For more than three decades now, Carpet Export Promotion Council (CEPC) has been instrumental in connecting Indian carpet exporters with overseas buyers. ‘Rugs of India’, a brand promoted by CEPC, today, defines India’s hand-weaving skills, globally. However, when it comes to exports, even these exotic, traditional rugs need to be branded and marketed well in the face of competition from machine-made products. CEPC Chairman Mahavir Pratap Sharma explains why.

Interview by Aamir h. kaki | May issue 2017 | The Dollar Business

TDB: The 33rd edition of India Carpet Expo was held in New Delhi last  month. How was the response from visitors? 

Mahavir Pratap Sharma (MPS): We brought together 305 small, medium and large manufacturers and exporters from across the country and showcased their products to 397 overseas carpet buyers who visited the expo held in New Delhi. The latest edition of the expo generated about Rs.800-1,000 crore business during the four-day exhibition period.

As India accounts for about 35% of global export of handmade carpets, India Carpet Expo (ICE) provides an ideal platform for international carpet buyers, buying houses, buying agents, architects and Indian carpet manufacturers and exporters to meet and establish long-term business relationship. In fact, for the first time 60 countries participated in ICE – buyers from countries like Bulgaria, Israel, Malaysia, Mauritius, Taiwan, Zimbabwe, Vietnam, Serbia and Hungary attended the event for the first time along with traditional buyers from Australia, Brazil, Canada, China, Chile, Germany, Mexico, Turkey, UK, US, Japan, etc.

The expo has been very successful in opening new markets for the industry and in helping small and medium carpet  manufacturers promote their products across overseas markets. 

TDB: Which are the key export markets for Indian handmade carpets?

MPS: Indian handmade carpets are exported to 73 countries around the world, with US being the largest importer.

In fact, India has been dominating the US carpet market for more than a decade now, emerging as the most preferred carpet supplier to US among all major carpet exporting countries, including China, Nepal, Iran and Pakistan.

Apart from US, we are looking at China as a focus market. Carpet Export Promotion Council (CEPC) is planning to establish a warehousing facility in China. We are also conducting a market study  to prepare an export promotion plan for improved penetration of Indian handmade carpets and floor coverings in the Chinese market. Simultaneously, we are also looking at opportunities in newer geographies in North and South Africa. To achieve that we are organising trade and road shows, and are undertaking branding exercises in these countries.

Exports of handmade carpets and other floor coverings from India stood at $1.45 billion in FY2016. For FY2017, the government has set an export target of $1.56 billion for carpets and floor coverings, which we believe will be easily achieved. Even though global economy is sluggish, India is not losing its world market share. But as consumption has declined, the growth rate has been slow.

TDB: Do you foresee any impact on export of Indian handmade carpets to US under the Trump administration?

MPS: Indian handmade carpets are known for their attractive colours, quality raw material, skilled workmanship, fine weaving and finishing. Supported by a large labour pool, the Indian carpet industry has today positioned itself as a high-volume, cost-effective producer of a wide range of carpets. We have dominated the US market for years now. Hence, as long as demand is there, I think exports to US will not decline.  

TDB: What competition do our carpet exporters face in international market?

MPS: The main competition is from machine-made products, regardless of the country of origin. If tomorrow, India starts manufacturing machine-made carpets, then even that will be a challenge. Carpet weaving, which is an ancient Indian tradition, has been a flourishing industry in the country, 16th century onwards. Today, we are the world’s largest producer and exporter of handmade carpets both in terms of value and volume. About 70–75% of carpets manufactured in India are exported. Made-in-India carpets are known for their excellent design, fascinating colours and quality.

To counter the looming threat from machine-made products, CEPC is now focusing on marketing and branding of handmade carpets across the world. But by not demeaning machine-made carpets in any way. We are trying to show the world what is better, what is different, why handmade carpets are more expensive and why they are more durable. We are trying to create a marketing strategy that will focus on attracting customers, from across the globe, towards Indian handmade products.

TDB: In today’s age of machine and technology, weavers need support, particularly when it comes to skill development, to keep up with the competition. What are you doing on that front?

MPS: From time to time, CEPC helps and supports skill development centres that are imparting skills to our weavers. We also work with local associations and NGOs and help them in organising training programmes for weavers. In fact, over the years, we have created more than 2,000 new weaver families that were originally not weavers. Hence, CEPC continues to harness this traditional art form.

TDB: What support do you expect from the government?

MPS: The industry needs the government’s support in marketing and branding and helping the weavers’ community. And if we continue to sustain the weavers, they will not move away from this industry. If we get marketing and positioning of handmade carpets right, I think sooner or later Indian carpet exporters will benefit. We don’t want subsidies for manufacturers and exporters, but we do want weavers to be subsidised. Competitive interest rates though will go a long way in helping this industry.

TDB: How will Goods and Services Tax (GST) benefit exports?

MPS: In general, all Indian exports, which have long suffered due to differential taxes existing in the country that led to the lack of competitiveness in international markets, are expected to benefit from the GST regime. The subsuming of major central and state taxes in GST will reduce the cost of locally manufactured goods and services. This will definitely increase the competitiveness of Indian goods and services, globally.

Meanwhile, as carpet making is a labour-intensive industry that involves a lot of small manufacturers, CEPC has conveyed its point of view to the government that handmade carpets should be exempted from GST or refund should be made through the drawback channel.

TDB: How has the Council evolved over the last few years?

MPS: CEPC understands the market well. It understands the needs of weavers, manufacturers and exporters. It is also aware of the needs of importers across countries. We know that designs and colours are ever changing. As a promoter of handmade rugs and carpets, it is our endeavour to keep track of the changing trends so that we are able to educate weavers on the latest designs and colours and help our members showcase these trending products in different countries.

CEPC aims to provide an exclusive business environment to both carpet importers and manufacturer-exporters, which ultimately will benefit about two million weavers and artisans employed in this MSME-driven industry.