indian cottage sector

8/8/2019 Indian Cottage Sector

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2. 2. Objectives of the proposal 12

3. 3. About the venue of the Buyer Seller Meet 20

4. Target countries for reverse BSM 27 5. Need for Reverse BSM 39

6. Target Beneficiaries 45

8. Response received from the BSM 46

9. Recommendations 53

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India has a vast production base for handicrafts (including carpets ),

handlooms, jute and jute products etc. The growth in these sectors has beenphenomenal in terms of employment and foreign exchange earnings. TheHandicrafts, handloom and jute sectors have contributed substantially to theforeign exchange earnings. The growth of these sectors for the last five yearsis significant. The Indian Cottage sector has seen rapid growth in the past andis currently a Rs.60,000 crores plus industry.

In-spite of a vast production base in the above sectors, the opportunity forinternational marketing of these products is not adequately available to theIndian manufacturers / exporters.

Because of the higher marketing cost involved for introduction of any newproduct in the foreign market, exporters are unable to undertake aggressivemarketing. Besides, the cost of participation in an international event abroadis very high. It has also been observed that these events give opportunityonly to a handful of exporters who can spare substantial foreign exchange.

The total World trade in Handicrafts, Gifts & Decorative isestimated at US$ 235 billions of which China accounts for 71 billionwhereas India at 3 billion.

Currently, marketing efforts of Indian exporters are driven by individualrelationships and an India-specific integrated approach is lacking, which can besubstantiated from the facts that individual exporters take part in internationalevents and fairs establishing contact with the importers and are increasinglyusing the Internet for establishing new contacts.

The need for an India specific cottage sector initiative was felt that couldattract leading importers and stores to India.

Most of the developed nations and even developing countries like China

have set up national level, wholesale trade Marts to provide a fillip to thecottage sector exports.

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The world economy is no longer monopolized by the developedcountries. The Western world has now realised that without Africa,Asia there can be no globalization. Since economic growth in


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developing and transition economies remains higher than growth inadvanced countries, it is probable that within the next two decades theglobal economic map will change more than it has done over the last20 years. Business firms in Brazil, China, India and Poland continue togather momentum and they will gradually become major players in

international markets. This will mean a fundamental change in theglobal corporate landscape.

An important aspect of the globalization process is the rapid changeregulations affecting the international marketing environment. Theworld trading system is constantly spinning over new opportunities andcreating new threats. Certain tariffs and quotas are removed but newtechnical norms, phytosanitary measures and anti-dumping actions arerendering the export trade more difficult for companies in emergingeconomies. While numerous subsidies are being eliminated and thebureaucracy of customs procedures curtailed, new rules on intellectualproperty rights, certification requirements or complex domesticregulations require export managers to respond to new regulatorychallenges. The positive aspect of globalization is that the trendboosts productivity and living standards is most countries. It is oftenconsidered the force that enabled the worlds poorest nations in the1950s to rise to their place today among the more advancedeconomies.

It is in this backdrop that strategies for the export sector at macrolevel have been formulated for the next 5 years which would be co-

terminus with the 10th Five Year Plan period. These strategies are inthe nature of board directions giving a road map for the export sectorin the Medium Term.

Policies and programmes specifying step-by-step sequence of actionnecessary to achieve the major objectives will have to be formulatedbased on this Strategy Document.

The Medium Term Export Strategy outlined by Government of Indiaalso provides attempts to provide this direction by focussing not only

on products in which we have a revealed comparative advantage, butalso identifying products which have real comparative advantagebased on the potentialities. It is an attempts to provide a realistic mixof macro policies with sector specific policies and provides attainablegoals with appropriate checkpoints.

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The cottage sector including handicrafts, silk, jute and carpets hasover the years contributed significantly to the employment and foreignexchequer of the country.

However, despite the large production base the market at international

level is still unexplored. The biggest constraint which the sector facesis the marketing of their products, especially in this era of globalizationof information technology which has major influence.

The forces of globalization have created an environment ofinternational competition throughout the world, leaving few niches ofprotection for the inefficient.

At the same time, the large-scale use of international marketingtechniques is revolutionizing the way the world does business. It is inthis environment that small and cottages sector have an increasinglycritical role to play.

The basic reason is lack of focussed and aggressive internationalmarketing network. The value of International Marketing Tools forthe small scale sectorin general and cottage sector in particular is becoming increasinglymanifest, not only from the functional point of view but also from theperspective of many opportunities that focussed marketing offers itsusers for participating in growing world trade.

In view of above background EPCH has envisaged a integratedinternational marketing initiative to launch an Aggressive FocussedExport Promotion Measures for quantum jump in the export earningsfrom the handicrafts sector which is the largest provider ofemployment in the country.

The proposal primarily aimed towards Aggressive Launching of IndianCottage products by way of organzing Theme Shows throughout theyear and motivate major overseas buyers, importers, departmentalstores, chain stores and prominent journalists, editors of specific trade

magazines to attend these shows.

A proposal under title International Marketing Linkages for Handicraftsand other allied Products through Reverse BSM & Publicity Campaignhas been envisaged for providing a platform for round O clock internationalmarketing of handicrafts, jute, silk, carpet and other synergy products andsubmitted to the Ministry of Commerce & Industry, Govt. of India.

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The Empowered Committee of Ministry of Commerce in its meeting held on 24th

January, 2005 has approved the proposal under Market Access (MAI) scheme for100 buyers for each BSM in 1st year for following 4 Buyer Seller Meets:

1. 1. Indian Furnishing, Floorings & Textiles Expo (IFFTEX)2. 2. Indian Fashion Jewellery & Accessories Show

3. 3. Stationery & Paper Products4. 4. Deco Festive India,06

The basic objective of launching of this specific project is to target

Focused Buyers, Focused Countries & Focused Products. Today

Indian Handicrafts & Gifts is a general terminology which includesthousands of product categories and overseas buyers are not able tosource the products as per their requirements and choice. The reasonbehind is that the Indian Handicrafts & Gifts Fair being organized byEPCH for 4 days is not able to cater participation of large number ofthe products and similarly the overseas buyers are also not able tosource in a short period due to the multi complexity of the productgroups.

The need of today is to organize shows on product specific themes onregular intervals and target the specific buyers from differentcountries.

The broad objectives of the proposal is to provide institutional supportto cottage, small scale and SMEs engaged in exports in their marketingefforts through long term planning and creation of support facilities.The priority areas will be:

1. 1. Creation of new and improvement in the existing internationalmarketing techniques / export opportunities of the cottage sectorand SMEs exporting units.

2. 2. Efficient utilisation of present potential of exporting small scalesector by creating a new concept of export marketing.

3. 3. Creating an atmosphere of awareness of the concept of roundO clock international marketing through permanent contact pointi.e. India Expo Mart which is the first State-of-Art infrastructurefacility created for the cottage sector in the international markets.


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4. 4. To create a link between Indian craft industries which havelimited international marketing facilities and the consumer marketof Europe & USA and other developed nations.

5. 5. Development of international network of marketing and productdevelopment expertise with the help of international productdesigners, trend-setters etc.

6. 6. To bring together buyers and sellers around the world throughout the year with focused publicity.

ADVANTAGES FROM INTERNATIONAL BUYERS POINT OF

VIEW- - A permanent contact point for buyer seller interaction.

- -

Reliable source of supply.- - Preference to buy from the country of origin.

- - Ability to visit as per buyers' convenience.- - Efficient utilization of limited time of the buyers.

- - Opportunity to source a large assortment of products and meeta large number of sellers at a single location.

ADVANTAGES FROM EXPORTERS' POINT OF VIEW

- - Cost effective utilization of international marketing expenditure.

- - Opportunity for exporters located at remote places of these

states to met International buyers.- - Opportunity to meet a large number of overseas buyers at a

single location throughout the year.

ADVANTAGES FROM GOVERNMENT'S POINT OF VIEW

- - To achieve higher exports of cottage sectors which includeshandicrafts, silk, jute, carpet and other synergy products.

- - To promote new products and languishing crafts.

- - To promote new exporters / entrepreneurs and small & cottage

exporters.- - To promote new craftsmen.

- - To promote design development.- - Increased share of export earnings from the sector which have

tremendous potential but due to lack of focussed export promotionmeasures can not be substantially achieved.

- - To benefit the artisan, the actual manufacturer, from theexports.


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- - To increase employment opportunities.

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- - To improve the level of livelihood of craftsmen.

- - To launch Indian cottage sector in the world market for the first

time in an integrated manner among the leading importers,departmental stores, buyers etc.

- - No such effort have been made till date by any Governmentalagency for the international marketing of the cottage sector with adefinite business plan and an objective to increase the share ofIndian Exports through state-of-art infrastructural internationalmarketing hub.

OTHER OBJECTIVES

- -

To establish specific integrated approach for cottage crafts whichis lacking and currently marketing efforts of exporters are driven byindividual relationship.

- - Urgent need for specific cottage sector initiative that wouldattract leading importers to India which otherwise have China as amajor destination point since no such facility is available in Indiawhere an overseas buyers can source their requirements round Oclock.

- - To bring buyers from round the world throughout the year and

create new marketing opportunities for cottage sector.

- - To create aggressive international marketing strategy.

- - To fill the gap of inadequate infrastructure specially in the

remote craft pockets.

- - To achieve a quantum jump in the export earnings with theenhanced flow of trade.

VENUE FOR THE REVERSE BUYER SELLER MEETS INDIA EXPO

MART & CENTRE

The international trade fairs in India being organized by EPCH etc.provide a greater opportunity for a large number of foreign buyers tovisit and meet a large number of exporters at one place.

However, the future of international trade fairs in India has to undergoa change. Buyers prefer to visit the country as per their own


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convenience and they cannot coincide their visit every time with thedates of trade fairs in India.

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As such, there is a need for a permanent contact point throughoutthe year where all potential importers or wholesalers can visit any timeduring the year and look for supplies which dispenses their needs forcarrying high inventory. This kind of permanent contact point can createa window for our products by ensuring:

a) Permanent contact point throughout the year

b) Reliable supplyc) Quick turn-over

d) d) Capacity to absorb new techniques and designs.

Based on the above issues and theme of upcoming centralized exportmarketing centres as already been incorporated in Dallas (USA),Utrecht, The Netherlands, Japan, Shanghai etc. the idea of setting upIndia Expo Mart came into existence.

On the basis of the analysis of participation in various internationalfairs, organising Indian Handicrafts & Gifts Fair and various and feedback from the member exporters which are approximately 25,000 innumber, there was strong justification for setting of this ambitious

project.

The sector especially the target product categories i.e. handicrafts,handloom, jute, silk and similar product groups which are basicallysmall and cottage level in general is not equipped with inherentexpertise for Export Marketing and Development to respond to thechanging trends.

It is this background that India Expo Mart (IEM) has beenconceived.

IEM is thus envisaged as a nodal point where foreign buyers can

meet cottage sector exporters round the year and where periodicexhibitions fairs could be organised.

The India Exposition Mart has been conceptualised as apermanent display point for exporters in the cottage sector.


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This mart is a unique way of bringing together buyers and sellersfrom around the world throughout the year and would fulfill thefollowing key objectives:

New marketing opportunity for the cottage sector

nodal point of contact thereby reducing the effort involved inestablishing contacts

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Benefit of smaller exporters who find it difficult toparticipate in international fairs

Promoting Indian cottage sector & artisans byarranging special events

India Exposition mart has been conceived along similarlines are trade marts in cities such as Dallas, Brussels andShanghai. The mart would help eliminate a key infrastructurebottleneck and will help improve the competitiveness of Indianexports.

It would more importantly help sustain the exports ofIndian Handicrafts, which have shown robust growth in therecent past.

The exclusive presence of cottage crafts & synergyproducts at such a nodal point will be able to get a focussedexport marketing opportunities without any substantial efforts asIndia Exposition Mart is supported to be future hub of sourcingfrom the buyers all over the world.

TARGETED COUNTRIES FOR INVITING OVERSEAS BUYERS /

IMPORTERS / JOURNALISTS FOR REVERSE BUYER-SELLERMEETS

The product groups accounting for a major share of exports arecarpets, embroidered goods, hand-printed textiles and artmetalwarewhich, in themselves, account for over three quarters of Indias exportturnover of handicrafts.


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In the span of five years since 2000-2001 export of handicrafts grewfrom the level of Rs.8490.16 crores to Rs.13032.70 crores in the year2004 - 2005.

The principal export destinations for handicrafts (including carpets) are

U.S.A., Germany, France, U.K., Japan, Italy, Canada and TheNetherlands with over 31 per cent of export value in 2003-2004 beingaccounted by the U.S.A. alone. The prominent EU countries listedabove together accounted for another 30 per cent of the export value.As single country destinations, U.S.A., Germany and U.K., amongthemselves, accounted for one half of exports by value.

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The exporting countries are wider in numbers and prominently includeChina, S. Korea, Taiwan, Philippines, Malaysia, Indonesia, India, SriLanka, Pakistan, Iran, Turkey, Mexico, Bangladesh and Vietnam.

In view of above it can be analyzed that limited Indian Handicraftsproducts caters to a particular segment of market and hence there is aurgent need to identify, explore and develop new internationalmarkets, beside providing a push in the existing markets bybroadening the product base.

The analysis of country-wise share of handicrafts exports reveals thatIndian handicrafts are excessively concentrated in 3 markets: U.S.A.,U.K. and Germany; Indias export penetration of handicrafts in

France, Netherlands, Italy, Switzerland, Canada, Japan andHong Kong is very low. These countries are other sizable marketsand there is no reason why Indian handicrafts cannot penetrate thesecountries when they do so in the others.

COUNTRYWISE SHARE OF EXPORT OF

HANDICRAFTS FOR THE YEAR 2004-2005

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U.S.A.Largest market as it is the U.S.A. is principal destination for gifts &decorative produced in various developing countries of Asia. The U.S.

A. market is well integrated across the whole nation, with retailingcontrolled by large-sized chains. Consumers in U.S.A. are very priceconscious or price sensitive; price ranks above quality in consumerconsiderations. Hence, Unit Value Realization (UVR) in this marketstrends to be lower than in other countries.

Marketers consider it to be a valuable destination for low and mediumvalue items, Owing to its multiethnic composition with a largepresence of Asians, including Indians and other South Asians, theU.S.A. market has scope for traditional decorative items, The U.S.A.market keeps growing in population size unlike Japan and EuropeanCountries and multiethnic immigration continues.

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U.K.

Compared to the previous two (USA & Germany), U.K is relativelysmaller markets in total size. But UK features amongst top 5 end

markets for 8 items out of which Indian scores as a major supplier inthe case of 3 items in UK and France do not import from Indiadecorative in such quantities as they do from else where. In U.K thereis a good degree of import taking place from European Countries.

GERMANY

Once the thriving economy in Europe, the German market tended tobe very sophisticated but recession and costs of unification havedepressed consumer aspirations and spending. Thus this market hasturned to Asian providers for cheap goods. Such as handicrafts wares.All said and done markets for such goods are tending to decline.

Quality is the key of German consumer consideration. There isemphasis on articles that are natural and authentic. Wall decoration

are very popular amongst Germans so also statutes and figurines.Epch.11


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FRANCE

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THE NETHERLANDS

ITALY

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AUSTRALIA


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JAPAN

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NEED FOR ORGANIZATION OF REVERSE BUYER SELLER MEETS

The Indian handicrafts are sold in the international market due to itsunique artistry work and traditional work. But in present scenario thenew and newly develop items by our neighboring competitorscountries like, China, Taiwan, Philippines and Malaysia etc. aregradually replacing the traditional Indian handicrafts. Due effortshave been made in this direction and the liking of Indian cottageproducts is continuously increasing in the world market and the sectoris witnessing a average growth of around 15% since last 10 years.

These competitor countries unlike India are also extremely active inpromoting their trade. Chinese, Korean, Philippines, Thailand,Malaysia, and Taiwan participate in almost all the international fairsand also big in numbers.

Whereas Indian participation in international fairs is very less andalways very small in number. Beside this, most of the South EastAsian Countries exporter have their counterparts in these importingcountries who have either showrooms or warehouse and are in

position to supply the goods on immediate delivery basis.

There are mainly two types of retail channels in operation, commercialchannels and alternative channels. Commercial channels comprisedifferent types of stores, with exclusive and non-exclusive featuressuch as department stores, specialty stores, independent retailers, etc.whereas alternative channels comprise organisations with idealisticattitude towards handmade goods from developing countries. Theydeploy a commercial bridge to help craft organisations in developingcountries to sustain themselves financially by creating markets for

them in developed countries.

The proposal envisages organization of 4 Buyer Seller Meets in1st year targeting 11 major countries and motivatingapproximately more than 100 products specific overseas buyers /journalist for each show.

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Further, vigorous publicity campaign has been launched in all thesemarkets for backward linkages for creating an environment ofawareness in those targeted countries so these theme shows can beprojected as ahub of sourcing among all the buyers in the years to come.

The publicity campaign mainly comprises Development and mailing ofcorporate fliers to the major importers, procurement of database,organization of seminar, workshops for foreign media, embassies,consulates, advertisements at strategic locations, development ofwebsites, road shows in major markets, video films.

However, strong & urgent need has been felt to organize the buyerseller meet through organization of product specific shows to supportthe manufacturer and exporters of the cottage sector.Four Reverse Buyer Seller buyer meets on the following productgroups have been organized from 19 22 January, 2006 at India ExpoMart & Centre, Greater Noida in first year. Prominent Buyers /Journalists have been invited from the targeted countries.

1. 1. Indian Furnishing, Floorings & Textiles Expo (IFFTEX)2. 2. Indian Fashion Jewellery & Accessories Show3. 3. Stationery & Paper Products

4. 4.

Deco Festive India,06

The entire cottage sector of India including small and mediummanufacturers, artisans, craftspersons, exporters of handicraft,handloom, jute, carpet, silk and other similar product groupsthrough increased export earnings which means more livelihood tothe rural based craftsmen who are in-fact the backbone of theentire sector. The more export orders means better livelihood

opportunities to the craftspersons. No such focused effort havebeen made to project Indian cottage sector in the world market in asystematic manner by motivating major players in the world marketto visit India to source their requirements from the hub which isopen 365 days.

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Four product specific shows have been organized from 19 22January, 2006 at India Expo Mart & Centre and number of buyers /

importers / journalists have been invited from the targeted countriesviz. USA, UK, Germany, France, Italy, Japan, Canada, TheNetherlands. Following good responses have been received:

The leading importers of the world got the option of sourcingvariety of product range from a single nodal point which otherwisewas not feasible.

Enhanced export earnings due to international marketingfacility.

Increased foreign exchange earnings to the country which have

negligible share of exports in the world imports despite vastproduction base.

Effective business development and efficient utilization ofmarketing expenditure.

Increased flow of overseas buyers (Who prefer to shop at thecountry of origin) who will have the time and effort of reaching thehandicraft production centres scattered all over the country.

PARTICIPATION IN REVERSE BUYER-SELLER MEETS (RBSMs)More than 600 Number of manufacturers, exporters participated in the

RBSMs on following product categories:1) Indian Furnishings, Floorings & Textiles2) Indian Fashion Jewellery & Accessories3) 3) Stationery and Paper Products

4) 4) Festival decorative products

AREAAn area of more than 10,000 sq. mtrs was covered by the exhibitors.

PRODUCT CATEGORIES

A wide range of product categories were exhibited by the exhibitorswhich was displayed in a tasteful manner receiving an encouragingresponse from the overseas buyers.

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OVERSEAS BUYERS

More than 2000 overseas buyers from various countries like USA,Germany, Colombia, Brazil, Span, Canada, Italy, Turkey, Argentina,Poland, Uruguay, China, France, Australia, Venezuela, Portugal,

Netherlands, South Africa, UK and Russia visited the product specificRBSMs.BUYERS VISITED UNDER MAI ASSISTANCEMore than 600 buyers were identified and recommended to visit theproduct specific RBSMs under MAI scheme and were provided airtickets and hotel.

These buyers have been identified through the established consultantsfrom all over the world and screening has been made on the basis of

performance and obtaining details of the vendors with whom they areworking. These proformas were further scrutinized by a teamcomprising trade and industry and on the basis of recommendation,these buyers were provided air tickets as well as local hospitality. Thecomponents of the air tickets has been from the MAI and hotel weregiven by EPCH so as to make the event successful.IMPORTANT BUYERS

Some of the top buyers who visited RBSMs are listed below :

1. 1. CARREFOUR/ COLOMBIA,

2. 2. OLIMPICA / COLOMBIA

3. 3. COMERTEX / COLOMBIA

4. 4. URBAN OUTFITTERS (200 STORES) / USA

5. 5. WISTERIA (MAIL ORDERS)/ USA

6. 6. ROOTS (160 STORES) / USA

7. 7. LOBLAW STORES (100 STORES) / USA

8. 8. ABC CARPETS / USAEpch.18


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9. 9. OVERWAITIA GROUP /USA

10. 10. COSTCO / USA

11. 11. MUDO CONCEPT / TURKEY

12. 12. GUNTHER LAMBERT GMBH / MONCHENGLADBACH /GERMANY

13. 13. GUNTHER LAMBERT GMBH / MONCHENGLADBACH

GERMANY

14. 14. INESS CONFECTION SA / TUNIS

15. 15. KANGAROO GMBH / BAD OLDESLOE / GERMANY

16. 16. KRIEGER HANDEL GMBH & CO. KG / SCHOENEFELD /

GERMANY

17. 17. KRIEGER HANDEL GMBH & CO. KG / SCHOENFELDGERMANY

18. 18. LAMBERT FLAGSHIPSTORES GMBH / MUCHEN /

GERMANY

19. 19. LAMBERT FLAGSHIPSTORES GMBH / MUCHEN /GERMANY

20. SCOTTOS OF STOW LIMITED / LONDON / UK

More than 600 prominent buyers / importers / journalist havebeen invited for the shows.

Approximately Rs.428.00 crores business generated during theshows.

Approximately 2200 foreign buyers visited the shows.

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1. 1. To motivate and invite potential buyers from the focused, non-

focused countries, financial assistance for Reverse Buyer-SellerMeet is essential.

2. 2. The assistance has increased the visit of buyers including top

importers from the traditional as well as non traditional markets.

3. 3. In this competitive world and when other countries are providingassistance for visiting the potential as well as established buyers,such incentives is important in order to increase the share inexports.

4. 4. The visits of buyers, journalists to the shows enlighten them

with the culture, tradition, availability of skill in the country whichultimately induces for import.

5. 5. The assistance provided towards air fare, hotel may also beprovided for the extra days i.e. before and after the event whichenable the visiting buyers to visit the units and understand aboutthe products and can add new to the ideas.

6. 6. The assistance should be provided for a single event to the

maximum 200 buyers for one show in order to attract large numberof buyers for larger business

7. 7. The assistance for inviting buyers may also be considered for theprofessionals on various subjects on exports strategies, consumerpreferences for education of the exporters, entrepreneurs with theview to produce the products as per the requirement of theconsumers.

8. 8. The assistance to invite persons from trade organizations,

importers, journalists may be provided for brand promotion of theproduct.

indian cottage sector

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