CASE 14 India is one of the largest exporter of hand woven carpets, the first being Iran.

Other important exporters of hand-woven carpets are China, Taiwan, Pakistan and Turkey. The major markets for carpets are the United States, Germany, the United Kingdom, Australia, Switzerland, France, and Netherlands in the west and Saudi Arabia, Japan, Hong Kong and Australia in the east. USA and Canada account for as high as 53% of the international carpet market in value terms and Germany absorbs about 22%. The oriental nations buy only 4.25% of the global overseas buying of hand-knit carpets. In the high quality market, Iranian exporters have a clean sway, while in middle quality China, India and Pakistan have come to the fore. In low quality, at times Nepal outstrips the other two countries of the subcontinent. Major Market Facts USA According to the statistics compiled for country wise exports, the share of our exports to USA & Canada is 54% (USA accounts for 52.55% whereas Canada accounts for only 1.45%). USA consumes around 28% of the world import of carpets & floor coverings. The major portion of import of carpets and floor coverings into USA is of knotted carpets accounting for 38% whereas other woven carpets accounts for 29.8% and tufted accounts for 27%. There is an overall increase of 19.73% in import of carpets and floor coverings into the USA. The major competitor of India in carpets & floor coverings is China followed by Pakistan, Nepal and Turkey. The imports of carpets and floor coverings are largely controlled by a group of importers based in New York. The market in the USA for carpets and floor coverings is unevenly distributed. Most of the parts in the USA are almost nonexistent markets for carpets and floor coverings. The American consumers are choosy about colours and fashion dominates the sale of carpets and floor coverings into the USA. The position of Indian Carpets till 2000 was very comfortable because of embargo on import of carpets from Iran. However this has been lifted since February, 2000. Canada is relatively small market for carpets and floor coverings. The US market has not grown much over the last 3 years. Germany In Germany which is the second largest importer of carpets, China has the highest share of exports around 31.4%. Following China, other significant players are India, Pakistan, Nepal & Iran with shares of 25%, 11.7%, 11% & 10% respectively. Germany registered a decline of 8.3% in value term whereas the decline in Europe was only 2.9%. The reason for decline in German Market is because of piling of stocks with German Importers. Germany is importing

carpets of different quality. The share of India in terms of volume for carpets less than 350 knots is around 49% whereas it is having the share in value of only 33%. The German Market for medium and low knottage carpets (less than 350 knots) is dominated by Nepal and India. For Carpets above 350 knots in the German Market is being supplied mainly by Iran and India. India is having 38% share in volume whereas 21% in value. Iran which has 22% share in volume has 40% share in value. The German Market for Silk Carpets is again dominated by India and China. China has a 52.3% share in volume and 42% share in value whereas India has 33.7% share in volume but only 19% share in value. The analysis above in German Market clearly reveals that although India has a strong grip in the market in various qualities of carpets but it does not have a grip on unit value realisation. South East Asia In this region because of climatic conditions and economy, the market has not developed for carpets and floor coverings. Although Japan has grown a small market for carpets and floor coverings but Indian exporters have not been able to penetrate much in this market because of dominance of China and Pakistan. These countries account for only 4.21% of the total exports of carpets and floor coverings from India. The main competitors in these markets are China and Pakistan. Rest of the world The share of exports of Indian Carpets and Floor coverings to rest of the world including Latin American Countries accounts for only 7.39% which clearly shows that these markets remained un-explored.
No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Country Argentina Australia Austria Belgium Canada Denmark Finland France Germany Italy Japan Luxembourg Netherlands Norway Sweden Switzerland 19992000 0.65 6.17 3.75 6.41 7.89 6.46 4.39 14.64 142.96 10.26 9.67 0.25 7.05 2.52 9.32 5.62 2000-01 0.52 7.74 4.9 4.46 9.14 4.49 4.01 15.29 125.62 7.72 13.81 0.21 6.64 1.36 10.5 4.47 2001-02 0.4 4.82 4.92 4.5 8.14 4.94 2.7 12.22 127.1 6.66 12.3 0.08 4.91 1.12 3.06 5.98 2002-03 2 5.05 4.72 3.12 7.69 4.92 3.02 12.14 132.26 6 10.48 0.17 5.06 1.23 6.95 7.68 2003-04 2.33 5.83 5.46 2.58 8.92 4.17 3.25 10.82 135.86 5.65 10.82 0.18 4.23 1.42 4.05 5.95 2004 - 05 2.25 6.08 4.78 2.48 8.57 4.47 3.49 11.23 130.74 5.44 11.33 0.2 4.39 1.72 3.9 5.73

17 18 19 20 Total

Spain U.S.A. U.K. Others

6.17 195.65 18.24 34.95 492.94

7.47 223.05 23.63 37.25 512.05

5.8 244.24 26.06 34.2 514.07

5.66 247.55 26.18 41.22 532.96

5.4 325.44 24.88 47.2 614.44

5.2 313.18 23.96 42.21 591.35

Major Markets for Indian Carpets

60 % of Indian Exports 50 40 30 20 10 0 Countries Australia Canada France Germany Japan USA Others

Types of Indian Carpets Handknotted Woollen Carpets The Indian woollen carpets are inspired by the classical Persian Tradition of motifs to the most modern design. Superior hand-knotting technique, variety of designs, colours and a good number of knots per square inch are the features of these carpets. The prominent areas which produce woollen carpets are Bhadohi, Mirzapur, Khamaria, Ghosia, Varanasi and Agra in Uttar Pradesh; Amritsar and Pathankot in Punjab and Jaipur in Rajasthan. Tufted Woollen Carpets The handmade Tufted Woollen Carpets are produced with the help of tufting guns. A good quality fabric is used for a desired pile density and number of stitches per square inch. Panipat is main carpet producing centre of Tufted Woollen Carpets. GABBE Woollen Carpets Hand-knotted Gabbe Woollen Carpets portray a unique tradition of Tribal Design. The raw material composition of these carpets is generally 75% wool and 25% cotton.

Gabbe Woollen Carpets are mainly produced in Bhadohi-Mirzapur region in Uttar Pradesh. Handmade Woollen Dhurries Woollen dhurries are one of the least expensive yet very elegant 'Hand-Woven Flat FloorCoverings' making them one of the popular floor coverings in the world. Woollen dhurries are mainly produced in Bhadhohi, Mirzapur, Agra, Jaipur, Panipat and Bangalore. Pure Silk Carpets Hand knotted pure silk Carpets are renowned for suppleness and softness and fine workmanship in the world. The material composition is 80% silk yarn and 20% cotton yarn with knottage 400 knots and above per square inch and are produced in Kashmir. Carpet Export Promotion Council (CEPC) The Carpet Export Promotion Council is a Company set up under Companies Act and limited by guarantee and was registered at Kanpur in February, 1982 .

The Objectives of the Council are:

To provide commercial useful information and assistance to its members in To offer professional advice to members in areas of technology upgradation, quality

developing new markets and increasing their exports; and design improvement standards and specification, product development, innovation, etc.;

To attend the problems of the Members for redressal with appropriate authorities. To organise visits of delegation of its members abroad with a view to explore To organise participation in trade fairs and buyer seller meets in India and abroad; To promote interaction between the exporting community and the Government both To build up a statistical data base on exports and imports of the country as well as

overseas market opportunities;

at the Union and State levels; other international trade statistics for dissemination to the members and submission to the govt. from time to time.

To attend to Child Labour issues on monitoring & registration of looms and issuance To execute the marketing assignments of UNDP Carpet Project.

of Kaleen Labels.

To handle management of Welfare Projects under the Child Welfare Activities. To make projection for future development of the industry.

Competition Iran Iran is the world leader in the export of hand made and hand knotted carpets. It has for long been the leader in the export of highest quality hand knotted carpets. Though Irans share in world carpet trade has fallen from 55% to 28%, with the lifting of the international embargo on Iran, its share in the world carpet trade is only going to rise. Pakistan Pakistan currently exports only hand-knotted carpet worth around $280 million and volume of rugs has almost been stagnant in the last five years. On the other hand, the share of over $400 million worth tufted carpets is increasing at the rate of 10-15 per cent per annum. China China is the world leader in the export of carpets accounting for 42% of the world trade of carpets. It manufactures carpets of the middle and high quality at very competitive prices. It is the leader in the production of woven carpets. Nepal Nepal enjoys a competitive edge because of the Poor Country status given to Nepal, which entitles import of Nepalese carpets without payment of any duty. Nepals carpet production is mainly of low quality carpets. Issues and problems:

Infrastructure: The carpet industry is a rural based industry facing infrastructural

problems, such as poor roads, lack of telecommunication facilities, power shortage and direct linkage with metros or ports by rail.

Lack of resources: Majority of the manufacturers and exporters are very small not

having enough resources to venture out on export promotion effort or R&D and even to go for production of ordered goods.

Non-availability of market intelligence: The carpet industry in the decentralized

sector is not properly equipped with market intelligence and non-exposure to ecommerce.

Unattractive tariff structure: Hand made carpet in most of the countries are still Negative publicity: The industry attracted a negative publicity launched by some

considered as a luxury items having a very high duty structure.

vested interest and NGOs over the issue of child labor.

Non-recognition of carpet industry by the policy framers: The Indian carpet industry

is very important because it is not only earning foreign exchange but providing gainful employment as well, particularly in the rural areas but no recognition has been given to this industry for safeguarding the interest for its proper growth. Suggestions: Product

Manufacturers also need to be kept aware of world market requirements, so that they

ensure capability of meeting them. Market research results can be made available to the small exporter. Besides helping them gauge export needs this can also spare him exploitation by the big importer. Exporters should also look for alternate buyers in order to reduce dependence on a Fashion oriented and less expensive products should be promoted i.e. woven dhurries, single buyer to avoid exploitation and offer products in new designs and stress on quality. chain stitched rugs, woven carpets, tufted carpets and art silk carpets. Finance Liberalized export credit both for pre-shipment and post-shipment to be made available to the manufacturers/exporters on concessional rate of interest. Govt. may also like to write to RBI not to insist for repatriation of export proceeds within 180 days and grant extension upto 360 days in hard pressed cases. The rate of interest on Export Credit is very high as compared to China where the interest rate for export is only 3% to 4% and repayment is relaxable upto 12 Years. Marketing and Promotion -

The small exporters should be assisted to participate in fairs and exhibitions abroad,

in export promotion tours, etc. (eg. MDA given by CEPC) International publicity, as well as the cost of freight, can be subsidized.

CEPC should open retail stores at airports in the major markets abroad as well The Indian carpet industry should aim to target the upmarket segment of the

as at famous tourist spots in India. customers in the established markets such as US and Europe, i.e. customers of fine hand knotted carpets who are presently customers of the Iranian carpets. Also new markets in Africa and Latin America should be developed.
Stress on use of Kaleen Label for restoring the confidence of the importers. Regular publicity for image building

Infrastructure -

Only Bhadohi has been declared a Special Economic Zone. Others like Mirzapur in

Uttar Pradesh, and other manufacturing areas in Jammu and Kashmir, Rajasthan, Andhra Pradesh, Karnataka, etc. also need to come under this umbrella.

A ware house facility to be provided to the exporters for temporary storing their

consignments on refusal of payment by the buyers to avoid auctioning by the customs and distress sales. Warehouse facilities may be provided at the following places. (i) In Europe - at Hamburg or Rotterdam (ii) In USA -at New York and Los Angeles. The cost of setting up of ware house for the first 3 years may be 100% subsidized and thereafter it should be run on self funding basis. Conclusion The Indian Carpet Industry has potential for expansion since adequate skilled manpower & raw-material is available, requirement for capital is almost negligible, Indian Products are acceptable all over the World and are at par on quality and competitive in prices. We have tremendous flexibility and adaptability. We have large range of products to offer. India can supply carpets & floor coverings strictly in accordance with the requirement of consumers.