National Seminar cum workshop on recent R&D Initiatives and Developmental Schemes of wool and woollens1Present scenario of Indian carpet industry vis-a-vis international markets

National Seminar cum workshop on recent R&D Initiatives and Developmental Schemes of wool and woollens

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Present scenario of Indian carpet industry vis-a-vis international markets

Shishir Tyagi

Wool Research Association, Thane

The Indian carpet industry during the post-independence era has witnessed an export-led

growth. The prospect of carpet industry is very much dependent on the exports. Export

prospects of carpets basically depend on overseas demand and domestic supply potential. In

this paper, an attempt is made to identify the major issues of Indian carpet industry and

India’s supply potential for hand made carpet exports.

1. Carpet industry- an overview

The carpet industry in India is an age-old, well established decentralised sector, employing

over 2 million rural workers, and who are mostly non-agricultural rural populace. Indian

carpet is an export oriented item & above 90% of its production being exported. The industry

has made rapid strides during the post-independence era especially during and after 70s in the

wake of overseas demand which stimulated carpet production and exports. As a result,

exports which were worth around 3 crore in 1947-48 and 11 crore in 1970-71 registered

manifold increase and exceeded Rs 3,600 crore in 2006-07. But after 2007-08 there is a sharp

decline in export due to worldwide economic recession.

Indian carpet has a special place particularly in the heart of the people in the developed

countries which absorb 88-90% of Indian carpet exports. USA and Germany, the two largest

and established markets for carpets together account for 76% of India’s exports. The other

developed countries and only a few developing countries account for the rest of the part. The

carpet industry is basically both export-oriented and labour intensive. Apart from earning

foreign exchange, the industry provides employment to a large number of people mostly in

rural areas and helps in generating supplementary income for their families.

2. Global market for carpets

Global imports of floor covering averaged US$9 billion during 1991-93 including US$2.2

billion worth of imports of woollen knotted carpets which shared nearly 26 percent of the

global imports of floor covering. Although the world market for floor coverings is dominated

by synthetic and tufted carpets, the world imports of knotted carpets including carpet of wool

seems to be sizeable and growing steadily.

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Top importing countries or areas in 1993

Rank

Country or area

World share%

Cummilative World

share%

1

Germany

43

43

2

USA

12

55

3

Japan

8

63

4

Italy

6

69

5

Switzerland

5

74

6

United Kingdom

4

78

7

Austria

4

82

8

Belgium-luxemberg

2

84

9

Sweden

1.5

85.5

10

Australia

1

86.5

From the above table it is clear that Germany continues to be biggest carpet importer

following by USA and Japan in 1993

Top importing countries or areas in 2009

Rank

Country or area

World share%

Cummilative World

share%

1

USA

14.9

14.9

2

Germany

11.5

26.4

3

United kingdom

10.3

36.7

4

Canada

6.5

43.2

5

France

4.9

48.1

6

Japan

4.7

52.8

7

Netherlands

3.4

56.2

8

Australia

2.5

58.7

9

Italy

2.2

60.9

10

Belgium

2.1

63.0

11

Poland

2.0

65.0

12

Switzerland

1.9

66.9

13

Austria

1.9

68.7

14

Czech republic

1.7

70.5

15

Sweden

1.7

72.1

Source: UN Comtrade

In present scenario USA and Germany still continues to hold their top position in the table of

2009, but good point is that some other countries also included into the table at top positions,

which indicates that market is now globalised and new horizons in carpet exports in different

countries are opening up, which shows new trends in carpet consumption and potential of

different countries to be a big market in the future.

Marketwise, the German market is dominated by the demand for low to medium quality

(Persian as well as Nepali) carpets in the proportion of 40:50 and demand for high quality

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carpets is reportedly shrinking. In the low quality (with carpets under 50 knots per sq. inch)

segment, the German market is dominated by Nepal followed by India, while the medium

quality carpet (with carpets between 50 and 300 knots per sq. inch) segment, Iran dominates

with a substantial share followed by India. The carpet market in USA, on the other hand, is

dominated by medium to high quality segments in the proportion to 60:20, where India

dominates followed by china, Pakistan and others in absence of Iranian carpets. In view of

this, Indian carpet industry , in general ,is facing tough competition from iran,china,Nepal

and Pakistan.

3. Major issues of the carpet industry

Against the background of rising world demand and India’s promising export potential of

carpets, the major issues of concern for carpet industry and trade which are creating or likely

to create major impediments to export growth are broadly as follows-

1) Lack of reforms in the production system hampering productivity, organised production

and supply of carpets.

2) Shortage of carpet grade wool - Indian carpet industry imports a large quantity of wool,

prices of which increased substantially in the recent years. However, due to increased

competition it is not possible to pass it onto the final prices.

3) Raw material prices of wool, woollen yarn, cotton yarn shot upto by 50% in last few

years.

4) Shortage of skilled carpet weavers- Due to lack of skilled labour, the labour cost are

surging. There is an urgent need of training of weavers to fill the gap caused by

NREGA. Another fact is that the new generation is not keen to learn carpet weaving

techniques. If sufficient efforts are not made then in coming years carpet weaving will

face the threat of weavers extinction.

5) Lack of modern production facilities particularly dyeing, washing,processing,designing

etc.

6) Upgrading and maintaining carpet quality- since carpet is not a full time job, most of

the labour involve in carpet weaving is unskilled and primarily depend on agriculture,

so they don’t know the importance of quality of a carpet and don’t give much attention

to quality aspect.

7) Indian Carpet industry is getting a intensified competition from the major carpet

producing countries viz. Iran, Pakistan etc. This situation becomes even grimmer as the

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currency exchange rates of these countries are under-values Vis-a-Vis US Dollar than

Indian Rupee which is stronger Vis-a-vis US Dollar, making Indian carpets less

competitive compared to Iranian carpets.

8) The need of hour is to initiate some R&D actitvities in terms of material and machine

development

9) Reduce Paleness and odour problem in latexing by usage of polymer sheets in the

process of latexing

10) Cost reduction measures without compromising with quality of carpet-like usage of

primary cloth (Non-woven backing material),usage of polymer sheets in the process of

latexing, care instructions on the usage of carpet to the buyers / Importers

11) Organizing training programmes for the masters in latexing process to counter the

odour and backing problems

12) Lessening the corrosive and hazardous chemicals in carpet washing by adopting herbal

washing.

13) Facilitate adequate infrastructure, communication channels for marketing, proper

finance assistance to Indian exporters for the quantitative and qualitative improvement

of Indian carpet industry.

14) Problems due to decentralised and unorganised sector(lack of management)

15) Search for new potential domestic and international market.

4. Points for consideration- There are some points that are worth noted for

consideration for improvements.

1) At present looms are scattered in the villages and there is no such production time on a

particular loom for a particular quality of carpet but if the looms are installed in shed

under the campus then not only it will improve productivity but also help to monitor

and plan the production and keeping the secrecy of design, and finally may encourage

the female weavers to participate in the trade.

2) There is shortage of Indian carpet grade wool (like chokla, Patanwadi), and the average

diameter of presently available carpet grade wool is getting coarser day by day ,hence

it is important not only to increase wool production but also maintain wool quality. For

this purpose breed improvement through selective breeding should be done. There are

some CWDB schemes (like SWIS) in which genetically improvement of sheep through

adopting modern scientific practises.

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3) Quality consistency is essential to remain competitive in the overseas market which can

be maintained by use of required quality wool, proper blend proposition, weaving by

the skilled weaver and improved processing, finishing etc.

4) There is a huge shortage of carpet weavers (especially for hand-knotted carpet) as most

of the weavers shifted to NREGA scheme which is providing more wages per day. So

skill development programs should run more rapidly by government agencies and

exporters should think of welfare of weavers to mitigate the migration.

5) Emphasis should be given on the R&D activities in terms of raw material, machine

development/modification or process development/modification.

Like in process development, presently we are using corrosive chemicals in carpet

washing; which produce a bad impact on the carpet. Inspite of this chemical washing,

we can go for herbal washing. the carpet will be ecofriendly and less hazardous to

health of user.WRA has taken the initiative and done some work in herbal washing of

carpets. Also in recent years, IICT has developed a carpet backing machine, Horizontal

Bar Cross Loom and non-woven primary backing cloth to lower down the price of

carpet without compromising with quality of carpet. IIT-Delhi has developed process of

carpet washing through machine inspite of manually by harrows. Incorporating these

developments will not only increase the productivity but also will upgrade the quality.

Thus the final product will be cheaper.

6) To rescue the Indian carpet industry from the ongoing crisis, the government need to

undertake important initiatives and introduce the tax exemptions on a long term basis at

least till carpet industries make full recovery and back on track.

7) Financial institution can help by providing adequate finances to carpet industries for

technology updradation and put low interest rate on export finance in order to help in

revive the carpet industry.

5. Conclusion: At present carpet industry is passing through its tough time, especially the

hand knotted carpet sector. Nothing is going in its way, on the one side, carpet industry is still

reviving from the recession blow and on the other side industry is facing a huge depreciation

in skilled weavers in order to complete the export order in time. Cost of production has

increased, but buyers want the carpet at old prices. Indian rupee is getting stronger vis a vis

US dollar, the countries like Iran is getting tougher and tougher in competition. In this crisis

government agencies and financial institution should take forward steps to revive and boost

the carpet industry