indian handicrafts industry-an analysis

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Indian Handicrafts Industry

India is one of the important suppliers of handicrafts to the world market. TheIndian handicrafts industry is highly labour intensive cottage based industry anddecentralized, being spread all over the country in rural and urban areas.

Numerous artisans are engaged in crafts work on part-time basis. The industryprovides employment to over six million artisans including those in carpet trade!,which include a large number of women and people belonging to the weakersections of the society.

In addition to the high potential for employment, the sector is economicallyimportant from the point of low capital investment, high ratio of value addition,and high potential for export and foreign exchange earnings for the country. Theexport earnings from Indian handicrafts industry for the period "##$-## amountedto %&' ".( billion.

)lthough exports of handicrafts appear to be sizeable, India*s share in world

imports is miniscule. It is a sector that is still not completely explored from thepoint of view of hidden potential areas. India, a country with (+ states and "$languages and more than " dialects offers an enormous range of handicraftsfrom each of the states. a/or centres in %ttar 0radesh are oradabad alsoknown as the "Peetalnagari" (City of Brass), &aharanpur for its woodenarticles, 1erozabad for Glass. The North 2estern state of 3a/asthan has to offerthe famous Jaipuri quilts 4agru and &anganer printed te!tiles and woodenandwrougtironfurniturefrom 5odhpur. The coastal state of 6u/arat comeswith e#$roideredarticlesfrom 7utch. Narsapur in )ndhra 0radesh is famousfor its %aceand%acegoods. 4ut this is only a small part of the total productrange. India offers much more.

Handicrafts are classified into two categories:

1. Articles of everyday use2. Decorative items

The craftsmen use different media to express their originality. The diversity of thehandicrafts is expressed on textiles, metals 8 precious and semi-precious, wood,precious and semi-precious stones, ceramic and glass.

&e!tile $ased andicrafts'9and printed textiles including block and screen printing, batik, kalamkari handprinting by pen! and bandhani tie and die! are used in products ranging frombed-covers to sheets, dress material to upholstery and tapestry. The famousembroidered articles of silk and cotton, often embellished with mirrors, shells,beads, and metallic pieces are also found in India. :mbroidery is done too onleather, felt and velvet etc. This segment of the industry accounts for almost halfa million strong employment in addition to a large number of designers, blockmakers, weavers and packers involved in the trade.

Clay etal and Jewellery'

e*s#*sectorpapers*+,,


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4rass, copper, bronze, bell metal are used for a variety of wares and in a varietyof finishes. &cintillating ornaments are available in a wide range of patterns,styles and compositions. ade from precious metals, base metals, precious andsemi-precious stones; these ornaments have traditional as well as modern styles.

-oodwor.'2ooden articles in India range from the ornately carved to the absolutely simple.


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4#$roidered goods ' 'utch +/u%arat-, !aisaimer, &aroda, 0ucknow,

!odh"ur, Agra, Amritsar, 'ullu, Dharmshala

*hamba ( rinagar

ar$le /oft /tone

Crafts

' Agra, Madras, &aster, !odh"ur

Papier ace Crafts ' 'ashmir, !ai"ur

&erracotta ' Agra, Madras, &aster, !odh"ur

5ari 5ari Goods ' #a%asthan, Madras, &aster

I#itation Jewellery' ' Delhi, Moradabad, ambhal, !ai"ur, 'ohima

+$ribal-

0rtistic %eaterGoods

' lndore, 'olha"ur, hanti )iketan +&-

/elected crafts poc.ets for acieing e!port goal'

)lthough each crafts pockets has its particular problems, a few selected craftpockets are identified based on their past performance for immediate remedialattention to stimulate a =uantum in exports of handicrafts in the coming years.

orada$ad(6P) ' or Artmetalwares and imitation %ewellery

/aaranpur (6P) ' or ooden handicrafts ( rought iron handicrafts

Jodpur (7a89) ' or ooden, rought ron and ea hell handicrafts

:arsapur (09P9) ' or 0ace and 0ace goods

?


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/awls as 0rtwares ' audi Arabia, 3..A. !a"an ( 3.'

5ari 5ari goods ' 3.'. 3..A., !a"an ( audi Arabia

I#itation Jewellery ' 3..A., 3.'., audi Arabia ( /ermany

iscellaneousHandicrafts

' 3..A., /ermany, 3.'. ( rance

adaption and refinement

Test marketing

%pgrading e=uipping facilities

&ecuring inputs

:ntrepreneurial hiring, training, managing

0roduction, =uality control and packaging

?osting and pricing

0hysical distribution

:xport market development


(a8or =estinations for Indian HandicraftsD share in "##$-##!


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In the changing world scenario, craft products exported to various countries forma part of lifestyle products in international market. The impact is due to thechanging consumer taste and trends. In view of this it is high time that the Indianhandicraft industry went into the details of changing designs, patterns, productdevelopment, re=uisite change in production facilities for a variety of materials,production techni=ues, related expertise to achieve a leadership position in the

fast growing competitiveness with other countries.

The + million craft persons who are the backbone of Indian 9andicraft Industry asprovided with inherent skill, techni=ue, traditional craftsmanship but that is =uitesufficient for primary platform. 9owever, in changing world market these craftpersons need an institutional support, at their places i.e. craft pockets for valueaddition and for the edge with other competitors like ?hina, 7orea, Thailand etc.

&e Ger#an andicrafts and Giftware ar.et

2ith over $( million inhabitants, 6ermany is the largest market for giftware andhandicrafts items in :urope. ) member of and situated within the :uropean%nion, 6ermany is supplied with giftware and handicrafts from 6ermany as wellas the surrounding :uropean countries such as 1rance, Italy, &witzerland and


Countrywise 4!port of Handicrafts

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$illion it corresponds to a broad definition of giftware and handicrafts thatincludes the following itemsC home furnishings, artmetalware, table accessories,*hristmas decoration, woodware and furniture, imitation %ewellers, artificialflowers"lants, scentscosmetics, sweets, toyscom"uter games, books,discsvideos, watches%ewellery, certain a""arelte4tile items and others. The6erman giftware and handicrafts market grew from B (#." billion in "##$ to B(#. billion in "###, but experienced a slight decline in the first =uarter of (.

The substantial supply of giftware and handicrafts has transformed the 6ermangiftware and handicrafts market into a fiercely price-competitive market place.Nevertheless, innovative and new to market giftware and handicrafts items place

still have good market prospects. It is essential for the 6erman giftware andhandicrafts marketers to find new products to stay competitive. )lthough 6ermanconsumers may be willing to pay a high price for exclusive items they are veryprice conscious and want value for money. )mong traditional gift items, candles,festive items, including ?hristmas decoration, exclusive gift boxes and gift-wrap,ribbons, nostalgic calendars and all types of scented items have best prospects.The 6erman market shows a strong demand for low-priced candles. Thusimports from 0oland and ?hina have increased substantially. The averagegrowth for the overall giftware and handicrafts is estimated at "-( percent over"###-(.

Co#petitie /ituation

6erman giftware and handicrafts consumption is growing more or less in line withthe relatively slow growth rate of income during the last years. Thus,expectations for additional growth are not very high. )nnual growth rates ofbetween ".-( percent are forecast for the next few years for the overall giftwareand handicrafts market. In general the market shows good businessopportunities if prices and =uality are competitive and delivery schedules arefulfilled.

)part from its own producers, 6ermany is supplied by giftware and handicraftsfrom nearly all of the :uropean countries. 6erman firms often import specificproduct groups from a particular country. a/or suppliers of pottery are, forexample, &pain and 0ortugal; fine exclusive stationery comes from Italy,1rance and &witzerland; candles from 0oland, ?hina and 0ortugal; driedflowersfrom the Netherlands etc.

1ierce price competition in 6ermany is intensified by the increasing =uantity of?hinese and )sian made products on the market. 1or India this situation



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coupled with the relatively strong Indian rupee which means that firms proving tobe most successful in the recent past have offered niche market giftware andhandicrafts, i.e., exclusive to Indian handicrafts items or new-to-market products.

0 few wellesta$lised Ger#an #anufacturers of giftware and andicrafts

ite#s are'

7oziol 6mb9, :rbach 7rebs-6las-Hauscha 6mb9, :rnstthal

4arti 6mb9, 6arching argarete &teiff 6mb9, 6iengen

Buni 6mb9 ?o. 76, 4ramsche 21 )6, 6eislingen

3astal, 9oehr-6renzhausen 3osenthal )6, &eib

1artak, Hahr 2. 6oebel 0orzellanfabrik, 3oedental

6I:& 7erzen, 6linde 2alther-6las 6mb9, 4ad Briburg

5et 0apier 6mb9, 4ernau

/ales olu#e of specific su$sectors (esti#ates)'

&ome estimates of individual giftware and handicrafts subsector volume salesare provided as followsC

/easonal' arket insiders estimate the total volume of the seasonal itemsmarket, including ?hristmas, :aster, Jalentines Bay and the 6erman counterpart

of Thanksgiving, at B G.G billion. In "##G, about B E billion were spent alonefor ?hristmas decoration, ?hristmas floristic items and ?hristmas trees only.?hristmas items are usually imported from ?hina, Taiwan, Thailand, 0hilippinesand India. 9owever, Indian ?hristmas decorations as candle stands or?hristmas tree hangings and soft toys find a ready market in 6ermany if they aremoderately priced.

Ho$$y and art supplies'The present market volume of hobby and art suppliesin 6ermany is estimated at about B E billion, while the total :uropean marketshould amount to B "( billion. Insiders believe that this specific marketsegment still offers some potential for new products. ) recent survey shows that

apart from their school days, most of the 6ermans who do regular BI@ or hobbywork are between + and +# years ".$ percent of the 6erman adults! old. 2iththe fast ageing of the 6erman population a stronger demand for hobby and craftsis likely.

Incentie ite#s'1rom "##( to "##$, the total 6erman market for incentivesincreased from nearly B E billion to B + billion.



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&oys' In "##$, annual sales of licensing products amounted to about %&' F.(billion in 6ermany. )lso in "##$, the toys market volume expanded to B +billion. Total annual sales for computer games and learning games alone,increased to B ( billion in "##$ compared to the pre-year level of B ".Gbillion.

ar.et 0ccess

:% member states and )sian countries, ?hina and India in particular, are ma/orsuppliers of giftware and handicrafts to the 6erman market. Indian firms makinga first approach to the 6erman market are advised to have comprehensiveproduct literature and data sheets professionally translated into 6erman.

)lthough :nglish is widely understood, a well-prepared translation gives animportant marketing edge, particularly in the initial presentation. Indian firmsshould preferably appoint an agent or distributor who can maintain a stocksufficient to answer short-notice orders.

Custo#s =uties

?ustoms duties vary according to material and product. Though duties are highfor a few items, i.e., dried flowers, potpourri "+.G-( percent!, T-shirts "(.-"E.(! and hand- woven, woollen blankets "E.F percent!, the ma/ority of customsduty rates falls in the range of -$ percent. 1or exampleC

*ustoms Duties +in "ercent-

?eramics C F." - G.

Toys C .+ - +.E

&tationery C $.F

0lush animals C +.

Kuilts>blankets C G.

?andles C (.$

&ilver /ewellery C (.

In addition, there is a "+ percent sales tax, which is eventually passed on to theconsumer in form of the alueadded ta! (6erman importer.

Items that originate from certain animal species, i.e., snakeskin or hides of someanimal, it must be ensured that the export of these products complies with the?onvention on :ndangered &pecies ?IT:&!. 3egarding sample orders,exporters should be aware that one sample with a maximum value of B



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each or, five identical samples of one product group not exceeding a total valueof B , are usually customs free.

Product /tandards

In view of the wide field of products that could be considered as giftware andhandicrafts, it is difficult to name standards. ?ompliance with :% standards andregulations is strongly suggested. There are, however, only few product groupsin the giftware and handicrafts field that have to follow standards. It is essentialthat *56labelling be observed where re=uired. The ?:-mark includingconformity statement and technical documentation! is mainly re=uired for toys$$>EG$>::? standard!. 2hile the =uality regulations for candles are obligatoryassuring a certain level of =uality, the toy regulation and the electronic standardshave to be observed because of safety considerationsC

a8or =istri$ution Cannels

n /ermany, giftware and handicrafts is distributed through five ma%or channels:

2holesalersImporters>distributors?ommission agents>sales representativesBepartment storesail-order

Internet salesTele-shopping

The individual channels are described in detail in the following.

holesalers:

4esides offering wide range of goods to retailers for direct sales, this channelalso supplies large =uantities of individual articles. They are very particular inmaintaining consistency in the kind of products and their =uality.


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his sales force and his existing distribution channels. Bistributors call on giftwareand handicrafts retailers, purchasing groups and supermarkets. The distributorsLmark-up varies depending on the giftware and handicrafts item, but at least percent. 2hile the mark-ups vary according to the distributor; they usually alsodepend on the exclusivity of a product and on its competitiveness in the overall

giftware and handicrafts market.

6ermany hosts more than F, giftware and handicrafts retailers. &everalretailers import directly from the %nited &tates and sell to the 6erman customer.%sually these are small companies looking for items new to the market andhandling small orders only.

*ommission agents:

?ommission agents provide Indian companies with direct access to the 6ermanmarket and direct control. Independent commercial agents are normally working

on a " percent commission and operate on a regional basis. They concentrateon specialist retailers, purchasing groups and department stores. ?ommissionagent contracts are based on stringent :% and 6erman regulations. )n Indianfirm wishing to appoint an agent should make sure that such standard contractsmeet its expectations. In order to facilitate market entry efforts by the agentstheir initial commission is often a few percent higher than the MusualMcommission. These additional payments are to reimburse the agent forsubstantial advertising and any special efforts facilitating the new productLsmarket entry.

De"artment tores:Indian companies interested in establishing business contacts with ma/ordepartment stores, mail-order houses and retailers may also choose the directapproach. Bepartment stores in particular, prefer to deal directly withmanufacturers. Their buyers are very specialized and only handle a limitedrange of products. )t some occasions department stores also buy throughindependent commercial agents. Kuite often they have their own buyers as wellas a few agents that usually work with them and who know their assortments. Ifa department store decides to import a particular giftware and handicrafts item, itplaces bulk rather than small orders.

Mail 7rder:


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9uelle chickedan A/ ( *o. in 1uerth. In addition, several 6erman mail ordercompanies operate in other :uropean countries, as well.

nternet ales:

6ermany will become market leader among the :% countries with regard to sales

over the Internet by the year (. It is anticipated that by then 6ermanelectronic sales, which are estimated to reach a volume of B billionworldwide in (, become second in the worldwide ranking after the %nited&tates and before 5apan. ) typical 6erman Internet user and a ma/or 6ermanmail-order publication is between (-E# years old, is highly educated and earnsmore money than the average 6erman consumer. This age group consists ofabout F. million 6ermans. &eventy percent of these consumers are male.

)lready today, the Internet is a ma/or sales channel for 6erman mail-orderhouses.

$elesho""ing:

KJ? and 9


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/-& 0nalysis of te Indian andicrafts industry

pportunities

3ising appreciation for

handicrafts by consumers in the

developed countries

2idespread novelty seeking

Harge discretionary income at

disposal of consumer from

developed countries

6rowth in search made by retail

chains in ma/or importing

countries for suitable products

and reliable suppliers.


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indian handicrafts industry-an analysis

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