 Handbook Of Procedures: Tables

Special Focus Products:

48
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50
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