Export Temples of India March 2018 issue

Export Temples of India

One of the few things that the new government has been most vocal about is the establishment of a pro-business environment in the country. “Make in India”, “Ease of Doing Business”, "Skill India", etc., have become modern, sacred chants of the nation's export-manufacturing community. Of course, these so-called "movements" will help improve India's perception amongst those who romance quality, free markets, and FDI. Agreed – perception matters. But all talk and no play will only allow India to bend the truth so much. And campaign slogans alone won't lead to growing India’s share in world trade. Forget the unfriendly tax structure, if basic problems like electricity shortage and infrastructure continue to plague the manufacturing sector, hope will only degenerate into hopelessness. How good are fruit processing clusters in Chittoor (Andhra) and textile plants in Panipat (Haryana) without power? Why should export clusters like Firozabad (UP) and Kashmir lose their competitive edges due to logistics costs and poor connectivity to ports? There are many such cities and towns across India that are grappling with similar issues but are still adding those precious greenbacks to India's kitty, without making much noise. From handloom to leather, fruit pulp to coir, glassware to Border Haats, The Dollar Business explores India’s hinterlands to investigate what makes a handful of these ‘middle of nowhere’ towns and cities worthy of being labelled 'India’s Export Temples'. Given more attention from policymakers, these ‘export temples’ can work wonders for India.

For The Dollar Business, this cover story is an all-important potpourri of on-ground reality checks that lasted over four months, from Kashmir to Kerala, Gujarat to Tripura! Our team's tour files from these clusters confirm that the healthy pulse of India's foreign trade can be felt across most of these temples. And where hope is dwindling, the spirit is alive and the faith isn't buried yet! So, enjoy this business tour package, covering 11 states, and spread over 49 pages. It could lead you to the epicenter of your next big export idea!

The Dollar Business Intelliguest Unit | August 2015 Issue | The Dollar Business

Alleppy - Good to great... can be an impossible job

Business and Kerala don’t mix. While on one hand, you have the state’s notorious trade unions, on the other, you have its serene beaches and splendid backwaters that make earthly matters like business look trivial. So, to figure out how this rocky marriage is faring, The Dollar Business visited Alleppey (now Alappuzha).

Nearest Port/ICD: Cochin Port (80 km) | Nearest Airport: Cochin Airport (80 km) | Nearest railway station: Alleppey railway station

Shakti Shankar Patra | August 2015 Issue | The Dollar Business


Alleppey Export-TheDollarBusinessA look out of the window while landing at the Cochin airport told me that my decision to make a trip to Alleppey to figure out the health of its coir industry was not wrong. For, while taking off from Mumbai, all I could see was slums, Cochin welcomed me with a beautiful sight of its coast and of course, lots and lots of coconut trees. The 80 km long drive from Cochin to Alleppey only confirmed this further. For, while it was a breeze and felt more like a drive through a never-ending urban setup, coconut trees were never out of sight. It was almost as if God had made a special provision and gifted all of the world’s coconut trees to Kerala. Did I say God? Oh yes, I was in God’s own country.

The protagonist

My trance, soaking-in the natural beauty of what I was seeing, was broken when my cabbie informed that we had reached Alleppey. Although initially sad that the drive had ended, I got excited at the thought of my scheduled meeting with V. R. Prasad, Managing Partner, Travancore Mats & Mattings Company. Central-Coir-Research-cochin port tarrifI was eagerly looking forward to a chat with him since the day the trip to Alleppey was finalised. Within two minutes of shaking hands with him, I was not disappointed. The 81-year-old Prasad speaks straight, as straight as an arrow. “Kerala is not the place for any kind of industrial activity. We are here. Life is interesting. But you can’t grow beyond a point,” the St. Xavier’s College alumni’s first lines to me are. “About 680 workers are there with us today, but we are dealing with five unions,” he adds, answering the question that I was planning to ask.

Travancore Mats & Mattings Company is, by far, the biggest and most prominent coir mat manufacturer not just in Alleppey, but in the entire world. Yes, it has been supplying to MNCs like IKEA for the last many decades, is exporting close to 2.5 million floor mats in the current financial year and can count the President of the United States as one of its customers. Really? Prasad answers with a nod.

The Central Coir Research Institute in Alleppey is involved in developing machinery and equipment for the local coir mat industry.

Coir-mat-factory-TheDollarBusiness2The company’s factory near the Cherthala railway station (Cherthala is located to the north of Alleppey and most coir mat factories in the region are located on either sides of the 22 km stretch between the two towns) can put to shame even the best in the developed world. It boasts of modern machinery from Belgium, a pristine clean environment, even water harvesting and RO water treatment plants, and of course, hundreds of thousands of floor mats ready for exports. Fully satisfied with my meeting with Prasad and the visit to his factory, I got ready to leave and asked him how to locate smaller mat making units in Alleppey. “Just look for red flags,” prompt comes the reply, in what appeared to be a mixture of sarcasm and disgust.

Visit any coir mat factory in Alleppey and you will very likely find women workers outnumbering their men counterparts. Because of being a large job provider for women, the coir mat industry in Alleppey has always been used as a political tool, with some left-leaning politicians even resorting to destroying machinery.


Left-wing politics is not the only issue that is hampering the growth of the coir mat industry in Alleppey. Scarcity of the raw material – coir fibre – means that almost all of the demand here is catered to by Tamil Nadu. How is that possible? What’s wrong with the sea of coconut trees here? “When land reforms were done in Kerala, people were left with only small holdings, making us dependent on Tamil Nadu,” says Sajan B. Nair, Secretary General, Federation of Coir Exporters’ Association, answering the troubling question.

Realising that it’s almost impossible to divorce business and politics in Kerala, I ask Nair what his two top demands from the government are. “The government has to put in the effort to make good quality raw materials available to us. Once we have access to good quality raw materials, better products can be manufactured and higher productivity can be achieved. The government should also strike a balance when it comes to the powers of the unions here. We would welcome changes to the existing labour laws,” he replies, giving me an impression that as the top office bearer of his association, he would have answered this question a zillion times.

Helping hand

While driving from Cherthala to Alleppey, it’s difficult to miss the Central Coir Research Institute and the Coir Museum located next to it. A couple of phone calls and I was sitting in front of the institute’s Director T. A. Rajendra Babu. A machine design specialist, Babu is a veteran of the coir industry and holds two patents. “We make equipment and provide technological help to the industry here,” he replies when asked in what ways his institute support the local industry. “There are certain restrictions when it comes to bleaching and certain dyes are banned. We help local manufacturers abide to the laws and also check for pollutants,” he elaborates and adds, “Nowadays, young people are not very interested in mat-making. Finding skilled workers is turning out to be a big challenge. Hence, we are constantly trying to develop new spinning and weaving machines that can reduce the industry’s dependence industry’s labour intensiveness.”

As I took a tour of the museum with Babu and he showed me some of the machines his institute has developed, I realised that Prasad and Nair’s modernisation and mechanisation hopes are in safe hands.

Of all sizes

As I was winding down my trip to Alleppey, I realised that a labour-intensive and politically-sensitive industry like coir can’t just be about large companies like that of Prasad. Hence I decided to meet the people involved in the not so large ones.

“There are around 100 coir mat exporters in Alleppey, including about 15 EOUs, with annual turnovers ranging from as low as a few lakh rupees to as high as Rs.90-100 crore,” says Vishnu Raj, Export Executive, The United Coir Factories, which supplies gymnasium mats to the Indian armed forces, but earns almost 95% of its revenue from exports, mostly to the United States. Although Raj is reasonably happy with the health of the coir mat industry in Alleppey, he says at times, when demand for coir fibre is very high in China, sourcing the same from Tamil Nadu becomes an issue. “We can actually say that Alleppey competes with China for Tamil Nadu’s coir,” adds Raj.

Mixed feelings

Before I knew, my trip to Alleppey was over. It was time to bid adieu to its beaches, backwaters, greenery and seafood. As I sat down to gather my thoughts, it dawned on me that I hadn't seen a single beggar while I was there. The abject poverty and destitution that one sees all over India wasn’t to be seen in Alleppey. Its infrastructure is pretty good and general standard of living reasonably high. Though it reduced some of the hatred that I had developed for communism during the tour, I couldn’t stop thinking about one of Prasad’s statements. “Whenever politicians here see machinery being brought in, they destroy it.” So, what’s the future of Alleppey’s coir industry, I asked myself.

Alleppey's coir industry will probably always do reasonably well. Alleppey will probably always remain ‘Venice of the East’. Neither the town, nor its coir mat industry will, however, ever achieve the greatness I think they clearly have the potential for. And it's not my heart, but my head that was answering.


“The young generation here is moving away from the coir industry ” - Sajan B. Nair, Secretary general, Federation of Indian Coir Exporters' association (FICEA)

Sajan B. Nair, Secretary general, Federation of Indian Coir Exporters' association (FICEA) 

TDB: Is Alleppey’s coir industry’s dependence on Tamil Nadu for raw materials impacting margins?

Sajan B. Nair (SBN): I won’t say it’s affecting margins. In fact, without Tamil Nadu’s coir, our industry here wouldn’t have survived. But it has changed the quality and look of our coir products. Earlier, our coir, thanks to it being immersed in the backwaters here, used to be golden in colour. But since that’s no longer viable, we are dealing with white fibre from Tamil Nadu.

TDB: How helpful has the Central Coir Research Institute been for the coir industry here? Is bleaching the fibre and making it brighter to enable designing its biggest contribution?

SBN: I won’t say bleaching is an invention of CCRI. Bleaching is being done here for ages. What the institute has worked on successfully, though, is softening the fibre. They have also come up with a process of using tamarind solution to ret and bleach the fibre together.

TDB: Most exporters we spoke to claim that the biggest problem for the coir industry here is the lack of interest of the younger generation. What’s your take on this?

PSK: In the olden days, education was an issue. So, coir factory workers’ children inevitably used to follow the path of their parents. But given the free education that successive governments have provided to the masses here, today, they have many other options like the booming tourism industry. So, despite coir being one of the best paying sectors in Kerala, the younger generation is moving away.

TDB: Given that the Kerala government has a separate ministry for coir, what are your main demands from it?

PSK: The government has to put in the effort to make good quality raw materials available to us. Once we have access to good quality raw materials, better products can be manufactured and higher productivity can be achieved. The government should also strike a balance when it comes to the powers of the unions here. We would welcome changes to the existing labour laws.

TDB: Considering the fact that Alleppey’s coir mattings face very little competition in the international market, what kind of margins are on offer for its exporters?

PSK: When you say we don’t face any competition, it’s a fact that there are certain products, which others just can’t make. But then large MNCs like IKEA, who procure from us in bulk, are very aware of our cost of production, the export benefits that we are entitled to, so I won’t say the margins would be in double digits.

TDB: Are you saying that Alleppey's coir mat exporters are earning single digit margins, despite healthy export incentives?

PSK: Yes. The problem here is that only manufacturer exporters are being able to cater to the bigger players. For the rest, margins are low.


"Whenever politicians here see machinery being brought in, they destroy it" - V. R. Prasad, Managing partner, Travancore Mats & Matting company

V. R. Prasad, Managing partner, Travancore Mats & Matting company 

TDB: Given Kerala’s left-leaning political ideology, how much is the State involved in Alleppey’s coir industry?

V. R. Prasad (VRP): Alleppey’s coir industry continues to head down due to the State’s intervention. This, since growth of communism here has a lot to do with the coir industry. The State wants the industry to keep employing women. So, it is totally against mechanisation. Whenever politicians here see machinery being brought in, they destroy it. Because of this, the industry continues to be dependent on handloom and is scattered all over. It is not growing the way it should. Even the export industry has accepted this fact and hence, is not making any serious investment.

TDB: How has the dependence on Tamil Nadu for fibre affected the industry here?

VRP: About 50-60 years back, when it comes to the quality of products, the industry here was on a much better footing. The coconut husk used to be immersed in the backwaters for a fixed number of days and wouldn’t be pulled out even a day or two earlier. The free flow of water used to make the fibre supple and make extraction easy. Their quality used to be extremely good. Those truly were golden fibres.

Since fibre extraction has almost stopped here, we have no choice but depend mostly on mechanically extracted fibre from the green husk. They are no match to the golden fibres.

TDB: Most coir exporters in Alleppey are family-owned businesses, which have been passed on for generations. Given this fact, how difficult is it for a newcomer from outside to enter the business?

VRP: If you are a newcomer, this is not the place for you. Your destination should be where the raw material is – Tamil Nadu. If you have the capital to invest and the acumen, there’s a lot of money to be made in this business, but definitely not here. The industry needs to embrace technology in a big way. But that’s not possible here. A newcomer just can’t deal with the unions here.

TDB: So, are you saying if a newcomer comes for your advice, you will ask him/her to set up operations in Tamil Nadu, since the raw material is anyway available there?

VRP: Yes. In fact, IKEA, which accounts for almost 90% of our exports, and have been sourcing from us for over four decades, keeps asking us why we still want to be present here and not shift to Tamil Nadu.

TDB: Have companies started doing that?

VRP: Absolutely! In fact we, ourselves, already have a factory in Bhavani in Tamil Nadu. Not only is the productivity much higher there, but also is the work culture much better!

TDB: Do you think this business is scalable? Can it become a multiple billion dollar exporter?

VRP: Yes, you shouldn't look at it only as a maker of door mats.

 Export Temples of India

Kashmir - Weaving magic and winning hearts

There's more to Kashmir than just bloodbaths and scenic beauty. A vast cultural and ethnic diversity has ensured a variety of motifs and crafts thrive in the region. Be it carpets, shawls, papier-mâché, or any other craft, Kashmiris have perfected all of it over centuries. All they now require is a little push from the government.

Nearest Port / ICD: Bari Brahamana (312 km) | Nearest Airport: Srinagar International Airport (11.4 km) | Nearest railway station: Jammu Tawi (294 km)

Vanita Peter D’souza | August 2015 Issue | The Dollar Business

The handicraft & handloom industry is considered to be the primary driver of economic growth in rural Kashmir.


What images does the word ‘Kashmir’ evoke for you? For a non-Kashmiri imagination, it is a land of undulating range of snow-clad mountains, houseboats resting on lakes, endless meadows of flowers! Describing the beauty of Kashmir in words might be an indomitable task. It would rather be easier to narrate the tales of protests, militancy and unrest in the Valley. But then Kashmir is much more than bloodbaths and breathtaking beauty!

In fact, while visiting Kashmir it’s difficult to forget the business at hand. And when you say business, it's the centuries-old handloom and handicraft industry of Kashmir boasting of a prominent place in the economy of the state.

The handloom and handicraft industry, which specialises in weaving Pashmina and Kani shawls, Kishtwari blankets and Kashmiri carpets, and crafts like papier-mâché and wood carving is the mainstay of Kashmir’s economy generating employment opportunities for lakhs of people. Apart from being a labour-intensive cottage industry, the handloom and handicraft sector makes a significant contribution to the State's export. Data from the local industry body reveal that handicrafts worth Rs.1,204 crore were exported from Kashmir in FY2014-15. [Interestingly, this number is Rs.490 crore less than the exports figure touched by the industry in FY2013-14.] Further, in FY2014-15, while exports of carpets from Kashmir stood at Rs.409 crore (also down by Rs.142 crore), the State exported shawls and papier-mâché worth Rs.368 crore and Rs.71 crore (up by Rs.31 crore from last year) respectively. Just like apples, the handicraft & handloom industry is also considered to be one of the primary drivers of economic growth in rural Kashmir, with its USP being hand-made products reflecting incredible craftsmanship.

Kashmir exports-TheDollarBusiness

Real vs. fake

The repertoire of Kashmiri handicraft is incomplete without woolen shawls. From Pashmina to Kani to Shahtoosh, Kashmiri shawls have represented unmatched tradition receiving worldwide acclaim. The first one to find a mention is Pashmina shawl that holds the highest market value among shawls from Kashmir. In the non-Kashmiri imagination, Pashmina shawl is the one that passes a ring test. But, what if you get to know there is no ring test to check the authenticity of Pashmina shawl?!

This myth about Pashmina shawl passing through a ring to assess its purity had landed a leading Indian telecommunication company in serious controversy. A television commercial by the company featured a trader trying to sell a Pashmina shawl to two women, who show him a video that authentic Pashmina shawls are supposed to pass a ring test. But that's not really the case. “The ring test is for Shahtoosh shawls and not Pashmina,” confirms Muheet Mehraj, Co-founder of Kashmir Box, an e-commerce platform selling authentic Kashmiri products.

Although the company later pulled out the commercial, this was one of the classic cases of ignorance and misconception related to the traditional arts of the country. So, how can one check the authenticity of a Pashmina shawl? A Geographical Index (GI) seal is the easiest way. Yasir A. Mir, a faculty at the Crafts Development Institute (CDI) located at Srinagar elaborates it further: “There is no such mechanism to differentiate between the original and fake Pashmina. In the interest of the weavers and to protect the identity of Pashmina we provide a GI mark to the real Pashmina.”

Three factors determine the GI seal for original Kashmir Pashmina. “First, the wool should be obtained from Capra Hircus mountain goat from the highlands of Ladakh. Secondly, the wool should be hand spun. Third, and most importantly, it should be hand woven,” Mehraj tells The Dollar Business. And it's the CDI which ensures that this GI seal doesn’t get copied easily. “The label includes details which can be read only under the ultraviolet (UV) light. Further, each label has unique number registered with CDI and can be checked online. CDI is well equipped to test the adulteration in Pashmina wool,” adds Mir.

Handicrafts industry occupies an important place in Jammu & Kashmir's economy.


Ring reality

Pashmina is often confused with Shahtoosh shawls – so fine and delicate that they can pass through a ring and are warm enough to hatch a bird's egg. The very name signifies royalty – as it means ‘king of fine wools’ in Persian. But Shahtoosh shawls – worth hundreds of thousands – are banned in India under the Convention on International Trade in Endangered Species (CITIES).

Nazim Zai Khan, Director – Industries & Commerce, Jammu & Kashmir Government, explains The Dollar Business the reason behind the ban. “Shahtoosh wool is obtained from Chiru antelope found in the vastness of the Tibet and Ladakh regions. Over the years, the population of Chirus decreased to a level that the killing of the animal and weaving of Shahtoosh was banned. Subsequently, the age-old craft of weaving Shahtoosh shawl was forgotten and the artisans suffered.” However, Khan is of the opinion that a craftsman would never kill a Chiru. "In fact, he would follow the animal and pick up the wool. But the government did not look into details and imposed a blanket ban,” he adds.

Some of the magnificent Kashmiri carpets are woven with a hand knot count of 450 per square inch – a symbol of incredible craftsmanship!


Woven magic

For connoisseurs of carpets, Kashmir is like entering into a cave of woven treasures. Kashmiri carpets are known for their intricate pattern that are knotted by hands and not tufted. And therefore, the number of knots and not the design determine the price of Kashmiri carpets. “There is no competition to the carpets of Kashmir in the entire world. They stand out for the raw material used like fine wool and silk. Further, it's the number of knots per square inch that makes Kashmir carpet exclusive. Some of the magnificent carpets are woven with a hand knot count of 256 to 450 per square inch – a symbol of incredible beauty," Zubair Ahmad, Director of Srinagar-based Indian Institute of Carpet Technology (IICT), tells The Dollar Business.

The Kashmiri carpets owe their origin to Persia. The hand-knotted carpet weaving craft is said to be introduced to the natives of the Valley by invaders in the 16th century who brought Persian weavers to impart training. Although the weaving craft was influenced by Persian tradition, the artisans in Kashmir started giving their distinctive touch to the style in 17th century. Rich in floral and tendril motifs, Kashmiri carpets therefore are a blend of Persian designs – leitmotifs of a geometrical symmetry – and local styles.

It's cold out there!

However, the ground reality is not so encouraging. The carpet weaving craft has its own set of challenges, the biggest being the dwindling number of craftsmen. “As carpet weaving is becoming non-remunerative, the number of craftsmen is going down. Also, the labour-intensive nature of the craft has forced the artisans to look for other easy jobs. It takes many days to complete one carpet. At the end of the day there is no surety if the product will be sold. Secondly, the younger generation doesn’t want to continue the tradition and thus want to look for lucrative jobs for better living," Ahmad elaborates. And then, there are middlemen who eat up the majority share of the weavers and exploit them.

According to industry observers, insurgency and conflict have also adversely affected the business. Several Kashmiri families have lost their male members in violence, leaving just females of the house to continue the legacy.

Once a major source of income for many Kashmiri families, tourism industry too has been hit by the political turmoil, terrorist activities and unrest in the Valley. Subsequently, restrictions in tourism in Kashmir has also stolen the sheen of the craft.


No respite

Kashmir's handloom sector, which had suffered over the years following political unrest and militancy, was somehow limping back towards normalcy when floods hit the Valley last year, throwing life and economics out of gear. The devastating floods have spared no one!

And then there are other issues. Lack of skilled human resource and innovation, unavailability of easy financing schemes, dominance of unorganised players, lack of market intelligence, long-drawn-out processes, lack or R&D, and poor infrastructure act as a major deterrent. In fact, lack of rail connectivity between Srinagar and the rest of the country has been a major hurdle in the industry's growth. “The Valley is well connected to Jammu through NH1. But one landslide or a heavy snowfall can easily disconnect Kashmir from major cities. Although the state has an international airport in Sringar, it too has various restrictions. With such limited resources how can we boost our business," says Mehraj.

The only saving grace, however, is the Inland Container Depot (ICD) at Bari Brahamana in Jammu, which is about 312 km away from Srinagar. Kashmiri handicrafts are also facing an all-round assault from counterfeit products within and outside the state. Be as it may, one thing that is strikingly clear is that the survival spirit is certainly in abundance in the Valley.

"I think everything in Kashmir is untouched. It holds so much potential but the government hasn't realised it. An ecosystem where businesses flourish is missing and once government takes care of this, there'll be no looking back," says Mehraj pointing out the opportunities Kashmir offers. And anyone, who has spent a few days here, will find it very hard to disagree. We couldn't!



“Kashmir’s handicraft sector has suffered due to the turmoil. Earlier, foreign clients used to visit Kashmir for business. Time has changed now and we hardly have any orders from abroad.Government too has been of little help to us.”

G. R. Jan, Proprietor, G. R. Jan & Sons



“I would say there is no entity called government. Only bureaucrats rule here. They don’t act like regulators. At times, they misuse their power. Corruption is another major problem. When they join hands, entrepreneurs like us suffer.”


Ashfaq Mir, MD, Indo Kashmir Carpet Factory 



“I think everything in Kashmir is untouched. It holds so much potential but the government hasn't realised it. An ecosystem where businesses flourish is missing and once government takes care of this, there'll be no looking back.”

Muheet Mehraj, Co-founder, Kashmir Box



“We don't register any unit that uses machines to spin Pashmina” - Nazim Zai Khan, Director, Industries & Commerce, J&K Government

Nazim Zai Khan, Director, Industries & Commerce, J&K Government


TDB: Give us a sense of Kashmir’s handicraft and handloom industry?

Nazim Zai Khan (NZK): The handicraft sector in Kashmir has suffered to a large extent ever since the turmoil began. Manufacturers and traders from other districts took over the business during this period and hampered the craft trade. Even as initiatives are being taken to give new lease of life to the sector, the art is dying for want of support. Also, the intense competition from China is killing the Kashmiri art. We can’t keep up with Chinese goods. Besides, people are losing interest in hand-woven products and are opting cheaper alternatives.

TDB: How has the controversial ad on Pashmina shawls (which says a shawl that does not pass through a ring cannot be called genuine Pashmina) by a leading telecommunication company affected business? What is the government doing to ensure authenticity of Pashmina?

NZK: The television commercial was pulled out after it was told that the ring test is not a confirmatory test for certifying quality of real Pashmina shawls. We even wanted the company to play a clarification on national television but that did not happen.

Pashmina is a warm wool that comes from highlands of Ladakh and Kashmir. The mechanisation of Pashmina shawls is killing the art since a machine-made shawl takes less time and it is not pure. At our end, to curb the menace, we are not registering any unit that machine-spins Pashmina. This is certainly in the interest of the weavers.

The second is the Geographical Index (GI) mark on pure Pashmina shawls. A handcrafted Kashmiri product is tested in the labs of Indian Crafts Institute in Srinagar. The products passing the test are given the geographical index status (GIS). Sadly, the raw material available in Srinagar is impure. So, none of the shawls have passed the test so far.

TDB: You mean to say the raw material that is being used in the making of Pashmina shawls is adulterated? So, what steps are being taken by the government to stop the malpractice?

NZK: Yes, the problem is with the raw wool which is sourced from Ladakh. During an investigation it was found that wool growers in Ladakh were sending Pashmina wool to Amritsar and Nepal to earn more money. Since, Kashmir artisans can’t afford to pay higher amount, the growers sell them the adulterated wool. The government is thus considering to ban the exports of Pashmina wool.

TDB: Last year, the Valley suffered extensive damage due to floods. Has the market recovered?

NZK: The devastating floods have spared no one. Business and commerce has been hit badly. A lot of people have no money to run their businesses and so are dependent on the government. The Omar government had sought Rs.44,000 crore flood relief package from the Centre but nothing happened. The market is suffering. Although the new government had promised cluster development in Srinagar to revive Kashmir’s handicraft industry. But nothing has been done so far.

TDB: When will we see a railway line connecting Srinagar to other parts of the country? What is the government doing to improve logistics facilities and infrastructure in the Valley?

NZK: Money is required for everything. Post floods, a majority of the rehabilitation work is done by private entities. I haven’t seen any government infrastructure coming along in a big way. But the railway connectivity to Srinagar is on its way. The track is almost complete and testing will begin soon. Railway connectivity will definitely provide impetus to the industry.

TDB: Tell us about cross-LOC trade since its inception. Are people willing to participate?

NZK: Trade across the Line of Control (LoC) started in 2008 as a confidence-building measure to strengthen economic ties between Pakistan and India. As per the standing operating procedure (SOP), only 21 items are being traded between the two sides on barter system and at zero custom duty. Trading takes place four days in a week and items produced by a third nation cannot be allowed for trade. Initially, not many traders were interested and we had to literally urge people to participate. Despite all odds, the cross-LoC trade has gained popularity over the years. The business transaction has increased significantly.

TDB: What are the other issues affecting cross-LOC trade?

NZK: There have been a few shortcomings in the trade such as absence of a currency exchange mechanism, lack of banking facilities and limited items in the trade list. A lot of proxy traders from both sides have got involved to make quick profits. We are now taking steps like registration of traders, checking their address and ID proofs to curtail proxy traders. We have also cut down the numbers of traders, to 380 from 650, since we don’t have the infrastructure to handle so many traders.



Export Temples of IndiaPanipat - They call it the city of weavers!

Mention this town's name and odds are high that the first word that comes to mind is "war". History is such. Coming to the present, it is as important in business terms as it was politically, centuries back; it's the epicentre of India's handloom industry, where thousands of weavers, with magic in their hands, nest!

Nearest Port / ICD: Babarpur (7 km) | Nearest Airport: IGI Airport, New Delhi (100 km) | Nearest Railway Station: Panipat railway station (5 km)

Himanshu Vatsa | August 2015 Issue | The Dollar Business

Panipat has carved out a niche as one of the fast flourishing handloom centres in India where signs of development are omnipresent.


Situated on the banks of river Yamuna, this sprawling industrial city comes with several tags of history – sufism, partition tales and even mythology! Known to be one of five villages founded by Pandavas during the times of the Mahabharata, according to legends, it's been a land of battles – a place where three major battles, which changed the course of Indian history, were fought. Today, history, craft and cottage industries come together to form this Haryana city called Panipat, aka the City of Weavers!

Located just 100 km away from the national capital, New Delhi, Panipat has transcended through many socio-economic phases from sheltering migrants from Pakistan to a luminary of handloom units. Long before one enters the main city, the presence of the textile industry is palpably felt with an array of showrooms on either side of the Grand Trunk (GT) Road, flanking hand-woven durries, carpets and blankets. 

Labour problems apart, Panipat's handloom industry is also facing intense competition from Chinese suppliers of home furnishings.


Minting money

According to Handloom Export Promotion Council (HEPC) data, the overall handloom exports of India in FY2014-15 stood at $374 million. If the industry experts are to be believed, Panipat’s handloom industry accounted for about 40-50% of the said number.

Luring the world with its fine quality products, Panipat's handloom industry – which produces everything ranging from rugs, durries, blankets, carpets to bed sheets, bed covers and all kinds of linen for the domestic as well as the international market – has become an innate part of the city’s economy. In fact, the success of this ancient town is woven from the threads of weavers’ experience, industrial spirit and innovation. “You can call Panipat the Silicon Valley of Home Décor,” says Sidhartha Kohli, who runs a Panipat-based handloom unit.



Image makeover

From the day it was founded to the time it was re-formed in 1992, Panipat has carved out a niche as one of the fast flourishing handloom centres in India where signs of development are omnipresent. So, what changed the historic city into flourishing business centre? Post-partition, a large number of professional weavers from Pakistan migrated and settled in this region. They got down to their ancestral craft, setting up looms. Adversity turned into an opportunity for Panipat as the tradition engulfed the entire population. Result: The district today houses over 20,000 registered and unregistered handloom units which have transformed the city into a major production and export hub for home textiles. Today, the handloom products from Panipat are exported to all major international markets including US, UK, Germany, France, Italy, Brazil and Africa.

“There is no specific product that is exported. We are selling our creativity. Our first margin is job satisfaction, and the other being our creativity. That is our biggest margin. You have to consider being creative as a reward,” Ashish Jain, owner of the city-based AKS Rugs Co., tells The Dollar Business. Although handloom exports from India have recently witnessed a downfall due to economic crisis in several European countries, industry performers are confident to explore new markets with more innovative products. “Handloom is a thriving industry. We are doing pretty well. Of course, there is some problem on the demand side. But there is certainly a market for the handloom products, we just have to make extra efforts to create that market,” Gagan Rai, Chairman, Handloom Export Promotion Council (HEPC) tells The Dollar Business.

In high spirits

Meanwhile, the handloom industry in Panipat is undergoing an image makeover. The product range and designs are changing rapidly. The emergence of new markets, with a huge demand for designer floor coverings, is giving business the much-needed boost. "The products made here stand out in quality and are distinct. With handloom being a part of the local tradition, industrial spirit coupled with availability of skilled labour, raw material and presence of ancillary units in the vicinity have contributed to the rapid proliferation of the industry. In addition, continued innovation has helped Panipat retain its position in global markets," Ramesh Verma, President, Handloom Exports Manufacturing Association tells The Dollar Business.

The existence of an inland container depot (ICD), barely 7 km away at Babarpur, also gives impetus to exports. However, the said ICD still has no rail link. That apart, two proposed ICDs in and around Panipat and one already operational at Sonipat (just 50 km away from Panipat) are expected to boost exports from the region. “The cost of sending a container from Babarpur to Tughlakabad freight depot in Delhi is nearly Rs.14,000. But with the functioning of Sonipat ICD, the cost has reduced by almost 50%,” says Ashwani Jindal, Proprietor of a Panipat-based shipping agency JM Global Logistics.


Labour pain

Over the years, things have changed drastically, with clienteles and profits shrinking owing to labour crunch, increase in production cost and rising competition. “Weavers who have been engaged in this business for generations are looking for greener pastures for want of a better living. They don’t want their children to continue this tradition. Those in the industry, demand higher remuneration. In 1980s, when we started business, weavers were happy taking home Rs.25-30 a day. Now, they are unwilling to work even for Rs.600 a day. Out of our 40 looms, 25 had to be shut down due to labour crunch,” laments Kohli. Dwindling number of skilled weavers has forced many unit owners to close down their shops.

But weavers have their reasons. “We feel exploited. There is no implementation of factory laws, no facility of insurance or legal working hours. There is no proper education and medical facilities for our families. There are many weavers from other states on contractual basis. After a hard day’s work what we get is a minimal amount. So, it’s better we switch to better paying jobs with lesser workload,” says Toofani, a migrant weaver from Bihar’s Kishanganj area.

Thorny path

Labour problems apart, the handloom industry is also facing intense competition from Chinese suppliers of home furnishings. According to the industry players, the influx of cheap Chinese goods in the international market has affected their business.

Logistics is also a big issue. “Since Babarpur ICD does not have any rail link, goods are first transported to Tughlakabad freight depot at Delhi in containers hired from CONCOR, from where they are sent to Mumbai's Nhava Sheva Port by train. It takes at least 45 days to deliver one consignment. The entire process delays the shipment. Sometimes goods even get stolen and exporters suffer loss, both in terms of money and credibility," says Verma. Further, mushrooming industrial units in unauthorised areas, ever-changing technology and increasing production cost are some other key challenges before the industry.

All is well

Although critics feel the handloom industry in Panipat has reached the pinnacle, the scope and growth in this business is immense. In fact, with the advent of new technologies and rising demand from newer markets, there's a wide scope for product diversification when it comes to home textiles. Further, Panipat has some unique characteristics – proximity to the national capital, existing and proposed ICDs in the neighbourhood, easier access to raw material, presence of ancillary units, strong marketing sense and creative abilities – that will continue to make it the epicentre of India's handloom exports. So, notwithstanding the hiccups, handloom exports from Panipat will continue to flourish. The game has just begun, we would say!


“we want the government to enroll weavers under MNREGA” - Ramesh Verma, President, Handloom Exports Manufacturing Association

Ramesh Verma, President, Handloom Exports Manufacturing Association


TDB: Give us an overview of Panipat’s handloom industry.

Ramesh Verma (RV): Panipat is the centre for quality blankets and carpets in India and abroad. The units produce everything from carpets to blankets, from rugs to durries to all kinds of linen for both domestic and international markets. In fact, the district is home to more than 20,000 registered and unregistered units and 90% of them are located in the non-designated areas. The industry serves as a major source of employment generation for the people of the district. There are over 70,000 looms across the city generating employment for about 3 lakh people.

TDB: What is it that gives Panipat’s handloom industry an edge over its competitors?

RV: Handloom industry has provided international recognition to Panipat. The products made here stand out in quality and are distinct. With handloom being a part of the local tradition, industrial spirit coupled with availability of skilled labour, raw material and presence of ancillary units in the vicinity have contributed to the rapid proliferation of the industry. In addition, continued innovation has helped Panipat retain its position in global markets. Flexibility as per the market demand and requirement has been another plus point.

TDB: What is the contribution of handloom units in the growth of Panipat?

RV: I would say the entire economy of the district is dependent on handloom industry.

TDB: What are the major problems faced by exporters in Panipat?

RV: A majority of handloom units continue to operate from non-designated areas without even basic infrastructure like roads, drains, etc in place. Although the government has allotted a sector for dyeing units, water problem is an issue there. Besides, in the absence of technical know-how, majority of the handloom weavers find difficult to compete in international market. Further, there are logistics issues. Despite Panipat being an export hub, we have to spend extra money to send our consignment to Mumbai port. Nearest ICD Babarpur still has no rail link. We have to buy containers from Tughlakabad ICD or Dadri ICD through CONCOR. No steps have been taken to set up special clusters for handloom units.

TDB: What measures are required to scale up production and exports of handloom?

RV: While operating from non-designated areas, the units fail to meet the requirement of foreign buyers. Government should specify a cluster for handloom units so that people can get everything under one roof. Loans should be provided at lower interest rate. At the same time, land should be allotted at subsidised rates and payment should be recovered in installments. Since, we are the second largest source of employment after agriculture, we want the government to enroll weavers under MNREGA. It will ensure proper implementation of the scheme and provide better work environment to workers.


“Labour crunch has slowed the production process in Panipat” - Gagan Rai, Chairman, Handloom Export Promotion Council (HEPC)

Gagan Rai, Chairman, Handloom Export Promotion Council (HEPC)


TDB: Apart from cultural advantage, what are the other factors that make Panipat a hub of handloom products?

Gagan Rai (GR): Positive factors that have enabled Panipat to become a hub for handloom products are the availability of weavers, raw material, presence of spinning mills that produce coarse count required to manufacture handloom products, easy availability of looms and their spare parts and existence of supporting industries such as dyeing units and process houses.

TDB: What are the competitive advantages for Indian handloom exporters in the international market?

GR: The USP of Indian handloom products is that they are made by hand and are environment-friendly. Indian handloom products are best suited for buyers who are looking for eco-friendly products.

TDB: What are the typical challenges faced by Panipat handloom industry?

GR: The major challenge is the losing interest of younger generation in the weaving craft. The labour crunch has slowed down the production process in Panipat, which is not the case with China as they use machines. Machine-made products tend to be cheaper and have better finish and as such China is giving us stiff competition.

TDB: Given the reduced demand from US and EU, India's traditional export markets, what are the prospects of handloom exports over the next one year?

GR: Other countries like Japan, Australia, Brazil, South Africa, Malaysia, Mali, Saudi Arabia, United Arab Emirates and Canada can be a few potential markets for the Indian handloom products. In the coming year, there is a possibility that exports may get affected given the trend where importers are looking for a viable alternative to Indian handloom products.

TDB: Duty credit scrip on products falling under Chapter 57 like carpets, rugs and mats, cotton durries and mattings has been reduced from 7% to 5%. How will it affect export of handloom products from India?

GR: It will have a huge impact on Indian handloom exports as there is tough competition in the international market. When the rates are reduced, profit will come down and there will be additional cost burden. Council has taken up the issue of reduction of rates with the Department of Commerce.

TDB: What measures should be taken by the government to encourage handloom industry?

GR: Government should ensure continuous power supply to handloom units for speedy production. A better tax structure and other basic amenities should also be provided apart from coming up with welfare schemes for the betterment of the weaving community. It is very important to implement schemes for skill upgradation and labour management.


Export Temples of India

Lucknow - With Love, from the city of Nawabs

While exploring the land of Nawabs and Kebabs – Lucknow – you are enamoured by its enormous traditional wealth. One among its offerings is Chikankari – the time-tested intricate art of embroidering a plethora of patterns on fabric – a thriving cottage industry that continues to bewitch connoisseurs and highly discerning markets!

Nearest Port / ICD: ICD Lucknow (10 km) | Nearest Airport: Amausi, Lucknow (20 km) | Nearest railway station: Lucknow railway station (5 km)

Neha Dewan | August 2015 Issue | The Dollar Business


At the factory unit of MLK Exports at Jankipuram Extension in Lucknow, you can sense the frenetic pace of activity as you step inside. And as you sit down for a candid chat with exporters Shishir and Sharad Kapoor, this buzz continues as the door of their office keeps opening frequently with keen queries from the workers.

For the two brothers, who started off in 2005, the decision to separate from their family business and set up their own unit was a ‘necessary’ one. Today, after 10 years in the trade, they are among the few leading exporters of Lucknow Chikan. Beaming with pride – well they have every reason to be cheerful – the duo narrates their success story to The Dollar Business. “For 15 years, I was urging the family to grasp the potential of the product, but they were not keen to explore further. Eventually, we separated from the family business. The very first week, we secured an order from Brazil and since then there has been no looking back,” reminisces Shishir Kapoor, Director, MLK Exports, a leading export house in Lucknow.

Lucknow Exports-TheDollarBusiness

Old city charm!

Lucknow is like a window to the poetic charm of a bygone era. As you travel through the streets, the city though crowded, portrays its culture with a certain grace that is unmatched. And, of course, flaunts urdu in all its fluency and eloquence. Or, if you are a novice to the lingo, you may just take a few seconds to respond when someone addresses you as ‘Mohtarma’, just the way I did!

Around 5 lakh artisans in and around the villages near the city are involved in Chikankari craft. The word ‘Chikan’ has been derived from the Persian word ‘Chikeen’ which means a kind of embroidered fabric. Traditionally, Chikan work was done on white cotton cloth. However, now this has extended to other types of fabrics such as silk, georgette, crêpe and wool among a host of others, to match contemporary tastes. There are 36 different stitches in Chikankari, each fascinating and beautiful in their weave. Some of the names are no less intriguing – Tepchi, Jali, Bijli, Ghaspatti, Keel Kangan, Bulbul and Chanapatti! However, despite Lucknow being at the heart of this unique craft, only 5% of the total production is exported while the rest goes to the domestic market.

In chikankari, the designs and patterns depend on the type of stitch and the thicknesses of the threads used for embroidery.


Speed breakers

So, what is the reason for this limited presence in international markets? “The results are not that great in exports and hardly any incentives exist. You have to face the price competition. Then there is struggle at every stage of the production process, right from sourcing the fabric to its finishing, apart from having to deal with those who lack technical knowhow. And if you end up appointing people who are skilled, you have to pay higher salaries which again increases the overheads,” Dilip Kumar, Director of Nazrana Chikan, a company that ships 25% of its production to overseas markets, tells The Dollar Business. In addition to these issues, factors like shortage of skilled manpower and a lack of awareness among buyers also play up in creating this imbalance. “The knowhow acts as a major deterrent. Also, people don’t want to get into production. Even the NIFT graduates want to be in administration rather than in manufacturing. This mindset needs to undergo a paradigm shift for things to improve,” adds Kapoor.

There are 36 different stitches in Chikankari, each fascinating and beautiful in their weave.


A long way to go

Fashion designer Rinki Gautam working in the city’s National Centre for Design and Product Development (NCDPD) says that product lines that are innovative and contemporary are preferred picks from exhibitions for international buyers. “We see a good demand for western fusion outfits, tank tops, palazzo pants, and kurtis with creative motifs. The more creativity that is infused in the product lines and colour variations, better is the demand.” But there is still a long way to go. NGOs such as Uttar Pradesh Vigyan Manch is also trying to enhance skills among artisans in ways which can work as an incentive for them to continue in their tasks. “Entrepreneurship is not catching up. Through our workshops, we try to encourage the artisans to become entrepreneurs so that they also feel motivated in being a part of the industry,” says B. K. Srivastava, Secretary, Uttar Pradesh Vigyan Manch.

And these efforts, even if at a small level right now, are playing a part in changing the mindset. Ask 35-year-old Babita Shukla who has been crafting these fine weaves for the last 20 years! “I enjoy doing this work. I have a 4-year-old daughter as well who comes with me to the centres where I work. We will have our own business by the time she grows up and she will be a part of that venture,” Babita tells The Dollar Business with effusive zeal and confidence visible in her eyes. Babita’s ambition is supported by rapturous praise by fellow artisans working with her.

Incidentally, a large part of the embroidery is outsourced to villages in Lucknow and hence timely deliveries of the end product becomes another pressing issue in the case of exports. In the case of international competition, machine made Chinese Chikan which ends up being 25-30% cheaper does raise eyebrows.

However, exporters in the trade try to use their USP of handmade embroidery to their strength and work around this hurdle by being more creative. “You cannot have too many variations in the placement of the embroidery in Chinese Chikan as it is machine made unlike our garments where there is no such constraint. We also frequently come up with new styles and designs and that works for us,” adds Kumar.

Women workers at a chikan embroidery unit in Lucknow. Both men and women are equally involved in this centuries-old craft.


Road ahead

The way forward then can only be that the government steps in to create awareness and promote the product aggressively so that buzz around Chikankari can be revived. Ironically, the GI status bestowed upon Lucknow Chikan has also done little for the industry. Besides this, increasing wages and incentives for artisans and the overall workforce involved in the chikankari process can go a long way in making this art evolve for domestic and international markets.

Perhaps this is the reason which made exporter Dinesh Kumar of Nazrana Chikan sit up and take note of his newly married worker’s marital woes. “I asked him if his wife was working and she wasn’t. And that is where the problem really was – of her being idle all day. I gave him a simple solution of taking back some pieces from the factory every day to his house so that she could be occupied with the work and earn some extra income as well. As it turned out, his marital discord was soon over in a few days,” he says with a laugh.

Going by the focused endeavours, all round efforts and strategies, both by the industry and the government, the chikankari is bound to captivate more hearts in the years to come. What it all needs right now, is a bit of marketing!


“Government should establish an apparel park in Lucknow” - Shishir Kapoor, Director, MLK Exports

Shishir Kapoor, Director, MLK Exports


TDB: You carved out your own path 10 years ago when you moved away from the family business and set up MLK Exports. Would you say that it was a step in the right direction?

Shishir Kapoor (SK): Ten years ago, when I started this business I didn't have funds but knew the product very well. The hurdle, of course, was that nobody was ready to stitch my products as my family had a monopoly over the business in Lucknow. At that time, the drawbacks were very good apart from zero taxation so automatically my family was minting money without caring much about quality. I, however, wanted to focus on quality. Hence, I bought world-class machines and started production. The very first week I secured an order from Brazil with 100% advance. Since then there has been no looking back.

TDB: Despite Lucknow being the biggest Chikan embroidery cluster of India, why exports of the product from the place is still limited to small numbers?

SK: The know-how acts as a deterrent – people still don’t know about the product. For instance, I have been in the business for 22 years now, but I still haven't come across a graduate from any leading fashion institute who understands the technicalities of Chikan embroidery. Manufacturing is tough and for that you have to be aware of each and every aspect of production. As such, it's difficult to find people who can take Chikan embroidery business ahead. You have to put your life into it and understand the shape of the product and what the customer wants.

TDB: What about competition from China and other countries, if any?

SK: The Chinese in fact come to us and feel very happy when we tell them that our products are made by hand. We are not facing any competition from China. In fact, two of our buyers are Chinese. Our products are reasonably priced, they are not cheap. People who are connoisseurs understand a handmade product and love wearing something exclusive.

TDB: What steps, according to you, the government should take to help the Lucknow Chikan industry flourish?

SK: The government should first of all establish an apparel park in Lucknow. It is a necessity here so that people start setting up manufacturing units. There are many exporters in Lucknow but they don’t even have a factory or a workshop. The government should also set up a centre for women who want to learn the tricks of the trade.

TDB: Do you plan to venture into the domestic market?

SK: Designs that we are selling overseas are also good for the domestic market. But, as of today, we are not being able to fulfil even just the export demand. Also, it is a big investment because to cater to the domestic market, you need to operate on a very large scale. Ultimately, we would want to cater to it. It is huge and people here are deprived of low-priced quality products. But we need a brand or maybe an association that can protect and market the product at reasonable prices.


“We need government to create awareness about Chikankari” - Dilip Kumar, Director, Nazrana Chikan

Dilip Kumar, Director, Nazrana Chikan


TDB: Why is it that even though Lucknow is the centre of Chikankari embroidery, only a handful of exporters are present in the city?

Dilip Kumar (DK): The export portion of Chikan work is very less. The reason is simple. Chikankari is an unorganised industry and most of the work is done by artisans staying in nearby villages. Hence, time-bound production is a big issue that hampers exports. It takes 60-90 days for production and most of the people are not willing to wait that much. For domestic production, there is no time criteria. We can sell the product whenever it comes. Only 2-3% manufacturers in Lucknow are into direct exports. We are doing both – 25% exports and 75% domestic sales. We are majorly exporting to countries in Europe which include Italy, France, Germany, apart from shipping our products to Middle East, Japan and Singapore.

TDB: What competition are you facing from China and how are you countering it?

DK: Bulk international buyers are looking for very low rates and they are sourcing the product from China. Their prices are lower and production is faster. Their products are 25-30% cheaper. However, we do a lot of creative work and come with different patterns and styles. And that works to our advantage. We also have lot of options when it comes to placing designs on garments. For China, this is a limitation. There designs can be symmetrical or uniform throughout as its done by machine. So, you cannot do too many variations in the placement of the embroidery. Because of hand embroidery, our products are slightly more expensive than the machine made products. So, only those who are aware of Chikan embroidery are willing to pay for it.

TDB: What are the main issues ailing the industry and impeding its growth?

DK: The basic issue is lack of awareness about the artwork. If awareness about this art-form increases, we will get the desired price. The biggest problem at present is that buyers end up comparing it with machine embroidery. There is a great need to make people aware of the fact that Chikankari is a delicate and artfully done hand embroidery and Lucknow is the only place where it is done. The government should also promote this craft.

Further, the embroidery part of the product is beyond our control, as most of it is done in villages that are far from the city. There are 36 different kind of stitches in chikan work and evey stitch is carried out in a different area. Also, the villagers take up this craft as a part-time job. All this causes delay in production and also results in small quantum of exports from Lucknow as exporters are not able to fulfil their commitments on time.

TDB: Has the geographical indication (GI) status worked in any way for Lucknow Chikan?

DK: No, it is of no help as of now. Unless you popularise it, how would the tag help? It has to be promoted, which is lacking at present. This is a bog issue, particularly for exporters.


Export Temples of India

Firozabad - This way up. Handle with care.

Call it the government's apathy towards it or its resistance to change, Firozabad – India's biggest glass cluster – is slowly losing its sheen. But still, it's not all doom and gloom. The trend can be reversed. All that this city requires is a radically formulated sip of change and, of course, a little push from the government to binge on success!

Nearest Port / ICD: ICD Tughlakabad (230 km) | Nearest Airport: Kheria Airport, Agra (51 km) | Nearest railway station: Firozabad railway station (2 km)

Neha Dewan | August 2015 Issue | The Dollar Business

This mecca of ‘all things glass’ flaunts its craftsmanship with élan!


It’s a busy day at work at Jagdamba Glass Works’ (JGW) factory unit in Firozabad. As you walk along, awed with the way it all unfolds before the eyes, you can see a bevy of workers lining up the various stages of the glass manufacturing process – cutting, blowing, making, et al.

JGW, which has primarily been manufacturing double walled glass liners used in vacuum flasks, is seeing a slow movement this year. “At least 70% of the company's business is from exports. We export glass refills to countries such as Brazil, Europe and China. But the demand is seeing a slow patch at present. Globally, the demand is low and competing with China is increasingly becoming fierce. Their quality is better and costs are lower. More incentives from the government alone can help to change the dismal scenario,” says Vivek Garg, Managing Partner, Jagdamba Glass Works.

Firozabad exports-TheDollarBusiness

Royal connect

This industrial town of Uttar Pradesh – more popularly christened as the ‘Glass City of India’ is a renowned name in the business. Located just 40 km from Agra, this mecca of ‘all things glass’ flaunts its craftsmanship with élan. From fancy bangles and wine glasses to pretty flower vases, all size candle stands, princely chandeliers and cut glass table lamps – you name it and you see it!

Historically, Firozabad was known as Chandwar Nagar. The town derived its name Firozabad after it was given as an estate to Firoz Shah, a general in Akbar’s court. During this period, many glass articles were brought to this region. A few when rejected were melted and moulded in local furnaces. And that marked the beginning of glass industry in Firozabad. The industry here received patronage during the Mughal era and the town developed into a glass-making centre, manufacturing lamps, chandeliers, trinkets for the royal courts.

Today, Firozabad houses more than 400 small-scale units engaged in the production of glass articles that find their way to the domestic and export markets.


Gleaming business

Today, Firozabad houses more than 400 small-scale units engaged in the production of glass articles that find their way to both domestic and export markets. By rough estimates, Firozabad accounts for almost 70% of the total glass production in the country. Generating employment for lakhs of people, this cluster is the biggest glass industry cluster in India.

Apart from decorative household items of glass, Firozabad is also famous as the ‘City of Bangles’ with at least 150 bangle-making and decoration units catering to the domestic demand. In fact, a walk down the ‘Bohran Gali’ market in the city and shops full of resplendent bangle colours will lure you towards them. Racks with bangles, which are moved frequently through the lane, is a fascinating sight.

Although Firozabad is considered a lucrative glass export hub, the ground reality is that FY2015-16 is proving to be a challenging year for exporters in the glass trade.


All is not well

Although Firozabad is considered a lucrative glass export hub, the ground reality is that FY2016 is proving to be a challenging year for exporters in the glass trade. Factors such as cut-throat competition from countries such as China and Vietnam, increase in gas and soda ash prices and changes in the duty drawback structure have all played a role in slashing profit margins. “Earlier we were working on a margin of about 14% (7% duty drawback and 7% from Focus Market Scheme; FMS). Now, we are finding it difficult to break-even. FMS is not there anymore for us and drawback has also been revised from 7% to 3%, according to the categories. We are 30% down this time as compared to last year and it is a worrisome situation,” laments Anuj Jain, Partner at Amita International, a Firozabad based company which manufactures and exports glass handicrafts. Good news for Jain, the government has recently introduced changes in the MEIS scheme, which can be taken advantage of by export-manufacturers like Amita Intl.

And then there are other factors. Prices of gas and soda ash – the main raw material used in glass manufacturing – have gone up considerably. “We are not able to match the prices offered by other countries, particularly China, Vietnam and Taiwan. Prices are at least 30-40% lesser in these countries. And since gas prices almost doubled last year, the raw material cost has gone up by 30-40%. However, at the same time, we have not been able to increase our prices owing to the slump in the international market,” Sanjay Agarwal, Treasurer, All India Glass Manufacturers’ Federation (AIGMF) tells The Dollar Business.

The city’s location is also playing spoilsport. Firozabad falls under the Taj Trapezium Zone (TTZ) which does not allow the use of charcoal in the area, as per the Supreme Court’s directives. This has made life more difficult for manufacturers and exporters of glassware.


Greener pastures

In order to counter the challenges, a few are changing track to check what works. Some exporters of handicraft glassware are switching to production of liquor bottles where they see robust demand. While some others are exploring new destinations for their products. For instance, Jagdamba Glass Works is venturing into newer geographies. “We usually receive export orders worth Rs.15-20 crore annually. It is the same this year too. Although the demand is low, we have explored other markets such as Turkey and parts of EU which has helped us retain export revenues,” says Garg.

Then there are other exporters such as Gupta Glass House who are relying more on their diversified product portfolio and as such do not find much competition from China. “In our company, we are dealing with over 70% items in mosaic. The handicraft item that we are dealing in is not manufactured in China. And the one manufactured in Turkey is at least 3-4 times more expensive than the one made in India,” avers Priyank Gupta of Gupta Glass House.

Voices of dissent

The industry, however, is unanimous on the front that government incentives and support is surely lacking at present and is an absolute must if growth has to be back on track. “We are bringing in foreign currency for the country, so we should be given some incentives. Small exporters, particularly, are in bad shape at present. They should be offered adequate support from the government that can back up their survival in such a volatile market,” Jain of Amita International tells The Dollar Business.

This apart, most industry observers and exporters are of the view that China has scaled up primarily due to favourable government policies that have aided its growth. “There is a place in China called Yiwu, where nearly 200 shops have been set by the government. Such initiatives help greatly in boosting both exports and domestic sales. Similar initiatives can really help in reviving the industry's growth” adds Agarwal of AIGMF.

A silver lining

The bottomline is that a concerted effort – from both the government and the industry – needs to be made to push Firozabad back on the growth trajectory. When it comes to counter competition from China, some of the leading players in the glass industry feel that an anti-dumping duty should be imposed on glass imported from China. It will not only safeguard the interest of domestic players, but will also give exports the needed boost. “Despite sitting in the glass city, we are importing glasswares from China and selling them here. How much sense does this make? If you want to ‘Make in India’ then provide the basic facilities that encourage manufacturing,” asserts Jain. An upgradation in technology to meet qualitative international standards, removal of infrastructural bottlenecks that deter buyers and improving the quality of education collectively can help give Firozabad the much-needed facelift. If all this becomes a reality, India’s glass city can certainly relive those “glory days”!


“Govt. duties exist at every step and add up to the production cost” - Sanjay Agarwal, Treasurer, The All India Glass Manufacturers’ Federation (AIGMF)

Sanjay Agarwal, Treasurer, The All India Glass Manufacturers’ Federation (AIGMF)


TDB: Glass exports, this year, from Firozabad is witnessing a significant drop. What factors are responsible for the decline in exports?

Sanjay Agarwal (SA): In Firozabad, we manufacture several varieties of glass, but it's the glass handicrafts that are exported the most. This year has been particularly bad as we are not able to match the prices offered by other countries, particularly China, Vietnam and Taiwan. Prices are at least 30-40% lesser in these countries. And since gas prices almost doubled last year, the raw material cost has gone up by 30-40%. Labour prices too have increased. However, at the same time, we have not been able to increase our prices owing to the slump in the international market which dampened consumer spending, resulting in fewer orders for the exporters.

TDB: How have government policies and taxes impacted the industry in Firozabad?

SA: Excise duty on handicrafts is present only in India. Duties exist at each and every step in the process and add up to the costs. We are paying the highest VAT – 14%. The natural gas in some of the states is VATable whereas in UP it isn’t VATable. So there is a direct difference of about 10% in cost of other manufacturers and us. We had approached the UP government too but nothing has been done so far. Even the container subsidy has not been revised for the last 15 years. No margins exist at present. Rumour is that the small exporters will not get any drawback or incentive from the government. They want to do away with the small-scale businesses which is very surprising. People in Firozabad are currently exporting only on the drawback. This industry is slowly perishing as we are not able to compete. In fact, the manufacturers in Firozabad are facing severe survival crisis these days. Further, since the area falls in the Taj Trapezium Zone (TTZ) area – there is a restriction on new units. You cannot expand your capacity nor build any new unit. This is hindering the growth of the industry.

TDB: Is the industry getting enough support when it comes to soda ash and gas, which constitute almost 60% of your production cost?

SA: Till 2012, we were allotted 11 lakh cubic meters of subsidised natural gas every day. But since then, under the new uniform price mechanism, gas prices have almost doubled. Soda ash is another major problem area. In India, it is manufactured by only three players – GHCL, Tata Chemicals and NIRMA. These three, time and again, get together and increase the prices. This time they have increased it by at least 30%. Production cost is going up but we can't increase our selling prices.


“If everything gets automated, the art of Firozabad will take a hit” - Priyank Gupta, Owner, Gupta Glass House, Firozabad

Priyank Gupta, Owner, Gupta Glass House, Firozabad


TDB: How lucrative is Firozabad as a glass export hub?

Priyank Gupta (PG): There is no dearth of opportunities here. Firozabad's glass industry has immense growth potential. Labour is cheap and raw material is easily available. Roughly 50% of the industrial land is owned by Uttar Pradesh State Industrial Development Corporation (UPSIDC). Availability of private land is also not an issue. Naturally, costs and processes would vary largely. Unfinished glass and chemicals are mainly coming from Delhi and Ghaziabad. There is no inconvenience in terms of infrastructure since we have learnt to work around issues including electricity, which is a problem in most parts of the state.

TDB: The technology used here is not at par with international standards. Don't you think this is the major hindrance in the industry's growth?

PG: Yes, this is true. The reason is simple. There is no support from the government. Firozabad doesn’t enjoy any facility or financial support from the government when it comes to upgrade technology in glass making as can be seen in China.

TDB: How have the export volumes turned out for you in FY2014-15?

PG: The export demand is down by at least 50% this year. Our business has almost halved. International market volatility, competition from China and currency fluctuation have all contributed to this drop.

TDB: What kind of competition is the industry facing from China?

PG: There is cut-throat competition from China. Firozabad no longer enjoys a monopoly in the international market as cheap Chinese products have made serious inroads into it. A drinking glass that was once a major selling product from Firozabad no longer exists. There is a world of a difference between our glass products and the ones manufactured in China, both in terms of quality and design. Their glass is 10 times stronger than our glass! This apart, mushrooming automated factories will end up spoiling the market. If everything gets automated, the art of Firozabad will take a hit.

TDB: What efforts are being made to ramp up demand?

PG: We are going by ‘wait-and-watch’ policy. We will go by how things shape up in October. If recovery doesn’t happen during October fair, the entire cycle will get disrupted. We will see the response to assess if the sentiments have improved. Only then we can decide if we have to introduce any new category or to bring changes in some items. So far, we have not got any negative feedback from the buyers. But if the situation persists, we will approach them more aggressively.


Export Temples of India
Mizoram – Looking east going west

It is the southernmost landlocked state in Northeast India and has the highest density of tribals among all states in the country. But does that make it any less when it comes to untapped export potential? Not, we would say, at least when it comes to bamboo and its products, omnipresent across the length and breadth of the state!

Nearest Port / land customs station: Zokthawthar (214 km) | Nearest Airport: Aizawl (32kms) | Nearest Railway Station: Silchar (175 km)

Satyapal Menon | August 2015 Issue | The Dollar Business

Lack of energetic and innovative initiatives have affected the growth of bamboo industry in Mizoram.

Beyond and deep within the enchanting facade of cascading clouds caressing the verdant valleys, a sense of alienation is palpable. Mizoram symbolises a conundrum, in a dilemma over choosing between remaining sequestered or being more accommodative. Despite being an Indian citizen, you are required to take an Inner Line Permit to enter the State, and that too is valid only for seven days. A strong message that you are not so welcome and anyway since you are here, make your stay short!

The ingrained xenophobia in the Mizo psyche is also attributed to apprehensions about "outsiders" exploiting their resources and "outside" influences on their culture and tradition. K. Lalhmingthanga, President, Mizoram Chamber of Industries & Commerce (MCIC) when queried by The Dollar Business about the logic and relevance behind the Inner Line Permit echoes similar sentiments. "Such restrictions are imposed to prevent exploitation and assimilation by outsiders," he says.

Mizoram Exports-TheDollarBusiness

Uncharted avenues

True, Mizoram being a state with 100% tribal population is entitled and empowered with rights to protect its domain and resources. Tribal related laws and regulations have specific provisions which give them land holding rights. Non-tribals and outsiders are not allowed to purchase, acquire or own lands on such exclusive tribal terrains. The only exception to this rule is that it can be leased out only by the government for a certain period. The protectionist mindset is justified and acceptable to some extent, but from the socio-economic point of view there is a need to open up avenues for progress and development of Mizoram, which unfortunately is not happening here, resulting in economic stagnancy.

Fueling feelings

The entrenched resentment within has only grown stronger with the State being subjected to neglect by the Government of India in terms of providing infrastructure, connectivity and other economic support systems. One glaring example is the abysmally wretched roads and, of course, lack of connectivity to Mizoram. The government never spares a chance to eloquently express its focus on Northeast region. But the eloquence as usual is confined to the files and public platforms. Sample this for example. One of the biggest bamboo clusters in Bairabi village in Kolasib district of Mizoram is yet to start functioning for want of the funds. The committed amount, a mere Rs.3 crore – a pittance compared to colossal public funds splurged by bureaucrats and politicians for their so-called official travels and five-star conferences – which was supposed to be released by North East Council (NEC) is yet to see the light of day. The artisans at the Bairabi cluster were trained in making various bamboo products and left in the lurch. The cluster could have generated income to many families in and around that area.

From cuisine to contraptions for livelihood to handicrafts to shelters and home interiors, bamboo is an integral part of Mizo survival, lifestyle and culture. Need and necessity have also inculcated in them the expertise and skillset to make the products on their own. Bamboo could be a big time money spinner for Mizoram. The State is endowed with munificent bamboo resources and skilled human resources. The skill to create exquisite products is in their bloodline and genes. Evidence of this is the large number of households involved in this profession. On a visit to some of the households, I was overwhelmed with a sense of fascination at the dexterity with which the artisans wove their creations ranging from the famous Mizo bamboo hats to lamp shades and containers.

One of the major bamboo producing clusters, at Bairabi, has stopped functioning as it's yet to receive funding from the North Eastern Council.


Crafting creations

Lalrindiki of Eden Handicrafts located in Aizawl, the State capital, displays her array of creations and says, "we make utility items like flower vase, fruit baskets and lamp shades. Our entire family is involved in this profession and this is our source of livelihood. We directly sell the products to the shopkeepers and our average income per month is Rs.10,000." Going down the lane we come across another family of four, busy weaving the traditional Mizo bamboo hats and bamboo winnows. According to Hrangliana, one of the artisans here, the cost of the traditional bamboo hats can range anywhere between Rs.500 and Rs.2,500. "We get this price from buyers. I am not aware at what price they in turn sell the products to their customers. We get orders from buyers and make the products accordingly. Presently we have ten orders. As for the raw materials we get it free of cost," she tells The Dollar Business. The bamboo baskets and winnows are sold by the artisans to their buyers/markets at prices ranging between Rs.700 and Rs.900 – depending on their size and make – and the lampshades are priced Rs.1800. It is quite incomprehensible why this treasure trove of skills and resources is not being translated into mass production. One answer could be that the industry is unstructured, splintered and unorganised. There are many clusters sprouting on the firmament but then a majority has failed to take off. Lalduhawmi, Mizoram Coordinator, Indian Institute of Entrepreneurship, Ministry of Skill Development, GoI, attributes it to change resistance among the artisans in the State. "We have conducted training programs to enable the artisans to adapt to new methods and technologies for making value-added products, apart from the ones they are already making. But, after training they go back to their traditional ways of production," she tells The Dollar Business.



The 'trained' artisans are also expected to switch from traditional to machine crafting. But is that the way forward to a modernised future for the Mizo bamboo craft industry? Apparently not. "They are trained to make products which have bigger markets, for instance, they are making bamboo hats. But these are not products that people want all the time. In fact, the training is imparted by the National Institute of Design. To be honest, the results are not satisfactory. They continue to prefer traditional methods because that is a more secure livelihood option." Precisely so, because the solution is in providing marketing support to ensure a source of income for their livelihood. A cerebral and market-orientated approach would have resulted in innumerable cottage industries sprouting in Mizoram. There doesn't to be any, expect for scattered, cluttered and disoriented clusters, many in a state of status quo ante for want of funds and machinery. According to Michael L. T. Moyi, Secretary, Finance and Projects, Mizoram, MCIC, the emphasis should have been on promoting cottage industries, instead of big bamboo product manufacturing units, as was the case. "Today all units including those initiated by the State government have stopped functioning because of sub-standard machinery procured from Haryana and other parts of the country. Handloom produced in Mizoram are in demand in Meghalaya, Manipur and Nagaland. The same role model should have been adapted for bamboo products since they are financially and commercially viable. But unfortunately, this does not seem to be happening," Moyi tells The Dollar Business. Cachar (Assam)-based Hindusthan Paper Corporation, which procures both raw material and bamboo chips from Mizoram is the only major market for industries in the State.

Bamboo products have evolved from being just handicrafts to an ideal substitute for timber for fabrication of doors, windows, flooring and an extensive range of architectural and construction requirements. When J. B. Rualchhinga, CMD, Nutech Bamboo Project Pvt. Ltd. – one among the two or three companies in Mizoram manufacturing high-end and high-value bamboo products – showed me the doors, windows and flooring produced in his unit, the finish looked so similar to timber and other wood products, that it was hard to believe that they were made of bamboo. Nutech is again among the one or two other units which is into exports, but in small values.

Unlike timber, bamboo cultivation is also considered good for the soil. The people of Mizoram have been involved in unscientific jhum cultivation, which was depleting the forest cover. Now bamboo is being promoted in a big way as an option for jhum or shift cultivation.

So much. So little.

India is the no.2 bamboo producer in the world and Mizoram accounts for a major chunk of pure bamboo brakes. While pure bamboo brakes occupy an area of about 226 sq. km., dense bamboo is spread over an area of 6,116 sq. km.

There is a huge global demand for bamboo products. Global bamboo-products import is to the tune of about $5 billion. Though Asia accounts for the lion's share of exports, India's share is negligible. Isn't it paradoxical, that despite occupying the pole position in bamboo resources, India's presence globally could be found only on closer scrutiny, that too with a magnifying glass. The reason – lack of genuine and committed approach to promote the industry and its stakeholders. Mandarins ensconced in the corridors of power are too preoccupied it seems. Nobody in the industry has even an inkling of what the fancy sounding white elephants like North East Center for Technology Application & Reach (NECTAR) and National Bamboo Mission (NBM) are doing, except for being a drain on the exchequer.

All that the industry requires to scale up the export ladder is technology, funding and marketing support. Is it too much to ask for?


“We impart training and provide marketing support to the artisans" - Lalzarliana Hrahsel, GM, cluster Development, BDA


The Bamboo Development Agency (BDA) has established eight handicraft clusters across the State each having 25 artisans who have been imparted training in making various bamboo products. Another cluster for producing bamboo furniture is also coming up soon. Apart from training we also facilitate them in marketing by buying their products through BDA outlets. Clusters are established in locations where bamboo resources are available. Beneficiaries are selected based on their experience. The artisans in the clusters earn around Rs.10,000 per month. The United Nations Industrial Development Organization (UNIDO), which is working with the government to develop clusters, has brought in a technical expert who has trained the artisans about methods to increase productivity and also making products which are saleable in the markets. We are also planning Agarbathi clusters which could produce near finished products with just the perfuming to be done outside the State. Presently only the splints or Agarbathi sticks are being made here. We would also be focusing on exports to the European markets.


"Latest tech enabled units and contract farming will boost economy” - J. B. Rualchhinga, CMD, Nutech Bamboo Project Pvt. Ltd.


We have a wide range of products that includes flooring and doors which are 100% wood substitutes. We manufacture them using latest machinery imported from China. Our competitor is China. But our bamboo fibre quality is far superior to that of China. Our company is also now manufacturing products that are better in quality compared to the Chinese products. Bamboo industries in the Northeast India have collapsed because of lack of technologies. The technology Nutech uses has the capacity to produce 3,000 cubic metres of bamboo products. If more such units come up in Mizoram, the impetus to the economy would be tremendous. It can give a boost to contract farming and our resources can be utilised to the maximum. For instance, 1-2 lakh bamboos can be harvested on 20-30 hectares of land. And with bamboos priced at Rs.20 per culm, farmers can easily make Rs.20 lakh to 40 lakh. Our company sources raw materials from farmers through contract farming. We have exported one consignment to Dubai. But problems related to transportation and taxes for passage of consignments through innumerable check posts is hampering prospects.


“99% of Mizoram's bamboo resources remain untapped” - K. Lalhmingthanga, President, Mizoram chamber of industries and Commerce (MCIC)

K. Lalhmingthanga, President, Mizoram chamber of industries and Commerce (MCIC)


TDB: There is not much exports happening from Mizoram. Do you foresee any future prospects?

K. Lalhmingthanga (KL): Presently, Mizoram is not ready for export markets because we neither have the experience and exposure nor manpower trained in matters related to foreign trade. We had requested the Commerce Minister Nirmala Sitharaman to release funds for imparting training in export marketing techniques, but the amount is yet to materialise. We do not even have DGFT office. The only positive as far as exports from this State is concerned is the Land Customs Station established recently at Zokhawthar near Mizoram’s border with Myanmar which could facilitate trade through this route.

TDB: Could you elucidate on the scope of bamboo products' exports from Mizoram?

KL: Bamboo production here is not so big for export market demands. But, when the money and proper arrangement is there exports can be done. The reason is lack of latest technologies in the country. Prospects for exports can be created only through the adoption of appropriate technologies and marketing arrangements.

TDB: Huge bamboo resources but lackluster market performance. How do you explain this situation?

KL: Mizoram produces 5,196 million bamboo culms every year. But presently, there has been a decline in production because of a certain infection afflicting the bamboo plantation. There is no preventive for this infection since there has hardly been any research on this problem. When it comes to utilisation, only 1% of the total bamboo resources in the state is being used. 99% still remains untapped. Even out of that 1%, 90% is procured as raw material by markets outside Mizoram.

TDB: What kind of potential does the State have in terms of investments?

KL: Scope for investments in the State can be limited because we have regulations related to land tenure – which does not permit non-tribals or non-residents to own or acquire lands. Moreover, the North East Industrial and Investment Promotion Policy has prevented investment instead of promoting it, by not providing required incentives to encourage investors.

TDB: Why is there a lack of industrial development in Mizoram? What needs to be done to improve the situation?

KL: To establish and run an industry we need both initial funding and working capital. We need loans for establishing an industry and working Capital. But there is not enough support coming from the banks. There is ample scope for industrial development since we have talented pool of human resources. In fact, Mizoram is the third most literate state in the country with 91.33% literacy. Still, the State has about 80,000 unemployed youth. We need to provide them avenues of employment, otherwise there could be repercussions with chances of the youth being lured by insurgents.


Export Temples of India

Kutch - If beautifying the world, why be miserly

A scorching sun, lots of local chaiwalas and roadside chat stalls are the first few things one notices in Kutch. It’s also difficult to miss the local women, exquisitely dressed in traditional dresses, thanks to intricate Kutch embroidery work. But as we found out, embroidery work is not the only handicraft export of the region.

Nearest Port/ICD: Kandla port (142 km) | Nearest Airport: Bhuj Airport | Nearest railway station: Bhuj railway station

Aadhira Anandh | August 2015 Issue | The Dollar Business

“The nostalgia of expat Gujaratis, being far away from home, ends up increasing the demand for these traditional dresses"


Kutch – India’s largest district – is known for its temples, architectural marvels, a very harsh climate and of course, the Rann of Kutch. When it comes to economics, Kutch is home to two of the busiest ports in the country at Kandla and Mundra. The district is also mineral rich and home to a massive mining industry. What gives the district’s economy an altogether different touch, though, is its handicraft industry, dominated by, but not limited to, the unique local embroidery. Kutch embroidery is a well-known piece of handicraft that has admirers all over the world. Colourful woolen threads, shiny-shimmery mirrors and unique handmade designs set Kutch embroidery apart from almost all of its peers, not only in India, but all over the world.

On the other hand, the district’s showpieces have their own fan following. Be it those of women carrying water pots, or those of the district’s mother god, Kutch offers showpieces that can give life to even the dullest of rooms. What’s unique about these showpieces is that they are made of mud and are designed keeping in mind all kinds of budgets. “I and two other women working for me make all these showpieces. Once the design is decided, we start mixing mud and applying colours, giving each and every design a unique pattern,” Rachna Rathod, Proprietor, RR Handicrafts, tells The Dollar Business, holding a recently made showpiece in her hand.

Kutch Exports-TheDollarBusiness

Muddy buddy

Making exportable showpieces and wall-hangings from mud is not an easy job. Every single task is done using one’s own hands and the use of machines is not negligible, but zero. While such hard work pays off handsomely, they take up a lot of time limiting export volumes. “The main problem for us is time. We don’t use machines and hence, making a good frame can take up to three-four days. Cost of labour is high and is the main expense. So, I prefer to make them on my own, thereby limiting the number of frames I export every month,” adds Rathod. The same is the thought of most exporters The Dollar Business spoke to in Kutch. Most have their hands full with export orders with buyers in developed countries taking a special liking to their vibrant colours and the fact that they neither easily break nor fade. “Unlike the local market, the export demand for smaller frames from countries like the United States and Canada is huge. I export around seventy pieces every month,” adds Rathod with a sense of pride.

Although the total value of mud showpiece exports from Kutch still add up to very little, they have tremendous potential. As we found out, the margins they offer are huge. For example, a showpiece manufactured for Rs.500 is easily exported for more than Rs.2,000, depending on its size, colour and mirror work. According to exporters in Kutch, locally made mud showpieces and wall-hangings are increasingly finding a place in top hotels, exhibition centres and art galleries in the West, where money is not an issue.

Kutch's mud showpieces and wall-hangings are also very popular in the West.


Numero uno

Although mud showpiece exports seem to have a lot of potential, when it comes to handicraft exports from Kutch, presently, there’s nothing that comes even close to lehengas and other such traditional wear with mirror and embroidery work. Colorful woolen threads covering heavy mirrors on equally colourful fabric have given Kutch’s traditional wear a massive fan following in the international market, particularly in countries like the United Kingdom and the United States, which have huge expatriate Gujarati communities. “Exports to the United Kingdom is more because of the large Gujarati population there. Their nostalgia of being far away from home, missing its tradition and culture, ends up increasing the demand for these dresses. The demand particularly soars during the festive season," Sidharth Majethia, Proprietor, Bhoomi Handicrafts, tells The Dollar Business.

As you would expect, most of the embroidery and mirror work on such dresses are done by local women, skilled in the traditional art form. In fact, different designs and styles on dresses exported from Kutch represent different local communities. The manufacturing of these dresses typically involve providing local women with the required inputs and designs, giving them flexible timings, and then collecting the exportable dress after paying them as per the inches they have worked on.

What is surprising though, is the fact that despite the state government’s support, several manufacturers The Dollar Business spoke to are shying away from exports due to lack of investment capital. “The demand is there at the international level, but we really don’t have the money to make large investments and employ large number of workers to cater to export orders, particularly since they always come in bulk," Majethia adds. Fact is, the manufacturing community in Kutch is afraid of failing to meet quality requirements. As one confesses, "Many times, we stall the thought of exporting and concentrate on the local market.”

The making of both mud showpieces and traditional clothes with embroidery work are dominated by local Kutchi women workers working from their homes.


Given the status of Gujarat in India’s economy, it’s no surprise that even its handicraft items are a big hit internationally. It is a great testimony of the business acumen and skill of Gujarati folks. So, it’s puzzling that most handicraft items exported from the state, particularly from Kutch, are failing to scale up because (a) there are no large organised facilities for them, and (b) no one is willing to take them up at an industrial scale due to lack of investment capital.

Having spent a few days in Kutch and mingling with its habitants, one can’t but infer that the case of Kutch handicraft exports will be seen more favourably in years to come. Someone, someday will get over the myopia. Hope abounds!


“We need a lot more people to get involved in this business” - Brinda Desai, Proprietor, Desai Craft Lobby

Brinda Desai, Proprietor, Desai Craft Lobby


TDB: What made you get into the business of exporting Kutch handicraft?

Brinda Desai (BD): We have always wanted to stay in the fashion business and help people stay beautiful. We also wanted to keep our tradition and culture alive. Kutch embroidery is done using vibrant colours. It has a lot of variety to offer. Every design in it is different. It’s done using contrast colours that can bring any piece of cloth to life. And we wanted the entire world to know about and appreciate our traditional work. This made us decide on Kutch handicraft and take them to the next level.

TDB: Majority of your workers are women. Does that mean that you have to face many issues related to 'family-life'?

BD: I can’t say we have faced such issues. These women have been doing embroidery work for a very long time. They used to do it for their families. They also used to make decorative pieces and hang them on their walls. So, when we approached them, they were more than happy as it meant getting paid for something they have anyway been doing. Our business model is based on providing them with the required material and give them a time frame, within which they need to get the work done and then get paid for it.

TDB: Give us a sense of your export business. Are you getting any help from the government?

BD: We actually started this business eyeing the local market. But then, we realised that people in the local market are not very interested in these handicrafts. Hence, we planned to expand to the international market and started exporting since we already used to get lots of enquiries from different countries. In terms of support, the government provides us a drawback of 1% to 1.5% on our exports.

TDB: What do you think is the biggest threat to exports of the handicraft industry in Kutch?

BD: The biggest problem we face is the limited supply of products. Our products are largely made by women in their households in villages. We can’t expect them to supply to us in large quantities. So lucrative export orders cannot be met. Problem is, we receive bulk orders and hence, are not being able to meet the demand on time.

TDB: What do you think is the solution to this problem?

BD: We need a lot more people to get involved in this business. That will provide a much larger platform to the workers. That will help produce handicrafts on a much larger scale. And that, in turn, will help meet the demand. The problem, though, is that not many women of the new generation want to pursue this business.


Export Temples of India

Kolhapur - A fight for survival

The first thing that comes to one’s mind when one hears the word 'Kolhapur' is its chappals. Many amongst us might struggle to locate the city on the map, but we are all aware of the chappals (slippers) it has to offer. But as we figured out, the future of these durable chappals look anything but durable.

Nearest Port/ICD: Mormugao Port (235 km) | Nearest Airport: Dabolim, Goa (164 km) | Nearest railway station: Kolhapur railway station

Aadhira Anandh | August 2015 Issue | The Dollar Business

India's Kolhapuri chappal exports have continuously been falling over the last 10 years from $6.02 million in FY2006 to just $1.18 million in FY2015.



Other than its famous chappals, Kolhapur is also well known for its temples, lakes and rivers. A casual walk around the city is enough to get a sense of its beauty. People here are very helpful, but a bit skeptical of outsiders, maybe because this erstwhile princely state doesn’t get many visitors these days. Casual conversation with locals gives one a sense that they are too busy in love with the serene and the serendipity of the place to be worried about other things.

Royal fans

Without a doubt, Kolhapur’s most popular and credible offering to the rest of the world is its chappals. That addressing an election rally last year, Prime Minister Narendra Modi said, “Aaj pure desh ko Kolhapuri chappal ki zaroorat hai, taaki pura desh tez gati se chale (the nation needs Kolhapuri chappals, so that it can move ahead fast),” is proof of their popularity. Right from the moment you walk out of the railway station, all you can see is big and small shops selling Kolhapuri chappals. Ask the first person you interact with in the city and you are told the art of making Kolhapur’s well-known chappals is passed on from generation to generation.

In the past, workers engaged in making Kolhapuri chappals were scattered all over the district, largely in remote and hilly areas. But later, they were provided royal patronage by the then Maratha Empire, which not only trained them with sophisticated skills, but also organised them. Large workshops were organised and all possible help was provided to the community to master the art. The result? Well, just go by the Prime Minister’s words to ascertain how famous Kolhapuri chappals are.

Kolhapur exports-TheDollarBusiness

One of a kind

Kolhapuri chappals are largely made from buffalo, goat and bull hides and are available both in natural colours as well as in vegetable dye tanned form. Earlier, they used to come in monotonous designs and were much thinner than what we see in the market today. These traditional chappals used to have a two sided flap, which gave them the name Kanwali (chappals with two ears)! But with time and evolving tastes, today, Kolhapuri chappals are available in a variety of designs.

Popular for their durability and unique looks, Kolhapuri chappals have also got a fan following thanks to their health benefits. For, not only are they made of pure leather, which keeps one’s body cool, but are also designed to relax the entire body when one walks in them. In fact, Kolhapuri chappals are also believed to be good for the eyes. They are also believed to be beneficial in curing back pain and diabetes, since only properly processed leather is used to make them. Another advantage is that they promise allergy-free feet.

To greener pastures

Given the popularity of Kolhapuri chappals, one would assume it to be a flourishing industry. But that’s hardly the case. “We do not have anyone to carry forward this profession. My children are studying and want to work for a good company instead of making chappals. I took up the profession because I wanted to keep this art alive, but my son does not share the same thoughts,” owner of Kolhapuri Chappal House, Sadhasiv D. Satpute, tells The Dollar Business. These are not just the thoughts of Satpute but that of several family-owned businesses involved in manufacturing, retailing and exporting Kolhapuri chappals.

This migration of the younger generation to greener pastures is one of the biggest issues affecting Kolhapur’s chappal industry. Estimates suggest while not so long ago, 25,000-30,000 workers were involved in chappal-making in Kolhapur, today, the same number hardly adds up to 3,500. And most manufacturers The Dollar Business spoke to, claim the number is falling by the day. “We had a lot of people working for us few years ago. But today, they earn much more working in areas like construction,” adds Satpute.

Kolhapuri chappals are not just very durable, but are also considered to be very healthy for the eyes, the back and even for those who are battling diabetes. Sadly their exports growth over the years don't speak volumes about their goodness.


Slow death

While several export items of the country are witnessing falling demand in the international market, when it comes to Kolhapuri chappals, the situation is exactly the opposite. There is high demand for them abroad but nothing is being done to increase production and improve quality. In fact, most chappal manufacturers The Dollar Business spoke to in Kolhapur are of the opinion that since Kolhapuri chappals are known for their quality, the quality requirements of their importers are extremely high, catering to which, given the constraints, is very difficult. They claim the bar has been set so high for Kolhapuri chappals that exporting slightly inferior quality chappals has become impossible.

This fact is clearly reflected in Ministry of Commerce's export data, which reveals that the total exports of Kolhapuri chappals (HS Code 64032040) have systematically collapsed from a high of over 9.9 lakh pairs worth $6.02 million in FY2006 to under 2.3 lakh pairs worth just $1.18 million in FY2015. Maybe that’s why the DGFT, via a notification issued on the 14th of July, 2015, has increased MEIS incentive for Kolhapuri chappals from 3% to 5% if certified as a handicraft item. While most chappal manufacturers in Kolhapur welcome the move, they claim slaughter bans in Maharashtra is far bigger an issue for them since it has led to the lack of availability of good quality leather, forcing them to depend on leather from as far as Kanpur and Chennai.

While slumping exports have forced many chappal manufacturers in Kolhapur to supply to domestic retail chains like Fabindia, rising manufacturing cost and unavailability of skilled labourers are playing spoilsport even here. “We supply to big showrooms but that doesn’t promise us good income, neither does it ease our raw material woes,” claims Satpute. So, what’s the way out? “In another ten years, chappal manufacturing in Kolhapur is going to see a steep decline. The government doesn’t do anything about it and we have a tough time even to understand export procedures,” adds a dejected Satpute.

On hope

Kolhapuri chappals have a long and proud history. They have been a great example of Indian handicraft and heritage. They are durable, healthy to wear and not very expensive. In fact, they are as big a brand as anything the country has to offer. But unfortunately, they are going through a crisis. So, unless the government gives them a helping hand, one can’t see how they can turn a corner.

[Having learnt the on-ground reality in a matter of a few days in Kolhapur, as one left the city, one couldn't stop but praying for the survival of the only ancestral art and business at Kolhapur.]


"Most chappal makers here are unaware of export procedures" - Ashok S. Gaikwad, Chairman, Kolhapuri Chappal Cluster Pvt. Ltd
Ashok S. Gaikwad, Chairman, Kolhapuri Chappal Cluster Pvt. Ltd


TDB: What made you organise a cluster for Kolhapuri chappals?

Ashok S. Gaikwad (ASG): I used to own the largest chappal-making unit in Kolhapur. It had been passed on to me from my father. I used to love these chappals, so had taken up the business happily. But then I saw workers leaving because they were not being able to make a living from their wages. They used to earn more doing household chores as domestic helps. Moreover, none of them were ready to teach the art of chappal-making to their next generation since they used to think it wouldn’t lead to a good life. This made me start a cluster so that I could keep the art alive.

TDB: How do you intend to help labourers and prevent the art form from dying?

ASG: We plan to acquire proper raw material from different states and provide them to those working on making these chappals. This will ensure they don’t spend a bomb on raw material. We also intend to provide them with machines that will help them cut leather easily. Apart from this, we will pay them for each and every chappal they make. This will ensure the art lives on.

TDB: Tell us the kind of help the cluster gets from the government.

ASG: The central government has allocated Rs.15 crore for the cluster. The sanctioned money will help us in buying machinery and land. They also have plans to spread awareness about this dying art form by organising workshops. I can basically say that the central government has been largely helping us but we don’t see proper improvement because of the lethargy of the state government.

TDB: Tell us about the main problems that the cluster faces. Do you think you have been able to achieve much since it was set up?

ASG: The larger issue is that we are not being able to properly utilise resources provided to us. The money the central government has provided hasn’t been able to be put to use due to unavailability of good land. As long as we don’t have land, how can we execute what we want to? The machines can’t be placed in our houses. Every time we have asked the state government for land, all they have done is hold a meeting. We have been regularly attending such meetings for the last five years but I can tell you that they haven’t yielded absolutely anything. It's a sad situation.

TDB: Can you tell us about the challenges you face while exporting Kolhapuri chappals?

ASG: Kolhapuri chappal exports are not in a good shape. There is huge demand for these chappals abroad, but issues related to production are just so many that we are not being able to meet the demand. Even if we manage to cater to half the demand, we fail to meet the high quality requirements, resulting in importers losing interest to buy the next time. Moreover, most manufacturers are unaware of export procedures. This is another major issue that hinders the export of Kolhapuri chappals.

TDB: What's your expectation of the future of these chappals? Do you expect any positive change in the near future?

ASG: The future of these chappals is fully in the hands of the government. If they can help us formulate and work on the plan we have, we will see a difference.


Export Temples of India

Karimnagar - In need of that silver touch

Karimnagar has become synonymous with the renowned Silver Filigree. While the town boasts of a geographical indication (GI) tag for this ancient craft, it has much more to it than just filigree. It's home to a flourishing beedi industry employing over 2.5 lakh workers. But is Karimnagar all prepared for the future?

Nearest Port / ICD: ICD Sanath Nagar (165 km) | Nearest Airport: RGIA, Hyderabad (162 km) | Nearest railway station: Karimnagar railway station (2.5 km)

Shivani Kapoor | August 2015 Issue | The Dollar Business

Despite benefits, beedi rollers of Karimnagar do not want their children to take up this job.


Splendid with cultural heritage, it is an antique city of the newly formed Telangana state. A drive down to Karimnagar, located just 165 km away from the state capital Hyderabad, is a treat to eyes with wide, clean and plush-green highway that makes you hurtle towards your destination. Although it recently got the the ‘smart city’ tag, the town still has imprints of history, clearly visible in its architecture and monuments. But what really makes Karimnagar distinct and famous is its unique ancient craft – Silver Filigree, an art form which uses thin silver wires to make artefacts and jewellery.

The Karimnagar filigree is believed to owe its origin to the town of Elegandal located just 15 km away from Karimnagar. It was known to be traditionally adopted as a livelihood by the people of this region during the early 19th century. In 1905 this unique craft moved from Elegandal to Karimnagar. Since then, the district serves the second name to silver filigree. The craft flourished during the Nizam era when the rulers gifted filigree items such as paandaans, trays, hookahs, etc. to visitors. The Nizams encouraged craftsmen to make silver artefacts, taking the art form to its peak. But this was Karimnagar nearly five decades back.

Karimnagar Exports-TheDollarBusiness

Lost glory

Today's Karimnagar is nothing but just a shadow of its former self. The district no longer remains an exclusive centre for filigree work. It hardly has anything to offer to the craft for which it was renowned during the Nizam era. “The city no longer enjoys the monopoly that it once did. There were good number of craftsmen into silver filigree work 50 years ago. Today, it's really hard to find skilled filigree craftsmen in Karimnagar," G. Ashok Kumar, Secretary of SIFKA (Silver Filigree of Karimnagar Handicrafts Welfare Society) tells The Dollar Business. In fact, all Karimnagar today has in the name of the ancient craft is a tall building at the Kaman Circle that runs as a filigree cluster-cum-sales counter and two societies, with a handful of registered artisans, that are engaged in the making and promotion of filigree.

Delicate artistry and excellent craftsmanship, that Karimnagar filigree boasts of, can take one’s breath away. However, what’s puzzling is that despite an exquisite style, Karimnagar filigree has failed to generate export demand. Even the geographical indication (GI) tag hasn’t been successful in getting them good business. "Lack of awareness about the product and the government's apathy towards both the craft and the craftsmen is what is responsible for the sorry state of affairs of Karimnagar silver filigree industry," Syed Sardar, President, Kala Karimnagar Silver Filigree Handicrafts Society, tells The Dollar Business.

Beedi industry drives rural development and women empowerment in Karimnagar as it offers massive employment opportunities, especially to women.



Another veteran of the industry, Arroju Ashok (a national award winner who is also the SIFKA President), shares similar views and tells The Dollar Business what it took to bring back the craft from its death bed. “Modern times had its impact on silver filigree. Escalating silver prices and lack of patronage had a spiraling effect on the craft. In course of time, it started dwindling. By early 1990s it had almost disappeared. It was hurting to see that once-thriving art form was gasping for breath. So, we thought of giving it a new lease of life by imparting training of the craft to others.” says Ashok, who alongwith with two other amateur filigree artisans organised and formed a co-operative society.

Initially, as a self-help group, they tried to create a demand for the craft by designing filigree items suitable for gifting. In time, their efforts started paying dividends. Gasping for breath until a few years back, the craft has received a fillip through formation of such societies. It is a result of constant efforts of a handful craftsmen, that Karimnagar at present has 100 odd skilled artisans from just 2-3 about 10 years ago. “At the beginning we had to depend upon visiting tourists. Gradually, we started making souvenirs and mementoes for corporate houses. As the word for our work spread, we got government help,” says A. Venkateshwarlu, Treasurer, SIFKA. In fact, the society has been able to fetch some good corporate orders in the recent past and as such today boasts of an annual turnover of Rs.5 crore apart from providing a source of livelihood to about 100 craftsmen.

The making of silver filigree is in itself a fascinating process and requires delicate artistry and excellent craftsmanship.


Too Late. Too little.

The only help the artisans claim they are getting from the government is in the form of outlets which are serving as sales counters for the silver filigree. For instance, Central Cottage Industries Corporation of India (CCIC) emporium in Hyderabad has been getting orders for filigree craftsmen of Karimnagar. However, Venkateshwarlu of SIFKA feels that this is not a support enough to pull back an art form from the deathbed. “Even if the craftsmen make filigree items as commissioned by government agencies, they get paid almost a month after the delivery due to procedural delays. Until the government takes any initiative for its promotion, it will be difficult to ensure survival of the art,” he laments.

Artisans also allege that there is hardly any publicity from the government and they have to attend exhibitions at their own cost. While they don’t mind bearing small costs, all they want from the government is to promote the region and its craft. Is that too big an ask?

Noble leaf of death

If you thought Karimnagar is only about silver filigree and its artisans, you are in for a surprise. The district is also a home to nearly 2.5 lakh beedi rollers working for registered and unregistered units. A tour from Kaman circle in Karimnagar to Koratla, about 70 kilometers from the district headquarter, would give you a glimpse of what beedi industry means to the local economy. While the industry holds a dubious distinction of exploiting workers and ruining their health, the justification that comes is, “It is a legitimate business that serves the low-income category in the country.”

Lighting up

Patel Satin Kumar, In-charge of Karimnagar's unit of the popular '30 Brand' beedi, has several reasons as to why this industry needs to be encouraged. “Revenue source apart, the industry is one of the foremost cottage industries in India. Not only does it employ over 6 million workers, it is also a major avenue for women empowerment since 95% of beedi workers are women. In fact, in Karimnagar district alone, nearly 2.5 lakh workers depend on beedi rolling. All these factors count a lot to encourage this industry,” Satin tells The Dollar Business. Naga Kumar, manufacturer of Sri Krishna brand beedi in Karimnagar, also shares similar stories of many such women beedi rollers, who not only supported their families with earnings from this business, but a big proportion of whom have also bought a house each.

...up in smoke

Despite benefits, beedi rollers of Karimnagar do not want their children to take up this job. “The younger generations are giving the rolling activity a skip as they want better paying and lucrative jobs, thus creating labour problems and affecting production,” claims Satin, who is also the secretary of Koratla Beedi Manufacturers Association. Besides labour problem, beedi manufacturers in the district are facing competition from cheaper and spurious brands. “There are several unregistered beedi manufacturers who not only pay low wages to beedi rollers but also sell cheap and low-quality products. Since our customers are low-income smokers, the competition remains very tight hitting sales. It is for this reason that once-thriving, the beedi business – started by my grandfather – over the years has almost collapsed,” says Kumar.

Notwithstanding these hiccups, the beedi makers in the district are optimistic about the growth of the industry given the insignificant taxation and the growing preference for beedi over its fancy cousin.

The last word

As an export hub, Karimnagar holds a lot of promise when it comes to silver filigree and beedi. What it lacks badly, though, is support and incentives from the government. While the industry is doing everything it can do to relive the good ol' days, the least it expects from the government is a little push in the right direction.

Anyone spending a few days here will nod his head in affirmation. Karimnagar's tale is a sweet one – that the world will actually 'buy'. Literally!


“There are no efforts from the government to create awareness” - Arroju Ashok, President, Silver Filigree of Karimnagar handicraft welfare Society (SIFKA)

Arroju Ashok, President, Silver Filigree of Karimnagar handicraft welfare Society (SIFKA)


TDB: What's unique about Karimnagar silver filigree?

Arroju Ashok (AA): Karimnagar silver filigree is renowned for its unmatched intricacy. What makes Karimnagar silver filigree so distinct is the fact that no two works of art are identical as the craftsmen never repeat the patterns making every item a masterpiece. The manufacturing process is fascinating that defines fineness, patience and passion of the craftsmen. Karimnagar’s filigree works are praiseworthy for their spider-web delicacy.

TDB: If this is the case then why is it that Cuttack filigrees have more takers, both in India and abroad?

AA: Karimnagar filigrees are very intricate and delicate as compared to Cuttack work. While Cuttack filigree is characterised by a foamy appearance, Karimnagar’s work is more complex and refined. In terms of quality, Karimnagar filigree stands superior to that of Cuttack. However, since Cuttack has been the centre for silver filigree for centuries, it definitely enjoys an upper hand when it comes to promotion and sales. Besides, Cuttack has more number of craftsmen associated with this trade which means that it can meet a customer's demand for silver filigrees in less time as compared to Karimnagar.

TDB: Despite an exquisite style, Karimnagar filigree has failed to find a market for itself. Why?

AA: The ancient craft is facing talent crunch. In fact, these days it's difficult to find a skilled craftsman who wants to carry forward this legacy. Many have either switched to other jobs like gold jewellery making or they have migrated to other cities for better living. High input cost is yet another factor responsible for its dwindling popularity. Further, there are no efforts from the government to create awareness about the product and boost its sales.

TDB: What about the GI (Geographical Indication) tag? Haven't it added to the intrinsic value of the craft in international markets and help boost its sales?

AA: When silver filigree of Karimnagar got the Geographical Indication (GI) status in 2007, it was hoped that it would add brand image to the craft and ensure a better economic value of the product. In that sense, nothing significant has been witnessed so far. We are still doing business the way we used to before securing the GI registration.

TDB: To what extent has the government been helpful in facilitating the development of Karimnagar filigree?

AA: There has been government help but it isn’t sufficient to revive the art. There is no government scheme to train people in this art. Our society is the only cluster in the district that provides training. Further, we attend exhibitions at our own cost. The making charges paid to the artisans for the ready filigree item are also less. Government should come up with training centres in Karimnagar. It should encourage artisans by organising more exhibitions and fairs. The least it can do is declare Karimnagar as the ‘silver filigree city’.


“Disparity in wages and shortage of labour are the major challenges” - Patel Satin Kumar, Head-in-Charge, 30 Brand Beedi Manufacturing unit, Koratla, Karimnagar

Patel Satin Kumar, Head-in-Charge, 30 Brand Beedi Manufacturing unit, Koratla, Karimnagar


TDB: Give us an overview of the beedi industry, Telangana in particular.

Patel Satin Kumar (PSK): Beedi industry constitutes about 60% of the Indian tobacco market and employs over 6 million people, both directly and indirectly. According to estimates, nearly 100 crore beedis are produced daily in India. Telangana alone produces about 30 crore beedis a day. Major beedi producing districts in the State are Karimnagar, Nizamabad, Medak and Warangal. After agriculture, beedi rolling is the second biggest source of employment in Telangana, which has over seven lakh beedi rollers. Even Karimnagar is a home to over 2.5 lakh beedi workers who earn their livelihood from this industry. Daily wage of a beedi roller here is Rs.153.28 for rolling 1,000 beedis.

TDB: Who are your biggest foreign buyers?

PSK: Our company has a near monopoly in exports. About 20% of the company’s production is send to the Gulf countries, South East Asia, Japan and South Africa.

TDB: What are the issues that beedi industry in Telangana grapples with?

PSK: The industry is facing a host of challenges including a fall in smoking habits resulting in reduced beedi consumption, labour shortages, increasing input costs, etc. The major challenge is the lack of a uniform minimum wage in the industry. Then there is also an unorganised market to deal with. Influx of spurious and cheaper brands of cigarettes has removed possibilities of profits. Government policies too have dented the business. Procuring raw material is also a big challenge before the industry.

TDB: How have these factors impacted the beedi business?

PSK: Beedi sales are down by about 2-3%. Due to rising raw material and labour costs, the overall production cost is going up by Rs.20-30 per 500 beedis each year. Government policies are also affecting the industry. For instance, 65% VAT on beedis in Rajasthan is unreasonable. All these factors have affected its production and sales.

TDB: Is competition from West Bengal and Uttar Pradesh a threat to beedi units in Andhra Pradesh and Telangana?

PSK: Of course! Cheaper brands of cigarettes from these states are encroaching our customers. There is no respite in sight as these beedi makers from North and East are targeting low-income smokers in South and affecting our sales. Since beedi workers in North India and West Bengal get almost half the wages paid in Telangana, their production cost is low. Thus, they sell beedis at lower price.

TDB: What's your growth strategy?

PSK: We have limited options. We can’t pass on the tax burden to consumer as beedi is a price-sensitive product. We can’t reduce labour costs as they are solely dependent on us for their livelihood. The company is focusing on maintaining quality and brand building in the vast domestic and international market for future growth.



Chittoor - Reaping the fruits, quite literally

Don’t confuse Chittoor with Rajasthan’s Chittor! While the latter is famous all around the world for its rich history, the former is slowly making a name for itself as a hub for, among other farm produces, mangoes and its derivatives.

Nearest Port / ICD: Chennai Port | Nearest Airport: Chennai Airport | Nearest railway station: Chittoor railway station

Sisir Pradhan | August 2015 Issue | The Dollar Business


Chittoor is a small, sleepy town in the state of Andhra Pradesh. There is absolutely nothing noticeable about it. But if you are interested in fruits, particularly mangoes, or are planning to get into the fruit beverage business, Chittoor can be your Mecca. While its luscious mangoes were always well-known, it’s slowly emerging as India’s biggest hub for mango juice, pulp and canning.

All in place

Located in the Deccan Plateau, Chittoor is surrounded by hills. Its fertile red loams, hot arid climatic conditions and the nearby Nallamala forest range provide it a conducive environment for horticulture. Apart from fruits like mango and banana, Chittoor is also well-known for its tomato and sugarcane.

Farmers of the region have also taken up livestock farming on a commercial scale, particularly that of poultry and fish. Hence, the town has the perfect ecosystem for farm products. Be it cold storage facilities or processing plants, everything is in place here. Logistics is also a big strength of the district. It’s connected with Bangalore, Chennai and Hyderabad with four-lane highways, is located close to two prominent seaports (at Chennai and Krishnapatnam) and international airports (at Bangalore and Chennai), and has a modern railway station with dedicated sidings; and lots of vacant space along the sidings that help cargo handling. Hence, contract manufacturing is so much in flavour in Chittoor that even giants like Dabur and Coca-Cola source their products and raw materials from here.

Chittoor exports-TheDollarBusiness

Right watchdogs

Andhra Pradesh state government’s agricultural market committees (AMCs) control the mango trade here. “The state government appointed commission agents buy mangoes from the farmers and sell them to interested buyers after charging 4% commission. Although one can buy mango directly from farmers at slightly cheaper rates, most bulk buyers prefer to buy through these agents as they take care of a lot of hassles that arise while dealing with farmers. And the AMC takes measures to safeguard the interest of buyers and other stakeholders,” Chittoor AMC supervisor Ravi Kumar tells The Dollar Business. In fact, several people told The Dollar Business that under the eyes of the AMC here, mango trade is so well-coordinated that many bulk buyers don’t even travel to Chittoor while making purchases. Just a few phone calls and everything is taken care of. “Buyers come here just once and after the first deal is finalised, they don’t come here again. In the subsequent seasons, all transactions are finalised over the phone,” says Chittoor AMC Commission Agents President N. C. Ramachandra Reddy.

Chittoor is a hub for fruit and vegetable production and there are many export-grade small and large fruit processing units in the region.


The pests

Over the years, Chittoor’s mango trade has gone through ups and downs. But one of the biggest challenges that the industry here faces, which threatens its very existence, is a steady fall in mango yield over the last few years. Being located in a hot arid region, its crops are rainfed. So, climate change and erratic rainfall is starting to take a toll. While several local farmers have adapted to this by tapping ground water and drip irrigation techniques, all’s not well. Several empty godowns and a dry Ponnai riverbed in July are evidences of this. Reddy is of the view that such vagaries are pushing the younger generation to other professions. “Only people from my generation are still associated with this trade. It doesn’t interest the new generation. While I am associated with this trade since 1962, my children have moved to the United States. And that is the case with many,” Reddy tells The Dollar Business. Falling profits is another reason for people moving away from the mango business. “Profits have come down drastically. Earlier, on an average, we used to deal with 200 MT of mangoes every day. That has now come down to just 20 MT,” adds Reddy.

Local politicians and large farmers starting small mango markets at locations convenient to them, which has fragmented the market, is another impediment. Similarly, while the rising number of mango juice, pulp, canning and other fruit aseptic units in the region are making it possible for farmers to directly sell their produce to large buyers and avoid commission agents, some claim that such dealings are heavily loaded against the farmers with several claims of processing units not paying up on various pretexts.

Aseptically processed mango pulp stored in temperature controlled storage houses can be preserved for a period of 11months. There are several such storage facilities in Chittoor.


A helping hand

On its part, the Andhra Pradesh government is doing its bit for Chittoor’s mango trade by providing basic infrastructure like land and electricity. It’s also providing marketing support and encouraging entrepreneurs to set up fruit and vegetable processing units in the region. “Horticulture and other departments provide all kinds of support to new investors. As far as mango exports are concerned, Krishna district is also a good choice as many more varieties are available there. Chittoor is good for pulp,” C. Ramanjaneyulu, Person-In-Charge, Chittoor AMC, tells The Dollar Business.

And it is due to such support from the government, Raveendra Nalluri, who had a thriving software career in the United States, decided to move back to India and set up a mega food park at Mogili, a small village located at a distance of 30 km from Chittoor. Nalluri’s food park provides a plug-and-play kind of a setting for interested entrepreneurs with ready availability of almost everything. Nepal-based Chaudhary Group setting up a unit in the food park is a great testament of the convenience it offers.

Other than mango, Chittoor is also known for its processing units for other fruits like guava, pineapple, carrot and papaya.


No peer

Another advantage of setting up a processing unit in Chittoor is the fact that most of its neighbouring districts are also large producers of fruits like guava, pineapple, papaya, etc. Hence, once the mango season is over, one need not sit idle. “I have worked at processing plants in many parts of the country and I know that sourcing of fruit is a very time-consuming and capital-intensive process. But here, we have never had to put much effort to source raw material. You can always see trucks loaded with mangoes and tomatoes outside our unit,” Chandra Babu Pillay, GM (Operations), Srini Food Park, tells The Dollar Business.

One need not look hard for validation of Pillay’s praise for Chittoor. Naturo Fruits, a producer of popular mango bars, has its plant here. So has Jalgaon-based Jain Irrigation Systems after acquiring two processing plants from Parle Products. “Being in Chittoor helps us source different mango varieties that are good for pulping,” Sameer Sharma, Associate Vice President, Jain Irrigation Systems, tells The Dollar Business.


While leaving Chittoor and its mango-laden trucks, it’s impossible to not have respect for the place, its farmers and its businessmen. It’s impossible to not have respect for the transition the place has seamlessly gone through from being a supplier of just mango within the country to being a supplier of processed mangoes to even MNC giants. One question, however, remained unanswered. Just why is the visibility of an export hub like it so low?


“60-70% of our total production in Chittor is for coca-cola” - Sameer Sharma, Associate Vice President, Jain Irrigation Systems Ltd.

Sameer Sharma, Associate Vice President, Jain Irrigation Systems Ltd.


TDB: Tell us briefly about the operations of the two units that Jain Irrigation Systems has at Chittoor.

Sameer Sharma (SS): We have two units here that were acquired from Parle Products in 2006. Before our acquisition, Parle Products had only limited operations here. But after the acquisitions, we scaled up operations massively, starting from collecting fruits all the way to aseptic packaging. Today, we have three aseptic lines in each of the plants here, with 40 MTPH of finished product packaging capacity. These plants, and the unit at our Jalgaon plant in Maharashtra, make us the largest mango processor in the world. Last year, we crushed around 82,000 MT mango and this year, our aim is to cross the 1 lakh MT mark.

TDB: How are Chittoor’s mangoes different from those from other parts of the country?

SS: Like Jalgaon is known for banana, Chittoor is known for Totapuri mangoes, which has a flat taste, allowing us to giving it the flavour of your choice. It is also very pulpy, so its skin and seed can be easily removed mechanically. The skin of mangoes produced in other parts of India is very thin and easily gets crushed, making it difficult to make pulp from them.

TDB: You are the largest supplier of pulp to Coca Cola India. Do you export as well?

SS: Yes, we do export. Around 60-70% of the total production in this plant is for The Coca-Cola Company. The rest is exported to the EU and the Middle East, including Iran.

TDB: In terms of profitabilty, how different are domestic and overseas markets?

SS: There is a huge difference because of different usage. Given a choice, I would prefer export markets over domestic market.

TDB: How difficult/easy is it for you to source mangoes in Chittoor?

SS: Sourcing might be difficult for other companies but not for Jain Irrigation Systems since it is an agriculture-based company. Here, we have developed a model for mangoes that is similar to what we have for bananas and onions in Jalgaon.

Traditionally, farmers used to yield 3-3.5 MT/acre but the technology that we have developed and made commercially available to them helps yield three times more. Similarly, conventionally, they used to plant 54 mango trees in an acre of land, but using our method, they plant 674 trees per acre.


“We are actively looking for companies that can set up units here” - Raveendra Nalluri, Executive Director, Srini Food Park

Raveendra Nalluri, Executive Director, Srini Food Park


TDB: Please give us a brief background of the food park.

Raveendra Nalluri (RN): This mega food park is a part of the Government of India’s 11th Five Year Plan to create post-harvest infrastructure and promote fruit processing. It was incorporated in 2009 and the unit was commissioned in July 2012. It has been developed under the SPV model with support from the government.

TDB: Given the cumbersome and time-consuming approval processes in our country, how did you manage to start production soon after incorporation?

RN: Initially, we purchased land in Hyderabad and Vijayawada, but this was a preferred cluster and since APIIC (Andhra Pradesh Industrial Infrastructure Corporation) had already acquired land for the food processing cluster in FY2007, land was available. However, there were some delays in getting the needed approval from banks.

The food park covers an area of 142 acres and so far, we have invested around Rs.130 crore in it. This is the central processing unit, but we also have primary processing centres at Nuzvid, Madanapalle, Tirupati and Gudur, where collections, primary processing and backward linkages are done. Our exports and supplies to super markets are also done from these primary centres.

TDB: What was the biggest challenge you faced while setting up the unit?

RN: The biggest challenge was getting approval from banks as this was a new project and under the SPV model. After that, getting on board a consultant capable of setting up a mega food park was also difficult. We couldn’t find anyone with practical experience. So, we did lots of field visits to plants across India and abroad and learnt everything on our own.

TDB: What else is there in the food park other than your central processing unit?

RN: So far, we have given plots to eight units and about 22 acres have been leased out. We have another 18-20 acres that is available. Hence, we are actively looking for entrepreneurs and companies to come and set up processing units here. Chittoor is a hub for fruits and vegetables. It has good infrastructure. Three international airports are located close by. Chennai and Krishnapatnam ports are just three hours away. Major markets like Chennai, Bangalore and Tirupati are also located just 150 km away. One can get a single window approval within 21-30 days to set up a unit in the food park.



Export Temples of India
Madurai - Humble food's humbling story

Ministry of Commerce’s Data Bank reveals that India's exports of papads run into millions of dollars! Yes, those round and flat appetisers that you might be knowing as papadum, appadam or appalam depending on your mother tongue. As curiosity grew, The Dollar Business found itself sitting in a train headed for Madurai.

Nearest Port / ICD: Tuticorin port (149 km) | Nearest Airport: Madurai airport | Nearest railway station: Madurai railway station (2.5kms)

Shakti Shankar Patra | August 2015 Issue | The Dollar Business

Men weighing and packing freshly made appalam's at a factory in Madurai. Madurai's appalams are much cheaper than those made in Chennai, but have a lower shelf life.


There was a particular reason why I chose Madurai to investigate India’s papad exports. For, while I was initially very excited to learn about them, a detailed analysis revealed that the value of papad exports from the country, at slightly under $50 million/annum, has remained stagnant for the last many years. While Mumbai-based Shri Mahila Griha Udyog’s Lijjat's papads accounts for a big chunk of the country’s total papad exports, and Chennai is a major hub for exports, Madurai’s papads are the cheapest. And I thought if I really want to understand the industry, I should start from there.

Unusual hurdle

Mention Madurai, and the first thought that would come to most people’s minds is the famous Meenakshi temple. Some might also mention the city’s links with LTTE. Yes, there was a time when Madurai was the hub of LTTE’s activities in India. Not only did the region’s politicians offer patronage to the dreaded terrorist organisation, but also lakhs among its masses were massive sympathisers of it. Even today, it didn’t take me long in the city to see a massive poster of Prabhakaran, the slain LTTE chief.

Reminding myself that I was in the city to explore it as a papad exporting hub and not its past as an LTTE hub, I checked with my cabbie if he knew where most of the papad factories were located. “What’s papad?” came a prompt counter-question. That’s when I realised I was among the Tamil people, whose love for the their language almost borders on mania. “Appalam factory?” I asked. “Chinthamani,” he said. “How far is it from the station,” I asked. No answer. I knew I was going to have a tough time.

Madurai Exports-TheDollarBusiness


When Google revealed that Chinthamani is a small village on the city outskirts, my apprehensions grew. I need a translator, I told myself, but thought of brazening it out. Chinthamani, which literally means a wish-fulfilling jewel, is not a jewel, and gave me the impression of a place, whose wishes have never been fulfilled. It’s very dusty, with extremely poor quality roads, massive potholes, unruly traffic and open drains. My heart sank further when I saw all the signboards in the village written in Tamil. [Sorry! Only in Tamil.] This can’t be an export hub, I thought.

Lesson in humility

What redeems Chinthamani, though, is its people. Here, even those men, who have nothing to hide their upper bodies, have a glow on their face. Even those women, who can’t afford a slipper for a foot, deck themselves up with flowers on their hair. Every person you speak to, rather, try to speak to, is humble, greets you with a smile and exhibits a certain kind of warmth, which makes up for all of the village’s lacunae. And M. Manikandan, Proprietor, Sri Sastha Appalam, was no different.

A middle-aged man, Manikandan comes across as someone who has huge aspirations, but knows his limitations. He is passionate about his papads, sorry, appalams, takes pride in his humble factory, and is also a content man. “Things are good. We don’t really face many issues,” he says, answering the oft-repeated “What are your main challenges?” question from journalists like me. Really? I insist and rephrase my question to get the kind of answer I want. “There are about 1,500 small scale appalam making units here in Madurai, with monthly turnovers ranging from as low as Rs.5 lakh to as high as Rs.50 lakh. There are no big factories here. Madurai’s appalam industry is essentially a cottage industry. It is doing pretty well, but profitability has come down a bit in recent years,” he summarises, giving me the ammunition to understand reasons for stagnant papad exports over the last five years.

“Appalam is a low-margin, high-volume business. So, even small spikes in the prices of raw materials (mostly urad dal) affect us. Particularly due to the fragmented nature of the industry and increased competition, we are not being able to pass on the input price rises to the middlemen we supply to,” he reveals the reason for lower profitability in recent times. But why isn’t India’s total papad exports growing? “There’s limited demand for appalam in the international market as it is only consumed by expatriate Indians. That’s why only countries that have a big expat Indian community, import appalams,” he adds, answering the question that had prompted my papad quest.


Vertical limit

As I went around Manikandan’s factory and got a first-hand experience of appalam-making, I knew there was no need to investigate further. A couple of Manikandan’s competitors, who he was kind enough to introduce me to, also shared similar sentiments. There’s absolutely no serious challenge for Madurai’s, or for that matter, India’s papad exporting industry.

Exports are not growing because overseas demand is limited. Americans and Europeans, or for that matter, the Chinese and the Japanese don’t eat papad. And given the high inflationary environment India has been grappling with for almost a decade, urad dal price rises can’t really be considered as a big problem.

For better

Now that I had found my question answered, it was time to bid adieu to Manikandan. Just one thing troubled me though. Will Chinthamani never have its wishes fulfilled? Will its people never enjoy the basics that everyone deserves? Manikandan thinks it’s possible, but that would require organising the fragmented industry in Madurai and a better focus on branding. Who can do that, I ask. “I will support any large investor who is willing to procure appalams from me, better market them and gives me a healthy spoil of the margins. The business model that I think is conducive for a new investor here is outsourcing production of appalams to the existing units and concentrating only on the marketing part, since he/she can’t be as good as us in making appalams, while we are poor when it comes to creating a brand,” he answers promptly, as if he had been thinking long and hard about his as well as the industry’s future.

Women working at the factory of Sri Sastha Appalam. The company mostly, based in Chinthamani in Madurai, operates as a contract manufacturer for several appalam exporters.


Bitter truth

A visit to Madurai isn’t complete without a trip to the Meenakshi temple. It’s a magnificent structure, with splendid architecture. And though visiting it was not on the agenda, I thought of giving it a shot, now that the papad questions had been solved. Like several other famous temples in India, Meenakshi temple too has a differentiated rate card. A higher entry fee can take you to the sanctum sanctorum in minutes. Else, you will have to wait to pay your homage. Although it was a nuisance, I decided to ignore it and started marveling at the architecture of the place, trying to simultaneously summarise Madurai’s appalam industry. It’s a perfect cottage industry. It provides livelihood to thousands of men, and particularly, women. It will do well as long as Indians will have a taste for papads.

But truth be told, sadly, there’s nothing remarkable about it. And educating the Americans, Europeans, Chinese, and every non-Indian about this edible frisbee can be quite a task; even for a government that represents a headcount of 1.3 billion!


“Only a handful of appalam producers export directly” - M. Manikandan, Proprietor, Sri Sastha Appalam

M. Manikandan, Proprietor, Sri Sastha Appalam


TDB: How many appalam making units are there in Madurai?

M. Manikandan (MM): There are about 1,500 small scale appalam making units here in Madurai, with monthly turnovers ranging from as low as Rs.5 lakh to as high as Rs.50 lakh. There are no big appalam makers here.

Madurai’s appalam industry is essentially a cottage industry. The main export destinations of our appalams are Singapore, Malaysia, Maldives and Sri Lanka.

TDB: What is the breakup of your revenue between exports and domestic sales? Are export margins higher?

MM: Exports account for roughly 60% of our revenue, while the rest is accounted for by domestic sales. Exports used to offer higher margins, but that’s not the case anymore, though they do give us more visibility and help boost our image. This is because unlike what used to be the case in the past, there’s much more competition now. Today, buyers have more options to choose from and are in constant touch with appalam makers here. This has eroded our margins.

TDB: Do Madurai’s appalam producers export directly or do they supply to middlemen?

MM: Only a handful of appalam producers here export directly, while most of us supply to middlemen. One of the reasons for us earning low margins is also the fact that we don’t get the export incentives provided by the government. The middlemen we supply to benefit from them.

TDB: Is there any difference in the appalams that are exported from Madurai as compared to those that are exported from Chennai?

MM: The difference is in shelf life, although the taste is the same. While Madurai’s appalams have a shelf life of six months, Chennai’s appalams have a shelf life of close to one year. Hence, as you would expect, Madurai’s appalams are cheaper than those of Chennai.

TDB: How would you describe the health of the appalam industry here? What are your future expectations?

MM: The industry here is doing pretty well, but profitability has come down a bit in recent years. Appalam is a low-margin, high-volume business. So, even small spikes in the prices of raw materials affect us, particularly since due to the fragmented nature of the industry and increased competition, we are not being able to pass on the input price rises to the middlemen we supply to.

TDB: Do you think Madurai represents an opportunity for an investor to integrate the small units here and produce on a much larger scale?

MM: I will support any large investor who is willing to procure appalams from me, better market them and gives me a healthy spoil of the margins. The business model that I think is conducive for a new investor here, is outsourcing production of appalams to the existing units and concentrating only on the marketing and branding aspects.


Export Temples of India
Srinagar Border Haat - Free trade zone with a difference

When The Dollar Business reached Srinagar, a village on the Indo-Bangladesh border in Tripura, and weaved its way through a weekly makeshift market buzzing with business activity, it could discern the unmistakable markings of a small step destined to achieve a big leap in Indo-Bangla bilateral trade. Well, they call it Border Haat!

Nearest Port / land customs station: Agartala | Nearest Airport: Agartala (12 km) |Nearest railway station: Agartala

Satyapal Menon | August 2015 Issue | The Dollar Business

Border Haat would have more prospects if the products marketed here were unique to the participating countries.


My ride towards destination zero line was filled with mounting excitement and anticipation of the often heard and, of course, the unknown. The ride on flora-flanked 150-km stretch from Agartala (capital of Tripura) to Srinagar (a village in Tripura on Bangladesh border) further invigorated my thirst in the quest. Finally here I was, spot on the border. However, there was something conspicuous by its absence. The barricades were in place manned by the very alert Border Security Force (BSF) personnel. But, contrary to perceptions about encountering menacing looks, half-drawn guns, and, intimidating barriers, the BSF personnel were all amiability personified. In fact, they facilitated and ensured the smooth movement of the visitors to the Border Haat. Haat in local parlance means a weekly marketplace. The Border Haat – which can be best described as a Free Trade Zone with a difference – has been set up in what is generally termed as no man's land in an area between the two demarcated border barricades of India and Bangladesh respectively. Both countries allocate 50% of the space out of the total area of 75x75 sq-m for the Haat. Certain restrictions including vendors from only within a 5-km radius on either side eligible to set up shop and a ceiling to the count of customers and total purchase value allowed in the marketplace were seemingly dampening the very essence of the concept. [The purchase limit for each customer at the Border Haat is $100, and only 100 visitors are allowed entry into the market for any particular day.] Further, the products bought here are meant only for domestic use. "Since the space is limited, it is difficult to accommodate and control large number of visitors. Visitors are issued passes on payment of Rs.10 and after verifying their ID cards," Swapan Mitra, Manager, Marketing, Industries and Commerce Department, Tripura, tells The Dollar Business.

Srinagar Border Haat-TheDollarBusiness

Select few

The land for the Border Haat is identified by Border Haat Committees chaired by Additional District Magistrates on both sides. The committee also invites applications from prospective vendors within the 5-km area of the border. The applications are forwarded to respective panchayats which in turn recommend the final list of 25 vendors. What is however strange is that there is no fixed criteria for selections. To add to this problem, there is no mention of the specific period for which a vendor can do business on this platform. Doesn't it mean that applicants who fail to get selected would be deprived of future opportunities? An official when queried about this stated that they go by the transactions and business performance of the vendor and if it is below par he is replaced by another vendor. The explanation is rather implausible when looking at it from a perspective of providing equal opportunities to all the stakeholders. One interesting and convenient facet of the Border Haat is transaction happening in local currencies. Purchases can be done in either Bangladeshi taka or the Indian rupee. However, such purchases are limited to respective local currency equivalent to $100.

So far so good! But, if you are expecting some novel commodities unique to India or Bangladesh, then you are in for a great disappointment. It is the usual array of cosmetics, spices, fruits, vegetables, plastics, agriculture produce, dairy products, fish and handicrafts which are available in both countries. "Indian cosmetics, milk products, branded items and utensils are the most favoured among the Bangladeshi customers," V. George Jenner, Director, Industries and Commerce Department, Govt. of Tripura tells The Dollar Business. The business on the Indian side has been around Rs.84 lakhs every month at Srinagar Border Haat since its inception six months back.

As a cross-border market platform, Border Haats have a much higher potential than what has been achieved so far.


Prize catch

While going around the market place, a huge crowd at some shops on the Bangladesh side caught my attention. On closer scrutiny, Indian customers gathered around fish vendors haggling over the prices. Well, it was the famous Bengali obsession for fish on full display. They simply would not let go off the price catch. Swapan Mitra explained to me that the varieties available here are scarce and pricier in Tripura. "While the price of fish here is around Rs.200 per kg , in Tripura it is around Rs.500." According to a BSF official, "the Border Haat is all about fish and nothing else. Most of them come here just to buy fish." Irrespective of the commodities on sale, vendors on both sides seem to be quite happy with their earnings. Mukthar Hussain, a Bangladeshi youth who sells exquisitely designed bowls, tells The Dollar Business, "The Border Haat has provided us a very good platform for doing business. There are absolutely no hassles and I am quite happy. For exchanging the rupee we also have a money exchange facility here." Another vendor from Bangladesh, Mohammed Karim shares a similar sentiment. "I am doing business here right from the time it was established. Sales have been good. My earnings are 20,000 takas (Rs.16,150.52) on an average," he tells The Dollar Business. While the products sold here and the other restrictions could invite criticism, Jenner is of the view that the Border Haat is more than a mere marketplace and the basic objective is to strengthen relationship between the people of India and Bangladesh.

One aspect that becomes strikingly clear and perceptible is that the dividing line does not dissolve the common culture and language shared by the people of Bangladesh and Tripura. Since the bifurcation of Pakistan and creation of Bangladesh, people of Tripura have not only been involved in trade with the country but also share matrimonial links. The affinity towards each other can be gauged from the fact that a facility for the issuance of special India-Bangladesh passports – which the state government itself could issue – was provided exclusively to the people of Tripura until very recently.

Both countries allocate equal space for a Border Haat on either side of the zero line.


Umbilical links

Tripura shares 856-km border with Bangladesh – the longest in the country, which also explains its propensity for more linkages. In fact, the concept of Border Haats had its genesis in Tripura with it being the first state to suggest such trading platforms. But inexplicably, the first such Border Haat was established on the Meghalaya-Bangladesh border by the Government of India. It was much later, in 2015, that the Border Haat in Srinagar was established. Inspired by the success of Srinagar, another Border Haat was set up in the state at Kamalasagar. Four more cross-border market platforms are on the anvil on the Tripura-Bangladesh border stretch.

Transactions are allowed in both Indian rupee and Bangladeshi taka at Srinagar Border Haat.


Exclusive bane

The average spend on every Border Haat on the part of the government is Rs.2.53 crore. However, there are diverse opinions about the rationality of Border Haats. One is that it should be inclusive of the entire state without which such market platforms does not serve any purpose. The other contention is that it should be exclusively for the villages on the fringes of the border so that it could facilitate their growth.

"The Border Haats should allow traders from all parts of the state to sell their products and there is no relevance in the restrictions on marketing and marketable products," M. L. Debnath, President, Tripura Chamber of Commerce and Industry, tells The Dollar Business. Presently, according to a recent addendum to the policy, any product originating from India can be marketed on this platform. But, there is a catch! Only local vendors from the 5-km radius are allowed to sell the products. On the positive side such platforms which provide easy and unhindered access to markets has the potential to create conducive environment along the villages, in proximity to the border, for spawning cottage industries in the years to come.

The road ahead

Ironically, while Bangladesh has a huge trade deficit with India, the scenario is opposite when it comes to Tripura-Bangladesh trade. In FY2015, the state's imports from Bangladesh were to the tune of Rs.357.62 crore, while exports to Bangladesh were valued at just Rs.1 crore. And not to say, the Border Haats can come in handy if the state government wants to fill in the trade gap.

As of now, bilateral trade between Tripura and Bangladesh is routed through Land Customs Station – a state-of-the-art facility located on the border, 5-6 km away from Agartala, with all departments including customs, plant quarantine and forex under one roof. According to D. Nandi, Manager, Land Ports Authority of India, major import products from Bangladesh comprise cement, stone chips, prawns and dry fish. Further, Tripura's share in exports to other international markets is almost nil, the reason being poor connectivity with Kolkata Port. "The road corridor between Kolkata and Bangladesh which was opened up for passenger traffic could provide an ideal opportunity for exports from Tripura if cargo traffic is allowed on this route," Nandi tells The Dollar Business.

No doubt, that would be the ideal situation. But still, one cannot ignore the potential that these Haats offer when it comes to local economic development on both sides of the border. Remember, the objective of setting up of these makeshift markets is not just to strengthen ties among people in border areas, but also improve bilateral trade between the two neighbours. And that will only happen if traders from both the countries are allowed more economic engagement by easing restrictions on products and trade value. For, the very concept of Border Haat believes in allowing trade and not restricting it!


“At the Border Haat customers can pay in their own currencies” - V. George Jenner, MD - TIDCL, and Director - Industries & Commerce Department, Govt. Of Tripura
V. George Jenner, MD - TIDCL, and Director - Industries & Commerce Department, Govt. Of Tripura


TDB: Apart from Srinagar and Kamalasagar which are the other locations in the State identified for setting up Border Haats?

V. George Jenner (VGJ): The performance of the two Border Haats has been good. Proposals are on the anvil for setting up such market platforms in six other locations in the State. Among them Kamalpur in Dhalai district, Palbasti in Northern Tripura have been approved by the Government of India.

TDB: Don’t you think that restrictions such as only vendors from 5-km radius being allowed to do business in a Border Haat and also limit on the number of visitors allowed entry into the market would impact business prospects?

VGJ: The very objective of Border Haat is to facilitate trade between local vendors on either side of the border. The restriction related to only traders from the nearby villages being eligible for doing business in Border Haat has been done with a view to provide market access to them and boost the local economy. Apart from this, the number of visitors are limited to 100 because of space constraints at the Border Haats. Special passes are issued to visitors from outside the 5-km radius after verification of their ID cards.

TDB: Doesn't the fact that only local products could be marketed limit the scope for variety and range?

VGJ: Initially there was a restriction that only commodities produced in the 5-km radius have to be marketed. But now the restriction has been removed and any product produced anywhere in India can be marketed. But, it has to be by a trader hailing from within the 5-km radius.

TDB: Why was the facility of issuing Indo-Bangladesh passports discontinued?

VGJ: Tripura’s affinity with Bangladesh is reflected in the fact that Indo-Bangla special passports were issued by the district collector here itself. It was discontinued last year due to certain problems from across the border. Moreover, with more and faster access to passports through digitisation, there was no requirement for such a facility.

TDB: Is it a fact that due to connectivity problems with the rest of India, Tripura depends on Bangladesh for importing even basic essentials?

VGJ: It takes 13 days to route products through Vizag or Chennai ports. Chittagong, in Bangladesh, is only 75 km from here. It is quite easier to channel the commodities through this port. In fact, Tripura would have convenient and shorter access to Bangladesh if a 4-km bridge is constructed on a river that separates the two countries. Presently, special permission has been given for essential items like food grains, power plant machinery to be routed through Bangladesh. We are attempting to extend this list. Stone chips are being exported from Bangladesh. Granite is sourced from Meghalaya by Bangladesh and value addition is done there by crushing the granite into stone chips and then exported by the country to Tripura.


"I have my doubts about the success of border haats..." - M. L. Debnath, President, Tripura Chamber Of Commerce & Industry
M. L. Debnath, President, Tripura Chamber Of Commerce & Industry


TDB: You were among the first to float the idea of setting market platforms on the border with Bangladesh? Have the Border Haats met your expectations?

M. L. Debnath (MLD): Our idea, when we proposed the concept, was of a different nature. The products now being marketed are available on both sides of the border. The very name Haat means a weekly market trading in locally available agriculture products. In fact, it should actually be a big bazaar open every day instead of just once a week. Industrial products in small quantities should also be traded at the market.

TDB: The objective of Border Haat is to give a boost to rural economy. Isn’t it?

MLD: The question here is how much of a boost it gives to the rural economy when the market is open only once a week and with limited range of products. If it is open every day then there is some benefit for the traders. Apart from this, I have my doubts about its success because of so many restrictions and limitations associated with the Border Haat.

TDB: In your opinion how can this concept become a productive solution?

MLD: 86% of the total area in the State is on the border with Bangladesh. More such marketing platforms with more space and functioning on a daily basis can be set up on this stretch. This would definitely open up more opportunities for the traders.

TDB: Tripura does not seem to have any presence in the international markets? Why is it so?

MLD: We are not exposed to international trade and one of the reasons is the lack of infrastructure and connectivity. The other reason is that we do not have easy access to EXIM licenses and other required certifications facilities, since neither any export promotion councils nor other related agencies are located here. In terms of connectivity, we have made representations to both India and Bangladesh governments to route commodities on the recently opened Bangladesh-Kolkata road corridor or use the seaport or river port which is near to Tripura. Nothing has materialised so far. But we hope for the best. The withdrawal of Indo-Bangladesh passport facility has also created further impediments. We as businessmen frequently visit Bangladesh. Since there is no passport office here, for every requirement we are now forced to go to Kolkata. How do you expect us to get involved in International trade with so many obstacles?

TDB: How fertile is Tripura for investments?

MLD: Indian industrialists are not showing any interest in setting up their units here. So, now we are inviting the Bangladeshi industry leaders to come and start their operations here. We have had a good response from the Bangladesh side with a few already in the process of setting up their industries. One of the major advantages for the Bangladeshi industrialists is Tripura’s proximity to their country.