Linkages between Trade, Development and Poverty Reduction ... · PDF fileLinkages between Trade, Development and Poverty Reduction Perception Survey Indian carpet industry has travelled

Linkages between Trade, Development and Poverty Reduction

Perception Survey

Carpet Industry of India: Weaving Growth of Rural Economy

1. Introduction

Human Development has been the primary objective behind all the man-made enterprises. In this integrated, globalised world humans are constantly striving for betterment of all-round quality life. To usher in balanced development however trade liberalisation is much sought after policy. It is believed that increased trade will eventually lead to poverty reduction by developing all sectors of the economy. Besides, trade liberalisation intensifies competition, which leads to the establishment of the most competitive, efficient producers in the world market. Carpets and floor coverings are categorised as a handicraft product. A handicraft is a hand-made product that is made using simple tools. Carpet manufacturing is a long process – right from the design stage till the time final product is delivered to the buyers. Lots of conceptual thought, patience, labour, money, and infrastructure are involved in the entire process. In fact, the carpet weaving industry in India is highly labour intensive and it forms a considerable part of the handicraft industry. It is an almost 100 percent export oriented industry, which provides livelihood to approximately 2.5 million artisans and earns significant amount of foreign exchange for the country. Export earnings from carpet industry have been increasing over the years especially from 1996 onwards and over US$621mn was earned by the industry during 2005-06 [see Table 3]. This paper examines the importance of carpet industry in Indian economy given its potential to generate large-scale employment opportunities and its export-orientation. The paper analyses the importance of carpet industry in Indian economy given its export potential and labour intensity. The paper begins by charting out the evolution of carpet industry in India followed by its current scenario, including the role of Carpet Export Promotion Council (CEPC) in forwarding the growth of this sector. Besides, the paper delves into the employment and poverty reduction issues related to this industry followed by the export story. In the end, it presents views from the stakeholders followed by conclusion. 2. Historical Background and Geographical spread in India Carpet industry provides the finest example of how a domestic industry can be transformed into a full-grown, mechanised industry. From the safe confines of home where the carpet has been weaved jointly by all the family members, this handicraft has found its way to industries where it is now produced on a large scale. Carpet weaving is one of the oldest industries in India. The history of carpet weaving in India dates back to the 16th century (1580 AD), when Mughal Emperor Akbar brought some Persian carpet weavers to his palace in Agra. Subsequently, Agra, Delhi, Lahore (now in Pakistan) became the prime production and training centres of Persian carpets.

The Mughals established the art of carpet weaving in the town of Akbarabad or Agra. During the Mutiny of 18571 the carpet weavers fled from Agra to a village called Madhosingh between Bhadohi and Mirzapur and started carpet weaving there on a very small scale. It is difficult to

1 1857- This year is famous for the Sepoy Mutiny, the first organised armed struggle by Indians against the East India Company.


Perception Survey

determine why the industry is carried on in these particular places. Its distribution often appears to be capricious. Many a times, a few weavers gathered in a particular locality through the initiative of some local business magnates or by pure accident and the industry has been handed down from father to son and has persisted despite all odds. Somewhere, the industry has been started either by released convicts themselves or with the help of their labour. Many a times emergence of new towns have attracted weavers like during British India the emergence of the town of Kanpur in Uttar Pradesh drew weavers from Agra, Aligarh 2. In the medieval times, the prisoners were taught the art of carpet weaving and they used to weave carpets especially during the reign of British in India.

Later, with the support from the then Maharaja of Benaras (Varanasi), the art of carpet weaving flourished in the Northern part of India.

Since then, this weaver’s product has been gaining importance not only in providing employment to people in rural areas but also in earning crucial foreign exchange later for Independent India. From the beginning, this industry has been dominated by the Muslims and was practised by them, besides agriculture. In yonder days, most of the households had a loom at its disposal whereby the family members could weave a carpet as and when they had spare time.

Carpet weaving is looked upon as an industry that helps India in earning thousands of dollars every year and preserving India’s rich cultural past in its diversified art form. The carpet industry is spread over some specific belts in India. The traditional carpet manufacturing regions are located in Mirzapur, Bhadohi, Agra – all in the state of Uttar Pradesh; Jaipur in the state of Rajasthan and in the Kashmir valley. In the recent times, other parts of India such as Gwalior in Madhya Pradesh, Panipat in Haryana are also coming up in producing carpets as the industry is spreading away from its traditional centres.

Each manufacturing region specialises in producing a certain kind of carpet. Kashmir specialises in weaving elegant hand-knotted silk and woollen carpets. Agra specialises in producing high quality hand-knotted Persian, Turkish carpets using natural dyes. Bhadohi-Mirzapur produces maximum number of carpets in India and produces carpets of all designs and quality. Majority of the carpet weavers are established in Bhadohi-Mirzapur area.

Bhadohi-Mirzapur, Panipat, Jaipur, Agra, Kashmir form the prime carpet manufacturing areas in India. This growth and the spread of the industry can be partly attributed to the caste and village system unique in India3. This industry is primarily rural in nature with minimal infrastructure requirements. Over time this industry had become more modernised though in essence it still remains the same. The urbanisation of this industry along with its export worthiness has seen the spread of this industry to Panipat where the weavers migrated from Bhadohi-Mirzapur.

The carpet weavers have metamorphosed into creators, weaving poetry of myriad designs, with every knot they tie. A carpet weaver’s skills are his own and the design is the creation of his mind, which is translated into beautiful art form with the help of wool and silk4. Indian carpet industry draws inspiration from countries as diverse as Persia, China, Afghanistan in weaving intricate pieces of high artistic value. The speciality of Indian carpets lies in its exquisite designs with natural and traditional motifs, subtle elegance, attractive colour combinations and excellent workmanship.

2 Prasad Kunwar Jagdish, 1907, Monograph on Carpet Making in the United Provinces, Chapter II 3 ibid 4 http://indiancarpets.com/introduction.htm]


Perception Survey

Indian carpet industry has travelled a long way since the time Akbar introduced carpet weaving in India. They are mainly exported to US, Canada, Spain, Turkey, Mexico, Australia, South Africa, Belgium, Holland, New Zealand, Denmark and many other European countries. The industry, vibrant since the mid-19th century, had to face rough weathers during the World Wars I & II and the Great Depression of the 1930’s due to recession and a slump in demand. Between 1947 and 1965, carpet exports ranged from Rs 32.2 million (US$0.78mn) to Rs 56.6 million (US$1.4mn). The world market of handmade carpets is estimated to be around US$2.4bn. The market share of major carpet producing countries is given in Figure 1:

Figure 1: % Share of World Markets in Handmade Carpets

Percentage Share of World Markets of

Handmade Carpets and other Floor

coverings

Iran , 27%

China, 26%India, 25%

Pakistan,

9%

Nepal, 3%

Turkey, 3%

Others, 7%

Iran

China

India

Pakistan

Nepal

Turkey

Others

Source: Carpet-e-Journal, International Annual Journal 2006

The Figure 1 shows that India commands second position in the world market of handmade carpets. India is preceded by China. China is posing a strong competition to India because of her highly efficient production techniques.

3. Present Day Carpet Industry

Carpets that decorate homes, offices travel a long distance – from the initial raw material silk/ wool stage to the final product that find its way to homes/offices. From the time wool is sheared from sheep the journey of carpet manufacturing begins. This section recounts the manufacturing process and the current situation of the carpet industry in India.

3.1 Raw Material

Carpets can be woven out easily from the natural fibres like wool, silk, cotton thereby making it a farmer’s home product. In earlier days, the wandering travellers from West Asia, especially Persia used to weave carpets while migrating from one place to another. In modern times, with the commercial touch coming onto this domestic industry production equations have changed drastically. Carpets are no more made by the wanderlust. Rather now the entire production process in India and elsewhere has been systematised to suit timely qualitative delivery to the buyer.


Perception Survey

India specialises in production of all types of carpets. But silk carpets need a lot of fine work aided with concerted effort. Seven to eight months can be spent in weaving one silk carpet, at times. Once completed, such silk carpets are of high quality and fetch high prices abroad. However, the majority of carpets exported from India currently are woollen carpets. In the carpet industry, manufacture/export of woollen carpets have gained prominence because of increased availability of raw material i.e. wool and also since they can be weaved and manufactured within a comparatively shorter time scale.

The fine qualities of wool for weaving carpets are imported from New Zealand, Australia, Morocco and various other countries. Wool is imported because India does not produce quality wool for carpet weaving. Also, the quantity of wool produced in India is sufficient only to cater to 8-9 percent of the carpet industry’s demand. Given these conditions the major chunk of domestic demand for wool is imported from New Zealand. The imported wool has better shine and length than the Indian wool and is also cheaper than the Indian variety [Perception from the carpet manufacturers].

The imported wool industry forms a very important subsidiary industry of the carpet sector. Most of the wool finds its way to Bikaner (Rajasthan) where the wool manufacturers are based. From Bikaner, wool is transported to the respective carpet manufacturing destinations like Bhadohi-Mirzapur, Panipat, Agra, Kashmir. Bikaner has developed as an important wool-processing destination because of the sheep population. The presence of shepherds and the wool importers in Bikaner with the support of efficient transport system ensures timely delivery of wool required in the carpet manufacturing zones. The state of Rajasthan grows coarse carpet grade wool because the climatic condition does not provide for producing finer variety of wool with grass being copper deficient.

Dyes form another important ingredient in the carpet weaving process and are also one of the prime support industries for carpet weaving. Before the introduction of chemical dyes in the second half of 19th century, only natural dyes were used which were extracted from indigo plant, cochineal insects, fruit, wild rose and other indigenous products to produce the vibrant shades of red, blue, green. Modern day has seen the use of chemical dyes for colouring of wool. Nevertheless in recent times there is an increasing demand and also a trend to use vegetable dyes for colouring the wool. Agra is famous for using natural dyes in carpet production.

Once the wool is imported it is sent to the dyeing plants for dyeing. In carpet industry, the wool providers supply different colours of wool as per requirement of the manufacturer. Wool can be dyed in various colours like green, blue, maroon or the natural colour of wool is maintained. There are various dyeing processes but primarily two main dyeing processes are in use – power driven dyeing mills and the traditional way of dyeing where the wool is soaked in colour and steamed for long hours.

Some carpet manufacturers/exporters have their own dying plants. Once the wool is procured from the supplier, the manufacturer either gives the contract for dyeing to someone else or gets it dyed from his own plant. An average dyeing plant can employ up to 100 people. The employment is on the contractual basis and varies from season to season depending on the export demand. Usually, medium scale exporters own around 2-3 such dyeing plants. Both the dyeing and wool industry are backward linkages industry that provides employment to rural, unskilled people.

The dyed wool in the form of yarn is rolled into balls to be used for weaving. The wool is rolled into balls by women folk and on an average a medium sized carpet manufacturer with a yearly turnover of Rs 80-90 million (US$1.95-2.2mn) can employ around 15-20 women for rolling wool yarn into balls. However, since carpet industry is primarily a handicraft industry many a time wool is taken by weavers to their villages where their women roll the wool into balls. It becomes difficult to estimate, in this scenario, the employment generation capability of this industry. But women folk


Perception Survey

constitutes majority of the labour force without being accounted for. This is largely because of the unorganised nature of this sector. The labour structure is mainly contractual in nature and export demand driven i.e. when export orders are high there is more labour requirement compared to the lean seasons (if any).

The weaving takes place on a loom, which is a wooden frame. The looms can be found at both the weaver’s home and in the industry that manufactures the carpets. The loom supports the warp on which the carpet is weaved. Warp threads are vertically wound around the loom parallel to each other, on the basis of type and size of the carpets. Simple tools like a knife for cutting the yarn as the knots are tied, a comb like instrument for packing down the wefts, and a pair of shears for trimming the yarn are required for carpet weaving. Nowadays, a tufting machine, which resembles a pair of large scissors, is used for weaving the carpets. The tufting machine costs around Rs 100 (US$2.45) that is provided by the manufacturers themselves. The weaver sits on a tool throughout the day and weaves the carpet from bottom upwards.

3.2 The Working of the Industry

Carpet Industry is one of the prime industries that is entirely demand-driven. Indian carpet exporters dependent on demand are now manufacturing woollen hand tufted carpets that has a ready demand abroad. It is surprising to learn that exporters do not manufacture for the domestic market. Demand at home is minimal because of the tropical climate of the country. Also, carpets are one of the high end furnishing items for a middle class Indian. For example, it was found during the survey that a medium quality, average sized [5 feet by 8 feet] carpet will cost around Rs 25,000-30,000 (US$612-734). The price of Indian made carpet thus becomes comparatively high for Indian households. Moreover, these days competition from machine-made Belgium carpets priced at around R 3000-4000 (US$73-98) caters to the demand at home.

Different exporters adopt different modes of promoting their products. Generally, they prefer to promote exports by visiting overseas customers frequently, exhibiting its products in International and Indian Carpet Fairs and approaching foreign customers with carpet photographs and export promotion catalogues. They regularly produce new samples for the global markets. A hand tufted average sized carpet of 5 feet by 8 feet can be woven within 2-3 days if two weavers are employed. Following the weaving, another two-three days go in washing and latexing (the rear of the carpet is smeared with rubber to increase the longevity and durability of the carpet). Once the carpets goes through these processes a final trimming of the carpet’s surface is done to bring about the uniformity after which the carpet is ready to be packed and exported. The entire process ranges from 7-10 days depending upon the number of hands being employed. Usually, two labourers do washing and latexing respectively. For trimming an average sized carpet, one or two persons can be employed.

Once the carpet is packed, it is loaded on to trucks for its destinations overseas. Usually, the Mumbai port is used for exporting. Sometimes, to meet urgent orders exporters send across their goods by air also, in such case New Delhi airport is used for transit. The transport costs go up when air transport is availed; hence it is only used in emergency or when delay in delivery occurs because of some management/production glitches. The exporters have negligible grievance on customs proceedings. They report that delay in exports because of customs and other bureaucratic procedures are at a minimum.


Perception Survey

4. Carpet Export Promotion Council

The Carpet Export Promotion Council (CEPC) was set up by the Government of India in 1982 to promote the exports of hand-knotted carpets and floor coverings. CEPC advises the government on carpet export promotional measures and helps the exporters by bringing their problems to the attention of the government. It identifies potential markets; conducts promotional fairs and buyer-seller meet; conducts exhibitions for display of Indian carpets in and outside India. It also provides financial assistance to new exporters for enabling their participation in the fairs abroad. CEPC is headquartered in New Delhi with its representative offices in the major carpet producing centres. It informs the exporters through its regularly updated website about any change in the government policy with respect to duty drawback schemes and the likes for the benefit of the exporter. The exporters are the members of CEPC, which helps them in availing the export promotional measures undertaken by it.

4.1 What exporters say about CEPC?

i) CEPC Export Figures do not reflect the true picture

During the survey, many exporters said that the official export figures are exaggerated. The carpet industry is under recession for the last two years. But CEPC figure shows no decline. Since the exporters are not experiencing any improvement in the carpet volumes and value hence they cannot support the increased export figures quoted by CEPC. On the other hand no exporter reveals his export figure, was stated by certain stakeholders. Everybody is reluctant in this respect. Also there is a lack of authenticated data in this industry. The crux of the issue is that the figures reported by CEPC were not acceptable to the exporters. The exporters were of the opinion that if the government gets the correct figures, which will show a declining trend, then it will come forward with support schemes for the carpet industry. Exporters should provide correct figures so that the government will consider their case. This was the opinion of CEPC officials. Moreover, these figures should be shown state wise and product wise for analysing the demand trend i.e. demand for which product is higher. ii) CEPC Delegates have their own interest

Generally, most of the members of the CEPC delegation are only interested in promoting their own business interests in the visiting countries. In this respect the field perception was that the representatives from CEPC should have genuine interest for the welfare and promotion of the carpet industry as a whole. They should be able to take the open world market opportunities for facilitating maximum gain for the carpet industry. iii) CEPC must be fair on fairs

Merely sending delegation to the buying countries would serve no purpose. It must ensure stands in all carpet fairs. It should also allow even small exporters to participate in them with new quality and varieties at nominal stall rent. In this context, Market Development Assistance Scheme of Ministry of Commerce and Industry, Government of India and CEPC’s own fund could make up the balance. CEPC should be more active in promoting Indian carpet exports. It should make available promptly all the facts regarding various carpet fairs organised anywhere in the world. Details about the participating exporters, visiting buyers, quantum of business generated, products exhibited, special range of products needed in that country, should be incorporated in such reports.


Perception Survey

Box 1: Anecdotal Incidence

One of the exporter narrated that he did not have good experience with CEPC, which is the nodal agency for Export Promotion of Indian handmade carpets and druggets. He explained that recently he attended a carpet export promotion fair in Sydney organised by CEPC but did not found any promotional activity in favour of Indian carpet exporters during/after this fair. One of the exporters in Bhadohi described the mismanagement within CEPC. He narrated that his firm invested considerable amount of money in fees for booking stall in one of the international carpet fair abroad and it was CEPC’s responsibility to deliver the products en mass. But unfortunately CEPC could not get the products delivered to its destination and carpets/floor covering did not reach the stall till the day of the fair. It was a great disappointment for all the participating exporters, as they could not showcase their manufactures without the carpets! Source: As narrated to authors during their visit to Bhadohi

4.2 What CEPC says

i) The production figures value and quantity wise are taken from the exporters themselves. CEPC officials stated that production figures show an increasing trend in Jaipur and Panipat though there is a declining trend in production from Bhadohi. Size wise, Bhadohi accounts for 75 percent of the total production with 25 percent being contributed by Panipat, Jaipur, Agra, Gwalior.

ii) There is a shortage of funds within CEPC. There is no financial support from the

government for working of CEPC, which has to generate its own revenues. Annually, Rs 1.8-2.0 million (US$44,052-48,947) are generated by CEPC from membership fees. Carpet industry does not get any substantial support from either the central government or the state government was the general refrain from CEPC officials despite the export industry status that carpet industry enjoys.

iii) CEPC has taken up the initiative to establish warehouses in US and other countries for

focused selling. Government gives capital support to CEPC for establishment of such warehouses. CEPC is trying to take new initiatives for marketing of Indian carpets. The CEPC officials were of the view that Indian products lack proper marketing. There has to be aggressive marketing strategy. CEPC is arranging to display carpets rejected by importers with a nominal fee charged from the exporter.

iv) As part of promotional measures, CEPC has Market Development Assistance (MDA)

scheme, for exporters who give their stalls with CEPC in carpet fairs. CEPC gives Rs 0.15 million (US$3,671) as MDA to exporters whose total turnover is less than Rs 15 million (US$3.6mn).

v) CEPC arranges workshops with bank officials and exporters to discuss about probable

problems in banking operations and find ways to ease them for exporters benefit. Such workshops are organised 3-4 times in a year.


Perception Survey

Box 2: Child Labour

Carpet Industry is haunted with frequent labour problems. The one, which makes it wary of is the issue of child labour. In the mid-1980s, there was this movement against carpet exporters that they are using child labour. Situation has changed drastically since then. As we saw in our visits to different carpet manufacturing units in Panipat and Bhadohi, there were these labels of “ No Child Labour” pasted outside the manufacturing unit. Carpet weaving is primarily a family art, where the weaving is taught since childhood just as any other art form. Contrary to some prevalent myths, children are not employed as weavers either because they have nimble fingers or because they are paid less than adults. Children are employed because their parents are teaching them skills which are perfected only after a considerable period of time and which are not as easily performed by children.

[Source: Indian Carpets, CEPC]

Exporter’s common refrain was that if son or daughter of any labourer came to deliver meals or for any errand purpose in the workplace, the labour inspectors used to harass the exporters on the pretext of using child labour. In fact, most of the manufacturers are guarded against the presence of children in the premises. The scourge of labour inspectors and child labour is deeply ingrained within the mind of the carpet exporters. The labour inspectors used to come and charge two-three carpets sometimes as bribe for only himself and sometimes for family, relative/friend. The exporters have no choice but to keep the labour inspectors happy in order to maintain the exporting licence and avoid other bureaucratic hassles. [Field perceptions]

Box 3: Dismal Infrastructure in Bhadohi

Bhadohi can easily claim to be the home of some of the richest carpet exporters in India. Despite this, there are no proper roadways to and from the city. The road leading to Bhadohi from the state highway is rickety and gives the traveller a nice bumpy ride into the carpet city of India.

Electricity supply is on an average for 6-7 hours a day, though most of the time low voltage prevails. Situation worsens in the summer season. In the evening hours, the town is engulfed in darkness, and light comes from either lanterns or low-voltage bulbs or the car headlights. But as soon as one steps into the exporter’s mansion, the scene changes: the high-pitched generators ensure continuous electricity supply in the exporters’ mansions. Apart from road, electricity, water supply is also irregular. People have wells or deep tube wells for water supply. Though there are ponds and other water bodies near Bhadohi, the chemicals used in dyeing pollutes the water. The State Government is not taking any active role in improving the infrastructural facilities in this major export-earning city.

Carpet Production needs uninterrupted power supply, and the generators provide this power. One of the exporters engaged in this business for the last 40 years, lamented the misuse of human and financial resources because of the government’s inefficiency in providing uninterrupted power supply to Bhadohi. The story is as follows:


Perception Survey

On an average, a generator runs for 14-16 hours daily. A medium-sized exporter with two-three weaving mills and one or two dyeing plants needs to install a generator per unit. This brings the number of generators to five or six on an average. The cost of running the generator comes to 80 rupees per hour (inclusive of all costs, maintenance etc.). Therefore, per hour the cost multiplies to about Rs 320-400(US$7-9) (approx) for four or five generators that are installed. On an average the monthly expenditure on generators accounts for a lakh of rupees (approx) given the above. The dismal state of electricity is not new; poor electricity supply has been existent for quite a few years, adding to the distress of the people and exporters alike. Living without electricity has become fate of these exporters of Bhadohi who make a substantial contribution to India’s export revenues.

However, Panipat has a better power situation than those in Bhadohi. This can be partly attributed to the close proximity that Panipat has with the national capital New Delhi. The government approved Bhadohi as a special economic zone (SEZ) in the Exim Policy 2002-07. However, any development as expected in an SEZ is still far off.

(Field perceptions)

5. Employment Scenario / Structure

Carpet Industry is a skill-driven, labour-intensive industry. In India, it is dependent entirely on the shoulders of labour community. All the activities starting from the processing of wool till the loading on the ship is labour dependent.

Currently, the foreign buyer is at the top of the ladder. During 1970-80, exporters ruled over the carpet industry and were able to supply products of high quality to the world market. But with subsequent liberalisation all over the world and stiff competition from countries like China, Pakistan the buyers are now ruling over the industry. Since the demand is generated from the buyer, the exporters are dependent on them for their survival. The exporters in turn pass on the required demand to the manufacturer. In certain cases manufacturers are also exporters. Exporters-cum-manufacturers have been more common in Bhadohi than in Panipat. In Panipat, big exporters give their work to other carpet manufacturers. The factors behind this cannot be discerned distinctively, nevertheless an entire overview of this working is explained in the section below.

Bhadohi since long has been the prime location of carpet manufacturing. This art form has been transferred over generations from father to son and so on. Even today the work in Bhadohi speaks of the high quality output and is a pleasure to buy just for the sheer beauty of the work. Since the exporters are deep-rooted in producing high quality works, they manufacture carpets as well, to avoid any production lapse. However, such a lapse is not common, but carpets form an integral part of life within the Bhadohi populace.

Commercialisation of carpet manufacturing has not yet come to Bhadohi as was seen in Panipat. Panipat is an industrial area, where the exporters are absolute professionals. To avoid any manufacturing hassle, they distribute the supply order to a number of carpet manufacturers who deliver their work as per schedule. The exporter then exports the same. However, there are also exporters-cum-manufacturers in Panipat also. In Panipat, quality of work is quite stereotypical. More emphasis is given on quantity than on quality. This is because buyers demand more numbers at cheaper rates. Hence, the manufacturers design simple carpets that can be manufactured in larger quantity than the ones with intricate designs.

In Bhadohi, though the exporters and manufacturers are the sole owners of the enterprise the onus of carpet weaving is delegated to the labour contractor. The manufacturing unit is owned by the exporter who supplies wool etc., to the labour contractor. The labour contractor in turn hires the


Perception Survey

weavers responsible for carpet weaving. In this kind of arrangement, if a labourer gets paid Rs 100 (US$2.17) on a single day, then Rs 10 is passed on to the labourer contractor as a commission from the owner. The agreement for hiring of labours is made between the exporter and the labour contractor. An average labour contractor can make up to Rs 10,000 (US$246) a month (Bhadohi rate) and in Panipat, a contractor may earn up to Rs 25,000 (US$617) a month. Considering the cost of living in these carpet belts, most of the earning is saved. Many a times a weaver by his sheer determination can rise to the level of the labour contractor. The weavers come from rural India and are usually agricultural casual labourer. The labour contractor is responsible to look after the welfare of the workers. Separate living quarters are provided by the exporters/manufacturers for outside labour where the labourer makes his own arrangement of food and other living necessities. Many a times the exporter/manufacturer insists the hired staff for opening up an insurance policy or to enter into a government approved saving scheme. An interesting aspect in this field was there were almost no female weavers. Of course women folk were employed in the yarn stage where wool yarn is rolled into balls, but in the factories that were visited did not have female weavers.

A medium sized manufacturing unit can produce up to 100,000 square metre of carpet a month. The mill can employ 400-500 weavers spread over the entire manufacturing unit. This employment is apart from the people employed in other subsidiary industries of dyeing, washing. Weavers and all other employees are on a contractual basis. Permanent employees are people in administration and the security guards. Even the designers are recruited on a contractual basis. This is mainly because carpet production is a skill-driven and currently demand driven industry. On an average, a carpet weaver can earn Rs 100-150 (US$2.46-3.70) per day. However, the work also depends upon the number of hours a labourer can put in, and if someone works for more than eight hours he gets paid more. In fact, this particular feature of carpet industry is seen by the rural populace as a means to earn quick money during the agricultural lean season.

We learnt from the carpet weavers that they could earn Rs 3000-4000 (US$74-98) per month in carpet manufacturing units. The weavers are from rural India with little or no education. They come to weave carpets during the lean agricultural season and save up to Rs 2500 (US$61) a month that they send it back to their villages. Many a times these rural folk come to join carpet industry to earn quick bucks to meet their financial requirement at home. This temporary inclination of their stay in the carpet belts is facilitated by the contractual nature of the job. Usually, most of the weavers work for three-four months before going back to their home during harvest season or any festivities. At home they spend two-three months and then when again financially strained they find their way back to the carpet belts. Sometimes of course they go to other agriculturally strong states of Punjab, Haryana to earn a few more thousands before returning to their villages. The labour scenario in the carpet industry is a very good study of migration to industrial belts by the rural populace for increased income. However, had there been regular employment structure in the villages they would not have migrated to the carpet belts, as was opined by the weavers. This migration is driven by the lean season in agriculture and the structural uncertainty within Indian agriculture.

5.1 Employment supportive

A manufacturer-cum-exporter explained the potential that this industry has in providing employment to rural poor people. He gave a rough figure of number of people who are engaged at different stages in the making of ‘one’ carpet in the industry.

On an average, one tufted carpet goes through approximately 30-35 pairs of hand from the time order for a carpet is placed to an exporter. It would take 7-10 days to finish a tufted carpet of five


Perception Survey

inch by eight-inch size and of medium quality. Now a days, there is a heavy demand for low-quality tufted carpet than the high-quality hand knotted carpet. The profit margins are going down because of low price the carpets are fetching in the international markets. These days the gross profit of an exporter is 10-15 percent. Table 1 gives a detailed break up of number of labour required for an average sized tufted carpet.

Table 1: Number of labourers involved in various production stages (Hand tufted

carpet)

Production Stage Number of Labours

Daily Wage

(other than were mentioned)

Map/Designing of carpet (Design + Colour)

2 Rs 250-300 (US$6-7)

Contracted for making a carpet- Labour Contractor

1 Rs 8000-10000 (US$ 197-246) per month

Weaver 2 Rs 100-150

Washing 2 Rs 150

Latexing 2-4 Rs 30

Clipping/Trimming 2 Rs 125

Binding 3 Rs 32

Clothing at the back 2 Rs 20

Finishing 2 Rs 40

Role Packing etc. 2 Rs 10

Note: The wage earned is by one person for a five by eight foot, medium quality hand tufted

carpet

Apart from these labour expenses, the manufacturer has to bear electricity expense (carpet industry needs uninterrupted electricity supply especially in the night), transport expenses and other production costs. The wages for a designer increases on the level of available skill set. There was a common response from weavers, labourers, manufacturers that the daily wage rate in the carpet industry has gone up in the recent times. In the early days, wage rates were at a much lower level but now with carpet weaving spreading across India and alternative agricultural occupations such as harvesting of wheat and other economic activities giving a high wage to labourers, the wage rate in carpet industry has also gone up.

5.2 Importance/Role of the Carpet Industry in Poverty Reduction

The carpet industry provides job opportunities to the rural artisans and other poor sections of society. Along with providing direct employment to more than 2.5 million artisans as of now with a total of more than Rs 2000 million (US$49.3mn) export business, it also gives indirect employment to several thousands people who work with raw material and other sectors connected with carpet


Perception Survey

industry such as the transport sector which forms an important backbone for sustenance of this sector. It is difficult to completely assess the number of people employed in this sector as this sector has backward linkages and support industries. The Indian hand-made carpet industry is an ideal industry for the economy because of the following reasons:

• It is highly labour intensive, providing employment to two million artisans and their families.

• It is hundred percent export oriented and earns foreign exchange of the value of approximately Rs 24.3 billion (US$ 600mn) per annum.

• It is a rural based cottage industry, providing gainful employment to the artisans in their own dwellings.

• With no minimum educational requirements, it provides immense employment opportunities to the vast rural uneducated population.

• India creates a huge value addition, as wages constitute a large part of the cost of the carpet.

• The actual production of carpets can be started by a loom owner at a very low capital investment, as the cost of installing a new loom in the loom-owner’s home is low at Rs 5000 (US$123)5.

India has around 25 percent share of the world market for handmade carpets and floor coverings. Handmade carpets constitute approximately four percent of the total floor covering market worldwide and the share of Indian handmade floor coverings is only one percent of the total world market. In this situation India’s carpet exports can be doubled if it increases its share in the world floor coverings market by only one per cent6. The CEPC is launching an action plan to double the exports of Indian carpets during the next five years, i.e. up to the year 2010 and then to double the exports again in the next five years, i.e. from the year 2011 to the year 2015. This will lead to increase in employment and it is hoped that by the year 2015 more than five million people will be employed in the carpet industry in India. These objectives of the CEPC also coincide with the objectives of the Foreign Trade Policy, which are as follows: i) to double India’s percentage share of global trade within the next five year; and ii) to act as an effective instrument of economic growth by giving a thrust to employment

generation particularly in the rural areas7. Given the informal nature of carpet industry getting a correct picture of number of people employed in carpet industry is difficult. It is practiced as a family art besides agriculture as the primary occupation. Women besides working in the field, also take up weaving of carpet in spare time. In and around Bhadohi, Panipat, Jaipur, Kashmir there are villages where carpet is weaved in almost every family. This work is seen more as a family tradition than as a source of income. Table 2 shows the targets that the council has set up for the carpet exports in terms of increase in exports as well as employment generation:

5 Agrawal Gopi Nath, 2006, Carpet-e-World, Indian Carpet Industry- Prospects for Growth, pg 16-17 6 ibid 7 ibid


Perception Survey

Table 2: Future Employment and Export Target

Year Employment (Million) Exports (in US$ billion

2005 2.00 0.60

2010 3.25 1.20

2015 5.00 2.40

Source: Carpet-e-world, 2006 The impact of carpet industry on poverty reduction in rural India is difficult to estimate. This can be attributed to a certain mindset rural people have and also the informal nature of this industry. Undoubtedly, for a man/woman who wants to improve his/her economic condition, carpet industry gives ample chance. However, mostly rural people would like to go back to the not-so-profitable subsistence agriculture that they have been practicing for ages. The land is of immense value to the rural folk who come to work temporarily in the carpet industry. Even when Indian agriculture goes through a lean phase (the non-harvest season) the small farmers who work as hired labourers or as contract workers, will not leave their farming to earn and get skilled in the carpet industry. Since wages are dependent on the work a worker does, the more the work, the greater the wages. It was found that the weaver would not like to do more work. This can be partly blamed on the monotony of the work involved and partly the lassitude on the weaver’s part. Table 3 outlines the wages earned depending on the skills. However, wages differ from employer to employer.

Table 3: Wage distribution at different skill levels

Labour type Wage Earned (approx.)

Unskilled Rs 2360 per month

Semi-Skilled Rs 2470 per month

Skilled Rs 2620 per month

Source: Field Visit

India being a labour-intensive country it is difficult to increase the wage beyond a certain level. Since labour is cheap in rural India, and if a labourer asks for a higher wage than what the work will provide, a needy labourer who does not negotiate much can easily replace him. However, it was found that many a times especially during labour shortage season i.e. during wedding season or harvesting time in agriculture, weavers are brought in at a higher wage through undercutting from some other weaving plant. The major reason why a high daily wage cannot be fixed for workers is because this is a demand-driven industry. During a lean period with less work it is difficult to keep a weaver at a higher fixed wage. Hence, the contractual, time driven payment structure of this job exists.


Perception Survey

As has been said that it is difficult to estimate the poverty reduction impact of this industry, one fact can be ascertained that this industry is seen by villagers as easy job provider in times of need and one can earn a fair amount over a period of three-four months to tide over financial difficulties. Since a labourer never starts working without advance, his initial financial needs are taken care of. This very uncertain nature poses a problem for the manufacturer/exporter, which is discussed in details in section 7.4.

6. The Export Story

Table 4 shows the export statistics for some of the major years from 1996-97 of Handmade Carpets and Other Floor Coverings vis-à-vis Handicrafts exports and India’s total exports:

Table 4: Export Performance

Year

Total Value of

Carpet Exports

In US$ million)

[A]

Total Value of

Handicraft

Exports

(in US$ million)

[B]

Total Value of Exports

(in US$ million) [C]

1996-97 446.41 5665 33470

1998-99 478.68 1177 33218

2000-01 512.03 1116 44560

2002-03 532.96 1186 52719

2004-05 591.40 936 80540

2005-06 621.34 642* 52284*

Source: Column [A] - http://indiancarpets.com/information.htm [CEPC ‘s official website]

Column [B], [C] - Economic Survey 2000-01, 2003-04, 2005-06, Government of India

* April-October 2005

As can be seen from the table, the carpet exports has been increasing over the years. It is difficult to say how far this increase is because of trade liberalisation. However, because of increased trade across borders, more and more players are coming up in the world carpet markets and Indian producers have realised that they have to be competitive and deliver the best for sustenance. As was gathered from the field trips the exporters expressed that the export market has gone down in the recent years though the export figures show increase in exports. In 1970s India was one of the major players in the world carpet market. Now, India is facing stiff competition from China on quantity and from Iran and Pakistan on quality. Indian carpets can be of high quality but because of demand of low quality, high quantity goods, Indian carpet quality is on a decline. At the same time, China’s manufacturing structure being largely different from India’s it surpasses us in volumes. In fact, China produces in bulk and since the carpets especially the hand-tufted varieties production is completely mechanised, India gets a beating in the volumes of hand-tufted production. Though the exporters in India are trying their best to compete the hands fail before machines. It was learnt that Chinese Government supports both in manufacturing and in research and development (R&D) to constantly innovate worker friendly machines that can weave and produce more carpets in a short time.


Perception Survey

On the other hand, when it comes to quality Persian carpets are at the top. Though both Iran and Pakistan produce high-quality carpets they cater to a niche market where Indian exporters cannot compete since Indian quality is not so superior. Indian exporters are bogged down in both quality and quantity terms. If they want to sell quality products, buyers ask for quantity and to keep up with the volume certain compromise on quality of design has to be made. Export markets have widened over the decades from the earlier favourites of Germany to the current market i.e. US and other Scandinavian countries. This market shift is a result of consumer preferences, emerging demand in new markets as globalisation takes on. This entire industry is based on demand. As was said by an exporter, Japan’s market is for Pakistani carpets. Japanese highly value carpets from Pakistan, hence making a foray in Japan is difficult. In order to provide technical support to the carpet industry the Government of India has set up Indian Institute of Carpet Technology (IICT), at Bhadohi. The Institute is established to promote, aid in development of carpets, floor coverings etc., by strategically planning, introducing, and executing various programmes aimed to enhance the quality and competitiveness of Indian carpets, floor covering and textiles. 7. Tale from the Ground-Experiences and Perceptions

The authors interviewed many carpet manufacturers, exporters, weavers and workers mainly from Bhadohi, Varanasi and Panipat carpet belt as well as stakeholders in New Delhi and Bhadohi. These carpet manufacturers represented small and medium scale carpet enterprises. A few big exporters were also interviewed in Bhadohi. Some of them were very experienced who progressed from the level of mere labour working in a carpet firm to becoming an international carpet exporter by their hard work, workmanship and good practice. Authors also visited Indian Institute of Carpet Technology (Bhadohi) and CEPC located in Bhadohi and New Delhi. This section elaborates the issues, which are the experiences of the people and their perceptions working in the carpet industry. It describes the various problems that the industry is facing domestically and internationally with the increase in global competition, and it also pronounces a clear-cut vision and notion that if effective measures are undertaken the carpet industry can do well and its scope can be widened. Mere lip service or expressing concerns would not help the industry. The need of the hour is effective action. 7.1 Changing businessmen priorities and its impact on business

In earlier times, say a decade ago, scenario in the carpet industry was different. Most of the businessman preferred ‘Programming’ mode of business (taking/placing orders at a set deal and then supplying carpets). There was not much room for deception and price distortion. But now most of the buyers are not interested in programming (placing orders in advance). They look for ready stock goods. The reason behind is that they are able to choose their preferred colours and designs. Moreover, it is comparatively easy to do ready stock business. Above all, prices can be easily manipulated and goods can be acquired at cheaper prices. So, most of the buyers have switched over to ready stock business.

7.2 Change in consumer priorities abroad


Perception Survey

Earlier people were aware of the aesthetic and cultural values of the oriental hand-knotted carpets and they were proud of possessing it. It was a prestigious item and they also knew about its antique value. These unique carpets evoked in them a kind of cultural elation and satisfaction. But that aesthetic sense is no more. The new generation’s thinking has undergone a radical change. They are not aware of cultural background and aesthetic qualities of hand knotted carpets. For them, it is just floor covering. They are not ready to spend substantial amount to buy carpets. So cheaper and low quality carpets with shorter life are preferred. The consumers of today go for other goods like television, computer and electronic items. The new generation are also spending on gold, silver, diamonds and other precious items. They only think in terms of utility and carpets are seen as a floor covering and not as an asset.

7.3 Unethical business practices and its chain effect

Some carpet importers are relentlessly misguiding and pressurising carpet exporters in India. The importers approach one or two small and inexperienced exporter and express the intention of purchase from them. When the price aspect is discussed the importer would deceive the unsuspecting small exporter that the big exporters have offered much cheaper rates. Then follows a sort of threatening. If the exporter does not sell his goods at cheaper rates, the importer will buy from the big exporter. There is false temptation also in this plan. If the exporter sells on cheaper rates, he can effectively negotiate with the big exporters and in the course of time drive down the price of the product and increase his margin. The poor small exporter falls in this trap and agrees to sell his goods in remarkably lesser rates. This practice does not end here. In most of such cases the shrewd importer will leave these small exporters with some excuse that ‘we will come later’ and approach the big exporter. The entire episode will be re-enacted at the big exporter’s premises. The importer will say that small exporters are ready to sell at cheaper prices and if big exporter will not reduce prices, purchases will be solely made from the small exporter. These pressure tactics succeed on many occasions and both the big and small exporters are being made victims thereof. This entire practice has led to lowering of prices of Indian carpets. This has happened because of the absence of a collective bonhomie within the exporter fraternity. Amongst the exporters there is a certain hide and seek game that goes on because exporters are afraid that the designs might be stolen and sold off somewhere. This mistrust between the competitors and lack of willingness to share information between peers has led carpet importers and the middlemen to cash in by lowering the market price. In this age of computers and Internet, which ensure free flow of information it is baseless to have such a guarded stance against opponents, since orders are placed on the Internet and everyone can have access to the exporters site; hence, everyone can see the product. In earlier days, this kind of product insecurity was prevalent but in globalisation era this insecurity is proving detrimental to the industry’s pricing. As a result of the above practice of driving down the prices, manufacturers/exporters in order to compensate the losses exporters will be forced to make compromises in quality – they will use cheap yarn and other cheap raw material. Ultimately, this will create bad image for Indian carpets as a whole.

7.4 Problem of advances to weavers/loom owners

While placing orders with the contractors, weavers or loom owners for the weaving of carpets, the exporters have to pay a reasonable good sum as advances in the form of cash and/or raw materials along with the map of the carpet. It is a common practice prevailing in carpet belts. It may be all


Perception Survey

right considering the financial condition of weavers/loom owners. But what makes it a problem is that some weavers/loom owners try to cheat the exporters by selling the final product to somebody else. When exporters make enquiries, weavers or loom owners tell them that carpets are under production. Ultimately, when exporters find out the truth, a lot of unsavoury things happen like legal action, involvement of police, conflicts, unnecessary harassments etc. This also involves the theft of carpet designs. The exporters have to undertake difficult tasks to recover their products. Owing to such practice by the weavers/loom owners, the exporters have to suffer a lot of financial loss and are subject to severe mental tensions. They also might not be able to fulfil their commitment to their buyer. Sometimes, the buyers even cancel orders as exporters could not fulfill such commitments. This should be avoided at any cost. How can it be done? It was suggested that abolishing the practice of advance payment could not help this. Instead, weavers must be given advances but on humanitarian grounds. They have their kids whose marriage incurs big expenses. They have to build their houses. So they need money. Money they are able to get from weaving work only. So advances are indispensable. Equally indispensable is the need to ensure that the weaver does not cheat. It was suggested by an exporter that insurance companies could help exporters in this regard by taking reasonable service charges. In case of non-realisation of advances, insurance companies should reimburse it to the exporter. Insurance companies can recover such amounts with the help of government by treating such advances as government revenue.

7.5 Dishonouring orders by the clients

Some buyers play another unfair game also. Nowadays, the frequency of buyers dishonouring their orders has increased. After fixing prices and placing orders these importers do not accept the order at the time of shipment. At the last minute when the consignment reached port or is ready for shipment, a message comes from the buyer with a terse statement asking the exporter to put off shipment till further instruction. Then follows certain calculated steps from the buyer. After waiting for some time they start bargaining with the dispirited exporter whose entire fortune may be lying in godowns as unclaimed consignments. Buyers have some regular excuses to offer as reason for their attitude – like markets in their country is slow or bad, payments are not coming from the creditors, goods are not being lifted etc. The hapless exporters are left with only two options (both detrimental to the interest of the exporters): find alternative buyers; or give in to the unjustifiable demand of the original buyer at reduced prices. Actually, the real motive of the original buyer is to acquire goods at a lower price. Since other buyers are generally reluctant to buy such held up consignment, as those products may not be suitable to their taste or choice, the exporters have to accede to the demands of the original buyers. The buyers ask for discounts, which are sometime as high as 50 percent. Since majority of the buyers nowadays indulge in such dishonest and unprincipled activities, carpet exporters in India in general and Bhadohi in particular have to suffer huge losses.


Perception Survey

Box 4: Fear of the Exporters…

Why do the CEPC and the government not take necessary action against such unethical activities of the importers whosoever they are? Simply because the victims refuse to reveal the names of the wrongdoer. They fear that the carpet importers will victimise them and boycott them if they dare to do so. The exporters discuss the problem among themselves with deep concern. But when CEPC or any other authority asks them to submit details with specific names in writing, they refuse to do so. They fear that the carpet importers abroad would blacklist them. Thus this fear proves to be costly for not only the exporters but also the national exchequer. Source: Field perceptions

7.6 Child Labour: fighting with a bad image

Child Labour is no more a serious problem of the industry. Because of the consistent campaigning the exporters are now aware that engaging children in carpet manufacturing will cause the company to be blacklisted by the CEPC. So they avoid it. Now they are not taking any interest in training children in carpet craft. However, some practical people think differently and quoted examples of benefit of imparting training of carpet art to children. After learning carpet craft children can stand on their own when they grow up. As job opportunities were, and are rare they will be in a better position. They could start their own career and become self-supporting. Many of the established carpet exporters of today had begun their career early as a trainee in the field of weaving, washing, clipping, map drawing, and finishing when they were children. Nevertheless, the government of India, CEPC and the industry together have undertaken so many welfare schemes for the children in various carpet belts. As carpet manufacturers are unable to afford more wages, the weavers are deserting this skill and seeking green pastures elsewhere. Many children who were undergoing training in carpet weaving have already returned to their native places. And CEPC is stern in its effort to undo the bad name earned by the carpet industry due to the child labour issue. Frequent inspections have worked as a deterrent. The industry also does labelling, for example, Rugmark on carpets, which endorses that the carpet is made without engaging child labour. CEPC has established a labelling initiative, known as the ‘Kaleen’ label, to identify carpets woven on registered looms. The Kaleen label on a carpet is evidence of the commitment of the manufacturer/exporter of the carpet to avoid the use of illegal child labour and to assist the Indian weaver community through education, welfare, medical and vocational programmes.

7.7 Dubious role of the machine-made carpets8

Some of the exporters feel that the machine-made carpet makers are hand-in-glove in a well-planned bid to tarnish the image of the hand-knotted carpets from India. Actually, Indian carpet industry was growing up very fast, enjoying a high image among the importers and their consumers in foreign countries. Both the hand-knotted and hand-tufted carpets were attracting good demand. The hand-tufted carpets, which are cheaper and easy in handling, were attracting more and more buyer. Seeing this, machine-made carpet people thought that hand-knotted and hand-tufted carpets from India will conquer all the market and the machine-made carpets will have to bow out of the market. So they formulated a game plan. With the help of some equally vested interests such as

8 Perception from the interviews with the exporters, manufacturers


Perception Survey

some non-governmental organisations (NGOs) they started lobbying against Indian hand-knotted carpets.

7.8 Overall depression in global Markets

Exporters expressed that overall depression in global markets and cheap quality machine-made Belgian carpets are badly affecting Indian carpet exports. Another reason is tax imposed on import of Indian handmade woollen carpets in some countries like Turkey. It was emphatically recommended to the Indian Government to come forward and support carpet industry promptly by reintroducing different schemes of Passbook, Cash Incentive, Licence, etc. Also government should announce Income Tax Holidays for this industry since inputs are becoming costlier and consequently exporters are not being able to meet the international competition, especially from China, Pakistan and Iran. Desire was expressed that Market Development Assistance limit provided by government that has been reduced by more than 50 percent compared to earlier years, should again be reconstituted for purpose of participating in exhibitions abroad. It was suggested that the role of CEPC should be friendlier to small and medium exporter members.

7.9 Problems added by in-house issues

Carpet industry is being faced by an ongoing problem intentionally created by Provident Fund (PF) authorities, as was opined by almost every exporter. The PF authorities are creating problems in the Bhadohi-Mirzapur belt saying that all persons who are involved in manufacturing of carpets even at their home and are not salaried persons, do come under the purview of PF Act. In Indian handmade carpet industry, all exporters get their carpets made on contract basis, which is based on orders received from their overseas buyers and they all are manufactured in rural areas. No contractor is working for one exporter only or on monthly salary. Rather these contractors take order from various exporters and after an order is completed, if there is no repeat order, they take order from other exporters so that the weavers who are working under them could get work regularly for their livelihood. Since for last 4-5 years, this industry is passing through severe recession, many of the weavers have migrated to other areas in search of job for their livelihood. Therefore, PF is not at all applicable on those weavers who are not directly working with any particular exporter. Under above circumstances, the exporters demanded that the higher authorities of PF department should seriously and legitimately look into the matter for a justified action otherwise this cottage industry will be ruined and many youth belonging to rural areas will ultimately lose their jobs. 8. India in the Global Market

India was number one carpet exporter in the world during the 1990s. It has now lost its position to China and Iran and is now number three. This has happened because Indian carpets are no longer cost-competitive. Export of hand-knotted carpet segment has declined by more than 40 percent in last five years. The exporters commented that China could do better than India because of direct government support that they get both in R&D and other lines of carpet production. They have more advanced technology and tools. For example, China has power-run tufting machine which helps them to produce more finer carpets whereas in India this technology has still not arrived or perhaps it has just been introduced in Panipat recently. China’s tufting machine scissors do not wear for 1.5 years as compared to India’s tufting machine’s scissor which needs to be sharpened


Perception Survey

after every 3-4 days. There is no economy of scale in production, and marketing is pushing the costs higher in the competitive international market. Nevertheless, the exporters are hopeful for India’s carpet industry. Some exporters opined that Indian carpet industry would reign the world market in times to come. China’s labour was cheap five years back when it had integrated production house and was engaged in mass production. But because of increase in Chinese income in other sectors, labour has become expensive and they are not ready to do low paid jobs. Also, labour is shifting to different industry because of higher literacy level. Also, China cannot supply variety to the market with effective production cost. It does mass production in one pattern and buyer has to buy all in bulk whereas India can provide variety and produces quantity as per the buyer’s requirement. Some exporters said that China, like Belgium, is switching to machine-made carpets. Earlier Iran was the leader in hand-knotted carpets but when ban on their labour practices were imposed, production shifted to India. Today, India weaves the best of quality carpets, and the Iranian carpets are made in India and sold off around the world. Thus India needs to create her own brand in the world market. In Pakistan, the quality of their product is good but production is very expensive and they cannot supply much to the world market. Overall, there are good prospects for Indian carpet industry in times to come.

9. Prospects and Impacts of Carpet Industry on Women

Carpet weaving has proved an important weapon in fighting the problems of disguised unemployment. As mentioned earlier, most people in villages are engaged in agricultural activities. But such activities do not keep them busy the whole day through the year. They have enough free time. Villagers can work on carpet looms in their free time to supplement their income. More important is the fact that the carpet industry is becoming a big source of income for women too in the villages. In Indian tradition bound society, women are shy of coming out of their homes to work. This is the reason why women workers are reluctant to work in various industrial units being set up in the rural areas. But there is no such handicap in the case of carpet looms. Carpet weaving is done inside the home where looms are installed. An added advantage is that there is no pressure of fixed working hours. They work on the looms when they are free from the household chores. Hence, carpet weaving can become an important tool for fighting unemployment among rural women. Women working means more income for the family. There is a demand from the exporters to encourage female workers for carpet weaving through training and employment benefits. This would be able to solve the problems of scarcity of skilled weavers and unstable workforce prone to migration whenever there are better opportunities. However, at the same time, some exporters expressed that they prefer less women force in their factory because some women have small children and they bring them along to the factory. This gives wrong signal both to their foreign buyers visiting the factory as well as the carpet manufacturers. Also, women may be subject to unwanted harassment by government inspection authorities. The factory owners are never seen as one providing employment to the poor and allowing children to stay with mother. They also say that with increase in compliances pressure, they have to end up providing separate washrooms, rest room, and childcare room under the law to the women workers. It is not cost effective for them.


Perception Survey

The women work from home or they are largely employed in spinning mills to spin the wool yarn into balls on a spindle. Women were not seen to be weaving, however, when the weaver takes the wool home to weave then the womenfolk join in to weave as well.

Table 5: Indian Carpet Industry: An Overview

S. No. Strengths of the Indian carpet

industry

Threats and weaknesses Action plan of CEPC for

achieving a quantum jump in

carpet exports

1. It has a large diversified production base in the rural areas in several districts in Uttar Pradesh and in other parts of the country

Lack of Cost

Competitiveness:

• Withdrawal of export benefits and fluctuations in rates of international currencies favouring carpet exports from other competing countries of origin has made Indian carpets uncompetitive, cost-wise

Creating a strong Brand Image

for Indian Carpets: In order to create a very strong Brand Image of the Indian handmade carpet and floor-coverings in the developed markets such as US, EU and also in Japan, Australia, South Africa, etc., it is essential to create awareness and demand directly with the consumers in these countries. This can be achieved by the following:

• Launching a major and sustained publicity campaign to create awareness of Indian carpets by advertising in nationally circulated fashion and home décor magazines.

• Advertising in relevant trade magazines and publicity in local TV to create awareness amongst the importers and retailers of carpets.

• Holding of major exhibitions/Trade Fairs, Seminars/Workshops and Buyer-Seller-Meets in the Developed markets and also in the developing markets.

• Road shows and partnering with major retail chains for display and promotion of Indian carpets.

• Creation of a market intelligence related database to benefit exporters as well as buyer.


Perception Survey

• Creation of a world class website and portal for Indian carpets and Indian carpet exporter.

2. It has skilled manpower in abundance

Lack of infrastructure in

carpet weaving belts:

• Acute shortage of power. The largest carpet-weaving belt of Bhadohi-Mirzapur gets 2-6 hours a day power in the rural areas where the industry is located.

• Lack of proper telecommunication facilities, Internet connectivity, Broadband etc.

• Bad roads and poor hotel facilities

• Poor facilities for transportation of goods, customs clearance etc.

• Very high transaction cost as compared to other carpet exporting countries.

• Stigma attached to Indian carpets for use of child labour resulting from highly exaggerated negative publicity on the subject.

• Complete lack of a brand image for Indian carpets.

• Lack of awareness and knowledge of the intrinsic value of a handmade product amongst the consumers of handmade carpets in the buying countries. Also complete unawareness of the fact that India is one of the largest carpet manufacturing country.

• Archaic labour laws, forbidding in-factory weaving and production of carpets.

To make Indian carpets cost

competitive: It is essential to create conditions whereby Indian carpet exporters are cost-competitive with their counterparts in other countries of origin by-

• Improving the infrastructure in the carpet weaving belt mainly in respect of – Providing regular power and electricity; good telecommunication and Internet connectivity; Improving roads, transportation, hotels, etc.

• Introducing flexible labour laws for carpet weaving, if it is not possible to do so at the present time for all industries. The objective of this is to enable factory/shed weaving of carpets to create efficiencies necessary for cost reduction.

• Government Policy

support: The carpet industry needs changes in government policies to achieve the following: - Exemption of Income tax on

earnings of carpet exports as has been done in the case of exports of artistic wooden handicrafts.

- Making export finance available to carpet exporters at subsidised rate of interest considering the very prolonged cycle of carpet production.

- Reduction in other transaction costs.

3. There is no shortage of Raw material, whether indigenous or imported

Institutional and technical

support: There is an urgent need for creation of institutional and technological support for carpet


Perception Survey

production in the form of –

• World class design centres in the carpet belts.

• Providing warehousing facilities in EU and US at a subsidised cost.

• Strengthening the Indian Institute of Carpet Technology so that it can provide the industry the general standards for quality control and educate the exporters on various technical processes necessary for good carpet production.

4. It requires negligible capital investment to increase carpet weaving

- -

5. The greatest strength of Indian artisans and entrepreneurs is that they are versatile and can adapt themselves to meet the requirements of all world markets for handmade floor-coverings of all types, designs, colours, textures and weaves.

- -

Source: Carpet-e- world, Annual Journal 2006

10. More recommendations from the stakeholders

1. Indian hand-knotted carpets can achieve a great future if the real value, cultural and

aesthetic aspects of carpets are effectively and regularly publicised in the present buying countries and other countries where there is potential scope for Indian carpets. People should be made aware on various aspects of hand-knotted carpets. Its uniqueness, cultural heritage, nuances of manufacturing, history and royal patronage, qualitative aspects, durability and health utilities etc., should be publicised through media. The message should be clear and attractive.

2. They should be convinced that carpet is not just a consumer product – they should be made

aware that carpet is a piece of art created by the skilled and imaginative artisans and weavers. People do not hesitate to buy art pieces created by great painters and artists spending a lot of money because they know that they are spending on art. They proudly display such works on their walls. Hand-knotted carpets are also works of art and although the artisans may not be that much famous the craft is surely famous and it contains historical and ethnic value. The artisans have acquired the art from their forefathers whose great grandfathers might have received royal patronage. If these aspects are artistically conveyed to consumers all over the world, then more and more people will come forward to buy qualitative carpets from India. They will think that possessing a carpet being an art piece is not only a matter of pride but also is an asset.


Perception Survey

3. Creating new designs based on Indian culture, tradition and mythology should be

improved. 4. There should be prompt availability of working loans to needy units to help them start

manufacturing activities.

5. The manufacturers are fully dependent on Bikaner and Panipat for procuring quality wool, the basic raw material where they have to bear high transportation cost and loss of valuable time during transportation. The government should provide manufacturers at least one Governmental Wool Spinning Mill in Bhadohi area to make the process of wool procurement less costly and time effective. Due to such structural drawback India is unable to compete in the world market.

6. CEPC should make the best use of the media by releasing informative articles and

advertisements. Both the print and electronic media should be explored in this respect and attractive advertisements and other publicity material should be given to the media especially in the carpet buying countries. It should be remembered that media played an important role in tarnishing the image of Indian carpet industry as an exploiter of child labour earlier. Sensational and one-sided stories had been published. Such news items create an impact on the livelihoods of the small weavers and the producers. It is much needed to erase the bad image about the country. So CEPC should make efforts to befriend media and convey the message to the masses.

Conclusion

Carpet Industry is one of the best examples that utilises India’s advantage i.e. vast labour force. It is an industry that have transcended from the home to a separate manufacturing unit, from being a piece of art to being one of the important export industries in India. With some concerted effort by CEPC, government officials, the production and export problems of the manufacturers and exporters, can be addressed suitably. This industry provides alternative employment opportunities for the rural uneducated people. At the same time the product of the industry has a wide demand outside the country, helping the country to earn foreign exchange. Given the dyeing, wool processing industry associated with the carpet industry, the whole sector serves as a major employment avenue for the rural, uneducated, semi-skilled population. At the same time the industry helps to nurture the diversity of Indian culture through the design and craftsmanship. Majority of the poor and deprived are in rural and semi-urban areas. The carpet industry provides these economically and socially deprived people an alternate occupation apart from agriculture which is overburdened with labourers and low yields currently. The study was undertaken to examine the impacts of open world markets on the industry. To take the full benefits of export led growth strategy, this export-oriented industry should be given boost and suitable incentives to be able to be compete in the world market. This will promote sustainable growth in rural India. The paper is researched and written by Purnima Purohit and Prashmita Ghosh – Programme Officers, CUTS International. The views expressed are personal. The paper is based on the perception survey of the carpet industry. The field survey was mainly carried out in Bhadohi, Varanasi, Panipat, New Delhi. Interviews of different exporters, weavers, small carpet manufacturers, CEPC officials and other stakeholders in the carpet industry were taken. The authors are thankful to all the stakeholders, exporters, manufacturers, weavers for


Perception Survey

their kind and valued cooperation during the survey. The perception survey was undertaken under the project “Linkages between Trade, Development and Poverty Reduction” that is being implemented by CUTS CITEE. The project is being supported by MINBUZA, The Netherlands and DFID, UK. Any reproduction in full or part of this document is strictly prohibited without author’s prior permission.

References Agrawal Gopi Nath, 2006, Carpet-e-World, Vol.xxvii, Purvanchal Publications, Varanasi Agrawal Gopi Nath, 1998, Carpet-e-World, Vol.XX Bhattacharyya B., L.Sahoo (ed.) (1996), The Indian Carpet Industry: An Overview, in “The Indian Carpet Industry: Evolving Concerns, Prospects & Strategies”, Indian Institute of Foreign Trade, Global Business Press, New Delhi Economic Survey, 2000-01, Ministry of Finance, Government of India Economic Survey, 2003-04, Ministry of Finance, Government of India Economic Survey, 2005-06, Ministry of Finance, Government of India Indian Carpets, Carpet Export Promotion Council, India Prasad Kunwar Jagdish, 1907, Monograph on Carpet Making in the United Provinces, Chapter II

Websites

http://www.rugreview.com/orr.htm www.indiancarpets.com www.handicrafts.nic.in www.texmin.nic.in

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