Mr. Rakesh Kumar, Executive Director, The Export Promotion Council for Handicrafts (EPCH) & Managing Director, India Exposition Mart Limited
"Most of the products covered by handicraft category form part of the lifestyle products and are suitable for the retail business in India."
The Export Promotion Council for Handicrafts has been established under the EXIM policy of Govt. of India in 1986-87, and is a non-profit earning organization. EPCH is an apex organization of trade, industry and government sponsored by Ministry of Textiles, GOI, for promotion of handicrafts from country and project India?s image abroad as a reliable supplier of high quality handicraft goods & services and ensure various measures keeping in view observance of international standards and specifications.The council has created necessary infrastructure as well as marketing and information facilities which are availed both by the member exporters and importers.
Mr. Rakesh Kumar, Executive Director, The Export Promotion Council for Handicrafts (EPCH) & Managing Director, India Exposition Mart Limited, is responsible taking handicraft exports from India?s small and medium sectors to new heights. Mr. Kumar is also on the board of National Centre for Trade Information (NCTI) as a Director. A Post Graduate in Public Administration and International Foreign Trade, Mr. Kumar, has wide experience of working with SMEs especially export potential enterprises for more than 20 years. He represented and led Indian delegations in a number of important International Fairs, Trade Committees, and Boards abroad. Mr. Kumar is the key architect of several important projects in India such as setting up of the National Centre for Design & Product Development (NCDPD) in New Delhi and Moradabad (one of the largest forex earner Craft Pocket of India) and served as Founder Secretary of National level Design Center where Foreign and Indian Designers are working. Mr. Kumar is also a pioneer in development of North Eastern Handicrafts for exports.
In a detailed interview with Anil Mascarenhas of India Infoline, Mr. Rakesh Kumar says, "Most of the products covered by handicraft category form part of the lifestyle products and are suitable for the retail business in India."
How has the role of exports promotion councils evolved over the years?
The Export Promotion Council for Handicrafts (EPCH) was set up in the year 1986-87. The membership of the EPCH was 35 and the exports of handicrafts were Rs3.87bn. At the time of inception, the main objective before the EPCH was to develop awareness amongst Indian producers and exporters of handicrafts about the potential in world market, educate them in rules & procedures and documentation, enthuse them for exports, publicize and promote handicrafts in the world market. With the dynamic, persuasive, consistent and positive approach of the leadership of the EPCH, the exports of handicrafts started increasing steadily and the number of entrepreneurs and procedures of handicrafts started converting into regular exporters progressively. To make the Indian handicrafts competitive in the world market and to enable India acquire a larger share of the market, the EPCH devised an integrated policy for product innovation, development, adaptation, upgradation of technology, designs, packaging & presentation aggressive publicity in the world market ? both generic and product specific and comprehensive market strategy.
The market strategy included direct and indirect support through participation in trade fairs in the leading world markets, organization of Buyers Seller Meets, sponsoring of trade delegations, contact promotion programs, opening of showroom and warehouse and appointment of representative and agents for contact promotion with the overseas buying community etc. One important step taken by EPCH was to institutionalize the Indian Handicrafts & Gifts Fair two times a year. The fair, started in the year 1994 with 313 exhibitors and 500 overseas buyers and pre-dominantly displaying brassware, woodware, gifts, souvenir and decoratives., has now enlarged into a giant Indian Handicrafts Fair with more than 2000 exhibitors, 8500 buyers, 800 product lines designs, styles and raw material base spread over an area of 80000 sq. mtrs. IHGF is now "One Stop Sourcing Event" for overseas buying community and "Most Effective Market Medium" for Indian exporting community. There are now more than 7000 members of EPCH and exports have crossed Rs145bn mark in the year 2005-06. It will be much more in the year in the year 2006-07.
Realizing the need for a competitive product range for exports, the EPCH now brings international designers for the benefit of Indian producers and exporters and has set up Design Development Center at the New Delhi with branches in the production cluster, Common Facility Centers for producing and finishing of products at production clusters and centers for technology upgradation.
EPCH has played a very important role of catalyst between the exporters, overseas buyers and Government agencies. With the support of the Government a SPV called India Expo Mart Ltd. was created on Public Private Partnership model to create infrastructure of India Expo Center & Mart at Greater Noida to house 1800 showrooms, 8 exhibitions halls, conference facilities, banqueting facilities, parking facilities, warehousing facilities and logistics centers etc. The objective of this infrastructure is to enable overseas buyers to source their requirement from India all through the year at one place and at one time from all over the India. The India Expo Center, by virtue it is being located at Greater Noida, enables overseas buyers flying from east to west or west to east to stop over Delhi and visit the 1800 showrooms opened by exporters from all part of India to see the total Indian product range, discuss and negotiate business.
Indian handicrafts, which were initially known as souvenir and gifts items now form a very prestigious and important position in the houseware and lifestyle products categories as the Indian products are also of utility value than only the decorative value.
How often do you conduct the Indian Handicrafts? exhibition?
The Indian Handicrafts & Gifts Fair, which is organized by the EPCH twice a year viz. Spring & Autumn. This Fair is now recognized as ?One Stop Sourcing Event? by the international buying community and the ?Most Effective Marketing Medium? by the India exporters. This exhibition, which was initiated in the year 1994 with 313 participants covering a gross area of 5000 sq. mtrs. is now expanded to more than 80,000 sq. mtrs. space with 2000 exhibitors and 8000 buyers from all over the world. More than 800 product lines, designs as well as raw material based products are on regular display at this exhibition. Participants in the exhibition come from all nooks and corners of India.
Give us an idea of the size of exports of handicrafts? What is the potential?
Exports of Indian handicrafts have been rising on an average growth rate of 15% per annum consistently during the last decade or so. The total exports of handicrafts in the year 2005-06 amounted to Rs145.27bn. The figures for the current year viz. 2006-07 will be available a few months time now. It is expected that the growth rate during the current year will be more than the average growth rate.
The potential for increasing Indian handicrafts is very large. World market for handicrafts is estimated to be of the size of US $ 235billion. India?s share presently is less than 2% of the world market. Hence, there is tremendous scope. China?s share in the world market is estimated to be 30%. India?s main competitors in the world market are China, Taiwan, Korea, Philippines, Indonesia and Thailand. The industry in these countries is not only mechanized by computerized as against Indian handicrafts which are traditional, ethnic and hand crafted and unique in designs, colours, craftsmanship and raw material base. Hence, Indian handicrafts will continue to enjoy good potential in the world market. We have to improve quality, packaging, presentation, reduce the cost of production and increase production base.
What about the domestic potential? What activities are you undertaking to promote the same? Will there be separate units to look at the domestic market?
Handicrafts are more akin to the range covered by lifestyles products. The domestic retail market, both organized and traditional, is estimated to be of the order of US$300bn. It is expected to grow at the rate of 10% per annum by 2010. By 2015, it is estimated to acquire a size US$ 637bn.
Most of the products covered by handicraft category form part of the lifestyle products and are suitable for the retail business in India. Hence, the market for handicrafts products can easily be assessed to be of the same order as that of lifestyle products. So far exporters of handicrafts have been restricting themselves from supplying their products to the Indian retail market. Now that the buying power in India is increasing at a very fast rate and that expenses incurred by the normal person on lifestyle product is also increasing and that income levels of the normal person is on the regular increase, it is appropriate time for handicrafts exporters to open up their product supply base to the domestic retail market through the chain of organized retailers, buying houses, departmental stores and malls.
As a first step in this direction, the handicrafts exporting community represented by India Expo Mart & Center has decided to start a unique first time B2B exhibition called ?Home & Beyond? at India Expo Center & Mart in Greater Noida from April 15-18, 2007. This is first B2B show ?Home and Beyond? will have participation from all the permanent showroom owners in the India Expo Center & Mart and more than 100 companies from outside membership of India Expo Center & Mart and EPCH. The objective of the show is to enable the organized retailers in India to source the Indian lifestyles hand crafted products, hitherto not open to Indian market, for retail sales through their outlets in India. ?Home & Beyond? will ultimately help develop India Expo Center & Mart as wholesale market for lifestyle handicrafts products for domestic retailing.
Where would the margins be higher? Exports or domestic?
It is very difficult to pin point at this stage where the margins will be higher whether in exports or in domestic sales. Market forces will decide the quantum of margins. However, in exports payments are received over a period of time, products are produced as per specific requirement of the importer, considerable cost are involved in packaging, presentation, documentation and transport etc. and there are chance of rejection in case of inconsistency in quality. The domestic market will be much more beneficial than the export market as many of the costs involved and the risks involved in exports will be minimum in domestic sales. India is a very potential market. If properly harnessed and developed, it may perhaps be as big as American and European market.
Give us a size of the geographic break-up in revenues? Which are the top 5 or 10 products or segments which brings in the maximum revenues?
The geographical break-up in revenues arising out of exports of handicrafts can be described as USA being the largest with 30.72%, UK 11.49%, Germany 10.51%, Italy 3.28%, Canada 3.10%, Japan 2.42%, Netherlands 2.87%, Saudi Arabia 2.43%, Switzerland 1.58%, Australia 1.64%.
The product-wise break-up in revenue from exports of handicrafts is largest from embroidery and crocheted goods, artmetalware, hand printed textiles and scarves, woodware, zari and zari goods, imitation Jewellery, shawls as artware and miscellaneous handicrafts.
What kind of seasonality do you see in handicrafts exports?
I do not consider that the exports of handicrafts are seasonal. These are more connected to the festivals in the world market rather than to seasons. The demand for handicrafts items required at the Festivals like Christmas, New Year etc. is much larger than the normal exports.
What kind of help do the SEZs offer for handicrafts? Are there SEZs dedicated to handicrafts. Do you see it happening?
As of now, there are no specific SEZs, which cater to the requirement of the handicrafts exports. As such the exporters of handicrafts do not get any specific assistance or help from SEZs presently in operation. However, the EPCH has proposed to the Government of India to set up an exclusive SEZ for handicrafts exporter. Once the SEZ comes into being there will be a great help to make produce, fabricate, assemble, process handicrafts products and also help in packaging, polishing, labeling, refurbishing, reconstructing, remaking, products for exports. This will universally apply to nearly all product categories of handicrafts. I hope that a SEZ of handicrafts should be operative in few years time in the National Capital Region of Delhi.
What is the size of the world market for handicrafts and giftware? India, somehow seems to have less than 2% of the share. Could you cite the reasons for the same?
According to a study conducted by Export Promotion Council for Handicrafts through Frost & Sullivan, the world market for handicrafts is estimated to be of the order of US$235bn. The world market is expected to be growing at an annual average growth of 5%. Top 10 markets of the world viz. USA, Germany, UK, Japan, France, Canada, Italy, Spain, Hong Kong, Belgium account for 77.5% of the total market. USA is largest importer of gift and decoratives products, catering 32% of the world markets. Bulk imports by the USA are low value products. European Union imports medium to high quality products. At present, China occupies 30% share of the world market primarily because the Chinese products are inexpensive and suit the requirement of changing taste of consumers. India?s main competitors are China, Taiwan, Korea, Hong Kong, Philippines, Indonesia and Thailand. India?s share is less than 2% of the world market.
The main reasons for lower share in the world market are traditional designs, hand crafted products, low technology low productivity, poor infrastructure, inadequate marketing facilities and high transaction cost. EPCH is working hard to over come these problems. Government of India is also seized of the problems and is developing plans for making Indian handicrafts products competitive in the world market.
Like in most industries, we miss out on marketing and packaging. Is it the same case here? What is being done about the same?
It is true that India loses to its competitors in the world market on packaging, presentation, design and marketing. In the handicrafts category also we are not able to compete with others due to high cost of production, traditional designs, high transaction costs, inadequate and high cost of embellishments, components and raw material etc. and inadequate marketing support. The EPCH has already initiated actions for Design Development Centers, Common Facility Centers for technology upgradation and production, participation in trade fairs and exhibitions, organizing product specific exhibitions, inviting delegates, organizing Buyer Seller Meets, bringing in international designers, focusing on languishing crafts and languishing regions and supporting exporters in overseas marketing.
What kind of infrastructural benefits do you enjoy? Is there any corpus set aside to boost Indian handicrafts?
The infrastructure for handicrafts exports needs to be developed and strengthened. As at present, we have only Common Facility Centers for Upgradation of Technology, Centers for design development, India Expo Center & Mart for marketing of Indian Handicrafts, Showrooms in Dallas, and the big marketing event of IHGF. We have to increase such infrastructure in larger number at all production clusters in India. EPCH has already approached the Government of India for creation of Corpus Fund of Rs10bn for development and promotion of Indian handicrafts so that India can increase its share in the world market. The proposal for Corpus Fund is awaiting approval.
Did the budget have anything which could directly or indirectly boost the sector?
The budget has not provided any exclusive direct or indirect measures for boosting exports of handicrafts.
To what extent does technology help in boosting handicrafts? What are some of the measures you have taken?
Technology definitely plays very vital role in boosting exports of handicrafts as with better technology, cost of production can be reduced, quality of product can be improved the quantity of production can be multiplied, thereby helping increase in exports. Some of the measures already initiated are Common Facility Centers at selected places more are planned at clusters level. Under the Baba Saheb Ambedkar Hastshilp Vikas Yojana, financial assistance is also available to set up modern machine and technology production base.
How are the logistics managed?
EPCH provide help and support in managing and solving of logistic problems applicable to the handicrafts industry as a whole. However, individual problems at the company or exporter level is managed and solved by the individual company or exporter. In case of general problems like problem of import, difficulties in procedures with regard to export, import, finances, and the duties taxes, power supply, transportation, the EPCH makes a specific study of each problem in consultation with the exporters and thereafter it submits a memorandum with the concern Government agency and follow up regularly for solution of problems.
What are some of the challenges you face like Transaction cost?
Few difficulties being faced by the handicrafts exporters are high transaction cost, like high cost of export finances, banking charges for paid services, high rate of electricity, continuous depreciation of US $, high octroi/entry fee, delay in custom clearance for export and import and poor infrastructure at ports, airports, ICDs, railways, high transportation cost, high packaging cost, problems in import embellishment, components, parts required for export production etc. These are some of the problem which needs to be sorted out for increasing exports. EPCH is continuous in touch with the Government of India and various other Government Agencies for removing these problems and finding solutions as well.
Handicrafts usually need good packing and occupy lot of space while transporting. How do you manage the freight costs in such cases?
It is true that handicrafts occupy lot of space as some of them are quite voluminous and heavy also. The freight costs are high for up-country products which require firstly road transportation to the ports and thereafter sea & air transportation. These costs are, as a matter of routine, included in the export price and the burden is passed on the importer. Many times, these high cost make the products uncompetitive in the overseas market as compared to our competitors like China, Taiwan, Korea and Thailand. The Government of India has already been approached to find a solution for these high costs.
What kind of employment generation has happened through Indian handicrafts?
The handicrafts industry is unique as firstly it is concentrated at the village, khasba and town level in the interior parts of the country and secondly it employees persons belonging to weaker and backward sections of the society. It is estimated that more than 6 million people are directly employed by the handicrafts industry. Many more millions are indirectly employed by the handicrafts industry in finishing, packaging, transporting, shipment, handling and export etc. Hence, any increase in exports of the handicrafts products directly results in increase in employment at the grass root level particularly to the economical weaker sections.
What are some of the opportunities you see?
The handicrafts industry has tremendous potential for growth in world market as also in India. India has excellent craftsmanship inherited over the generations. It has uniqueness of diverse culture, diverse raw material base. There is a hidden treasure in the country which has remain unexplored and under explored in many regions. There are many crafts which are languishing and which require special thrust. Many languishing regions have not been concentrated upon by exporting community and require the support of the Government. I see many opportunities for expansion in the future.
Give us details of your establishment of Indian Handicrafts in foreign markets.
EPCH has set up a trial showroom for exports of handicrafts at Dallas market center in USA. There are plans to set up similar showrooms in California, Los Angeles in USA, Beijing in China, Frankfurt in Germany etc. EPCH has also planned to set up warehouse in the important center of import in the foreign markets to enable Indian exporters to supply small quantity consignments.
Give us a broad overview of Indian Expo Mart. What are the new developments taking place in this segment?
The India Expo Center & Mart is aimed at enabling Indian exporters of handicrafts products located in different parts of the country to display their merchandise at a place which is convenient for the overseas buyers to come and source. It is also aimed at enabling overseas buyers to source the totality of India coving handicrafts at a convenient location without wasting of time and resources in traveling all over India. The location of Greater Noida Expressway is most appropriate. It is easily accessible from the Delhi airport. Buyers traveling from east to west and from west to east can stop over at Delhi for a day and two and source their requirements. Similarly the buyers attending the important fairs in Europe or any other fair in east particularly China, Hong Kong, Taiwan, Korea can easily stop over at Delhi.
The Infrastructure of eight exhibition halls with support facilities of international standards at India Expo Center & Mart enables holding of world class exhibition where not only overseas buyers but domestic buyers can also source their needs. Since handicrafts form part of lifestyle products, it is anticipated that the India Expo Center will develop into a wholesale markets for hand crafted life style products. It will have the unique advantage of catering to the hotel sector, household sector, utility sector, art sector and lifestyle sector. It will have products and suppliers from all parts of the country.
How has the India Expo Center & Mart added to the export promotion in the giftware and handicrafts sector?
The India Expo Center & Mart has now become the venue of Indian Handicrafts & Gifts Fair held twice in the year in spring and autumn. It is adding directly to the export promotion of giftware and other handicrafts products more than 8500 buyers from all leading markets of the world visit the Indian Handicrafts & Gifts Fair every time.
To what extent is it a one-stop shop? How different is it from the ones in Chicago trade centre?
Indian Handicrafts & Gifts Fair is considered a "One Stop Sourcing Show? by the overseas buying community for the simple reasons that it is participated by more than 2000 exhibitors drawn from all nooks and corners of India and displays more than 800 product lines (more or less the totality of India) at one place and at one time.
The India Expo Center & Mart is different from the Chicago Trade Centre. In Chicago there are not only American Showrooms but there are also showrooms from various other countries. However, in India Expo Centre & Mart, the total display is by the Indian Companies. Moreover, business done at the India Expo Centre & Mart presently is only for exports and not for domestic sales. In near future the business at India Expo Centre & Mart will be opened for domestic market also but only on business to business basis and not on retail basis.
Tell us more about your upcoming expos. What kind of business do you expect to generate?
Indian Handicrafts & Gifts Fair institutionalized since 1994 is now recorded as a Mother Fair. It is more of a general nature as it covers the entire handicrafts range. The trend now in the world market is of product specific. The fairs to be held at India Expo Centre in future are therefore being branched out to product specific fairs. Last year, Indian flooring, Furnishing & Textiles Expo, India Houseware Show, Indian Fashion Jewellery & Accessories Show, Indian Furniture Show were started. These are being represented this year and will soon be institutionalized. We are starting a new exhibition ?Home & Beyond? this year. By these specialized products, specific business shows are expected to generate sizable business in handicrafts.
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