Dissertation Report_Siddharth Misra

7/30/2019 Dissertation Report_Siddharth Misra

1/59

Page | 1

Research Project Report on

Indian Home Furnishings Exports to USA:

Current trends & Future Potential

Submitted By: Submitted to:

SiddharthMisra Prof. Upendra Kachru

FORE School of Management Faculty Guide

PGDM (IB) 2011-13

FORE SCHOOL OF MANAGEMENT

B-18, QUTAB INSTITUTIONAL AREANEW DELHI


2/59

Page | 2

CERTIFICATE

This is to certify that Mr. SiddharthMisra, Roll No. 053047has completed his research

projectand has submitted this project report entitledIndianExport of Home Furnishings to

USA, Current Scenario & Future Potentialtowards part fulfillment of the requirements for

the award of the Post Graduate Diploma in Management (FMG-19/IMG-4) 2010-2012. This

Report is the result of his own work and to the best of my knowledge no part of it has earlier

comprised any other report, monograph, dissertation or book. This project was carried out

under my overall supervision.

Date:

Place:

-----------------------------------

Prof. UpendraKachru


3/59

Page | 3

ContentsACKNOWLEDGEMENT ............................................................................................................................. 4

EXECUTIVE SUMMARY ............................................................................................................................ 5

OBJECTIVE OF STUDY .............................................................................................................................. 7

Chapter 1 - Introduction ..................................................................................................................... 8

Demand drivers ................................................................................................................................... 9

Chapter 2 Literature Review .......................................................................................................... 10

Chapter 3 - Research Methodology .................................................................................................. 23

3.1 - Universe of the Study............................................................................................................ 23

3.2 - Locale of the Study ............................................................................................................... 23

3.4 - Data Sources ......................................................................................................................... 24

Chapter 4 Analysis and Interpretation ........................................................................................... 25

Visit To EASTERN FASHIONS (INTL) .................................................................................................. 32

Chapter 5 Secondary Data Analysis ............................................................................................... 45

Textile Export Trend: India ............................................................................................................ 45

Export of all commodities Vis-a- Vis Textile (value in US $ million) .............................................. 47

Business Environment of USA ....................................................................................................... 48

Chapter 6 Findings and Conclusion ................................................................................................ 52

Limitations of the project.................................................................................................................. 53

Chapter 7 - Recommendations ......................................................................................................... 54

References ........................................................................................................................................ 56

Annexure A Interview Questionnaire ............................................................................................ 57


4/59

Page | 4

ACKNOWLEDGEMENT

The satiation and euphoria that accompany the successful completion of this project would be

incomplete without the mention of the people who made it possible. I take this opportunity toexpress my sincere gratitude to Prof. Upendra Kachru(FacultyQuantitative Techniques

and Operations, FORE School Of Management) who has been a constant support and guided

me in the report.

I would also like to thankMrs. Anjali Garg(owner of Eastern Fashions Intl.) for her

inspiration, valuable guidance, support, encouraging words, guidance and suggestions during

the entire project duration.

Siddharth Misra

IMG V

Roll No. : 053047


5/59

Page | 5

EXECUTIVE SUMMARYThe changes seen in the recent global market scenario and abolition of trade barriers has

created a great number of opportunities for bilateral or multilateral trade amongst the

countries. This primarily has helped the Export & Import business all around the world to

grow.The area of my research is to make comparative study on export of home furnishing

items to USA and to find out the market potential for the Home furnishing items in this

country. These home furnishing items are one of the categories of Textile export from India.

This is a growing business in the global market beside export of readymade garments which

still bags the maximum share in terms of export of textiles from India.

As this project concerns the export & import business, so here I have explored the market

potential for the Home Furnishing items in United States, which is the worlds largest textileimporter. Most of my project is based on the secondary data that was available in form of

data with the export companies, Export & Import articles available in various magazines,

Websites etc. Primary source of data collection were personal interaction with employees

and experts in the same business lines and also few owners of the buying houses in Delhi.

The home furnishing products can be broadly categorized into five categories, which include

- bedding, window dressings, bathroom textiles, cushions and covers, and table linen.

Household penetration levels are high, especially in the largest sectors bedding and

window dressings. While replacement due to wear and tear is not inevitably frequent, an

increased consumer interest in home interior products has stimulated buying in what is now

very much a fashion-led industry. The industry also benefits from the growing number of

households, a trend, which is expected to continue at an even faster rate in near future

With the change in the current global political scenario, it has become easier to trade with the

foreign countries. This gives a big boost to the Export & Import industries all over the world.

Textile export industries in India also marks a substantial growth during the past decades.

This project is all about the current trends of the Textile industries (Home Furnishing

products) in the global market, especially in the USA. As according to change in the global

market scenario the consumers perception is also changing, now a days foreign buyers

demand for complete package as finished product. Also many of our competing countries

have shorter lead time to USA and European Countries which are the major market for Indian

exporters. With the coming up of open trade policies between countries, the foreign buyers

also have an option of moving their business from country to country, where they find


6/59

Page | 6

products cheaper in price, cheaper export quotas but same quality though. Cheaper

transportation cost is also considered as major factor of conducting export. Therefore the

exporters have to be very careful whilechoosing the country where to export their goods to

and conscious and sensitive in determining the prices of products.


7/59

Page | 7

OBJECTIVE OF STUDY

The main Objectives of this research are to:

Carry out market analysis of the production and distribution of home textile

furnishings in India, geared to the US buyers interested in the Indian market.

Identify potential buyers of products/operators in India, interested in US fashion

products.

Identify the concrete forms of industrial cooperation, both with local firms of equal

size (small and micro enterprise) and market bracket (high range) and with suppliers

of raw materials (yarn, woven silk, cotton etc.).

Examine the various legal and political aspects in commercial matters (procedures for

opening a credit line in India, general rules on the custom clearance of goods, custom

duties and other payments, rules of certification).

Check the main features of competition and the increasing needs of the customers.


8/59

Page | 8

Chapter 1 - Introduction

The textile industry of India is one of the largest segments of the Indian economy and

accounts for over one fifth of the countrys industrial production. The winds of change have

transformed a traditional art to a modern industry, employing state of the art technology and

providing direct employment to millions of people and also being considered as the second

largest Industry providing so much of employment. This combination of traditional art and

contemporary design has produced a variety of yarn, fabric, home textiles and other textile

products sought after the world over. With over 9 million hectares under cotton cultivation

and an annual crop of around 3000 million kgs, India is amongst the world's largest reservoirs

of this popular fiber. In addition the 80 odd cotton varieties of different descriptions being

grown in India, enables the industry's produce almost every conceivable count and

construction of fabrics in a width of choice.

Theprocess of economic liberalization begun in the last 20 years has seen the industry

become globally competitive-not only in terms of price, but also in the quality of the product

manufactured. Modernization has not been restricted to the installation of sophisticated

processing machinery, wide width looms, etc, but also to the adaptation of quality systems

conforming to ISO 9000 standards. The recent jubilation created in the European markets on

Eco-friendly textiles has sent the Indian industry into a flurry of activity to adapt itself to

market requirements.

The Indian Textile Industry is both unique and complex but is a very important sector for the

Indian economy. Besides, it has a very important role to play at the countrys macro

economic level. Just to put things in perspective, the sector contributes to almost 14% of the

industrial production and about 35% of the gross export earnings. The sectors contribution

to the GDP stands at over 6% and 12% of world production of textile fibers and yarn is from

India. Due to all of the above, the growth of the industry has a bearing on the development ofthe economy, especially exports.

Indian textiles is an integrated sector, as the industry not only grows its own raw materials

(cotton, jute, silk and wool) but also processes the same into high value products like fabrics,

garments, items of home furnishings etc. India exports a large portion of its textile produce.

Our main competitors in the textile sector include countries like China, Bangladesh,

Indonesia, Sri Lanka and Pakistan. Like India, these countries too are cost-effective textile

producers due to the advantage of lower labor costs. The major markets for India have been


9/59

Page | 9

the US and the EU. UAE, Japan and Switzerland are also amongst the top non-quota export

destinations.

Major furnishings product category includes:

Furnishing fabrics :upholstery, curtain material, curtains, drapes, doorcurtains and

fabric blinds

Bedding :mattresses and pillows

Bed linen :sheets, pillowcases, blankets and quilts

Table linen : towels and washcloths

Other household textile items as shopping bags, laundry bags, shoe bags, covers for

clothes and/or Furniture, flags, mosquito nets and sunshades.

Demand drivers

The demand drivers of the Furnishing industry are similar to the Furniture industry and are

depicted in the following figure.


10/59

Page | 10

Chapter 2 Literature Review

One of the most researched topics in international marketing is the internationalization

process and, in particular, exporting (Dhanaraj and Beamish 2003; Leonidou, Katsikeas, and

Piercy 1998; Li and Cavusgil 1995; Nakata and Huang 2005). Despite the relatively large

number of exporting studies devoted to small and medium-sized enterprises (SMEs;

Leonidou, Katsikeas, and Piercy 1998), determining the appropriate level of export activities

for small firms exclusively has received little attention. Although the combination of SMEs

has been examined in prior researches, its suggested that it is reasonable to question whether

differences exist between small firms employing approximately 3550 employees and the

typical SME, which can have up to 500 employees. In particular, understanding the key

factors that lead to improved export performance is important for small firms whose goal is to

internationalize their operations.

Brouthers et al, in their paper titled Key Factors for Successful Export Performance for

small Firms (Journal of International Marketing, September 2009), show how much

internationalization is beneficial for small firms. If a small firm decides to export, how many

countries should it target? Although questions such as these have been examined extensively

for other types of firms, such as multinational enterprises (MNEs) and small and medium-

sized enterprises, there is scant research addressing these same questions for small firms

exclusively. Despite their size, many small firms still attempt to expand abroad as a means of

exploiting the unique knowledge they possess, potentially reducing costs by developing scale

economies and/or leveraging resources, following customers abroad, alleviating competitive

pressures at home, and/or acquiring new products or market knowledge.

The propensity to expand internationally is counterbalanced by the many risks involved in

internationalizing, such as little market power and the lack of financial and managerial

capabilities, information about foreign market opportunities, foreign market expertise, and

other resources compared with the traditional MNE. Thus, for a smaller firm, given its

comparatively limited resources and expertise, internationalization may be much riskier than

it is for an MNE.

Brouthers, Nakos, Hadjimarcou, and Brouthers employ the internationalization process (IP)

theory and the organizational learning (OL) theory to answer the following question: Given

the comparative limited resources and greater risks involved for small firms, after a small


11/59

Page | 11

firm decides to export, how international (multinational) should it become? Previous research

has shown that learning through stage internationalization is an essential element of

successful marketing strategies. Consequently, the authors draw on the IP model and

hypothesize that small firms may be better off following the classic IP model, expanding

slowly and incrementally and severely restricting the number of foreign markets they enter.

Furthermore, focusing on a few export markets enables a small firm to develop expertise in

those markets, build a strong distribution network, and manage its export activities

effectively, resulting in superior export performance.

Organizational learning theory leads to the second hypothesis: Small firms that export a

larger portion of their output tend to perform better; they have accumulated knowledge in

international markets, and as a result, they have developed a competitive advantage, which in

turn leads to better performance. Finally, drawing from both OL theory and the IP model, the

study suggests that small firms that (1) export to fewer markets but (2) concentrate their sales

activities in export markets have even better performance than firms that pursue either

strategy in isolation. Unlike previous research, which has focused on larger, publicly held

companies, the authors test the hypotheses on a sample of Greek and Caribbean privately

held firms with 100 or fewer employees.

The findings show that (1) emphasizing international sales while (2) restricting exports to a

few foreign markets results in superior perceived export performance for the sample of small

firms from Greece and several Caribbean countries. Notably, post hoc analysis shows that the

greater a small firms concentration of export sales in a single foreign market, the greater is

its export performance.

The research methodology followed for this research includes Primary Research on Greek

and Caribbean firms and applied ttest to compare the two descriptive variables.

The limitations of this research are that scope of the study is limited to Greece and English

speaking Caribbean nations only. Also since the study uses cross-sectional sample, it is

possible that the behavior of firms changes over time.

Two alternative diversification strategiesthe geographic diversification of export sales and

key market concentrationare extensively discussed in management, strategy,

entrepreneurship, and economics literature. However, no conclusive evidence currently exists


12/59

Page | 12

as to how either of these strategies affects the performance of international sales. This paper

contributes to a better understanding of geographic diversification as a key dimension of the

internationalization process for small and medium-sized enterprises (SMEs). In it, we analyze

a comprehensive database of Polish exporters over a 3-year period to better understand the

geographic diversification patterns of exporters. Based on this analysis, six propositions

emerged from the export patterns examined and two viable strategies for exporting SMEs are

identified:

(1) Concentrating on a single market and

(2) A balanced approach aimed at targeting a small number of key markets, combined with a

strategy of penetrating other markets.

The scope of geographic diversification of the international operations of firms is discussed

in management, strategy, entrepreneurship, and economics literature as a key dimension of

the internationalization process. It has been argued that by increasing the number of export

markets (i.e., adding to the breadth of internationalization), a companys internationalization

effort becomes more intense and deepens, a process that is typically measured by foreign

sales/total sales ratio (FSTS, Thomas and Eden 2004; Pangarkar 2008). Other dimensions of

internationalization intensity include level of international production (Thomas and Eden

2004; Jones and Coviello 2005) and product diversification (Chang 2007).

Previously, the research community has focused on the diversification of international

activities of large multinational enterprises (MNE; Hitt et al. 1994, 1997); however, FDI

operations, being the center of the MNE research, are beyond the scope of our analysis. In

this paper, we focus on the diversification of international activities of small and medium-

sized companies (SMEs).

These SMEs are characterized by:

Constraints in international operations due to limited financial, marketing and managerial

resources (i.e., a weak infrastructure for conducting international operations); and,

A predominant use of exporting (the simplest form of outward internationalization).


13/59

Page | 13

Once a smaller firm engages in exporting, it can either focus on key markets or widely

diversify its export sales (Crick et al. 2000; Katsikea et al. 2005), yet no conclusive evidence

has been offered concerning how these export expansion strategies affect the growth of

international sales. Moreover, little evidence exists concerning existing trends in geographic

diversification. This incomplete knowledge base impedes the advancement of research that

could lead to meaningful recommendations for managers and policy makers. Therefore, the

purpose of our study is to remedy this shortcoming by exploring patterns of geographic

diversification of export sales.

More specifically, the aims of this study are twofold:

1. Identify the prevalence of the use by Polish domestic SMEs of two basic export expansionstrategies identified in the literature, namely concentration and spreading, and

2. Identify alternative ambidexterity strategies that attempt to pursue both concentration and

spreading.

The apparent trade-off between a wider geographic diversification and a concentration on key

destination markets has been the subject of substantial debate, particularly in export

management literature. This trade-off is called the concentration versus spreading debate

(Crick et al. 2000; Katsikea et al. 2005), and research into it began in the late 1970s and early

1980s (e.g., Piercy 1981). It gained importance in the 1990s in relation to export performance

whereupon the main conclusion was that performance results from export strategy, which

includes the selection of foreign markets (Leonidou et al. 2010). Although the findings are

inconclusive, they stress the rationale behind pursuing one approach versus another and relay

that various situational factors play an important role in choice (Piercy 1982). Leonidou et al.

(2002) based their meta-analysis on 36 studies specifically addressing market strategy, andfound that the concentration strategy, which is dependent on the performance measure used,

is positively related to export performance. In addition, a significant positive influence was

found while using sales-based indicators. Weak associations were observed for the remaining

measures, particularly the export market share. Similarly, market-spreading strategies were

shown to be positively related to export performance, with the exception of export sales

volume. The association was particularly strong when the share of exports in total sales was

used as a performance indicator.


14/59

Page | 14

Researchers have found long-term advantages of this spreading strategy when used to

improve the effectiveness of sales management and personal selling activities. Spreading

accelerates the process of accumulating diversified knowledge and experience, thus

improving the competencies of the staff involved in international operations. They

incorporated the dispersion of foreign sales across a number of regions by measuring the

degree of internationalization (DOI) and found that higher DOI (combining both export

intensity and geographic dispersion) led to better performance of SMEs.

Lu and Beamish(2006) investigated the impact of internationalization on a firms growth

and financial performance and pointed out that the learning-from-exporting effect is a factor

that facilitates building the strong capabilities that enable the implementation of

comprehensive strategies (thereby contributing to an accelerated growth). Lages et al. (2006)

stated that the learning process accelerates with the number and diversity of foreign markets

served, particularly when previous experiences in some of the export markets have been

positive. An additional advantage occurs because a broadly diversified market scope

stabilizes a companys earnings due to uncorrelated economic cycles in the different

countries to which they export.

Widespread geographic diversification, however, is not without risksparticularly for SMEs.

Researchers have argued that SMEs are not smaller versions of larger companies, but are

confronted with constraints in the internationalization process relevant to the pace of

geographic diversification. For example, SMEs do not regularly scan the environment for

information on a global scale and therefore frequently overlook opportunities in international

markets. SMEs also lack managerial resources that need to be assigned to the opening of new

markets. Once a smaller firm establishes a presence in overseas markets, a limitation to

further expansion stems from a scarcity of managerial capacity and the lack of material

infrastructure necessary for effective communication and coordination of a global network.

At this stage, a proactive and well-planned geographic expansion strategy is recommended

for SMEs.

Because SMEs often initiate exports early on without prior planning, these orders have been

identified in a number of empirical studies as having a high impact on managements

decision to expand internationally. The proactive adaptation and creative replication of

operating patterns from early markets to new ones also depends on the fungibility and


15/59

Page | 15

scalability of the resources, which generally reflects the firms preparedness to

internationalize

In the spreading versus concentrating strategy choice, the negative correlation between the

number of markets served and the percentage of markets that are significant seems evident:

the larger the proportion of goods that are channeled to a smaller number of key export

markets, the less remains for sale to other markets. In reality, exporters may pursue both

strategies simultaneously in that exports can be highly concentrated (e.g., 80% of exports go

to one destination) and simultaneously serve a large number of markets (the remaining 20%

are thinly spread among a large number of distant markets).

After compiling the results of studies on international marketing strategies, it was determinedthat the apparent successes of some new international ventures are derived from the firms

effective implementation of both concentration and geographic strategy. Such ventures tend

to employ a market-spreading strategy because they actively search (globally) for

opportunities, while simultaneously keeping much of the firms resources committed to

priority markets. Firms which internationalize rapidly enter a larger number of foreign

markets while at the same time relying heavily on key export destinationsmore so than

firms that follow less aggressive internationalization strategies. A more refined formulation

of the simultaneous use of concentration and spreading strategies is to adopt the concept of

ambidexterity originally applied to international operations of large multinational enterprises.

Ambidexterity addresses the need to simultaneously pursue exploratory strategies in new

markets while continuing to exploit opportunities in established markets. In summary, despite

a generally positive reputation of the diversification strategy for SMEs that was influenced

largely by a similar debate for large MNEs, this type of strategy involves significant

untenable risks, particularly for smaller firms with financial and human resource constraints

and limited operational experience

In the incremental process model, exporters gradually gain experience while adding new

export markets as they move from close proximity markets to ones that are more distant. In

this model, the use of a large number of export markets, of which a significant number are

distant, reflects a high degree of exporting maturity when the firm is engaged in an

internationalization process. Thus, the number of markets and the size of the firm correlate

positively with the (experiential) age of the firm. In turn, it was pointed out that not only the

number of export markets matters but also whether the company expands its international


16/59

Page | 16

operations within a relatively homogeneous cluster of countries (related geographic

diversification) or across heterogeneous geographic regions (unrelated geographic

diversification).

The importance of geographic diversification has received considerable attention in the

extant literature over last two decades and is identified as a crucial characteristic of born

global (BG) firms. Oviatt and McDougall (1994) define (p. 49) an international new venture

(INV) as a business organization that from inception seeks to derive significant competitive

advantage from the use of resources and the sale of outputs in multiple countries. Later on,

the scope of geographic diversification was viewed as a key differentiating factor between

INVs and those labeled as born global or truly born global firms. Luostarinen and

Gabrielsson (2004) illustrated that a born global firm must have business activities in at least

two geographic regions. Similarly, Kuivalainen et al. (2007) distinguished truly born global

firms as those that operate in multiple and distant markets.

Following the methodology adopted in the debate on global versus regional characteristics of

top MNEs Rugman and Verbeke (2004), puts forward a formalized categorization of BGs

and INVs (the latter of which only needs to internationalize within three years from its

formation, with export sales directed to at least three overseas markets that represent at least

30% of total sales). To qualify as a BG, the firm must derive at least 10% of its turnover from

each of three broadly defined triad markets: North America, Western Europe, and Southeast

Asia.

Early internationalizing firms do not possess established operating routines geared toward

domestic markets and are quicker to absorb knowledge about dealing in foreign markets and

subsequently change their processes to accommodate the needs of these markets more

efficiently (Autio et al. 2000). This, in turn, facilitates a rapid expansion of international

activities. As a result, early internationalization (precocity), combined with the rapidity of the

internationalization process (Zucchella et al. 2007), has a positive impact on the level of

geographic diversification (McNaughton 2003).

Larimos(2006) study of Finnish SMEs challenges the link between the extraordinary

performance and the strategy of rapid international diversification. Although the evidence

generally confirms a relationship between the two, the findings primarily apply to traditional

exporters and less to firms with intensive export operations (labeled by the author as truly


17/59

Page | 17

born internationals). SMEs included in the latter category concentrate their export operations

on key destinations and performed better by achieving a higher FSTS ratio.

The literature reports different results from the combined effects of differences in language,

culture, consumer behavior, and the legal framework of early internationalizing firms. These

differences are termed psychic distance or country distance, and they impede the flow of

information and cause uncertainty in foreign markets (Jones and Coviello 2005). In view of

the financial, marketing, knowledge, and managerial constraints faced by young and small

firms, what matters is not just the number of markets served, but also the effect of expanding

operations beyond the home region into one or more host regions. Taking into account recent

progress in regional integration [e.g., the European Union (EU) or NAFTA], the removal of

barriers in the flow of goods, services, and capital has a positive impact on the regional

operations of smaller firms. This is because the differences between conducting domestic and

regional export sales in terms of operations often become negligibleespecially when sales

within the EU single market are no longer considered exports but intracommunity trade.

On the other hand, some authors emphasize benefits of operating outside of the home region.

A number of factors underlie a direct, positive relationship between extended international

diversification and performance (Zahra et al. 2000). Entering new markets enables a company

to exploit market opportunities and gain access to an extended business network. The

learning-from-exporting argument advanced by Salomon and Shaver (2005) is particularly

relevant hereexporters receive valuable marketing and technological knowledge while

operating in a diversified international environment. Similarly, Preece et al. (1999) articulate

a difference between going international and going global.

In contrast to the above, Beleska-Spasova and Glaister (2010) hypothesized that smaller

exporters, unlike large MNEs, are less able to absorb the costs associated with international

expansion. As a result, those exporters concentrating on the home region often perform better

than those trading predominantly in the other triad regions, although this hypothesis is not

supported by empirical research. Similarly, mixed results were drawn from a large panel

study on German nonexporters (those exporting to the eurozone and those exporting outside

the eurozone, Verardi and Wagner 2010). After eliminating sample outliers, the differences in

the productivity premia between these categories of firms proved to be insignificant.


18/59

Page | 18

While regional integration facilitated the international operations of smaller firms within

regional country groupings, other developments paved the way for their global expansion

thereby resulting in substantial progress in lowering or dismantling international trade

barriers. The key driver was the information and communication technology (ICT) revolution

that resulted in better communication and decreased cost of international operations (Ruzzier

et al. 2006). Modern ICT enabled the implementation of new business models and facilitated

participation of smaller firms in global production and service networks (i.e., by means of

subcontracting, offshoring). With the use of ICT, global niche markets opened up to SMEs

and small batch production became economically viable. Finally, the integration of the

former communist countries in the market system and the emergence of new players like

China, India, or Brazil created new, more diversified environments for conducting business

internationally.

Hultman, Katsikeas, and Robson investigates how international experience shapes

managerial judgment in the formation of effective export promotion strategies. Their study

focuses on understanding how managerial decisions concerning export duration, scope, and

intensity determine the circumstances under which promotion strategy adaptation or

standardization connect to export performance.

Drawing from contingency theory and the organizational learning perspective, Hultman,

Katsikeas, and Robson develop and test a model of the effects of different forms of

international experienceduration, scope, and intensityon the performance outcomes of

promotion adaptation. Based on data from 336 Swedish export ventures, the results show that

the promotion adaptationperformance link differs depending on the type of experience

residing within the exporting firm. Specifically, promotion adaptation relates positively to

performance when duration is short and intensity low and vice versa. It appears that

inexperienced exporters in terms of duration and intensity can reduce their liability of

foreignness and benefit from adapting their promotional strategies in accordance with the

procedures prevailing in their new host markets, as opposed to following a standardized

approach. By contrast, more experienced exporters seem able to capitalize on their enhanced

international knowledge and likely to find standardized promotional strategies more

conducive to enhanced performance.

Surprisingly, the study results did not indicate that experience in terms of scope interacted

with promotion adaptation in the same manner. The authors further investigated this issue and


19/59

Page | 19

found that there is a more complex underlying relationship between promotion adaptation and

scope of exporting that includes sociocultural differences between markets. Additional

analysis revealed that the relationship of promotion adaptation and scope with performance is

conditioned by the learning barrier posed by large sociocultural distances between home and

export markets. High promotion adaptation relates positively to export performance when

scope is large, but only in cases when sociocultural distance is high rather than low.

Hultman, Katsikeas, and Robson conclude that management decisions taken on international

promotion strategies have profound implications for the performance of the affected

exporters. Adaptation or standardization can be powerful strategies in this era of

globalization, but it is important the promotion strategy decisions are aligned with relevant

experiential contexts. Moreover, managers are recommended to avoid broad-brush

conceptualizations of international experience since the study findings imply that firms have

fine-grained experience profiles that may lead to different levels of learning about markets

and export performance.

Jena (Indian exports in Globalization Times: an analysis of Global-Local dynamics, 2010)

refers to why the growing integration of societies, economies and cultures around the world,

has become one of the most hotly-debated topics and key area of research among the policy

makers, statesmen, corporate, politicians and academia respectively over the past few years.

As India opens up her doors to the multinationals during the era of economic reform and

liberalized market, putting an end to the license raj, it is not only the economies that often

meet in the global market sphere, but also the people and cultures, which bring a new

dimension to the multi-cultural setting. What we can see in present day modern world is that

there is always a cross-cultural interaction between the local and global and the much

discussed global village, is now not just a possibility but a reality despite many

contradictions. Talking about Indian Handicrafts, which constitutes a significant segment of

the decentralized sector of the economy, its export has reached at a commendable height.

Indian folk art and crafts which are the integral parts of the Indian culture and tradition are in

high demand among the western consumers. Again, foreign fashion industry borrows a great

deal from Indian appliqud motifs Saree designs, an ethnic Indian wear. Needless to say, the

borders between the world cultures are now eroding out and becoming irrelevant, therefore

prompting to call it as a de - territorialized world.


20/59

Page | 20

But notwithstanding, the real concern for many of us is that, can the local really meet with

the global by truly sustaining its localness? The biggest problem in the Indian Handicraft

industry is that the village craftsmen remain concerned that with free trade and mass

production, hand-made products from other parts of the world will out price the products of

their hard labour. So the basic question that arises, is whether globalization a panacea for

every human problems that the mother earth is facing now. With a brief theoretical

understanding, this paper looks at globalizations increasing impact on Indian handicrafts and

crafts persons. It tries to assess how far globalization serves as an opportunity and threat to

the artisans. The role of the government in promoting the crafts and protecting the artists is

also discussed.

The epitome of India lies in its art and craft, which symbolizes the culture, tradition and

societal values. Indian artifact industry is one of the oldest & biggest sectors of India. It

provides employment to millions of artisans, among whom a large number of women and

people belonging to the weaker section of the society are involved, and have accepted it as a

profession. India is one of the major supplier of Artifacts to the world Markets. Mohan et

al(The Plight of Indian Articraft Sector in an Era of Global Economic Crisis, 2012) attempts

to comprehend the essence of the art which hold the Indian artifact in high esteem and

demand in the international market. The paper primarily focuses on the immenseopportunities that exist for the Indian artifact industry. It also pictures the impact of global

recession on the industry and personnel associated with the crafts. The paper tries to

contemplate upon the hurdles which the manufacturers and exporters are facing. In addition it

would also plunge into the details of skilled labour migration and the plight of Indian Artifact

Industry in its present state. The paper is divided into five sections as under:

The first section speaks of the Indian Artifact industry and its recognition in the Global

market. The plight of the growth in Artifact sector has become a thing of deep concern due to

the recessionary trend witnessed in the global economy over the past few years.. The second

section deals with the research methods adopted to carry out the study and the various

statistical tools used to analyse the data (both Primary and Secondary data). It would also

detail the scope of the study undertaken. The next section focuses on the Government

allocation of funds for the development and promotion of the handicrafts. The fourth section

is set to deal with the Socio-Economic problems being faced by the artisans and the plight of

skilled and semiskilled laborers- forcing migration to other sectors to maintain an equitablelivelihood option, enforced on them by the economic meltdown witnessed at the global level.


21/59

Page | 21

Concluding observations would form the last section, providing concrete information on the

Artifact and Skilled/Semi-skilled Artisans, and, the urgency, the sector demands to protract

the traditional value of Indian Society.

The Indian handicraft sector has been a concern, since the rate of migration from the

traditional arts has been constantly on the rise. The initiatives taken by the Government are

found to be bearing fruit with the evidence of increase in employment generation in the

sector. The effect of recession seems to have had a toll on the sector but, the insurance

scheme launched by the Government to counter the ill effect is found to be materializing by

building confidence in the mind of the artisans. The traditional craft of India has been in huge

demand in the third world and has been able to withstand the pressure of economic slowdown

even during hard times by showing a positive growth. Hence, there is a ray of hope,

indicating that further steps would bring more population to take up entrepreneurial ventures

in this sector which would lead to the survival of the endangered art of the country. The need

of the hour is to invest more in Research and Development, Skill Development and

promotional activities. A regulatory authority and a quality control section is an urgent

requirement to streamline the Indian Handicraft sector towards further growth and prosperity.

One of the major factors that were noticed was with regard to the daily wages:- When

approached directly, the wage mentioned was found to be very low i.e. in most cases, less

than Rs. 100, but, for the respondents whose names were provided by companies, the wages

was on an average Rs. 200.There is a great opportunity to develop the art of rug weaving

business, as majority of the population in the age group of 20 to 40 were willing to accept the

art, provided, the wage rate was modified to at least Rs. 150. Women were willing to take up

rug weaving business, if proper training programmes were imparted and their wage rate were

revised to at least Rs. 125.It may be noted that, the wages may not be attractive enough, when

compared to MNREGA. The major concern was a better livelihood, since, at a wage rate of

Rs.100 or Rs. 120 for 100 days in a year; it is practically not be possible to save any money

for the rest of the year in the current inflationary situation. The respondents felt that, a

continuous income though nominal, but, on a continuous basis were required for a sustainable

livelihood. Though, most of the persons were willing to migrate to other places for better

opportunity, but, would prefer to continue rug weaving if the wage structure was revised and

regularity of order was ensured.


22/59

Page | 22

The art was transferred from one generation to the next generation through family initiatives

and friends. In most of the cases, children had a chance to inherit the rug weaving art, as

their parents were not reluctant, provided proper training, competitive wages and consistent

orders were ensured. The populations were willing to continue as weavers. They only wished

that, a proper value chain be created, since, they felt that, the current intermediaries exploited

them. Further, it was also observed that the family members especially women, were

supportive in the weaving business, which stands to be a constructive sign. The only thing

required, is, to provide a conducive environment for bringing in more people in the ambit of

weaving.

There was a strong relationship between experience and daily wages, where, experience was

being considered as the major determinant of wage. It was also observed that there was a

relationship between no. of hours put in weaving and daily wages. The daily wages acted as a

determinant for no. of hours to be allocated for weaving while the age group of 21-40 has a

higher wage expectation. Also, Gender did not seem to have any relationship with daily

wages, but, mean values showing male are paid higher than female.

Experience and monthly income were found to be related to each other. It was found that the

monthly income was determined based on the number of years of experience in weaving.

Wage being a major concern, the population were willing to migrate to other places which

provided them better livelihood. It was also found that, most of those who had shunned

weaving hinted, financial reasons to be the major culprit for their quitting. The population

opined that, they were ready to continue weaving, provided, they received proper support

from the family, revision of the existing wage structure and wanted specialised training to be

imparted to them.

The global economic crisis, though, have been affecting the Indian Handicraft Sector, the

impact have been minimal, due to the high quality brought about by the dedication of the

artisans involved in the craft. The major culprit have been the poor return for the hard work

put up by the labourers, bringing in forced migration in the sector. The recession though,

presently showing negligible impact would be having an adverse and long lasting influence if

proper motivation is not induced among the artisans who are considered to be endangered and

would become extinct.


23/59

Page | 23

Chapter 3 - Research MethodologyThe previous chapter gave insights about the various studies that have been carried out which

are relevant to the study. This chapter focuses on the research methodology which refers to

the tools and methods used for obtaining information for the purpose of subject under study.

The methodology followed for the purpose of finding customers response is random sample

surveys. To solve any managerial problem that you face in the organization you need

relevant information. This relevant information has to meet test of sufficiency and accuracy

to be useful to solve the problem in hand. The information which is processed in form of

data refers to collection of numbers, letters, or symbols maintained or produced for the

management when required.

3.1 - Universe of the StudyTextile industry is one of the most booming industries in the world. Over the years,

particularly after the adoption of liberalization policies all over the world, the world textile

industry is growing very rapidly. The Asian countries have their respective dominance in the

production of textile all over the world. India being one of the fastest growing economies of

the world has been considered the potential global textile hub internationally. For this

research, the universe of the study considered is the various export houses in India exporting

textile (and in particular home furnishing goods) to USA and other countries.

3.2 - Locale of the Study

For the purpose of the research, the locale of the study has been narrowed down to the exporthouses located in Delhi NCR. The export houses contacted for the research are listed below:

Name of Export House

Angelina Gif and Premium Co.

Acacia Fashions Ltd.

Poddar International

Sunny Enterprises

Eastern Silk Industries Ltd.

AN Craft

United Alamgeer ExportsNeha Exports Ltd

Eastern Fashions International


24/59

Page | 24

3.4 - Data Sources

Primary data:

It represents those items that are collected for the first time and first hand. This data is the

raw material which may be combined, or structured in any form. The point to be noted here

is that the data is not statistically processed. Various sources include:

Inputs from the employees of export houses

Owner of the export house

Inputs from the people working in export houses of the same nature.

Secondary data:

This is also known as published data. Data which is not originally collected but rather

obtained from published sources and is normally statistically processed.

Majority of my project is based on the secondary data that I got through my visits to the

export house. Secondary source of data collection were

Data available within the company. Home Decor books and magazines

Export & Import books available in the library

Websites.

These were some of the sources through which up-to-date and relevant data has been

collected. It is also one of the best methods as provides economy in terms of time andmoney. After the data was collected it was screened and then used as per the requirement of

the project giving a great importance to the authenticity of its sources.


25/59

Page | 25

Chapter 4 Analysis and Interpretation

9 export houses (5 small scale, 3 medium scale and 1 large scale) were visited for the purpose

of getting the questionnaire filled up and data gathering. Following is the analysis of the

responses:

1. Products manufactured and exported

All the respondents in the sample manufactured and exported curtains as they have the

highest demand in the international market. Second highest manufacturers were observed to

be of table linens (80%). 70% respondents manufactured bed linen and toilet linen and

kitchen linen is manufactured and exported by 60% of the respondents. 40% of the sample

exported other products such as mattresses etc. and 30% export home furnishing articles.

2. Percentage change in export

The market for export of home furnishings is growing at a steady pace since past few years.

This is evident from the above response. Only 10% respondents said that their export volume

has decreased in past couple of years whereas 90% claimed of increasein export volumes.

0%

20%

40%

60%

80%

100%

120%

Bed Linen Kitchen

Linen

Toilet

Linen

Table

Linen

Curtains Home

Furnishing

Articles

Others

Products manufactured & exported

0%

20%

40%

60%

80%

100%

Increase Decrease

Change in export

volume

10%

Increase

10%

20%

Increase

40%30%

Increase

20%

>30%

Increase

20%

10%

Decreasr

e

10%


26/59

Page | 26

40% respondents claimed an increase of 30% or more and same number for 20% increase.

10% respondents said their export volume has increased by 10 %. It can be clearly seen that

the demand for export of home furnishings in constantly rising.

3. Factors influencing export of home furnishings from India

Factors Mean Value

Good raw material base 2

Skilled and cheap labour 1.8

Good Transport facility 4.5

Availability of water resource 5.4

Strong finance base 2.2

Experienced supplier based for

production services and intermediate

goods

3.1

Respondents were asked to rank these factors influencing export of home furnishings from

India. The lowest rank (1) being the most important factor and the highest rank (6) being the

least important factor. Mean scores of the responses were calculated to find out the

importance of factors influencing export of home furnishings. It can be seen that the two most

important factors in this respect are availability of skilled and cheap labor and good raw

material base in the country. Availability of water, though important in steps during

manufacturing, was given the least importance by the respondents.

4. Factors creating problems

Seven factors were identified and respondents were asked how much problem these factors

create in export of home furnishings respondents rated labor shortage, high yarn prices and

infrastructure facilities as low problem creating factors. Respondents also said that currency

exchange rate fluctuation and production costs also create problems but only till a limited

extent and economic slowdown and power cuts created more problems for them. It can besaid that factors like recession have a huge impact on exports of home furnishings.


27/59

Page | 27

5. Government Policies

A majority of respondents agreed that government schemes and policies have a positive

impact and help in facilitating the exports of home furnishings.

GOVERNMENT POLICIES

Duty Drawback- The Duty Drawback Scheme is administered by the Directorate of

Drawback, Ministry of Finance. Under Duty Drawback scheme, an exporter is entitled to

claim Indian Customs Duty paid on the imported goods and Central Excise Duty paid on

indigenous raw material or components.

To facilitate export of home decors government provides a duty drawback on net exportsvalue of 68 % subject to changes from time to time

Taxation Aspects:

Prior to year 2000 export sales of home furnishings in our country were 100% tax free but

however in the accounting year 2000 government of India introduced a tax slab for the export

income pertaining to the same which was as follows:

YEAR TAX FREE RATE TAXABLE RATE

2000 80% 20%

2001 60% 40%

2002 40% 60%

2003 20% 80%

2004Onwards - 100%

Presently Companies income is 100% taxable at 30% rate with 10% surcharge and 3%

education cess on it.


28/59

Page | 28

6. SWOT Analysis

Strengths

The strength of the Indian textile export industry is that availability of the raw material in the

home country at a cheaper price and also the cheap manufacturing cost (e.g. cheap labor cost,

transportation cost etc.). It is also to be noted that the United States home furnishing market

is presently one of the world's most important markets and the prospects for growth are very

good indeed. The disposable income of upper age group is at a high level, which spends the

most on the home. They buy larger and more expensive houses, carry out restructuring or

often buy a second home. The formation of new nuclear families among population's youth,

through matrimony and other types of long term relationships, (in spite of the fact that in the

last few years young people are staying at home for longer periods of time). Another

determining factor is the rate of single people due to separations and divorces among the

young which has brought about a greater demand for reduced living spaces. This things

really becomes a major strength for the home furnishing market n USA.

The main strengths for which exporters choose USA as a major exporting country are

Political and economic stability even though the country suffered from economicdownturn conditions which are expected to revive in the future

Shared history and culture

Strong underlying relationships between the US and the India.

Indian goods have traditionally enjoyed a good reputation for quality in the US

US manufacturers often source components overseas.

Wider market access through NAFTA.

Weakness

The main weakness of the Indian Textile export industry is that it is limited by the certain

export & import quotas. Also non availability of raw materials, powers may affect the Indian

Textile export industry.

Inflexible Indian Labor laws are the biggest weakness of Indian Textile Export

Industry (manufacturing units). Demand of too much of job security is no good for anindustry whose performance greatly depends on the performance of its labor force.


29/59

Page | 29

Lack of discipline amongst work force in the Indian Textile factories is the reason for

very low productivity and high cost of Indian Textiles. It also reduces the Quality of

the products as well.

Another hurdle in the path of growing textile exports from India is Artificial pricingof the Chinese Currency, which is giving undue advantage to the Chinese industry in

the Global Market. Hardening of the Indian Rupee against US$ has also seriously

affected and eroded the bottom-lines of textile and garment exporting companies.

Another challenge is shorter lead-time; several of our competing countries have

substantially shorter transit times to Europe and USA, which are our main markets.

Non availability of direct sailing vessels and excessive government holidays

(currently about 160 days a year including Saturday and Sunday's) also lead to a lot

higher transit times from Indian ports.

Expenditure is very seasonal (dominated by Christmas) in USA.

Opportunities

Home Textile export industry is not a very old and still an emerging business in the global

business environment with a high demand during spring and Christmas seasons. Various

quotas that have been removed in 2007 have given a very big boost to this Textile Export

industry. Also, various schemes taken by Indian government like TUFS (Technology Up

gradation Fund Scheme) have promoted the same.India as a developing economy today is

well prepared for competing and has already opened the sector for manufacture of garments

and made ups for large, modern and contemporary units. Availability of abundant and low

prices of cotton and low labor costs provides India with significant competitive advantage in

manufacture and export of cotton yarn, textiles and made ups.

Trade fairs organized by Various Trade promotion organizations (Govt. approved) also help

promoting the Textile products to importers of other countries which is creating a good

opportunity for this industry.

As USA is capturing the largest segment of import of Textiles in the world, so it creates a

great opportunity for the Indian exporters to explore various markets in this country. The

factor that determines the purchasing of home furnishing items is the amount of disposable

income available in USA. In any case the average amount spent on furniture purchases is tied

to income brackets, as income increases so does the purchasing power. The


30/59

Page | 30

increaseddisposable income in USA as compared to any other country of the world creates a

big market opportunity for the home furnishing items in here.

Threats

Threats for the Textile Export industry in India is mainly the competitors from Asia which is

providing the products at comparatively lower price than India, but the same quality. If we

see the Chineses textile industry large number of textile projects are being undertaken in.

China is also improving quality of the product. In the year 2004, China imported textile

machinery valued at US $ 4.3 billion which is up by 24.26% year on year. Out of this,

knitting and weaving machinery alone accounted for US $ 1.75 billion. With such a huge

machinery and production China becomes the major competitor for India in Asia region.

Global recessions are also a major threat for the Textile Export industry.

Recently the Antidumping is also becomes the major threat for the India Textile Industry.

7. Risk Analysis

Exporters expose themselves to various legal risks each time they export. These risks can be

grouped under five headings:

Home country risk - Here the exporter may run afoul of home country laws and regulations

directed at exporting. Such laws and regulations may include those relating to export

inspection, documentation, finance, charges, shipping, occupation, and the environment. An

example would be failure to comply with airline packaging requirements, or

misrepresentation of product, or export of a prohibited product or species.

Importing country risk - This includes all laws and regulations directed at controlling

imports and regulating international trade. Such laws include inspection, safety,

documentation, and payment of appropriate duties and charges. An example would be

misrepresentation of product.

Home Country Third-Party Risk - Here is the risk associate with statutory or common-law

claims brought by Australian claimants relating to such issues as injury caused by negligence,

misrepresentation, or unconscionability that may adhere to the transaction. An example here

would be where an employee was injured by a sharp edge or nail on a packing crate.


31/59

Page | 31

Importing Country Third-Party Risk - As above but relate to actions brought by overseas

claimants. An example would be an action brought by a company in Japan against an

Australian exporter for use of a Japanese registered trademark or brand name, or an outbreak

of illness in Japan due to contamination of Australian products during processing in

Australia.

International Trade Law Risk - Here are included factors such as appropriate jurisdiction,

processes for dispute resolution, and claims for damages imposed on domestic traders by

international courts. If a dispute arises that cannot be resolved by personal negotiation

between the parties, the resolution of the dispute will be according to the Convention. The

Convention will also apply for contracting parties whose countries are not parties to the

Convention if they elect to have the Convention apply to their transactions.


32/59

Page | 32

Visit To EASTERN FASHIONS (INTL)


33/59

Page | 33

BACKGROUND

Established in 1978 the company Eastern Fashions (Intl) is an export house of repute, based

in Delhi. Started as garment exporters today they are not only exporters but also a

manufacturer and area of expertise in Home Furnishings, Textiles, Garments, and

Handicrafts.

It is managed by a team of highly skilled professionals and designers from one of the best

fashion institute of India namely National Institute of Fashion Technology (NIFT) all

working together to ensure quality products. It has a wide product range to offer to its

clientele which includes: Quilts (Hand Quilts and Machine Quilts), Cushion Covers, Table

Covers, Place Mats, Pillow Covers, Bed Covers, Bed Spreads, Curtains, Accessories, Lamp

Shades (printed and embroidered) etc. Beside an exotic range of goods it also:

Specializes in various types of quilted and embroidered products made either by hand

or by machine. Firm is also capable of developing new styling using different

techniques and concepts. It has its own computer aided sewing, cutting, dyeing, and

embroidery machines They provide textiles dyed in vegetable and natural dyes which are non- allergic, non-

toxic, and non- hazardous

In terms of infrastructure Eastern Fashions (Intl) is well equipped to handle various types of

fabrics for furnishings and accessories with a built up area of 25000 Sq feet in Tughlakabad

area of New Delhi. The production capacity of the plant on an average is of 1000-1500

pieces per day. Sophisticated facilities not only include skilled designers, artisans, and

craftsmen but also in- house production unit operational by way of fine machinery.


34/59

Page | 34

ORGANIZATIONAL STRUCTURE

Eastern Fashions (Intl) is not only an export house but also a manufacturer of home

furnishings and other items like accessories etc which undergo a production process in the

following manner:

Selection ofFabric:

Producing a quality product begins from the selection of right raw materials and cotton yarns

with established spinning mills in India, also so that the product meets its buyers demand

criteria. Generally prior approval of the buyer is taken for the nature composition and count

of the yarn. Most desired yarn is generally in 30s and 40s count for making fabric.

Company selects and forwards the yarn to its approved composite weaving mills that are

using world class looms and knitting machines for making the fabric

Dyeing:

Eastern Fashions (Intl) has its own dyeing facility. The company ensures that only natural

and Azo free dyes are used. The dyers use open width continuous dyeing with

microprocessor controls and automatic systems to produce uniform results and defect free

fabrics.

Printing:

The computer aided cotton printing machines have increased the rate of printing with high

accuracy. Computers are used for creation of designs, automatic color separation, setting of

designs and repeats during the process of printing, matching colors etc. Fully controlled

color kitchens and automated color dispensing systems are used to produce defect free prints.

CUTTING UNITSAMPLING WAREHOUSE

PRODUCTION

FLOOR

FINISHING

FLOOR

PACKAGING

FLOOR


35/59

Page | 35

SamplingUnit:

Within Eastern Fashions (Intl) each sample is allocated a unique computer generated code

for flawless recall. The sampling unit forwards sample input details like yarn count,

composition of fabric, target dates etc. Customer suggestions are promptly attended to and

the finalized details are reconfirmed to the buyer. The sampling unit recommends various

options available to the buyer keeping in view the customers appeal, regional tastes and

preferences. Once everything has been finalized by the buyer, the approved samples are

retained at the sampling unit for ensuring strict conformity at the time of commercial

production.

Cutting Floor:

After sampling of the products, they are forwarded to the cutting floor. This process is

named as laying up the cut the cutting is done both manually and by the cutter which

follows the pattern outlined on the maker using a straight knife machine. After cutting of the

fabrics the next step is to bundle the cut pieces of same size together and sending them to

storage centre from where they are dispatched to production floor for sewing

COLOUR WISE SORTING OFFABRIC


36/59

Page | 36

Production Floor:

Here the bundled pieces undergo the sewing process. Eastern Fashions (Intl) uses power

driven sewing machines like Chain- Stitch machine, Lock- Stitch machine, Over- Lock

machine etc. Individuals are assigned jobs according to their ability and efficiency in this

department. The whole system is supervised by the line supervisors. The company is also

dealing in quilting, an art people are not really aware of is a French technique of putting

together pieces of finest fabric to attain styling.

CUTTING FABRIC AS PER MEASUREMENT

MACHINE STITCHING OF FABRICS


37/59

Page | 37

Finishing Unit:The whole system is monitored by a supervisor. There are people who are

employed at different levels to check the quality of the products coming from sewing unit.

Finishing is an important function carried in an organization to insure products are made in

the same way as desired by the clients and even if there are any deviations they can becorrected. The finishing operation is carried in the following manner:

INITIAL INSPECTION

SPOTTINGALTERATION

THREAD CUTTING

FULL IRONING

MEASUREMENT

FINAL CHECKING

THREAD CUTTINGSPOTTINGALTERATION

PRESSING

RE-FINAL INSPECTION


38/59

Page | 38

FINISHED QUILT ON THE WORK TABLE

WASHING AND DRYING OF FINISHED PRODUCT


39/59

Page | 39

IRONING OF THE FINISHED PRODUCT

PACKAGING OF PRODUCTS


40/59

Page | 40

Labeling Unit:

Along the production line, approved labels given by the buyers are attached to the product in

this department in order to identify the following

Manufacturers name

Fiber content in order of percentage use

Country of origin

Usage care instructions

Washing or cleaning instructions

READYING FOR DISPATCH


41/59

Page | 41

Packaging Unit:

The packaging unit is also supervised by a supervisor. The finally approved products from

the finishing department come here for packing. For different requirements different

packaging cartons are there. According to the buyers need and shipping capacity packaging

unit gives an order for the cartons. Cartons have a label on them with following things

inscribed like

Buyers Name

Corporations P.O No.

Item No.

Style

Size

Cartons Dimensions etc.

After the packaging is complete detailed internal inspection is undertaken by the Quality

Control Personnel in presence of buyers inspection agent as well and on complete approval

these goods are exported.


42/59

Page | 42

COMPANY AND ITS PRODUCT LINE

Eastern Fashions (Intl) caters mainly to European markets with few clients in USA. They

are dealing with some of the most prestigious clients establishing long lasting and benefiting

relationship with endless possibilities. Few of its esteemed clients are as follows:

Pomax, Belgium

Botex Design, UK

Kaszer International, Belgium

Coquecigrues, France

Wood & Scherer G.B.R, Germany

Elcorte Ingles, Spain

Blanc Dlvoire, France

Dunjour Al Autre, France

Orient Style, France

Provence Distribution, USA / France

TJ Maxx, USA

HOME Goods, USA

Taylor Linens, USA

N.H Diffusion

PomPomMaison, USA. Etc

Company provides its clients with an exclusive range of products in attractive colors and

designs by keeping a close eye on the international market trends and concepts so as to be in

pace with the global change. Beside this they also pay a great deal of attention to the quality

of their products for premium as well as regular customers, thereby ensuring use of best rawmaterial sourced from reliable sources all over the country. Dedicated team of its highly

trained designers perfectly understand the clientele needs and bring out exactly what is

needed. The product range is wide and impressive retaining their finish for years. The exotic

product range comprises of:

BED LINENS

Quilts

Bed Head Covers


43/59

Page | 43

Bed Skirts

Duvet Covers

Throws

Cushion Covers

TABLE LINENS

Table Mats / Place Mats

Table Covers

Table Runners

Napkins

KITCHEN LINENS

Aprons

Bread Baskets

Kitchen Mittens and Gloves

Tortilla Warmers

BABY RANGE

Baby Quilts

Baby Pillow Covers Mattress Covers

Sleeping Bags

Cot Skirts

Bottle Warmers

Bibs

ACCESSORIES RANGE

Photo Frames

Cosmetic Pouches

Lamp Shades

Jewelry Boxes

Scarves

Shawls

Stoles

Tie Backs


44/59

Page | 44

Thus from trendy to ethnic, casual to formals wide product range is available in here, made

keeping in mind the upcoming demand. The company constantly strives at providing the best

and that too at competitive prices.

MARKETING STRATEGIES

Eastern Fashions (Intl) marked its presence in the market mainly by participating in fares

and exhibitions and internet. TheExportPromotion Council of Handicrafts (EPCH)

organizes two exhibitions in an year:

First being held at end of January or first week of February and

Second exhibition is usually scheduled at the end of September or first week ofOctober

These exhibitions invite foreign buyers from all over the globe. Company actively

participates in these fares held twice a year.

For its Product Distribution company uses direct channels with no involvement of

intermediaries.

Eastern Fashions (Intl) provides its products to its buyers at comparative prices which is

determined by adding the cost of raw material to the manufacturing and overhead costs of the

company and adding a markup of nearly 2025%.


45/59

Page | 45

Chapter 5 Secondary Data Analysis

Textile Export Trend: India

EXPORTS OF PRINCIPAL TEXTILE COMMODITIES - US DOLLARS(US $ million)

Commodity / Year 2005-06 2006-07 2007-08 2008-09 2009-10

A Textile and textile products 12791.5 13555.3 16402.1 17373.2 19015.1

1 Cotton yarn, fabrics, 3394.8 3450.1 3944.8 4218.7 4511.2

made-up, etc.

2 Natural silk yarn,fabrics,

379.8 405.0 432.6 441.9 381.9

made-up, etc., incl. silk

waste

3 Man made yarn,

fabrics,

1761.2 1962.7 1957.8 2204.4 2858.8

made-up, etc.

4 Manmade staple fiber 60.1 88.0 81.8 196.4 276.9

5 Woolen yarn, fabrics, 58.3 69.8 85.3 85.2 93.1

made-up, etc.

6 Readymade garments 6231.4 6561.4 8617.7 8892.3 9491.8

7 Jute & jutemanufactures

242.4 276.3 296.3 260.4 322.9

8 Coir & coirmanufactures

77.8 105.6 133.3 145.9 158.9

9 Carpets 585.7 636.4 852.6 928.0 919.7

(a) Carpet handmade 559.5 608.1 829.2 898.7 905.7

(b) Carpet mill made 0.0 0.0 0.0 0.0 0.0

(c) Silk carpets 26.2 28.4 23.3 29.3 14.0

B Handicrafts (excluding 499.7 377.4 462.0 438.0 460.7

handmade carpets)

Table1, Source: Directorate General of Commercial Intelligence and Statistics.


46/59

Page | 46

Graph-1

Above chart represents year wise export of various items of home furnishings and

handicrafts. Since 2005 export of readymade garments have always been maximum as

compared to other textile items like woolen yarns, jute made-up etc followed by cotton yarns,

cotton fabrics and made-up. Also that over the years it has shown an increasing trend.

US

YEARS


47/59

Page | 47

Export of all commodities Vis-a- Vis Textile (value in US $ million)

Period(April/March) Export of all

commodities

Export of all Textiles Share of textiles in all

export of commodities

(%)

2005-2006 63842.6 12791.5 20.04%

2006-2007 83535.9 13555.3 16.23%

2007-2008 103090.5 16402.1 15.91%

2008-2009 126361.5 17373.2 13.75%

2009-2010 159006.7 19015.1 11.96%Table2, Source: Directorate General of Commercial Intelligence and Statistics.

Thus following table represents the textile export trend which has subsequently shown an

increase from year 20032004 to 2007-2008 even though the share of textile in total exports

have shown a decreasing trend with maximum % in the recent year 2007-08.

Graph-2


48/59

Page | 48

Business Environment of USA

The federal governments oversees the operation of over 175 public-use Foreign Trade Zones

(FTZs) and over 180 private special-purpose sub zones throughout the country. These

secured areas, which are the US equivalent of international free-trade zones, currently

operates in almost all states. FTZs are used by both exporters and importers to warehouse,

package, and manufacture goods. Duties are paid only on those items that enter to the USA

domestic market from the zone, often at rates lower than those that would have applied upon

initial importation. A 1980 amendment to US customs regulations made Foreign Trade

Zones even more attractive to businesses, especially for those interested in importing into

United States. When merchandise enters US territory, the customs appraisal excludes the cost

of processing (US labor, overhead, facilities) and profit realize when determining the duty

value of imported articles. The federal government actively promotes exports of US

produced goods

The Export-Import Bank of United States (EXIM bank) is a government owned corporation

that assists in financing and facilitating US exports by making loans and providing guarantees

and insurance for loans from commercial sources. EXIM bank provides short, medium and

long-term financing when it is not available from the private sector on competitive terms.

Financing is available to buyer, sellers or bank involved in the export activity even if the

exporting company has foreign ownership, however, the products or services exported must

originate in the United States.

Exporting to USA:

United States is the worlds largest business place, for all kind of businesses due to it being

thelargest and most technologically powerful economy in the world, with aGDP of $14.58

trillion (2010). Exporting goods to USA consist of the following essential elements:

A sale of merchandise from the foreign exporter to a US importer.

When the merchandise reaches a port of entry, documents must be filed with customs

in order to assign a tentative value and tariff classification of the product. Goods

aregenerally released upon presentation of these documents, unless Custom selects theshipments for physical examination.


49/59

Page | 49

Customs may choose to examine the merchandise to see whether there are any

restrictions on importation (like quotas); to ensure compliance with customs and other

agency regulations (like proper marking or other means of identification) and to

uncover any prohibited items (like counterfeit goods).

Duties are generally payable within 10 working days after good are released by

customs.

If the estimated duties paid are determined to be correct, and customs doesnt require

any additional information, the entry is liquidated without any change. If the

Customs determinesthat the estimated duties paid were not correct, the entry is

liquidated with a bill for increased duties or a refund of overpaid duties.

Exporters should also be aware of the United States Antidumping law (Sales at prices

lower than for sales in export market) and the countervailing Duty Law (subsidies

exports).

Exporters should also be aware of various import duties applicable in USA over

various goods like:

1. Custom duties - Items brought into USA are subjected to duty in accordance with

their classification in the import tariff schedule. Duty rates vary, depending on the

products country of origin, the type of product and other factors. India comes in the

independent countries category.

2. Foreign trade - Duties are not paid upon importation when goods are admitted to a

Foreign trade Zone. The duties become payable only if and when those goods are

withdrawn from the zone for consumption in the USA. When the goods enter US

territory, the cost of processing undertaken in the Zone (including USA labor,

overhead and facilities) as well as the profit realized is excluded in determining

dutiable value.

3. Other taxes - In addition to duties, USA imposes a user fee of 17% ($1.70/$1000

value) on all imported goods. Imports and exports by water are also subject to a

0.125% ($1.25/$1000 value) harbor maintenance fee. Besides these fees and excise

taxes on some products such as alcoholic beverage, perfumes, tobacco and petroleum

products, no other taxes are due by virtue of exportation to the United States.

However, once the product is sold within the country, many local jurisdictions collect

inventory or sales taxes, which vary from state to state.


50/59

Page | 50

Documentation Procedure:

To make or file a customs entry the following documents are generally required

A bill of lading, airway bill or carriers certificates (naming the consignee for customs

purposes) as evidence of the right of the consignee to make entry.

A commercial invoice, obtained from the exporter that shows the value and

description of the merchandise.

Entry manifested or Application and special Permit for Immediate delivery.

Packing list if appropriate, and other documents necessary to determine whether the

merchandise may be admitted.

The documentation required up to the stage of customs clearance is known as pre-

shipmentexport documentation. The documentation in relation to negotiation of documents

for realization of export proceeds is referred to as post-shipment export documentation.

An exporter is required to deal with the various documents both at the pre-shipment and post

shipment stage to complete the export transaction. These documents are important as these

are used

as an evidence of shipment and title of goods

for obtaining payments

The shipment is represented by the set of documents once the goods have been cleared by

the customs for their transportation to the importer. These document are of vital interest to

both the exporter and importer. The importer needs them to claim peaceful and legal

possession and delivery of the goods in his country. The exporter needs to hand them over

to claim payment for the shipment.


51/59

Page | 51

Indias Trade with US (US$ Million)

2005-06

$ US

2006-07

$US

2007-08

$US

2008-09

$US

2009-10

$US

Exports 7,199.59 8,395.61 9,305.12 8,513.34 10,895.76

Imports 3,640.25 3,560.22 3,015.00 3,149.62 4,443.58

Table-9, Source: Directorate General of Commercial Intelligence and Statistics.

From the above table we can see that there has been a steady increase in the exports to US in

2005-2007 and thereafter in 2008-2009 the exports have decreased but again followed a rise

in the FY 2009-2010 at a greater rate than before. On the other hand the imports to US has

not increased at the same rate in comparison to the exports. Thus India has been one of the

major exporters to US leading to self sufficiency of the country.


52/59

Page | 52

Chapter 6 Findings and Conclusion

T

Date post:	04-Apr-2018
Category:	Documents
Upload:	siddharth-misra
View:	219 times
Download:	0 times

Dissertation Report_Siddharth Misra

Documents