Export temples of India March 2018 issue

Export temples of India

The Dollar Business travels across India to bring to you some of the lesser known towns of export excellence. An exclusive feature on how each of these ‘export temples’ are multi-million dollar economies


With the nation’s trade deficit out of whack and most economic, political analyses and commentaries centred around improving exports, we decided to ascertain what India’s export potential really is. We went far and wide – from Gujarat in the west to Mizoram in the east, from Uttar Pradesh in the north to Tamil Nadu in the south – to cities and towns that are quietly adding those precious greenbacks to our kitty, without making much noise. What we learnt is that with a little bit of support from policymakers, these ‘export temples’ can do wonders. [Not that they are not doing it already!] Our advice for the government is simple: Don’t forget, little drops of water make a mighty ocean. The Dollar Business presents an exclusive feature on ‘export temples’ that are multi-million dollar economies within India!

Moradabad - City of brass, adapting to prosper

It’s a town that makes national headlines, only, if ever, for communal riots. Based at the center of the Hindi heartland and its never ending communal and caste-oriented politics, Moradabad doesn’t usually show up on the itinerary of CEOs and business honchos. Despite this, it is home to a thriving brass products and handicrafts industry, whose value of exports would put to shame many of its more glamorous peers

Neha Dewan | @TheDollarBiz

 

Moradabad-The Dollar Business
Moradabad’s handicraft industry has adapted to rising brass prices by opening up to base metals, steel and even wood & glass

 

At first glance, Moradabad comes across as any other small town in India, with poorly planned narrow roads, dingy buildings, cycle rickshaws that are constant reminder of the last century, auto-rickshaws that are overcrowded and cramped, and youngsters honking away on their bikes. But that feeling lasts for all of few minutes. For, one simple stroll in the famous lanes and by-lanes of the city and you realise what’s behind the façade. Located about 150 km away from New Delhi, Moradabad’s history dates back to late 16th century, when prince Murad, son of Mughal emperor Shah Jahan, established it. Popularly nicknamed ‘Pital Nagri’ or the City of Brass, the spirit of Moradabad is felt the moment you enter the Bartan Bazaar – the heart of the city’s utensil trade. Here, one can find utensils of all kinds – from those made from steel and wood to pricier ones made of copper and of course, brass. At Bartan Bazaar, while on one hand, you can see people haggling fervently to grab the best prices for utensils, on the other, you can’t help but absorb the frenetic buzz reverberating all around this marketplace. All doubts about whether Moradabad had indeed exported goods worth Rs.4,000 crore in FY2014 (a big chunk being utensils) vanish after spending 15 minutes here.

Alloying with alloy

Brass no longer enjoys the monopoly that it once did here. Base metals like aluminium, because of being cheaper, have made serious inroads. Even stainless steel is being increasingly used instead of brass to manufacture handicrafts and utensils. However, Dhiraj Aggarwal, Production Head, Anurag Handicrafts, which also has a retail unit at Bartan Bazaar, believes even though metal mixing is more common now, brass continues to bask in the glory of some niche advantages. “Brass has good resale value. Moreover, intricate handicraft work can only be done on brass not on other metals. This makes the designs on brass far more unique,” says Aggarwal.

But the rise in brass price over the years is threatening Aggarwal’s beliefs. From Rs.280/kg a few years back, prices have escalated to almost Rs.450-480/kg now. As compared to this, aluminium is currently available at around Rs.120/kg. The availability of brass, as a raw material, also takes longer vis-à-vis base metals and steel and iron. Confirming this, Faisal Mobeen of Designer Home, a manufacturer, designer and supplier of home decorative, says, “After placing an order, it takes almost 10 days for brass to reach our factories, while in case of iron, this takes only three days.”

Lesser not less

Mohammad Abbas, President, Moradabad Handicrafts Exporters Association (MHEA) and Director of the Moradabad-based Shahid Group is a veteran of this business and has personally seen the shift over the years. “When I started out, brass was available at Rs.22/kg. Prices have since risen over twenty-fold. Similarly, a brass sheet used to be available for Rs.30, but today, it is not available for less than Rs.400. When brass was cheap, nobody even thought of using aluminium. But when prices rose, we had no choice but to check for newer materials,” Abbas tells The Dollar Business.

Another veteran of the industry, Ajai Gupta, Chairman, C. L. Gupta Exports, shares similar views and feels even buyers’ preferences have changed. Speaking to The Dollar Business at his sprawling factory spread over 50 acres on the Delhi-Lucknow (NH-24), Gupta, a man with an unassuming persona, says, “Combination products such as wood and glass or wood and metal fetch good sales. That is why buyers like coming to us.” When asked if this means Moradabad is no longer the ‘Pital Nagri,’ Gupta thinks a bit and says, “I think Moradabad should now be called ‘Handicraft Nagri’ as things have changed manifold.”

In fact, not just Abbas and Gupta, but most manufacturers in Moradabad have been quick to adapt to this shift. And even though margins have eroded from 15-16% during the heydays to single digits now, new players are joining the fray every other day since it’s still a very lucrative business with a huge potential.

Sore Points

However, despite being a very profitable export hub, Moradabad has its share of problems, the top one being constant power outages. Satpal Pugla, MD, Globe Metal & Glass Exports, who started his export business in 1976 after bidding a hurried goodbye to his two-wheeler business, feels what Moradabad is missing is government support. “Our factories are running on generators. The generator power costs Rs.12-14/unit. We also have to pay minimum charges to the electricity board, whether we get power or not. So, in effect this amounts to double cost of production and triple cost of power,” he tells The Dollar Business.

This is not all. Pugla laments that the difference in natural gas prices in various cities in India act as another dampener, particularly since prices in Moradabad are very high. “How can there be so much difference between gas prices in New Delhi and Moradabad,” Pugla asks and adds, “Presently we pay Rs.49-50 per unit, while in Delhi it’s around Rs.32 per unit. When I talk to gas suppliers, they say that Delhi has some special quota, which is not applicable to Moradabad.”

And then there is the obvious ‘Chinese’ factor. Products manufactured in China are a direct competition to the industry here. They are cheaper, machine made in high volumes, and are known to be resistant to tarnishing. However, Moradabad’s exporters are implementing various strategies to challenge the Chinese. Zakaria Shahid Industries, for instance, changed its product mix to include more handicraft based ones, which are difficult to replicate. Moreover, Chinese products can only be made in large volumes as they are machine made, unlike their Indian counterparts which can be easily traded even in small volumes.

 

"Frequent power outages and very high gas prices hinder more exports from Moradabad"

 

It's not just brass

If you thought brass products and handicrafts were Moradabad’s only exports, you are in for a surprise. While metals are the dominant industry in the city, there are several other items that are exported from here in a big way. For instance, meat is exported from Sambhal, a district part of Moradabad division, to the Gulf, Sweden, as well as South Africa. Household items such as kitchenware, furniture and soft furnishings are some of Moradabad’s other export items. If one were to do a recce of the city, these elements would make a very prominent appearance in many areas.

A helping hand

No visit to Moradabad is complete without trying out the famed delicacies at the renowned Gulshan-e-Karim. As you savour its soft Shammi Kebabs and roasted Chicken Butter Masala, you wander away to an old world, the charm of which, Moradabad continues to boast of. As an export hub, Moradabad holds a lot of promise with projections of Rs.5,000 crore turnover in the current fiscal doing the rounds. What it lacks badly, though, is support and incentives from the government. While the industry is doing everything it can to upgrade its capabilities by investing on technology and systems in order to take on global competition head on, the least it expects from the government is uninterrupted power supply. Is it an unfair demand by a city that exported over Rs.4,000 crore worth of goods in FY2014. Any objective mind would say, it isn’t.

 

“We have tackled Chinese competition by focusing on handicrafts” - M. Ahmar Abbas, Director, Zakaria Shahid Industries

M. Ahmar Abbas - The Dollar Business
M. Ahmar Abbas, Director, Zakaria Shahid Industries

 

TDB: Give us an idea of how you started the brass exports business.

AA: The business was actually started by my grandfather in 1975. Although it was my great grandfather who had spotted the opportunity for brass exports and migrated from Bombay (where we had a retail cutlery shop), the actual business was started by my grandfather. Later, my father joined the business and we set up our own factory, after which there was no looking back.

TDB: What changes have you seen in the industry in all these years?

AA: The biggest change is that the brass industry no longer exists! There was a time when it was 100% brass, but now it is around 15-20% brass, the rest being aluminium, steel etc. This, because brass has become too expensive.

TDB: So, Moradabad is no longer the ‘Pital Nagri’?

AA: Although the title remains, Moradabad has moved away from brass casting and brass sheets because of escalating prices.

TDB: Has this change affected your business?

AA: I think, even customer preferences and buying trends have changed. There was a time, when people used to happily pay for brass and loved the yellow colour. When brass was cheap, none had even thought of using aluminium. But when prices started shooting up, suppliers had to find new ways to conduct business and we started using aluminum, iron and stainless steel, the other alternative being, shutting shop.

TDB: How difficult was it for the industry to adapt to this change?

AA: The main difficulty was in convincing people and changing the mindset. It was the fear of the unknown. None had done it, so nobody wanted to do it! It was very hard for even workers to adapt to base metals, but we succeeded thanks to our constant efforts, communication and showing the stakeholders the examples of other countries.

TDB: Manufacturing of goods using brass and base metals is considered hazardous. What have Moradabad’s manufacturers done to address this?

AA: I cannot comment on other factories, but our factory has a very clean and safe environment. The only process that is hazardous is polishing. But the workers involved in the polishing department are paid accordingly. We have a sucking system in place, which sucks out the dust that is generated. So, there are preventive measures but it is still hazardous. Generally speaking, in each of our factories, we provide cooling machines, fans, proper lighting etc. so that workers can work in a clean and comfortable environment.

TDB: What about the ever diminishing number of artisans?

AA: There are no centres or outlets for artisans to learn. Moreover, with the standard of education rising, many have started looking at other professions. For the rest, the government has started and financed various programmes, such as the Cluster Yojna, but they rarely reach the people. Middlemen have eaten up the money and many of these schemes exist only on paper.

TDB: Other than the brass industry, what other promises does Moradabad hold as an export hub?

AA: Moradabad division, apart from Moradabad, includes Amroha, Sambhal and Rampur. Each place has its own specialty. Although Moradabad is still called the Brass City, but all the five metals/alloys – iron, brass, copper, stainless steel and aluminium are equally important for us. Each factory here has created its own niche over a period of time. Each has its own skillsets and customers, acquired over a very long period of time.

TDB: Is competition from China a big threat to Moradabad?

AA: Chinese threat is nothing new and we have been successfully dealing with it for the last 10 years by focusing more on handicraft based products that China cannot produce since they rely on machines and not artisans.

TDB: How many countries are you exporting to? Are there any plans to explore new markets like Africa?

AA: Today, we export to 16-17 countries, including Europe, Japan, Australia and the Middle East. Tapping Africa will take some more time since the region is highly dependent on china.

TDB: Will you use the term ‘flourishing’ to describe Moradabad’s brass industry?

AA: Electricity is a basic amenity and it’s a shame that we have to even discuss it in 2014. Many a time, we get electricity for just a couple of hours a day! If this is sorted, the city will flourish since it has immense potential. Until then the industry will continue to struggle to stay competitive.

Kanpur - Making leather that can weather

The first thing that will, most likely, strike you in Kanpur is its haze. But even though they say “first impression is the last impression,” Kanpur boldly challenges this adage. The city’s economic growth is no closely guarded secret. PricewaterhouseCoopers (PwC) pegs it as the 9th largest economy within India, with an annual contribution of $27 billion to the nation’s GDP. That’s not all. It boasts of being UP’s highest taxpaying city and is often referred to as the Leather City of the World

Neha Dewan | @TheDollarBiz

After Modi’s victory from Varanasi, the act of cleaning river Ganga has got fresh impetus 

Situated on the banks of river Ganga, Kanpur was referred to as the Manchester of the East in the 19th and early 20th century because of its thriving textile industry. The epicenter of India’s First War of Independence, Kanpur was home to British India’s top companies like Kanpur Textiles, Flex Shoes Company and North Tannery, despite being an important British garrison. And unlike many other historically important big cities that have decayed and are, today, just a shadow of their glorious past, Kanpur, thanks to its enterprising population, has continued its juggernaut.

Leather weather

Today, Kanpur is India’s undisputed leather capital and is home to many of its leather majors like Superhouse Group, Mirza International, and Rahman Exports, most of which have massive production units in nearby Unnao. In fact, Unnao Industrial Area, which is located to the north of Ganga, houses as many as 50 industrial units, mostly tanneries and slaughter houses along with a few textile and steel products manufacturing units. But despite their contribution to the local economy, Kanpur’s tanneries have been the target of public outrage in recent times because of the rampant pollution that they cause to water bodies.

Prime Minister Narendra Modi’s initiatives to clean the Ganga has given the simmering anger against the leather industry a fresh supply of gasoline. Amjad Ali, Manager at Allen Cooper, a subsidiary of the Superhouse Group, thinks the next few months will see some big changes in Kanpur’s leather industry. Speaking to The Dollar Business, he said, “Some of the factories will probably shift from Jajmau to the more distant Unnao and this will lead to more commuting time for labourers, which effectively translates to additional costs.” And that’s not the only challenge to counter. As the store manager at Allen Cooper, which sells leather bags, shoes and wallets, Ali has been privy to the buying preferences of customers for quite a few years. He feels that even though the price of leather has gone up over the last few years, the price that customers are willing to shell out for leather products remains fixed. “It is very difficult to change the mindset of customers, who are looking to buy leather. In their mind, they keep a price – say Rs.2,000 – as the maximum that they want to spend on leather shoes. Anything over and above that is pre-rejected in their mind,” Ali said.

Besides Allen Cooper, other retailers at Kanpur’s Meston Road – the mecca for all things leather – also have similar tales to narrate. Many of them are of the view that the leather industry in Kanpur, at present, has plateaued out with no upward or downward momentum. What can reinvigorate the industry is, they feel, improvements in power supply and other enabling infrastructure. “We run our shops on inverters and generators since electricity is barely available. Besides adding up to our costs, generators create a no-so-pleasing environment for customers to come and shop,” a retailer at Meston Road told The Dollar Business.

Unnao Industrial Area-The dollar business
Unnao Industrial Area, near Kanpur, is home to most of the tanneries from where Kanpur-based manufacturers source their leather 

Battling odds

Kanpur has reached a stage where infrastructure inadequacies have become too apparent and too big to ignore any longer. For instance, the city – India’s 9th biggest local economy – has no airport. Electricity is a perennial problem and even decent roads are a luxury. Highlighting the sorry state of infrastructure in Kanpur, Sharad Pandey, Export Manager, Equestrian India said, “Road traffic mismanagement and lack of basic amenities are some of the primary issues faced by the city. The sales and demand for leather can increase only with the right push from the government.”

Questions on external competition to the leather industry in Kanpur also triggers thoughtful gazes and passionate answers from all and sundry. “There is no competition within India,” asserts Mohammed Nadeem, Managing Director, SR Global, a company which manufactures and exports a wide range of saddlery and harness goods. Prod him a little more by mentioning the superior quality of Italian leather and he is quick to rebut. “Italian leather price is very high. Our quotations are far cheaper. For example, they might sell something for $2,000 that would cost only around $300 in India! So, there is a marked difference there,” Nadeem added. His brother, Parwez Mohammed, who is the Director of Marketing at the company, takes Nadeem’s point forward by highlighting some other advantages enjoyed by the industry. “Globally, labour charges are far higher than that in India. Moreover, their leather is also very expensive and the making of pieces takes a lot of time. A piece that would take them one week to manufacture, can be manufactured in less than half the time here.” The company, at present, exports a lot of equestrian ranges to Europe, Australia and New Zealand. On the anvil are plans to step into newer categories like belts and bags. 

"Many Tanneries are set to shift away from near Kanpur as 'Save Ganga' catches momentum" 

The softer side

Although leather is the dominant industry in Kanpur, some other products such as rugs, garments and meat are also exported to other countries in a reasonably big way. Exploring the lanes of Kanpur via its open rickshaws will take you to markets that are abuzz till late in the night. Head to Naveen Market if street shopping is what’s on your mind. Don’t forget to bargain though!

No visit to Kanpur is complete without a dig at Thaggu ke Laddu, the famous sweetmeat shop, which draws in a lot of hooked patrons from all over. The laddus, some of them made of pure khoya (dried whole milk) and suji (semolina) mixed with cashew, are a treat for the taste buds. And perhaps what you really will not be able to miss or close your eyes to, is its tagline – Aisa Koi Saga Nahi, Jisko Humne Thaga Nahi (there’s none who hasn’t been conned by us). This, more than anything else, redeems Kanpur – the ability to see humour, when you don’t even have electricity to even have a fan over your head, despite paying billions to the exchequer and being a major forex earner for the country. Really, who is conning whom?

 

“Our leather is much superior to Italian leather” - Irshad Mirza, Chairman, Mirza International Ltd

IRSHAD MIRZA - THe Dollar Business
Irshad Mirza, Chairman, Mirza International Ltd

 

TDB: How did your family enter the leather industry?

IM: Although my father Mirza Mohammad Ali used to work in the leather industry, it was me who started the business after he met a serious accident while hunting. It was a time when our family was under financial pressure and I had two younger brothers and three sisters to look after. After his recovery, my father taught me the nuances of the leather industry in his unique style. Now, even my son Rashid Mirza has joined the business after graduating from Leathersellers’ College in London and is currently the Managing Director of Mirza International.

TDB: You have consistently earned over 50% of your revenue from exports. Do you have any diversification plan lined up for the near future?

IM: We don’t have any such diversification plan. All we want to do is expand, in terms of workforce, factories, and to increase production. Currently, we have around 11,000 people working with us. We also want to innovate and start new world-class processes that is not found anywhere around the globe – things like leather suitcases. We want to make brand India a global phenomenon. For our leather suitcases, we use a small piece of leather and plant it with a linen cloth. The turnover of this product alone is over Rs.300 crore. My basic idea is to increase our exports and help India’s international trade grow. I will share an anecdote with you: Once, while travelling on a business trip, I heard a cobbler telling his son, “You can cut UP tannery and national tannery, but can never ever cut international tannery.” Just like him, I want to promote Indian goods in the international market and support my country.

TDB: While you are busy supporting the country via exports, are you receiving any support from the government in return?

IM: We have not received any specific support from the government since it lacks awareness. Our government, unlike those in other countries, does not respect exports. The government provides export incentives and duty drawbacks only because it is its responsibility and it has to provide us something to participate in international trade.

TDB: Which countries pose the maximum threat to Kanpur’s leather industry? What about Italian leather?

IM: Firstly, there is common misconception about Italian leather. Italian leather gets its name from Italian technology and not from its leather. It is the technology that has worked wonders and not the leather. Moreover, countries like France, Germany, along with Italy, are involved in the manufacturing of leather products, but hardly produce any leather. They do not pose any threat to us. In fact, according to me, we are much more superior to them.

TDB: Tanning is one of the main sources of pollution in Kanpur. How can it be controlled?

IM: Industries do pollute, but in our factories, we have treatment plants and we try to minimise harm to the city. At the same time, we have put up our factories in Unnao district, which is several kilometers away from river Ganga, since we try not to pollute the river.

Morbi - The manufacturing poster boy

It’s something most of us use in our everyday life – from kitchenware to housing, from artefacts to even superconductors. But odds are high that not many would be aware of the fact that more than three quarters of India’s ceramic products are manufactured in Morbi, a small cluster near Rann of Kutch in Gujarat

Sachin Manawaria | @TheDollarBiz

More than 75% of India's ceramic products are manufactured in Morbi, which is single-handedly responsible for bringing down India's ceramic goods import bill 

 

Located about 750 km away from Mumbai is one of India’s biggest industrial clusters – Wankaner-Morbi – that has come up along a 60-km-long stretch. The first thing that one notices after arriving in Morbi is the haze, thanks to innumerable chimneys in and around the town blowing away smoke with a disdain. There’s not much to see in the town, if at all anything. All one can see in Morbi is massive ceramic manufacturing units and a few hotels to cater to businessmen from all over the world, mostly in town to finalise deals.

Odds are high that a majority of Indians wouldn’t have even heard of this small town in Gujarat, despite it being an integral part of our everyday lives. Starting out with very humble beginnings almost a century back, Morbi is today the undisputed ceramic capital of India.

Leading the way

According to industry insiders, the combined turnover of all ceramic units in Morbi was about Rs.15,000 crore in FY2014, with exports of about Rs.2,700 crore. Today, there are 65-70 vitrified tiles, 350-400 wall tiles, 80-90 floor tiles and 50-60 sanitaryware producing units is Morbi, which put together provide direct employment to over 1.5 lakh people. Industry insiders also claim that almost 50 new units are in the pipeline but the state government is finding it difficult to accommodate all of them since ceramic units require a lot of land for the installation of pressing machinery, conveyors belts etc. Hence, it has acquired land nearby on the Morbi-Jetpar Road to accommodate these new units.

According to the Indian Council of Ceramic Tiles and Sanitary Ware, global ceramic tile production is around 9,515 million square meter per annum, of which India accounts for about 600 million square meter, which places it in the third place behind China and Brazil. And interestingly, most of India’s leading ceramic manufacturers and brands like H&R Johnson, Kajaria, Somany, Antiqa Ceramics, Euro Ceramics, Vermora Ceramics, Fea Ceramics etc. are either based in Morbi having their own manufacturing units or outsource manufacturing to Morbi based units.

All in place

One of the main reasons for Morbi’s relevance growing by leaps and bounds over the years is that manufacturers here have always adapted to changes in technology. And they got a major boost in 2005, when the state government relented to their demand and laid a gas pipeline that has given Morbi’s ceramic manufacturers access to cheap LNG from Gujarat State Petroleum Corporation Limited (GSPC). This has helped improve the efficiency of Morbi based manufacturers, making them much more competitive in the international market.

Thanks to Morbi’s rising efficiency, a lot of major brands have started outsourcing to Morbi based units, mostly by forming JVs. In case of a JV, the bigger brand, typically, shares its technology with the local manufacturer and gets the desired products manufactured at a much lower price. Speaking to The Dollar Business, Rajubhai Patel, Chairman, Fea Ceramics, confirmed this trend. “Today, there are several instances of major brands outsourcing almost 25% of their total manufacturing to Morbi based units,” he said.

Although most ceramic units in Morbi are family-run businesses, they have been at the forefront of adapting to technological changes in the industry. This has helped them stay competitive and relevant in today’s fast-paced world. 

"Morbi's efficiency has risen since 2005 thanks to the laying of gas pipeline"

 

Taming the dragon

India's ceramic products trade-The Dollar Business

Competing with China in the manufacturing sector is, to put it mildly, not easy. And the ceramic industry is no different. But armed with a gas pipeline that provided Morbi with the necessary impetus, in terms of operational efficiency, Morbi’s ceramic manufacturers are, today, taking on their Chinese peers head on. Although scaling up to China’s export levels will take time, Morbi has ensured that India’s imports of ceramic products are falling, while exports are rising.

Another reason why Morbi’s ceramic manufacturers are gaining popularity by the day is the fact that while Chinese manufacturers use local machinery, the ones in Morbi use much superior German and Italian machinery. Talking about this factor, Vipul Kundariya, Director, Antiqua Ceramics, told The Dollar Business, “We use premium quality products like Italian ink and German machines while manufacturing tiles, while in China, they still use their own machines and locally made ink. Explaining further, Kundariya said, “In the last few years, this trend is more visible in the wall tiles segment, where we have a clear edge vis-à-vis our Chinese counterparts.”

However, in other segments like floor tiles and sanitary ware, Chinese manufacturers still have an upper hand over Morbi. Not perturbed by this, Kundariya added, “Earlier, promoters didn’t focus much on exports. But now, with the younger generation at the helm of affairs, we have a clear export policy, which can be seen in our marketing strategies.”

Looking ahead

Another reason why Morbi’s competitiveness suffers a little at the global level is its poor connectivity to ports. This escalates costs and eventually, hampers competitiveness. “Many a times, the cost involved in transporting a container via road from Morbi to Mundra Port is almost equivalent to the cost of transporting the container from Mundra to the Middle East,” lamented Kundariya.

With Morbi emerging as a poster child of Indian manufacturing and making us believe that taking on China is, actually, not impossible, one can only hope that the government solves the logistics issues by setting up a dedicated rail line for Morbi’s manufacturers. If this becomes a reality, India’s ceramic capital can scale up to become that of the world.

 

“Large importers are starting to move away from China in favour of Morbi” - Rajubhai Patel, Chairman, FEA Ceramics

Rajubhai Patel - The Dollar Business
Rajubhai Patel, Chairman, FEA Ceramics

 

TDB: Please help us understand the history of India’s ceramic capital Morbi.

RP: Today, lots of ceramic units are flourishing on Lakhdirpur Road in Morbi. This road is, actually, named after the famous king who ruled over this area during the early 1930s. He faced a unique problem of loot and stealing during his rule. After careful analysis, he realised the real cause of the problem was acute unemployment. He thought of doing something to address the issue and hence, setup a ceramic unit, primarily to provide employment opportunities. It was, probably, the first ceramic unit in India. However, he couldn’t run the business for too long and hence, invited well known industrialist of Baroda (now Vadodara) Parshuramji to run it. Parshuramji was very successful in his venture and expanded exponentially in almost all ceramic items like bricks, roofings, floor tiles etc. In fact, Parshuramji largely shaped the ceramic industry in Morbi and helped people of the region learn the art of making designs out of clay.

Later, in the 70s and the 80s, a gentleman named Prajapati entered the roofing tiles business. He started running the business successfully, which lured a few more. In a few years, thanks to technological advancement, Morbi was able to make much better quality of roofing tiles at competitive prices, which gave it a sizeable market share in Rajasthan, Maharashtra and MP. By the mid-90s, Morbi had 30-40 ceramic units and some of them started venturing into sanitaryware. However, the cost of raw materials (dominated by fuel) and logistics was still very high since we were dependent on kerosene and petrol. We had a long standing demand for a gas pipeline, which became a reality in 2005. Once the gas pipeline was operational, we were able to reduce our operational cost significantly and the industry has since been expanding at more than 25% per annum.

TDB: Why do ceramic units all over the world always come up in clusters?

RP: The ceramic industry requires high precision work and hence, highly skilled labourers, who are easily available only in clusters. For example, to maintain high tech machines used in the industry, a unit would typically need to hire a specialist, which is very expensive. The advantage of a cluster is that the same person can attend to several units, thereby bringing down the cost. This is the reason for ceramic units across the world to have grown in clusters. The Morbi-Wankaner cluster has come up along a 60-km-long stretch. This is also one of the main reasons why a gas pipeline, which cost Rs.400 crore, was laid here. The gas pipeline significantly improved Morbi’s competitiveness.

TDB: What marketing strategies do ceramic units in Morbi adopt to tap the export market?

RP: In FY2011, a big technological development took place in Morbi that helped us to manufacture digitally printed tiles. Varmora Ceramics was one of the first ones to launch digital printed tiles in Morbi. In fact, in this technology, India is ahead of Chinese companies. This has resulted in many large importers moving away from China since they have understood that Morbi can provide better tiles at competitive rates. Apart from this, international expos held in Mumbai and Delhi and buyer-seller meets organised by CAPEXIL (Chemical and Allied Export Promotion Council) has also encouraged many entrepreneurs to explore the huge global demand for ceramics, thanks to direct interaction with clients from different countries.

TDB: What do you think will be the key drivers of growth for Morbi going forward?

RP: In his first speech in the Parliament, Prime Minister Narendra Modi has clearly laid down his vision to set up toilets in each and every village in India. Today, almost 60 crore Indians defecate in the open. To get these people the access to a toilet, we will require to double our present capacity in the next four-five years. This has come as a major boost for the ceramic industry in Morbi. At the same time, ceramic is now a necessary commodity due to its advantages over other commodities and hence, per capita consumption of ceramic is also steadily growing.

TDB: Give us a sense of competition in the international ceramic market.

RP: China is no longer a big threat. But if we can save a little on our logistics cost, we can be even more competitive. For example, if the government can build a container depot, along with a railway line from Morbi to the nearest port, we can cut costs in a big way and boost exports.

 

Jodhpur- Every art lover's Mecca

If you utter the name ‘Rajasthan’ in front of a Westerner, odds are high that the first few things that will come to his/her mind are forts, palaces and, of course, handicrafts. And the heart and soul of Rajasthan’s handicraft trade is Jodhpur – a city that has a history richer than most, something which acts as an inspiration as it attempts to become an economic powerhouse

Sachin Manawaria | @TheDollarBiz

Jodhpur’s handicraft exports were worth Rs. 1,500 crore in FY 2014, which industry insiders feel can be scaled up to Rs. 10,000 crore with just a little support from the government

 

Also known as Sun City for its year-round sunny weather and Blue City for its blue-painted houses, Jodhpur is Rajasthan’s second biggest city, behind the capital Jaipur. Jodhpur district is actually Rajasthan’s biggest and includes a bit of the very harsh Thar Desert. But despite being an arid zone, one can see a reasonable amount of greenery in and around the city. The most visited place in Jodhpur is the majestic Mehrangarh Fort, and is easily the main landmark in the city. Another fabulous monument, Umaid Bhawan Palace is still home to its royal inheritors in one section, while the rest has been converted into a beautiful museum and an ultra-luxurious hotel, owned by the Taj Group.[sociallocker id="9714"]

The business end

While visiting Jodhpur and soaking in its beauty it’s very easy to forget the business at hand. But such is the splendour of Jodhpur that even to get to business, one has to cross another fabulous monument – Rai-ka-Bag, which is the starting point of a paradise for handicraft lovers from all over the world. Some of the top names in Jodhpur’s handicraft and wooden and reclaimed furniture trade are Bhandari Exports, Nishitha, Basant, Lalji Handicrafts, Maharani Textiles & Handicrafts and Suncity Art Exporters. In fact, there are about 200-250 handicraft and art export units in Jodhpur that deal with handicrafts, reclaimed wooden and iron furniture, antiques and printed textile products. What’s also interesting is the fact that a majority of these units deal only in exports since the demand for their products is very high in the American and European markets. This recognition, love and respect for Jodhpur’s handicraft by the art loving consumers in the West, has turned the city into a multi-million dollar export hub.

Jodhpur handicrafts-The Dollar business

 

Not just handicrafts

Although Jodhpur is popularly known as the handicraft capital of India, it’s starting to become synonymous with high quality wooden furniture as well. Gaurav Jain, Director, Basant, confirms this new trend. “Jodhpur, in the last few years, has moved from its traditional handicraft base towards a more modern, designed based furniture industry, serving global markets,” he told The Dollar Business.

Even large retailers like Walmart, Target et al have recognised this and today source furniture from Jodhpur – a practice that has been picked up by online retailers like FabFurnish, Pepperfry and Snapdeal. Jodhpur is also one of the few cities in India that creatively manufacture furniture using reclaimed (olden or used) wood, thereby giving them a much desired rustic look. Jodhpur’s manufacturers are also on a constant hunt for antiques, usually found in old houses and palaces. Most of them have a dedicated team, spread all over the country, hunting such old palaces and abandoned buildings all-round the year. Once any antique is found, it’s brought back to workshops, renovated and sold for a fortune in international markets.

War's positives

The 1971 war between India and Pakistan, which saw the dismemberment of Pakistan on the East and lots of displacement in the West, was also, ironically, a boon for Jodhpur’s handicraft industry. With a lot of people, very skilled in handicrafts, migrating from the erstwhile West Pakistan, Jodhpur suddenly hit a jackpot, which its art loving population used to the maximum. And this is how the cottage industry around Jodhpur, which is the artery of its handicraft industry, came into being. Today there are around 3,000 cottage industries in and around Jodhpur that employ 2.5-3 lakh highly skilled and creative artisans.

 

"Jodhpur - made furniture is today sourced by even Walmart and Target"

 

Uniquely varied

Wood, apart from camel bone and metals like iron and alloys like brass, is the major raw material for handicraft items produced in Jodhpur. In fact, most of Jodhpur’s furniture is made from wood, either new or reclaimed. In many cases, wood and metal is also mixed to provide a contemporary look and appeal the young. Some of the most common items that can be seen in any exporter’s showroom in Jodhpur include cupboards, bed side cabinets, book racks, candle lamps, uniquely-shaped chairs, dining sets, kitchen cabinets, library cabinets, study and writing tables, wine racks, metal idols, statues and replicas. All these beautifully crafted products ensured that Jodhpur exported nearly Rs.1,500 crore worth of goods in FY2014, of which about 40% were wood-based, while the rest were iron-made furniture and handicraft items, 30% each.

Need a bit of help

However, not all’s well with India’s handicraft capital. Sanjay Jain, Director, Suncity Art Exporters explained the main hurdles on the way of Jodhpur graduating to become the world’s handicraft capital. “The growth of the handicraft industry in Jodhpur faces two main problems in the short to medium term. The first one is a shortage of labour due to National Rural Employment Guarantee Act (NREGA) and the second one is the continued slowdown in the American and European economies,” he tells The Dollar Business. Another problem that Jodhpur’s handicraft and furniture industry faces is that of ever rising logistics costs, which is affecting its competitiveness in the international market. “Although it sounds ridiculous, the cost of transporting our products from Jodhpur to Mumbai is actually almost the same as that from Mumbai to London,” rues Jain. Imposition of 5% VAT even on handicrafts is another setback that Jodhpur would have done better without.

While demand in US and Europe are not something that the Indian government can improve, including the handicrafts industry under NREGA, removing VAT and solving logistical issues are something that are very easily doable. And given that Jodhpur’s competitors in China and Indonesia are putting in all their might to attract Jodhpur’s traditional fans, this is the least the government can and should do.

“We should be given export incentives of at least 7%” - Nirmal Bhandari, President, Jodhpur Handicraft Exporters Association

Nirmal Bhandari-The dollar business
Nirmal Bhandari, President, Jodhpur Handicraft Exporters Association

 

TDB: What is the potential of handicraft exports from Jodhpur?

NB: In the last 20-25 years, handicraft exports from Jodhpur, have increased from a mere Rs.2 crore per annum to about Rs.1,500 crore per annum. But I personally feel, we are far behind what we can actually achieve. One of the main reasons for this is the lack of adequate support from the government. If we get proper support, we can easily touch Rs.10,000 crore per annum.

TDB: What are the main issues that Jodhpur’s handicraft industry grapples with?

NB: In my view, the government appears to be more focused on big corporations, rather than focusing on small and medium enterprises (SMEs). SMEs are the backbone of any economy and provide employment to millions of people. Yet, our government appears indifferent to this sector. On the contrary, China has made significant progress, simply by concentrating on its SMEs.

Jodhpur’s handicraft industry is dependent on the surrounding cottage industry in a major way. Nearly 2.5 lakh people are directly employed by this industry comprising 2,500-3,000 small units. Had this cottage industry and its creative workforce not been there, the existence of Jodhpur’s handicraft industry would have been under question.

Lately, availability of labour is also becoming an issue as people, traditionally employed in the handicraft industry, are moving towards NREGA programmes. We had put forth a demand to the government to include handicrafts under NREGA, but it was in vain. To further aggravate the situation, the government has put us under a 5% VAT regime, negatively hampering our growth.

Another problem that we grapple with is high cost of logistics. A nearby ICD (Internal Container Depot), belonging to the state government, has been shut for the last three years. Despite several appeals from us, the state government is least bothered to even listen to us. Had the ICD been operational, we could have saved on logistics costs, for sure.

TDB: How much does Jodhpur contribute to India’s total handicraft exports and from where do you source your requirements?

NB:  Jodhpur accounts for about 25% of India’s total handicraft exports, while Rajasthan, as a whole, accounts for about 30-35%. As far as sourcing is concerned, handicrafts and artefacts are being made or created across various towns like Saharanpur, Moradabad, Aligarh, Agra, Mysore etc. However, they are usually assembled and marketed as an end product from Jodhpur as it is considered to be the handicraft capital of India. Our specialties include wooden furniture, reclaimed and iron furniture and handicraft.

TDB: What are your key demands from the government?

NB: Our biggest demand is an immediate abolition of the 5% value added tax (VAT) that has been imposed on us. Easy availability of raw material from the government at competitive rates and an increase in export incentives to 7-10%, in order to offset high logistics costs, are also needed for the growth of Jodhpur’s handicraft industry.

Chimakurthy - From Terra Firma to El Dorado

Incredible but true. Embedded in the subterranean strata of earth is a masterpiece designed by nature. And there is only one place in the entire world that has this wonder stone, which also comes off the earth’s shelf in perfect shapes! While in geology it’s called bronzite bearing gabro, the rest of the world knows it as Chimakurthy’s Black Galaxy granite

Satyapal Menon | @TheDollarBiz

Black galaxy granite - the dollar business
The unique properties of Black Galaxy granite that makes them look like the mirror image of a far away galaxy, is what gives it its name

 

The evolution of this once somnolent obscure village, tucked away in a remote area of Prakasam district in Andhra Pradesh, from an arid and unproductive terrain to the cynosure of the world, has interesting antecedents. Located 20 km away from Ongole, on the surface, Chimakurthy presented a rocky topography. But deep inside, was a treasure trove yet to be unearthed. Nature’s repertoire remained hidden and Chimakurthy, despite its proximity to Ongole – a major tobacco export nerve centre – lived in oblivion as a stretch of uncultivable expanse flanked by hillocks and mountains. That was Chimakurthy three decades back.

The gold rush

In the mid-1980s, after decades of studies and explorations, geologists struck – not gold – but a precious variety of granite that has since become one of the most sought after products across the globe. When it was first brought out from its deep and dark confines, the world was dazzled by this gold colour speckled variety of granite. And within a very short span of time, after its discovery, Chimakurthy was transformed into El Dorado, with prospectors from far and wide rushing to this village to capitalise on this unique resource. Chimakurthy is the only location in the world where Black Galaxy granite is found. Its discovery propelled and positioned Chimakurthy on the global map. The epithet given to the granite could not have been more appropriate. Black Galaxy, with its splendorous façade of glittering dots superimposed and spread over pitch black background, looks like a mirror image of stars or the galaxy on a clear night sky.

Indian crude - The Dollar Business

The wealth within

The first impression one gets on entering Chimakurthy, betrays all expectations. The town does not exude the aura of its ever growing affluence, as is anticipated from a thriving billion dollar export hub. It continues to be like any other small, serene and tranquil town with middle-class houses, shops and other establishments. However, as one proceeds 3 km from the town down the highway, a plethora of granite companies, lined up on either side of the highway, greet the eye. From the highway, there are many dirt tracks branching out and leading to the quarries. As one traverses these dirt tracks, the quietude is punctuated quite frequently by blasts reverberating from the mines. The first reaction on hearing the sounds emanating from the detonations, is to look up in disbelief, mistaking it for thunder and expecting a downpour in the prevailing sweltering clime!

The dirt track snakes via massive craters created by quarrying activities and from a vantage point, one can see the landscape dotted by mines as far as the eye can fathom, each one digging out millions of dollar worth of Black Galaxy. According to The Dollar Business Intelligence Unit estimates, the total Black Galaxy reserve in mines owned by Andhra Pradesh Mineral Development Corporation (APMDC) in Chimakurthy is about 1.65 crore cubic meter (CBM) up to 100 meters depth. This, if valued at going prices, adds up to well over $20 billion!

The Chimakurthy Black Galaxy has also been categorised as a dimension stone. According to geologists, any rock possessing aesthetic beauty, pleasing colour, requisite physical parameters etc., which can be cut and dressed to required dimensions, is known as dimension stone. Based on the end-use, dimension stones are classified broadly into building stones, monument stones, ornamental stones, paving blocks, curbing slabs and flag stones and are marketed either as raw blocks or polished slabs. India occupies a unique position in this field by virtue of the occurrence of rare and different varieties of Dimension Stone Granite, with exotic colours and shades. Presently, there are about 300 varieties of granite that are traded internationallly, and half of them are found in India.

Mines in Chimakurthy-The Dollar Business
As this picture of one of the many mines in Chimakurthy shows, Black Galaxy occurs in perfect blocks

 

Glass half empty

Black Galaxy is a global favourite because of its glittery glaze that lends aesthetic values, style, splendor and sophistication to interior decors and designs. And being the only producer and exporter of Black Galaxy, Chimakurthy is raking in the moollah. In fact, Black Galaxy was the main contributor to India’s total rough and ‘cut into blocks’ granite export of $655.48 million in FY2014, a majority of which was exported to China.

There are two reasons for China’s love for Black Galaxy. Apart from meeting domestic requirement, which in itself is quite considerable, the blocks are also processed and polished in China and exported to US and European markets. And this dependence on China and lack of processing and polishing facilities, is both a weakness and opportunity for Chimakurthy. The severe impact that Chimakurthy felt due to a recent decline in Chinese procurement substantiates this point. The dip in demand was due to a hike in import duty in China to 15% and a legislation of ‘one house per family’. Talk about China sneezing and India catching a cold! The policy left quarry owners in a quandary, with mountains of raw blocks – also known as Gangsaw – accumulating at ports and excavation sites.

According to industry sources, exports to China have declined in recent months from 30,000 CBM per month to about 16,000 CBM. “The dependence of the granite industry on China has had an impact on exports. There is a need to increase the number of processing industries here and concentrate on export of polished and processed Black Galaxy to capture other overseas markets, apart from China,” Sidda Sudheer, Treasurer, Galaxy Granite Owners’ Association (GGOA), told The Dollar Business. “We have already started capturing the markets for processed stone, and even the Chinese are seeking the same,” he added. 

"More polishing units can boost Chimakurthy's export of polished granite" 

Up the value chain

Though Chimakurthy village wears the same old look, or maybe a little different from what it was like before its inherent resource was unraveled, the spinoff from Black Galaxy is quite evident. Innumerable ancillary units – from big time processing factories to polishing and cutting units – have sprouted on the firmament near and around Chimakurthy. According to estimates, the quarrying activity has generated employment to 15,000 persons directly, while an estimated 40,000 depend on it indirectly.

“Black Galaxy is the costliest granite in the world. It has created opportunity for setting up units related to polishing, processing and cutting. There are nearly 600 units catering to the requirement of 170 quarries in Chimakurthy, but there is a need for more such units to enable us to produce finished and polished products,’” Sudheer said. And with the innate potential of Black Galaxy on terra firma, the sky would perhaps be the limit.

 

“Black Galaxy mining has barely scratched the surface” - Subramanyeswara Rao, Assistant Director, Mines, Ongole

Subramanyeswara Rao - The Dollar Business
Subramanyeswara Rao, Assistant Director, Mines, Ongole

 

TDB: When and how was Black Galaxy first sighted?

SR: Black Galaxy was first uncovered around 1985. Later, samples of Black Galaxy were sent to and promoted all over the world.

TDB: Has mining in any way impacted agricultural activity in Chimakurthy?

SR: Mining is being done only on animal husbandry land belonging to the government, which had not previously been of much use. There was also no agricultural activity in this area.

TDB: Is Chimakurthy the only place in the world where Black Galaxy is available? What is the difference between Black Galaxy and black granite?

SR: Black granite is quite common and is available in many places in India and abroad. However, Chimakurthy is the only location in the world where Black Galaxy is available.

TDB: Can you explain why Black Galaxy is available only in Chimakurthy and not anywhere else in world?

SR: In technical terms, the Chimakurthy igneous complex is constituted of an outer ring of Bronzite Gabro, followed by a highly elevated crescent shaped ridge of clinopyroxene, which is further followed by a central core of olivine pyroxinite and massive anorthosite. Black Galaxy is a combination of all these elements, which is a rare occurrence and unique to Chimakurthy. It has been named Black Galaxy because of its semblance to stars across a dark sky.

TDB: In terms of reserves, what is the approximate availability of Black Galaxy in the Chimakurthy mining belt?

SR: We are still on the surface. Till date, we have barely quarried up to a 100-150 feet below ground level. Black Galaxy is available up to considerable depths and there are still huge reserves of this available.

TDB: How much revenue does the government earns from Black Galaxy mining every year?

SR: The government received royalties of Rs.88 crore in FY2014, which followed Rs.84 crore in FY2013. In the current financial year, royalty income stands at Rs.37.17 crore as of July.

TDB: How has Chimakurthy benefited since the time Black Galaxy mining started?

SR: In 1985, Chimakurthy was a nondescript village with little roads and a small business area. Over the years, with increase in employment opportunities, living standards have improved. The productivity of this sector is incomparable. Mining of Black Galaxy requires huge manpower and machinery. There are around 100 cutting and polishing units in the area and there are opportunities for more. Moreover, the byproducts, i.e., leftover bits and pieces of granite is being used for laying roads, which also is fetching good revenue.

Narsapur - Keeping tradition alive profitably

Many artistic traditions have either totally disappeared or are on the verge of extinction due to the onslaught of technology. But there is one legacy of artistry which has not only weathered the threat, but also continues to prove its everlasting durability by retaining its place and presence in the hearts of the aesthetic minded, particularly in international markets – Narsapur’s handcrafted crocheted lace

Satyapal Menon | @TheDollarBiz

Narsapur’s crocheted lace manufacturing is often outsourced to women artisans, working from homes

 

It is a scene that inspires the poetical you. As you take a drive along the banks of Godavari, you are treated to a mesmerising experience. The verdant pastures stretching to the hori-zon stimulates you to break into a lyrical vein – though it could only be the wahs and the wows, with high octane emo-tional intonation – until you become breathless by the breathtaking beauty.Welcome to West Godavari district in Andhra Pradesh.

In addition to munificent agriculture produce, West Godavari is a thriving source of aquaculture and coir exports to different parts of the world. Adding feathers to the district’s cap is the largest fresh water lake in India, the Kolleru Lake sanctuary, where exotic migratory birds of different plumes from different parts of the world flock to roost and dine. These are not the only attractions that lures the world to West Godavari. There is one tradition of artistry that is unique to the district and to be more precise, to Narsapur, which has been fascinating people all over the world for over a century – handcrafted crocheted lace products. With around 300 crafted designs, the lace products comprise crochet patterned mats, furnishings, garments etc., with floral and other attractive designs.

In the gene

There are different versions regarding the origins of handcrafted crocheted lace in Narsapur. The nitty-gritty of knitting crocheted lace products is believed to have been handed over by the British about a century back. The fisher folk community of Narsapur and surrounding areas, who had expertise in knitting nets, took to this art like fish to water. The legacy had its moorings here and soon spread across many villages in Narsapur mandal. A tradition of exquisite artistry had come to stay. And, Narsapur became synonymous with hand-crafted crocheted lace products. Crocheted lace is a fabric woven in an intricate manner to create different patterns with a stainless steel crochet. While crisscrossing various villages in Narsapur, one comes across small clusters or units in which womenfolk can be found busy knitting an assortment of captivating patterns and designs. These clusters and ‘Lace Parks’ are either managed by private players or cooperative societies promoted by the DRDA. “Around one lakh artisans are involved in lace making activity in units across West Godavari and East Godavari districts, of which Narsapur accounts for around 10,000 artisans,” K. Tulasi, Managing Director, Pan Godavari Lace Facilities and Services Pvt. Limited, told The Dollar Business. Similarly, highlighting the importance of handcrafted crocheted lace products, West Godavari District Collector Katamneni Bhaskar told The Dollar Business, “Handcrafted crocheted lace does occupy a unique position for its artistry and continues to have a demand.” 

"Lack of market accessibility is a major detriment for Narsapur's lace products" 

Man versus machine

The United States, Europe and Japan have been the major buyers of Indian handcrafted crocheted lace. Its exports have been fluctuating between Rs.50 crore and Rs.200 crore per annum over the last few years. The earnings are quite significant, considering the fact that the market for handcrafted crocheted lace comprises select and discerning buyers. Though volume and value of exports of crocheted lace from this part of the world is quite insignificant when compared to exports from other countries including Pakistan, drawing comparisons can be illogical because these countries are producing machine crafted crocheted lace, which can be manufactured much faster.

However, rising cost of production and dwindling exports have created apprehensions that this tradition and gorgeous art form might be on the verge of extinction. The waning interest among artisans only substantiates such fears. The fragmented nature of the industry and the need to involve middlemen in marketing the products have also impacted the business. Despite cooperative lace making societies being set up with direct participation of women artisans, lack of knowledge about latest market trends and non-accessibility to export markets have impacted the functioning, productivity and feasibility of many of lace manufacturing units in Narsapur. In fact, most private players having their own units are not exporters themselves. They channel their products through people who have access to international markets. “The people through whom we export our products have more knowledge about the markets and their requirements. So, it is quite natural to depend on them for our marketing requirements’” Swarna Babu, Managing Partner, Swarna & Company, told The Dollar Business. Citing the reason for the government’s lack of marketing support to the Narsapur’s lace manufacturers, Bhaskar said, “The government is providing all support systems to facilitate the promotion of handcrafted lace products from this region. But we are not into marketing. Private agencies are better equipped for marketing. So, there is nothing wrong in encouraging private participation in promotion and marketing of lace products.”

Handcrafted crochet lace work-The Dollar Business
Handcrafted crochet lace work in progress at one of the several units in Narsapur 

Doing all it can

A look at the making process reflects the sheer artistry and precision that goes into the patterning of crocheted lace. The process is quite arduous, but the expertise of the women artisans, as they needle through the patterns to create the designed form, is quite evident. “We have 25 to 30 artisans working in our unit and they are paid around Rs.300 to Rs.400 for completing a certain quantum of work, which takes 4-5 days. Most of our work is outsourced to households. There is considerably more cost involved in bringing the artisans to one place since we need to provide transportation from their houses and back. This will add to our overall production costs,” said Swarna Babu.

The government, on its part, has been sponsoring stakeholders to attend international trade fairs so that they are exposed to global demands and needs. With the aim to bring international buyers to doorsteps, an International Lace Trade Centre (ILTC) is being set up in Narsapur, which is expected to facilitate the development and marketing of lace products. Lauding the EPCH for setting up the ILTC, G. V. K. Rama Rao, President, All India Crocheted Lace Exporters Association, told The Dollar Business, “It is good that that EPCH is setting up the ILTC with the objective of facilitating lace exports, skill development and market orientation. All this while, we have been approaching international markets to promote our products. But with the ILTC, there is ample scope for buyers from abroad visiting the stalls and facilities, appreciating our products and placing orders.”

A Mega Cluster has also been established for artisans to work under one umbrella. Called Common Production Centers, these centers impart training to artisans in latest designing techniques, apart from providing them exposure to international requirements and markets through trade fairs. Going by the focused endeavours, all round efforts and strategies, both by the industry and the government, the traditional handcrafted crocheted lace legacy is bound to captivate more hearts in the months and years to come. What needs a bit more attention though, is the economics.

“Our exports are losing out to machine made lace products” - Kalavakolanu Tulasi, Managing Director, PGLFS

Kalavakolanu Tulasi - The Dollar Business
Kalavakolanu Tulasi, Managing Director, PGLFS

 

TDB: How did Pan Godavari Lace Facilities & Services come into being?

KT: Pan Godavari Lace Facilities & Services (PGLFS) was established under the aegis of Development Commissioner (Handicrafts), Ministry of Textiles, Government of India, to promote crocheted lace products on various platforms across the globe with the objective of boosting exports.

TDB: Why is it that crocheted handcrafted lace products, despite their artistic and utility value, are unable scale up to their potential and make inroads into export markets?

KT: Ours is a very fragmented industry and there is a need to create a more organised and corporate environment to ensure productivity and profit. Moreover, handcrafted crocheted lace production does not enjoy the status as a cohesive industry, which is an impediment.

TDB: What reasons do you attribute to declining exports?

KT: Declining exports can be attributed to international markets being more oriented towards machine crafted products. Machine crafted products are cheaper and take less time to produce than handcrafted products. While exports have been on a decline, cost of production has actually been going up. Logistics and manufacturing costs have almost doubled in recent years. Increased production costs are directly impacting marketing and designing budgets of many firms. Numerous attempts have been made for aggressive marketing in the past few years, but discontinuity in the process has resulted in major gap between markets and suppliers.

TDB: What is the current value of exports of handcrafted crocheted lace products from Narsapur and what do you expect going forward?

KT: Currently, the total direct and indirect export of handcrafted crocheted lace products is around Rs.70-80 crore per annum, but there is a lot of potential to increase the quantum of exports in the next three years.

TDB: What strategies are required to provide an impetus to the crocheted lace industry and boost exports?

KT: There is a need to research latest designs and establish processing centers like dyeing and bleaching units. These facilities will reduce the cost of production by at least 20%. Today, artisans are actually paid minimum wages because margins are less and are diminishing further.

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

KT: The government, on its part, has recognised the industry as a Mega Cluster and extended support in terms of marketing, raw material banks and common facility centers. Export Promotion Council for Handicrafts (EPCH), New Delhi, has also been lending a supporting hand to the Narsapur crocheted lace industry for the last many years by providing assistance to participate in national and international trade fairs.

Eluru - Long and short, hairy tale

If there’s one industry that is a glaring testimony to man’s insatiable hunger for wealth and an equally unquenchable desire to look good, it is the human wig industry. And what many might not know is that India is the undisputed global leader, when it comes to the raw material for the wig industry – processed human hair, accounting more than 60% of global exports of it. Another thing that many might also not know is that the hub of this industry in India is Eluru and the main source of raw material for it is Tirumala Tirupathi Devasthanams

Jayashankar Menon | @TheDollarBiz

Eluru’s hair industry provides employment to thousands of women

 

Any write-up on India’s hair ex-ports has to, just has to, start from Tirupathi. No matter how non-judgmental one tries to be, it’s impossible to not discuss the ethics of auctioning, for money, the hair of devotees who tonsure their head at this holy shrine of Lord Vishnu. And chances are that if you raise this issue in or around the sanctum sanctorum, you will get dirty looks, passionate speeches supporting the practice and plenty of not so friendly advices to leave.

By far the richest Hindu temple in the world, Tirumala Tirupathi Devastahanams had a revenue of Rs.2,262.5 crore in 2013, of which Rs.220 crore came from the sale of human hair. With lakhs of devotees thronging the temple every year, most of who shave their heads as a sign of submitting themselves to god, revenue generated from the sale of tonsured hair is rising at a rate of knots. And a byproduct of this practice is Eluru’s hair processing industry.

The real story

K. K. Gupta, one of the pioneers of the hair processing industry in Eluru, had set up Srinivasa Hair Industries back in 1983. All-round the year, one can find his factory abuzz with activity as workers, mostly women, sort, clean, shampoo, dry and then process hair bought from Tirupathi. What’s ironic about India’s hair Industry is that despite accounting for over 60% of world’s processed hair exports in CY 2013, its share in exports of wigs is not even 0.1%. Speaking to The Dollar Business, Gupta had just one line to explain this paradox, “We just don’t have the technology to make wigs in India.” Another interesting facet of the hair industry is that, ceteris paribus, longer the hair, higher the price. And so, while female hair sells like hot cakes, the male variety takes time to find takers. 

"India mostly exports hair to China, which uses it to make wigs and re-export" 

Check and mate

Those in the processed hair and hair products industry have been citing various reasons for hair products to be included in the Special Focus Product Scheme and asking incentives of 7%, instead of the prevalent 2%. Their first and foremost argument is the People’s Bank of China’s handling of the yuan, which is much more stable than the rupee, apart from China’s technological superiority. This, they feel, is hampering the growth of a industry which is labour intensive and creates a lot of jobs. Rising logistics costs is another factor that, according to them, substantiates their demands.

No haircut

There’s no doubt that Eluru’s hair industry, despite being unique, has fallen into the same trap as many of its more popular peers – supplying raw material instead of producing high margin end products. Another issue that the industry grapples with is mushrooming of unscrupulous elements, who are out to make a quick buck. Just search for ‘Eluru hair exporters’ on the Internet and you will see hundreds of poorly designed websites, trying to sell you that perfect hairdo. This, not only ruins the brand equity of Eluru as a hair products hub, but also makes it, almost, impossible for the genuine players to scale up to their potential. Is this the wrath of those whose hair is being sold off without them even knowing about it, or a normal free-market issue that will sort itself out?

“Hair products should be given incentive of at least 7%” - Benjamin Cherian, President, All India Human Hair Exporters Association

Benjamin Cherian - The Dollar Business
Benjamin Cherian, President, All India Human Hair Exporters Association

 

TDB: Can you elucidate the various varieties of processed human hair and the share of each category in India’s total exports?

BC: Today, we export about Rs.2,250 crore worth of non-Remy hair and about Rs.750 crore worth of Remy hair. What we really want to do is add value by manufacturing mannequins, wigs, hair pieces etc. Look at China. After importing processed hair from us in bulk, they add value to it and re-export all over the world. China exported wigs worth over $3 billion last year.

TDB: Why should the government pay heed to your demand of including hair products under the Special Focus Products Scheme and increase incentives to 7% from the current 2%?

BC: The human hair business is a cottage industry. By including our products under the Special Focus Products Scheme and giving us incentives of 7% under it, a lot more quantity of hair products can be exported. If one were to take the big picture view, increasing incentives by five percentage points won’t cost the government much, but the kind of impact the resulting rise in exports would have on the poorest of the poor women, employed in this industry, would be huge.

TDB: Please explain in detail how the hike in incentives will help the industry.

BC: Here, we are talking only in terms of quantity and not in terms of value addition. The government is reaping the benefits of our exports by doing nothing. This is an industry that is providing employment to 25,000-30,000 people. If because of us, India’s foreign exchange reserves are going up, what is the harm in hiking our incentives? Tomorrow, the usage of synthetic wig might come down across the world. When people have more money, they prefer buying wigs made out of natural hair. Today, people are using synthetic wigs only because the price of natural wigs is very high. If the government provides the right support, we could have a win-win situation for everyone.

TDB: What are your expectations from the new government?

BC: We have already put our demands in front of the DGFT and the Ministry of Commerce. We hope the government facilitates the growth of this industry since, I think, the industry certainly has the potential to hit the Rs.7,000 crore per annum export figure.

TDB: What should we do to match up to the Chinese?

BC: In China, hair is a very labour intensive industry in which 15 lakh people are engaged. We have suggested the government to establish a Self Help Group in each village to collect disposed hair in pouches, once every fortnight. Our estimates suggest that around 13-15 kg hair can be collected from each village in India, which can be a major boost to our rural economy.

 

Namakkal - Egg on the face of the egg city

Chances are that the omelette you had for breakfast this morning or the cake you cut on your last birthday were made of eggs produced in a small town in Tamil Nadu – Namakkal. Far from the madding crowd of Tier I cities (the nearest metro city Chennai is over 350 km away), despite having exported over 700 crore eggs in the last 10 years, it is the first ISO 14001-2004 certified municipality (for environmental management) in the whole of Asia

Jayashankar Menon | @TheDollarBiz

Namakkal - the dollar business
With its main customers imposing a ban on Indian poultry products, Namakkal is today just a shadow of its past 

The first thing that will strike you the moment you arrive in Namakkal is its cleanliness. It really throws a challenge at the notion of ‘typical small town’ that are described as grubby, grungy, filthy and crowded. With broad, clean and well maintained roads and pavements, a proper drainage system and lots of greenery around, Namakkal is a pleasure to the eye. Being the first district in India to ban the use of plastic bags, Namakkal has the distinction of being India’s only ‘zero garbage’ town. One of the other main attractions of Namakkal is Rock Fort – a fort built in the 17th century, standing majestically on top of a hillock. It has both a temple and a mosque within it that say a lot about Namakkal’s history. While in Namakkal, one should also not miss the Lord Hanuman Temple having an 18-feet tall idol, and the 1,300-year-old Sri Namagiri Lakshmi Narasimha Temple. An eco-friendly park located in the middle of the town, with the Rock Fort in the background, and a Bell Tower erected in 1945, as a memorial for freedom fighters, complete Namakkal’s immaculate looks.

Meteoric rise

Being situated in a very dry area, Namakkal’s farmers realised long back that agriculture was not going to be a feasible means of livelihood. While looking for alternatives, they stumbled upon poultry farming, and there joy knew no bounds when they realised poultry farming could also be a great source of manure for their farmlands. From such humble beginnings born out of desperation, Namakkal has, slowly but surely, graduated to become the Egg City of India. And at every step, lending the town a helping hand is Tamil Nadu Veterinary and Animal Sciences University’s (TANUVAS) Veterinary College and Research Institute. For the last 30 years, this Namakkal based institute has been helping the local poultry industry fight infections and diseases, increase productivity and meet global standards.

India egg exports - The Dollar Business

Chicken's wrath

However, despite the best efforts of TANUVAS, Namakkal’s glory days seem to be a thing of the past. From a high of over 122 crore eggs exported in FY2008, Namakkal’s egg exports have fallen like a stone, with it managing to export just 34.57 crore eggs in FY2014. And the main reason for this is a plethora of bans imposed on Indian poultry products by UAE and several countries in the Middle East – traditionally the top importers of Namakkal’s eggs – because of bird flu concerns. This can be validated by the fact that while in FY2006 UAE accounted for over a third of India’s egg exports, importing $14.37 million worth of eggs, in FY2014 it accounted for less than 0.1% of India’s egg exports.

Dr. P. V. Senthil, General Secretary, Livestock and Agri Farmers Trade Association (LIFT) and Namakkal’s most visible face, feels let down by the ban by countries like UAE. Speaking to The Dollar Business, he said, “There has never ever been a single outbreak of bird flu in Tamil Nadu. But the fear factor is so high that even if there is an outbreak of bird flu in desi or wild birds in some faraway state, a blanket ban is imposed on the entire country.” Senthil wants the Ministry of Commerce to individually negotiate with traditional importers of egg from India and revive Namakkal’s fortune.

India's egg exports-The Dollar Business 

The bypass

While the outbreak of bird flu in India in the middle of the last decade halted the forward march of Namakkal, India’s processed egg industry – producing high quality liquid and powder egg that is used extensively in bakeries – used the impasse to its advantage and started emerging from its shell (no pun intended). This can be validated by the fact that while in FY2008 processed eggs accounted for just 36.1% of India’s total egg exports, by FY2014 the number had surged to over 56%. And, by far, the biggest player in India’s processed egg industry, SKM Egg Products Export Ltd. – a joint venture between SKM Animal Feeds & Foods and Tamil Nadu Industrial Development Corporation (TIDCO) – was quick to seize this opportunity as its revenue surged from just Rs.106.9 crore in FY2008 to Rs.239.3 crore in FY2014. However, despite this 14.37% CAGR rise in revenue in the last six years, SKM Egg Products Exports, with factories on the Karur-Erode Road, a stone throw away from Namakkal, is a massive disappointment having made a loss in two out of the last three years. 

"In FY2014 Namakkal exported 71% less eggs than it had in FY2008" 

Bring to the table

Egg is consumed all over the world in huge quantities because of being a cheap source of proteins and minerals. And making a fortune out of this demand was Namakkal before India’s tryst with bird flu put an early end to the party. While no one can blame a country if it takes precautionary measures to protect its population from a potentially life threatening virus, the on and off ban on India’s poultry products by UAE and several countries in the Middle East seems grossly unfair, to say the least. Will the new government be able to convince and bring them back? Dr. Senthil and his brethren certainly hope it does.

 

“We need to create disease - free egg and chicken export zones” - Dr. P.V. Senthil, General Secretary, Livestock & Agri Farmers Trade Association (LIFT)

Dr. P.V. Senthil-The Dollar Business
Dr. P.V. Senthil, General Secretary, Livestock & Agri Farmers Trade Association (LIFT)

 

TDB: Please help us understand the evolution of the egg industry in Namakkal.

PVS: Namakkal’s poultry industry began in the 1970s in Kanavaipatti village, when a few farmers, tired of the lack of rain, started the poultry business with 400-500 birds. They also realised that poultry is an allied industry and bird waste could be used as a manure. As more and more farmers understood the benefits, poultry farming started gaining momentum. It was like a cooperative movement! Over a period of time, more and more people entered the business, which led to a shortage of chicks, feed, veterinary inputs and markets for selling eggs. Everything was dependent on Bangalore. Nothing was available in Namakkal. So, we thought of going for our own feed mills. One thing led to another and in a few years Namakkal was the place to go to for eggs.

TDB: But the situation is not good at present. What do you think should be done to help Namakkal recover from the current mess?

PVS: I think, India should engage individually with tradition egg importers. If the government initiates such a move and manages to convince some of our traditional customers, egg exports from Namakkal will go through the roof. The government should also form a standing committee, involving all stakeholders and push things on a priority basis.

TDB: Other than fighting import bans, what other issues do we need to tackle to help increase exports?

PVS: We are trying to deal with day-to-day issues with policies that are archaic. This should change. We also need to fully go online. We need e-governance. I don’t think these are very difficult demands. With proper coordination among all stakeholders and political will these are very achievable. We also need to expedite certification related issues with countries that have banned the import of our poultry and poultry products. We need to reach out to policymakers. We are talking about e-governance and e-India. We need to have a mechanism in place to address these issues as fast as possible. Only then, will we be able to compete with other exporting nations.

TDB: Why not look for newer markets?

PVS: Japan and Hong Kong, put  together, imports 600 containers of egg every month. The have their own stringent norms for food imports. So, we need to engage with them bilaterally. If these markets open up, our industry will grow at a pace of knots. Our farmers will also become debt free and lead a much better life that what they are doing today.

TDB: Nammakal’s egg exporters have been urging the government to create separate zones. Can you elaborate on this?

PVS: We should identify pockets in India and create disease-free egg and chicken export zones, like for egg in Namakkal, for chicken in Coimbatore etc. India, as a whole, won’t need more than three of four such zones. This will protect us from blanket bans.

 

Tuticorin - Of port, potpourri and prosperity

There is something about this city that never fails to fascinate the first-time visitor. It is a beehive, bustling with export activity. Its contribution to the country, in terms of revenue, is immense. A salubrious weather, industrious people, and of course, one of India’s major ports make this town in Tamil Nadu – Tuticorin – a ‘must go to’ place for a whole lot of products. One of the lesser known one being dried flowers

Jayashankar Menon | @TheDollarBiz

Tuticoron’s dried flower industry is a source of employment for hundreds of women

Abundant availability of skilled labour, apart from its resources, is the one of the main factors that make Tuticorin a major business and  industrial hub. CII Vision 2025 for Tamil Nadu has identified it as a planned mega city. Major industries that are based in Tuticorin include salt, edible oil, ilmenite and garnet, textiles, edible oil and printing.  Puthiamuthur, near Tuticorin, is renowned for readymade clothes. It is also the second largest salt producer after Gujarat and has a significant seafood exports industry. However, amidst all of this, there’s one product that is very unique to Tuticorin – Dry Flowers!

Dry flowers? Yes, dry flowers and Tuticorin is the biggest exporter of it in India.

Moisture killer

Tuticorin’s dry weather is ideal for dry flower processing, prompting a large number of big and small players to make it their base. Some of the main companies involved in this business in Tuticorin are Ramesh Flowers (Private) Limited, Fauna International and Sibaflor Natural Decorations. Dried plant material and agricultural waste, sourced from all over the country, are transported to Tuticorin on a daily basis and are the main raw material for this industry, which produces scented potpourris and other decorative showpieces.

Sibaflor Natural Decorations is one of the first companies to enter the dried flowers exports business in Tuticorin. Speaking to The Dollar Business, its Managing Director Russell Motha said, “We had set up a joint venture with Dutch major Hogewoning Dried Flowers 20 years back. Like in all businesses, this market too keeps changing. Our products are not need based, but are lifestyle based and mostly, impulsive purchases. So, when the whole market churned and the demand for traditional dried flowers market dipped, we acquired Hogewoning’s stake in the company and and rechristened the entity as Sibaflor Natural Decorations Private Limited.” Today, Sibaflor Natural Decorations operates out of an Export Oriented Unit (EOU) and is an ISO 9001:2000 company, supplying dried flowers to retailers like IKEA. Similarly, Tuticorin’s top gun in dried flower exports, Ramesh Flowers has its own R&D center and exports its products all over the world – from Europe to US and from South Africa to Australia. 

"Dried flowers from Tuticorin are sourced even by retail chains like IKEA" 

Inexplicable

Despite being a port city, Tuticorin’s dried flower industry doesn’t benefit much out of it. The Tuticorin Port harbour is, more often than not, chocked with containers. So, it takes several days before a dried flowers container gets on board. For a seasonal industry like that of dried flowers, this is a killer. Even customs clearance takes days. “Port officials shrug off our questions on such delays, saying it’ the case all over the country,” lamented Motha.

Having a global presence in something like dried flowers doesn’t come easy. A lot of hard work and sweat of people like Russell Motha is behind it. With a port right on the doorsteps, it’s ridiculous that the industry is facing logistics issues. Are the powers that be aware of this?

“We need to come up with innovative designs to compete globally” -Manju Singhwi, Director, Ramesh Flowers Pvt Ltd

MANJU SINGHWI - The Dollar Business
Manju Singhwi, Director, Ramesh Flowers Pvt Ltd

 

TDB: Which factors have helped Tuticorin become a hub for dry flower exports? Further, are exports just limited to dried flowers?

MS: If I have to speak about just one factor that has helped the dry flower business flourish in Tuticorin, it has to be the dry weather of this coastal city. We also have a very large, very skilled workforce, mostly women, which is well-versed in the creation of various products such as potpourri, incense, candles, gift sets, wreath, dry bouquet, topiaries and arrangements, dry flowers and sea shells. This has also been a great facilitator for us.

TDB: Can you tell us about the seasonality aspect of dry flower exports?

MS: Autumn is the biggest season for dry flower exports from Tuticorin. In fact, more than 60% of our export business happen in the autumn, followed by the spring which accounts for roughly 30%.

TDB: What steps, according to you, are necessary to make India a major dry flower exporting country?

MS: In order to compete in the international market, we need to come up with innovative designs, as well as colours. In this industry, trends change very quickly, particularly in US and Europe. Another unique characteristic of this industry is that designs of potpourris and flower arrangements need to be sent to clients a year in advance and get them approved. Then only does supply start. So, staying ahead of the curve is very important.

TDB: What was your sales turnover in FY2014 and what is your market share in the export market?

MS: Our turnover in FY2014 was Rs.130 crore, of which the dried flower business accounted for about Rs.100 crore. Our share in India’s dried flower exports is about 30%. Currently, we have a target of reaching Rs.400 crore turnover in the next five years.

TDB: Can you also throw some light on your new candles division?

MS: Ramesh Candles India (Private) Limited started operations in 2011. It has a factory spread across 75,000 square feet area and has a capacity to produce 15 MT wax daily. We manufacture and export scented and unscented candles to big retail stores in US, UK, Mexico, Canada, Switzerland and Germany.

 

Chilika - A unique gift of nature

Chilika Lake is an integral part of Odisha’s culture. Its beauty has been immortalised by many poets. Spend a couple of days on its shore and you would realise why. However, its natural beauty hasn’t stopped it from becoming one the biggest seafood export hubs in India, particularly for black tiger prawn – an absolute must-have in all top restaurants across the world!

Sisir Pradhan | @TheDollarBiz

Chilika's seafood industry is becoming increasingly dependent on aquaculture due to lack of investment in modern fishing trawlers 

Located about 100 km away from Odisha’s capital Bhubaneswar is one of the largest brackish water lagoons in the world – Chilika Lake. Spread over an area of about 1,100 sq. km., Chilika is visited by millions of tourists every year – many of them human, but a majority of them exotic birds trying to escape the harsh northern winter,  primarily that of Siberia. Other than being a graceful host for migratory birds, Chilika is also home to around 225 species of fish, the endangered Irrawaddy Dolphins, 28 species of shrimp and two mud-crab species.

Chilika Lake is also the source of livelihood of around two lakh fishermen, most of them, always on the hunt for the much sought after black tiger prawn. Explaining the massive demand for this particular variety of shrimp, G. Mohanty, President, Seafood Exporters Association of India (Odisha), told The Dollar Business, “The black tiger prawn sourced from Chilika is in very high demand in the export markets, particularly Japan.” Trying to put a number on the potential of marine food exports from Odisha, Mohanty added, “Our seafood exports were worth about Rs.1,800 crore in FY2014 and I expect at least a 20% growth in FY2015.”

The hard work

Chilika became a ‘go to’ destination for aquaculture activities in Odisha in the 1980s, due to massive volumes of shrimp produced in the lake. As a result, illegal fencing inside the lake and encroachment of the lake’s coasts increased. This uncontrolled and unscientific prawn farming had a very negative impact on the industry. In a bid to make shrimps grow at a faster rate, many farmers started using higher dosages of nutrients that led to the spread of diseases, primarily Early Mortality Syndrome that led to slump in demand for Chilika’s shrimp. The lake also started making it to the front page of newspapers because of face-offs between locals and gherry (aquaculture farm) owners.

Sensing a threat to the bio-diversity of the lake, the state government formed the Chilika Development Authority (CDA) in November 1991. Since then, CDA has been working towards the restoration and sustainable management of the lagoon. According to the FY2013 Annual Report of CDA, thanks to the effort of its management, fish landings in the lake have increased by almost six times over the last decade.

Chilika-The dollar business
Every year hundreds of thousands of beautiful birds flock to Chilika in order to escape the harsh Arctic winter 

Seafood paradise

Chilika’s marine products can be segregated into three categories: fish, prawn and crab. Normally, fish captured from Chilika is sold in the domestic market, while shrimps find their way to overseas markets. “Fishermen prefer selling fish in the local market because the payment is immediate and there are no process controls to comply with,” said Mohanty. But it is exports of shrimps that gets Chilika the big bucks. Aquaculture has also increased many fold in recent years to fulfil the rising demand for prawns in the international market. Chilika’s sea food exporters source marine food from both aquaculture farms and the open sea.

According to its FY2013 Annual Report, CDA handled 7,114.3 metric tonne (MT) of fish and 6,413.9 MT of prawn during the fiscal. Some of the major fish varieties of the lake are mullets, catfishes, perches, sciaenidae and threadfins. CDA, in collaboration with Marine Products Export Development Authority (MPEDA), has also started training local fishermen to promote responsible fishing in the lake. However, some exporters said the authorities don’t involve them in sustainable fishing and marketing programmes at Chilika. Tara Ranjan Patnaik, the founder of Odisha’s leading seafood exports company, Falcon Marine Exports, told The Dollar Business, “CDA should involve exporters in the management of sustainable fishery programmes. Exporters can help fishermen get better return on their catch. Moreover, authorities should allow the organised sector to carry out aquaculture activities in the lake, particularly where there is less activity of endangered species. It will not only help check illegal gherries, but will also provide a larger market to the products of the lake.”

Mohanty added, “Through MPEDA, we have approached the CDA to carry out dredging of the lake and ban illegal gherries, but CDA is never open to our suggestions.” Agreed Patnaik, “There is a good demand for Chilika’s shrimp in the international market. Due to the outbreak of several diseases in other major shrimp producing countries like Vietnam, Thailand and China, demand for Indian shrimp has only increased in recent years. To meet this demand, some aquaculture farms try to overproduce, which could be dangerous.”

According to Mohanty, another impediment for Chilika is the customs duty structure in China. “There is a good demand for our products in China. However, the Chinese government taxes seafood imports at 16%, which is quite restrictive for our products. Hence, we are looking at expanding in Mexico, Canada and CIS countries,” said Mohanty. 

"In FY2013, fish landings in Chilika were at 7,114.3 MT and that of shrimp were at 6,413.9 MT" 

Perfect barbeque

Although Odisha has several modern marine food processing units operated by private players, infrastructure bottlenecks are huge. Mohanty said shrimp farms are mostly located in rural areas, which don’t have proper road connectivity. Erratic power supply is another concern. Though Odisha is home to India’s 2nd biggest major port, Paradip, lack of container handling facilities at the Port, makes it useless for Chilika’s seafood industry. Lack of international air connectivity is another impediment since frozen seafood is usually exported via air.

Taking the point forward, Patnaik said, “We export shrimp in by reefer containers. However, lack of facilities at Paradip means that we are dependent on the Kolkata Port and the Vizag Container Terminal.” On the same lines, Mohanty added, “While exporting, we are totally dependent on agents. In case of any issue, we are forced to stock our products in public cold storages in Vizag or Kolkata. Inter-state border hassles are also routine and hamper the seafood trade. Overseas buyers, generally,  prefer exporters whose factories are close to a port. We will save a minimum of Rs.50,000 on transport of a 40 feet container if Paradip can provide proper facilities.”

Chilika’s shrimp has fans all over the world. Spend a few days there and locals will tell you how the black tiger variety is not available in local markets because almost all of it is exported. While they don’t mind this sacrifice, the least they want is the government to provide the area the basic amenities as a compensation for providing the country with a perennial source of forex. That’s not too much to ask? Or, is it?

 

“We should be brought under one government department” - Tara Ranjan Patnaik, Chairman, Falcon Marine Exports

TARA RANJAN PATNAIK-The dollar business
Tara Ranjan Patnaik, Chairman, Falcon Marine Exports

 

TDB: Briefly run us through the profile of your company and tell us how you got into this business.

TRP: I started Falcon Marine Exports in 1985. I never dreamt of becoming a businessman, it was just a coincidence. I wanted to be a lawyer. However, during final year in college, many of my friends ventured into the business of mechanised fishing boats. Those days, the Odisha government used to encourage investment in sea fishing trade and used to project lucrative figures of return on investment. I entered the business by borrowing Rs.5,000 from a cousin and taking a small loan from a bank. However, after getting into the profession I realised that the government’s projections were far from reality. So, I gradually moved to the business of exporting seafood. At that time, there were no aquaculture. Due to my acquaintance with fishing trawler operators at Paradip, I was able to source fish at a cheaper price and make good profit through exports. Initially, we exported only to Japan. However, now we export largely to US.

TDB: Which species of marine products are the most popular in overseas markets?

TRP: Freshly captured ocean shrimps are the most sought after seafood in the export market. Sea tiger, white, brown, pink, black tiger and small white shrimp of Chilika are the most popular varieties in the international market.

TDB: What kind of encouragement do you get from the government? What do you think should be done to help the industry grow?

TRP: Odisha has one of the best fishery policies in the country but the implementation is painfully slow. Fish farming should be treated as an agriculture activity so that the farmers can avail benefits.

We come under multiple departments like Department of Fisheries, Ministry of Commerce and Department of Agriculture. Many times, we don’t know whom to approach to solve an issue. I think the government should set up a single point of contact for us or put everything under the Department of Agriculture. The state government should also improve basic infrastructure like road and power supply. Fish is a perishable item and requires timely availability of ice and goods transportation facilities. Running a farm using diesel generators adds up to Rs.30-40/kg to production cost, which is not calculated while giving duty drawbacks.

TDB: What is the total value of exports for your company and who are the major buyers of your shrimp in US?

TRP: In FY2014 we exported around Rs.900 crore worth of shrimp. Mostly large restaurant and retail chains import our shrimp. Some of our major buyers are Red Lobsters, Legal Sea Foods, Golden Seafood, Walmart and Costco.

 

Mysore - Mesmerising the world... with its scent

The former capital of Mysore Princely State is one of the few cities in India that has opened up to modernity and yet keeps its rich cultural traditions alive. Result: an amazing cohabitation of a multi-billion dollar information technology (IT) industry, along with equally big cottage industries of silk sarees, sandalwood products and, of course, agarbattis

Sisir Pradhan | @TheDollarBiz

An inside view of Karnataka Silk Industries Corporation Ltd.’s (KSIC) factory in Mysore. 

The moment one thinks of Mysore, majestic palaces and beautiful gardens come to mind. For cricket aficionados, the image of Javagal Srinath, fondly known as Mysore Express, might also pop up. However, still not many know that the city’s name is also synonymous with silk sarees, agarbattis and sandalwood. In fact, these industries have been the driving force behind the city’s socio-economic growth since the pre-independence era. In 2002, the city got a massive shot in the arm when Infosys decided to begin its Foundation Programme in the city. Today, the IT major’s Global Education Center in Mysore is one of the world’s largest corporate universities. And since then, the city has gained in prominence and grabbed the attention of the who’s who of the business world. Mysore is also the home of nine Geographical Indications (GI) – Mysore Silk, Mysore Agarbatti, Mysore Rosewood Inlay, Mysore Sandalwood Oil, Mysore Sandal Soap, Mysore Traditional Paintings, Mysore Betel Leaf, Mysore Jasmine and Mysore Ganifa Cards – each of which is a multi-million dollar business.

In the shadows

It’s very surprising that a city like Mysore has an airport just for namesake. SpiceJet, the only airliner that caters to the city, flip-flops all-round the year. In fact, it recently, once again, discontinued all services till the end of October. Even when it comes to trains, most major long-distance ones, either start from Bangalore or go via Bangalore. Mysore’s business fraternity has been, for long, insisting on developing the city’s rail connectivity with metros like Bangalore, Hyderabad and Chennai, but all such demands have fallen on deaf ears. R. C. Jagadesh, Chairman, CII Mysore Zonal Council, is one of many such vociferous demanders. Speaking to The Dollar Business, Jagadesh said, “The city’s proximity to Bangalore has its advantages and disadvantages. Not many flights operate from the city airport. SpiceJet is the lone service provider. However, its flight schedules don’t really meet the needs of business travellers. Lack of proper domestic and international air connectivity has been a stumbling block for the city’s economic growth.”

When it comes to the sea, though Mangalore is the nearest port, most of Mysore’s importers and exporters prefer Chennai or Kochi. “The main reason for us preferring Chennai or Kochi ahead of Mangalore is the poor condition of roads between Mysore and Mangalore,” Jagadesh explained. S. R. Uttama Nambi, General Manager (Export Division), Vasu Agarbathies, a Mysore-based major manufacturer and exporter of agarbattis, told The Dollar Business, “We ship around 60 containers full of agarbattis every year. However, due to the lack of proper connectivity between Mysore and Mangalore, and lesser number of ship calls at the port, we prefer Kochi. Interestingly, while transporting one container from Mysore to Kochi costs us about $600, transporting the same from Kochi to Dubai costs us only $400!” Nambi feels if the city can get its own Inland Container Depot (ICD), expenses can be cut significantly.

Unscheduled power cuts are another headache for city-based business establishments. Interactions with several business houses brought out the fact that most of them run their units on diesel generators, at least for a few hours every day. B. L. Srinivas, Manager at a leading hotel in the city said, “Unscheduled power cuts are a concern for the hospitality sector. The least authorities can do is fix a time for power outage so that we are prepared in advance.”

Mysore Silk Saree - The Dollar Business
The making of a Mysore Silk Saree is a very intense and time consuming affair 

My Mysore

However, despite such hiccups, Mysore’s journey towards becoming an economic powerhouse chugs along. Local traders feel the city’s biggest asset is ‘Brand Mysore.’ “Today you can find products, especially Mysore Agarbatti, Mysore Silk, Mysore Sandalwood and Mysore Sandal Soap, all over the world. They are the ambassadors of this city. Many businessmen, who are not even remotely connected to the city, establish their businesses here so that they can add ‘Mysore’ to their products,” said a salesman at a local handicraft shop, with a broad smile of pride on his face.

Counterfeiting is a major threat to the products of Mysore. Despite GI status, many of its products are imitated. If one spends a bit of time in the city’s main business district and walks through the busy Sayyaji Rao Road, K. R. Circle and Devaraj URS Road, one can find many stores openly selling cheap imitations of Mysore Silk Sarees. D. Krishnappa, Production Manager at Karnataka Silk Industries Corporation’s (KSIC) lone silk weaving factory, told The Dollar Business, “We are very much aware of imitation. It gives a bad name to the Mysore Silk brand. To tackle this, we constantly train our salesforce to help consumers learn to distinguish original products from the fake ones. We also put 3D holograms and have engraved special numbers on every saree manufactured at our plant. This has helped fight imitation to a certain extent.” 

"Transport cost from Mysore to Kochi is higher than that from Kochi to Dubai" 

Role model

The popularity and potential of Mysore Silk Sarees can be gauged from the fact that despite them being retailed anywhere between Rs.11,000 and Rs.2 lakh, they vanish off the shelves like hot cakes. Hence, while many state-run handloom industries in rest of the country have shut down shops or have been declared sick, the 100-year-old KSIC is a profitable organisation. KSIC made a profit of Rs.20 crore on a turnover of Rs.127 crore in FY2014 – remarkable for a century old public enterprise.

KSIC is one of the first corporations in Mysore and was setup in 1912 as part of a master plan for the city’s industrial infrastructure. A while later the Princely State of Mysore (now Karnataka) got its Sandalwood Oil Factory in 1916, followed by the famous Mysore Soap Factory in 1918. The performance of these industries underline the business competency of companies operating in the region. Vasu Agarbathie’s Nambi is quite confident of the quality of Mysore’s products and the loyalty of their consumers. “Although many non-Mysore based agarbatti manufacturers use the name ‘Mysore,’ they can never match the aroma that comes from the ones made by local artisans. Perfect blending of perfume on raw stick is key to making agarbattis and the skill is inherent to thousands of local artisans who make these sticks at their homes,” Nambi added.

Are we there yet?

Attracted by Mysore’s talent to carry forward the legacy of traditional industries, well-known corporations and business houses like JK Tyres, Triveni Engineering, Wipro, Kingslay Readymade Garments, Boruka Steels, Brooke Bond India, Bharat Earth Movers, Automotive Axels, Rane Mysore, Avasarala Tungston, Reckitt Benckiser and Nestle have today made Mysore their home.

The city’s future-ready, wide, pot-hole free roads, salubrious climate, civic infrastructure and a very well developed education sector, are some of the key strengths that provide a perfect platform for sustainable growth. The city also has the potential to be a major food production center as India’s premier food research institutes – Central Food Technological Research Institute and the Defence Food Research Laboratory – are located here.

“Mysore has a pleasant weather all year round, which lures many businessmen, women and tourists. Unlike many other cities in the country, Mysore is not very crowded. At the same time, Karnataka Industrial Areas Development Board (KIADB) has developed good land bank to accommodate existing and future industries. There are four (Mysore Zonal Industrial Area, Kadakola Industrial Area, Koorgalli Industrial Area and Thandya Industrial Area) industrial areas around the city. There is no scarcity of water as two major rivers – Kaveri (Cauvery) and Kabini, flow near the city,” said the CII Chairman, pointing out Mysore’s strengths. And anyone, who spends a few days in this former capital of the Princely State of Mysore, will find it very hard to disagree.

“We use different fragrances for different markets” - S. R. Uttama Nambi, GM (Export Division), Vasu Agarbathies

S. R. Uttama Nambi - The Dollar Business
S. R. Uttama Nambi, GM (Export Division), Vasu Agarbathies

 

TDB: Please briefly run us through the history of Mysore’s agarbatti industry.

SRUN: The history of Mysore’s agarbatti industry goes back to several hundred years. There is no definite answer to when and how the agarbatti industry started in this region. However, easy availability of raw material has been one of the major reasons for the growth of this industry. Basic raw materials like bamboo and jigat bark (a natural binding agent) are abundantly available in Karnataka and neighbouring Kerala and Tamil Nadu. Another major factor for the success of the agarbatti industry here is the availability of skilled labourers. Making agarbatti is a cottage industry here and many households are engaged in it.

TDB:  How many companies are there in the agarbatti sector in Mysore and how did Vasu Agarbathies come into existence?

SRUN: Although there are many unorganised players involved in agarbatti manufacturing in Mysore, there are only 4-5 organised players like Vasu Agarbathies, N. Ranga Rao & Sons, Gopika Perfumery Works, Karnataka Sandalwood Oil Factory and Aravinda Parimala Works. N. Ranga Rao started one of the first manufacturing units of agarbatti in the organised sector in 1948. Following his death, his sons started two ventures under the name Vasu Agarbathies and N. Ranga Rao & Sons. Today, Vasu Agarbathies exports its products to about 55 countries. Currently, the organised sector sells around Rs.200 crore worth of agarbattis in India and around Rs.500 crore worth of products are exported every year.

TDB: Who are your major buyers in the overseas market and how did you venture into exports?

SRUN: People in different countries use agarbatti for different purposes. Though a majority of them use it for religious purposes, many use them as room fresheners and also as gift items. In Brazil and Chile, it is mainly used for meditation and yoga. Initially, we catered only to the domestic market but since the 1980s we started exporting. Many people from this region who have migrated and settled in different countries also started canvassing our products, which was also a great help. Our founder N. Ranga Rao used to know many of them, hence shipments first started to US, followed by the Middle East, Europe, Malaysia, and Sri Lanka. Later, even the Ministry of Commerce (GoI) started promoting agarbatti exports.

TDB: What is the ratio between domestic and overseas sales? Do you adhere to any specific quality processes for exports?

SRUN: On an average, we sell about Rs.20 crore worth of agarbattis in the domestic market and about Rs.5 crore worth of it is exported. The manufacturing process is the same for domestic and overseas markets. However, we package and perfume differently for different countries, depending on the preferences of consumers in that market.

TDB: Tell us something about perfuming process, which is key to the success of any agarbatti.

SRUN: We have our own R&D unit where chemical experts develop new aromas. It involves combining natural and synthetic aromatic ingredients. In the current market scenario, there is a lot of pressure to keep production costs under control. Hence, we outsource the production work to local households. They give us raw (unperfumed) agarbattis. Perfuming is, primarily, done through dipping and spraying. We prefer traditional sprinkling of perfume onto the sticks.

TDB: What is the price difference between similar varieties of agarbattis in the domestic and overseas market?

SRUN: There is not much of a price difference between domestic and overseas markets. However, the prices of exported products are higher as freight and other transaction costs are involved. The average price of agarbattis in US is between 50 cents and $20 per 12 sticks. The shipment goes in 20 x 40 feet containers (holding $30,000-$35,000 worth of goods) via Kochi port as ship calls are more frequent there.

TDB: What are the main challenges for Mysore’s agarbatti industry?

SRUN: There are a lot of restrictions on import of agarbattis in Sri Lanka, so we have plans to set up a manufacturing unit there. Some Asian countries have also started bulk manufacturing of machine-made agarbattis and started shipping them to India. But the quality of handmade agarbattis is much better. Agarbattis manufactured by organised players in this region have an aroma that is more popular than anything manufactured by any other country in the world. Taiwan, however, has established itself by manufacturing high quality and attractive packaging for agarbattis.

Bellary - It's got jeans in its genes

In the ever-changing world of fashion there’s perhaps just one garment that can boast of a stable demand. From being a part of the wardrobe of a rock star to that of a miner, from being Putin’s favourite to Obama’s preference while making an MLB appearance, a pair of jeans (irrespective of class, culture and gender) is increasingly becoming a part of modern man’s everyday life, or perhaps a necessity. And feeding India’s insatiable need for them is Bellary, unfortunately making headlines for all the wrong reasons in recent times

Sisir Pradhan | @TheDollarBiz

Bellary-The Dollar Business
Jeans manufacturing is a cottage industry in Bellary and provides employment to thousands of women in and around the town 

Giorgio Armani once famously said, “Jeans represents democracy in fashion.” And Bellary is as good a testament to this as anything else. For, being a small town in Karnataka hasn’t stopped it from making a name for itself. Today, it is home to 400-450 manufacturers of jeans of all fathomable varieties, manufacturing for the mega brands and supplying to top retail chains.

From being the centre of media attraction 15 years back because of being Sonia Gandhi’s (President of the Indian National Congress Party) choice for starting her political career to being the epicentre of the iron ore mining scam, Bellary has had a very chequered recent history. What hasn’t got deserved attention, though, is its textile industry, efficiently manufacturing millions of pairs of jeans every year.

Since forever

A casual look at advertising hoardings put up all over Bellary confirms that mining and jeans are the two major drivers of the region’s economy. Stitching comes naturally to most locals from the pre-independence era. Explaining how Bellary became a hub for garments, Lucky M. Shah, President, Bellary Garment Manufacturers Association, told The Dollar Business, “During the 1930s, a majority of city dwellers were from the Darji community (tailors) and used to stitch uniforms for the British Army. This is how the town’s association with the garment industry started. And after independence, the region grew as a jeans manufacturing hub.”

Jeans manufacturing is a cottage industry in Bellary. Several manufacturers in the town outsource to local households, with very good sewing and stitching talent. “In Bellary, there are only 2-3 manufacturers, who do end-to-end manufacturing of jeans. In all other cases, after cutting the cloth as per the design requirement, it is outsourced to households where members of a family, mostly housewives, stitch it and return to us. There are sub-contractors, who take the work order from us and give it to families,” added Shah. Shah feels outsourcing the manufacturing of jeans, which involves seven different aspects – cutting, stitching, buttoning, washing, trimming, ironing and packaging – makes prudent business sense.

Jeans manufacturing-The Dollar Business
Jeans manufacturing involves seven processes, beginning with cutting as per design specification 

Down south

Bellary’s jeans manufacturers, primarily, market their products in India’s southern states. Giving the rationale for this, J. Mohan, Factory-in-charge of He-Man Garments, a major jeans manufacturer in Bellary, said, “We primarily focus on the southern states because the northern markets, which source their requirement from several jeans manufacturers based in Mumbai, Gujarat and the NCR, are very crowded. Since we are located almost at the centre of South India, focusing on the southern states also make logistical sense.” Moreover, the garment business runs on credit as distributors take consignments in advance and pay after they sell the garments. Hence, focusing on a particular market helps manufacturers to better manage their inventory. “Though the mushrooming of retail chains have also helped our products to get better visibility, they ask for higher margins and if the product is not sold, return it back. Jeans manufacturers operate on wafer thin margins of 5-6%. Irregular demand also make things difficult for us,” adds Mohan. 

"Bellary Jeans manufacturers claim to operate on wafer thin margins of 5-6%" 

But for a port

Although United Nations Industrial Development Organisation (UNIDO, which has developed an industrial cluster in Tiruppur) had identified Bellary to develop a SME cluster, delay in land allocation by the state government forced it to shelve the plan. However, Shah is not perturbed and believes the helping hand is just a few years away. “We are in touch with the government for the development of an apparel park near the city. Garment manufacturers, who have a capacity of 3,000-4,000 pieces or more per month, are ready to set up a SPV to develop the park. All units that set up plants inside the park would get concessions from the government for purchase of machinery. I am sure, it will attract a lot of buyers,” added Shah, optimistically.

Some of Bellary’s popular jeans brands are Iceberg, Nasty, Hotline, Pierre Bellari, Point Blank, Walker, Key and Podium. The manufacturers of these brands, primarily, target buyers looking for medium to low priced jeans in the range of Rs.500 to Rs.1,500. Interactions with several jeans manufacturers revealed that seasonality is also the reason for many of them not having a lot of people on payrolls. Seasonality in demand and volatility in the forex market have also forced several of Bellary’s manufacturers to stop exports. But companies like He-Man Garments, which has its own manufacturing unit, continue to export to Singapore, Dubai, Sri Lanka, Europe and US. Speaking to The Dollar Business, Founder, He-Man Garments, Pukhraj Bhurat said, “Whatever exports we do, we do through personal contacts. Due to quality issues, not many companies in the region export. And those who do, do it through middlemen. The middlemen take care of hedging requirements, in return of export incentives.”

Although Bellary houses many large industries like granite, steel & alloy, sponge iron, textile, cotton, oil, rice and many other agro-based industries, it doesn’t have an inland container depot. So, those exporting depend either on the Mangalore Port (12 hours away) or Visakhapatnam (18 hours away). Lack of air connectivity only adds to export woes since international buyers prefer to visit a factory before placing an order. The ban on mining has also busted all hopes of the city getting a full-fledged airport.

What’s also puzzling is that Bellary doesn’t have an active industry body, which could have approached the government on behalf of the jeans industry. “Collective approach is missing among the city’s businessmen,” feels M. Ahiraj, a journalist working for a leading pink paper. Only recently have people like Lucky Shah and A. Sudhakar, Director, Sudhakar Polymers, taken up initiatives to make their respective trade chambers more active. Speaking to The Dollar Business, Sudhakar said, “Due to the absence of an active trade body, many developmental projects have either been delayed or have overshot their time limits. This has hampered the region’s growth.”

Not impossible

Thankfully, Bellary doesn’t suffer from one issue that many such manufacturing hubs in India grapple with – relentless power outages. At the same time, being centrally located in the Indian peninsula, most major southern cities are easily reachable from here. Its garment manufacturers feel the proposed apparel park will boost the industry in a massive way and could be a game changer. If only Bellary could get an airport. India’s Minister of State  for Civil  Aviation is from Karnataka, isn’t it?

“Exports are falling because of high logistics costs” - Pukhraj Bhurat, Founder, He-Man Garments

Pukhraj Bhurat-The dollar business
Pukhraj Bhurat, Founder, He-Man Garments

 

TDB: Tell us about the jeans industry, in general, and Bellary jeans, in particular. What are the major differences between jeans made in Bellary and that by global brands?

PB: Bellary is known for low-cost jeans manufacturing, but there are only a couple of manufacturers like us who carry out all processes under one roof. Manufacturing of jeans involves multiple processes and due to ad-hoc manufacturing the quality of the final output gets affected.

Further, there is no major difference between us and MNCs, both in terms of quality and cost of stitching. But there is a big difference in washing. Jeans’ washing costs range between Rs.50 to Rs.200 and this is where a pair of jeans gets the maximum value add. During washing, dyeing is the cheapest value addition, while wrinkle freeing and scrubbing cost more. Stitching cost varies between Rs.100 and Rs.200, while material cost vary between Rs.50 and Rs.100. Similarly, fabric cost varies between Rs.180 and Rs.250. Making a top quality pair of jeans costs around Rs.800. However, MNCs price them significantly higher because of their marketing and branding expenses.

TDB: Today, we see many new brands coming up with their exclusive stores. Have you ever tried to establish your own stores, or you plan to?

PB: In retail, even if you earn 25% gross margins, rising real estate costs, interest on investment and the cost involved in maintaining fancy showrooms would eat up almost everything. Currently, the market condition is such that stores, even in district headquarters, don’t do business of more than Rs.50-60 lakh per annum. New brands crowding the market has also made the business unviable.

TDB: What retail business model do you follow?

PB: Our sales executives directly sell our products to retailers. If we build a distributor network, it will take away at least 15% margins, followed by a minimum of 40% by retailers. And even if we take a conservative 30% as manufacturing cost, nothing much is left. When it comes to jeans manufacturing, an average production period is about 60 days. Further, 30 days is what a pair of jeans takes to reach the selling point. And it takes another five months for us to receive payments. So, in all, we have to wait for about eight months to recover our investment. This leads to a substantial interest expense.

TDB: Are you focused only on the domestic market or is there a plan in place to supply to overseas markets as well?

PB: Colombo and Dubai are the two major exporting destinations for us. A jeans that is retailed in India at Rs.1,000 (manufacturing of which costs us about Rs.350-Rs.400), typically has an FOB value of $7.5-8, when exported. In the west, they are very particular about quality and have very stringent parameters. Export markets are also very volatile. In case we increase our production capacity to meet export demand but end up on the wrong side of forex volatility, all our costing can go for a toss. There are also several regulatory and compliance issues when it comes to exports. So, all in all, while exporting, the only major avenue for profit is duty drawback, which is currently around 8% for jeans.

 

Mizoram - For a million flowers to bloom

Mention the Northeast and imprinted images of turmoil materialises in the mind. Imprinted? Yes, because such an impression has been created in the minds of people across the country and abroad through consistent focus on only the negatives of this region that most are unaware of its economic potential, which among other things, include Mizoram’s anthurium

Zodin Sanga | @TheDollarBiz

The annual anthurium festival is a great platform to promote Mizoram’s anthurium

 

Misconceptions about Mizoram vanish the moment you arrive here and observe the pleasant and cheerful demeanor of the people of the state. Their innate passion for music becomes quite evident as we see many youth strumming the guitars and breaking into rhapsodies. From turmoil to tranquility, the metamorphosis of Mizoram is conspicuous. Insurgency is passé and peace is all pervasive in the state. The industrious and resourceful populace is making the maximum out of the abundant natural resources in the state. Nature has endowed Mizoram with a bonanza of bounties. It has abundant bamboo resources occupying 31% of the forest area. According to estimates, the state’s share in bamboo sales to export oriented industries is 14%. Bamboo has multiple values and properties with viscose by-product being a useful ingredient for the textile segment. Its intrinsic value apart, bamboo is an ingrained part of Mizo tradition, which is reflected in the Cheraw dance. The dance, with women rhythmically stepping in and out of a maze, never ceases to amaze.

Blessed by nature

According to the state’s official website, Mizoram has a geographical area of 21,087 sq. km, of which the horticulture potential area is 11.56 lakh hectares (11,560 sq. km). At present, the total area under horticulture crops is 1.10 lakh hectares (1,100 sq. km). The geo-climatic situation of Mizoram offers an excellent scope for growing different horticulture crops including fruits, vegetables, spices, and plantation crops, medicinal and aromatic plants of high economic value. Of the many spice crops, ginger, turmeric and ‘birds eye chili’ are the major spice crops of Mizoram. Mizoram’s climatic condition is ideal for the cultivation of almost all types of flowers. Despite that, only two flowers, i.e., anthurium and rose are cultivated on a commercial scale.

India's anthurium exports-The Dollar Business

Mizoram has evolved to become a state with a flourishing economy. Apart from its abundant resources, Mizoram’s bouquet includes, well, quite naturally, anthurium! Horticulture has always been an integral part of Mizo culture. Realising the market demand across the country and abroad, the Mizos had deployed their natural flair for floriculture, coupled with highly fertile terrain to productive use. Their efforts have fructified and come to fruition. Innumerable anthurium farms are sprouting on vast stretches of the firmament. The enrapturing array of anthurium blossoming, and in full bloom is a feast to the eye.

 

Gifting back

Mizoram is the largest producer of this exotic flower in India. Samuel Rosanglura, former director of the horticulture department, who was also the brain behind anthurium cultivation in Mizoram, feels the launch of Technology Mission in North-eastern States in FY2002 was a turning point for the growth of this product in terms of productivity and exports. Mizoram is considered as the hub of anthurium and has a lion’s share in India’s exports. However, exports have been on a decline during the last few years due to several factors – lack of adequate transportation, packaging and cold storage facilities, but more importantly rise in domestic demand.

In terms of India’s total export of anthurium, the values indicate a negative trend over a five year period. While the export was at its highest in FY2009 ($8.26 million), it has declined over the years and stood at just $0.52 million in FY2014. Although most of Mizoram’s anthurium currently has a lot of takers domestically, improvement in logistics and connectivity – two of Mizoram’s main woes – would help the tiny state cater to its Japanese patrons and create more fans elsewhere. That these export markets offer higher margins is just an added advantage!

 

“Connectivity is a major issue that hampers Mizoram's exports” - Mallikarjun Kumar, General Manager, Zopar Group

Mallikarjun Kumar - The Dollar Business
Mallikarjun Kumar, General Manager, Zopar Group

 

TDB: What is unique about Mizoram because of which it has become a major hub for anthurium?

MK: Mizoram’s climate – heavy rains during the rain and dryness during rest of the year – helps the local anthurium business. Another important factor is the high altitude of the state.

TDB: What is the value/volume of anthurium exports from Mizoram?

MK: While I can’t give you a number, I can tell you that we are the only major exporter of anthurium from Mizoram. We own our own farms and also have very close relationship with local farmers, from whom we source anthurium. We have also formed a farmer’s association, which has been a great help.

TDB: Which are the main markets for your anthurium exports?

MK: We primarily export anthurium to Japan, and a bit to New Zealand.

TDB: What has been the growth rate of anthurium exports from Mizoram?

MK: Anthurium exports have actually been going down in the last few years. The primary reason for this is that domestic demand for flowers is growing. Although Mizoram’s anthurium and flowers are in high demand in Japan, it’s much easier to sell them in India.

TDB: Which other products does Mizoram have the potential to export in a big way?

MK: Turmeric and ginger produced in Mizoram is of very high quality and can be exported in a big way, if the right support is provided.

TDB: How big an impediment to exports is Mizoram’s location?

MK: It is indeed a big factor. Connectivity is a major issue in Mizoram. Direct flights are not available to many cities. Roads too are not in great shape. Moreover, everything – from tools to fertilisers – has to be sourced from the rest of the country, and the final product has to be sent back before shipping abroad, which takes time due to connectivity problems.

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