Management Development Programme On Marketing of Rural Products By NGOs (22nd-27th September 2003)
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Management Development Programme
On
Marketing of Rural Products
By NGOs
(22nd-27th September 2003) - extracted text
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Management Development Programme
On
Marketing of Rural Products
By NGOs
(22nd-27th September 2003)
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Sponsored By
National Bank for
Agricultural and Rural
Development (NABARD)
Organized By
Narsee Monjee Institute of
Management Studies (Deemed i;
University),
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Vile Parle (W), Mumbai-56.
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MANAGEMENT DEVELOPMENT PROGRAMME
ON
Marketing of Rural Products by NGOs
{22-27^ September 2003)
Programme Team:
Dr.Meena Galliara (Coordinator)
Dr. Naresh Singh (Co-coordinator)
Dr. Bala Krishnamoorthy (Co-coordinator)
Reading Material:
Compilation
Dr. Meena Galliara
Dr. Naresh Singh
Reading Material :
Formatting
Ms.Cheryl D’souza. (Secretary)
Mr.Akshat Kaul (MBA-ll yr.student)
Mr.Aarohi Vaishnav (MBA-I yr.student)
Administrative:
and Secretarial
Assistance
Ms.Shobha Pereira (Secretary)
Ms.Cheryl D’souza (Secretary)
Mr.S.P.Singh.(Senior Machine Operator)
Cover page design: Ms.Karishma Galliara
Cover page layout: Mr. Masseh Katib Z (Computer Instructor)
Marketing Of Rural Products By NGOS
CONTENTS
S.no ____________________ Topic__________
_____ _____________ Preface__________
Section I
1
2.
3.
4.'
5.
6.
_______________ Review and Documentation
Review and Documentation of Existing Programmes
for Self- Employment
Dr. Meena Galliara___________________________
Agro & Rural Industries
(http://pib.nic.in)_________________________ ■
Handicraft sector in India
(http://texmin.nic.in)__________________________
India’s Handloom Sector
K. Rajendra Nair_____________________________
The Central Wool Development Board
(http://woolboard.india.com)____________________
Schemes undertaken by NABARD
(www.nabard.org)
Pg.No.
i-ii
1-3
4-8
9-15
16-17
18-20
21-33
Section II
8.
9.
__________ Issues & Strategies in Rural Marketing________
Threats & Strategies in Rural Marketing
(NIRD,Hyderabad)____________________________________
Marketing channels for Rural Industries.
Rajagopal,NIRD,Hyderabad_____________________________
Net Working For Market Access_________________________
34-53
54-60
61-65
Section III
10
11
12
13
14
__________ Product Development and Marketing__________
Marketing Tool Kit
Galliara Meena, NMIMS)_______________________________
Designing for Handicrafts: A socio-technical perspective Sanjay
DhandeJIT Kanpur____________________________________
Guidelines for Product Development
(http://kvic.nic.in)__________
Why Standards Matter
(www.bis.org.in)_______________________________________
Post harvesting Handling of Horticulture
(www.foodindia.org)
66-78
79-85
86-92
93-97
98-106
Section IV
15
<<
_______ __________ Export Marketing
Export Marketing Strategies
(ITC, Geneva)
110-115
16
17
18
19
Export Packaging
(ITC, Geneva)__________________
Identification of Export Marketing
(S.M.Chaturvedi)________________
Steps in Exporting._______________
National Small Industries Corporation
116-122
123-130
131-142
143-147
Section V
E- Marketing
20
21
E-Marketing.
Prashant Sumeet (www.brandchannel.coml
Rural Bazar.
(Rural Development Informatics Systems)
148-152
153-161
Section VI
Case Studies
1.
2.
3.
4.
5.
6.
7.
8.
Galicha Making
S.LBapana & P.M.Shingi_______________
Catching the Tiger by Tail.
Bogaert,Das & etaII____________________
Orissa Rural & Urban Producers Association
Learning to stand on one's own feet
(BAIF Journal)________________________
Rural Marketing & Enterprise.
(www.aidindia.org)_____________________
Dignity through Papad Making
Arun Srivastav________________________
Producers & Markets in Rural Bihar.
Sanjay Pal, EDI_______________________
Gauri’s Pankhi-Slipping Away.
S.L.Bapna & P.M.Shingi________________
162-164
165-169
170- 177
178-179
180-182
183-186
187-196
197-198
Section VII
Reference and Fact Sheets
Reference Sheets
Facts Sheets
Statistical Data.
199-215
216-225
226-242
Preface
A revitalized rural non-farm economy (RNFE) is vital to addressing key poverty issues in
rural areas. It is the engine for local economic growth and improved opportunities - not
just for simply increasing incomes, but also to provide a wider range of employment
opportunities that (potentially) offer a better quality of life and increased opportunities to
large numbers of the disadvantaged.
The recipe for poverty alleviation now is "micro-enterprises organized by self-help
groups supported by NGOs and micro-credit". This is also the pathway recommended by
Mahatma Gandhi, who taught us that the most important duty of independent India is to
enable every woman and man to earn his or her daily bread, through technologies based
on the principle of production by masses. Free trade ceases to be fair trade when the
products of mass production technologies compete with those produced by production
by masses (i.e., micro- enterprises). Small micro entrepreneurs constantly face the risk
of commodity/product market failure because of lack of information on market demand.
Secondry there are other important constraints like lack of power/water supply/roads and
marketing support networks. Some of the progressive NGOs made attempts to help
these rural entrepreneurs in marketing their products, but have said to achieve only a
limited success. This calls for strengthening both marketing strategies of NGOs as well
as marketing skills of NGO staff.
NMIMS is a leading business school, which also plays an important role in strengthening
the capacities of social development sector through designing need based training
intervention and working with NGOs. Teaching marketing and other related subjects has
been one of our core competencies hence we have decided to strengthen the rural NGO
sector by organizing MDPs in the area of “ Marketing of Rural Products”. We are
thankful to NABARD for strengthening our intervention by sponsoring this MDP. It
is a matter of appreciation that NABARD has recognized the need for a systematic
training in the subject of ‘marketing rural products by NGOs’.
The present MDP aims at orienting and upgrading knowledge of NGO Executives in
performing major tasks related to marketing such as product promotion, pricing, product
diversification and development, market expansion, product positioning, branding,
exporting, networking and so on.
This compendium is intended to supplement the presentations and discussions and thus
serve as a source of reference material, especially as materials related to marketing of
rural products by NGOs is scattered and not easily accessible. The reading material
compiled in this compendium is divided in to seven sections.
• The first section reviews the government intervention for providing self
employment and provides information about the various schemes launched by
NABARD, KVIC, and others.
• Section two deals with analyzing the issues affecting marketing of rural products
and strategies to overcome the same.
•
Section three deals with basic ‘Fundamentals of Marketing’, aspects of ‘Design
and Product Development’ and also includes articles on Handling and Packaging
of Horticulture products and Milk
• Section four highlights strategies and processes required for export promotion
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•
•
•
Section five carries information about possibilities to market rural products
through E-marketing
Section six contains case studies which highlight how NGOs have been able to
strengthen the micro enterprise units and develop marketing strategies of NGOs
involved in promoting micro enterprises
Section seven provides important information about important addresses and
information required to support your “ Marketing Efforts”
Although the contents of this compendium are best understood in the light of the
objectives and content of the MDP, the compendium will be useful for all those who are
interested in the strengthening the marketing support initiatives of the NGOs
My special thanks are due to my colleague Dr. Naresh Singh who placed his faith in me
and gave me the responsibility of coordinating this programme. He readily submitted the
case study compilation and few other articles, which he had with him for the purposes of
this compendium.
I owe my thanks to Dr. Sunanda Easwaran, Dean, NMIMS who needs a special mention
here because it was she who helped us in logically sequencing the entire programme.
Dr. H. Mankad, Vice-Chancellor and Dr. N. Kondap, Pro-Vice chancellor and Dr.
BalaKrishnamoorthy, Head, General Management have always provided us with
enabling environment to take up new assignments. I take this opportunity for expressing
my gratitude to them.
Mr. Akshat Kaul and Mr Aarohi Vaishnav our MBA students have bome the main brunt
of formating the articles after they were downloaded. I acknowledge their efforts in
helping me to bring out this compendium. Cheryl D’souza, my secretary, readily agreed
to reformat the articles, type out new ones and has extended her wholehearted support
to prepare this compendium. I express my heartfelt thanks to her. I am thankful to Ms
Shobha Pereira, office secretary, for always giving us unstinting support in managing all
the unending tasks to carry out our MDPs. I am equally thankful to Mr. Sanjay Pai for
extending his cooperation in typing out a few articles for this compendium.
My special thanks are also due to my family members who shared my additional
responsibilities at home so that I could concentrate on my work. Without their support I
would not have been able to complete this assignment.
Dr. Meena A. Galliara,
Programme Coordinator
NMIMS
II
Section I
The papers in this section highlight how over the years Government of
India through Ministry of Agro and Rural Industries and Textiles have
devised their schemes to activate self-employment. The schemes initiated
by NABARD to strengthen the self-employment and micro enterprise sector
also have been separately documented.
Review of Self-Employment Programmes Initiated by the
Government to Alleviate Poverty through Self Employment
Programmes1
One of the major components of the anti-poverty programmes in India was the
self-employment programme, the most extensive of which was the Integrated
Rural Development Programme (IRDP), launched in 1978. The basic aim of
IRDP has been to provide assets to the asset-less target groups (such as
small and marginal farmers, agricultural labourers and rural artisans) through
income-generating activities that would enable them to break the poverty
cycle. IRDP has been successful in providing incremental income to poor
families; however, it has not been adequate in enabling the beneficiaries to
cross the poverty line on a sustained basis, mainly because of low per family
investment. Inadequate development of infrastructure, forward and backward
linkages and market facilities has been another area of concern under IRDP.
The major achievement of IRDP was the promotion of on-farm activities in the
animal husbandry sector, such as dairy, poultry, fishery etc. for the benefit of
small and marginal farmers. Land assets being limited, provision of non-land
assets to the poor was an alternative way of achieving income generation.
Given their labour-intensive and land-saving nature, the poorer households
were better suited for those activities. The growth of the dairy sector during
the 1980s was much helped by the Operation Flood Project, an integrated
dairy development programme started in 1970. Wherever dairy projects were
promoted under IRDP along milk routes, the small and marginal farmers
making use of infrastructural facilities were able to bring about sustained
increase in their income levels.
The third major area of IRDP assistance to the rural poor was in the small
business and services sector. Since a large segment of the rural poor are
landless, around 50 per cent of IRDP activities have now been concentrated
in the secondary and tertiary sectors. Assistance has been offered to_ those
rural poor with no access to land by introducing suitable projects based on
local resources and local requirements. Those projects include processing
industries, handloom production and handicrafts etc. The success of IRDP
activities in that sector has been dependent on the development of a skill
base among the poor, the upgrading of technology, the establishment of
forward and backward linkages, and the availability of infrastructure and
marketing tie-ups. In view of the diversification of the rural economy and the
growth potential of the non-farm sector, the need remains to further
strengthen ISB sector activities under IRDP.
Three IRDP sub programmes have been implemented during the past few
years to supplement the efforts on self-employment. Launched in 1979, the
Training of Rural Youth for Self-Employment (TRYSEM) was aimed at
providing basic technical and managerial skills to the rural youth from families
below the poverty line to enable them to take up self- employment in the
broad fields of agriculture and allied sectors, industries, services and business
1 Dr. Meena Galliara. Associate Professor. NMIMS
activities. That objective was subsequently enlarged in 1983 to include wage
employment for trained youth. TRYSEM played an important role in facilitating
the diversification of activities taken up under IRDP. In 1992, a sub
programme was launched to enable rural artisans to enhance the quality of
their products, increase their production and income, and to ensure a better
quality of life with the use of improved tools. Under the scheme, artisans from
different crafts and who were living below the poverty line were to be given
improved tools to enable them to enhance the quality/quantity/market
potential of their products; the aim was also to prevent migration to the urban
areas. The third sub programme, Development of Women and Children in
Rural Areas, was launched in 1982. Initially, it was implemented in only 50
districts as a pilot scheme; later, it was extended to all districts.
Rural industrialization
The promotion of cottage and village industries has been an integral part of
Indian planning. The Industrial Policy Resolution (1956), recognized the
importance of decentralized centres and their close linkages with the large
industries. All the five-year plans gave attention to improving productivity skills
and opportunities in the rural industrial sector. To encourage industry in the
backward areas, schemes for a transport subsidy and an investment subsidy
were designed. Small and village industries were recognized as a major
avenue of employment in rural and semi-urban areas. The strategy of the
plans has been one of encouraging research and innovation in traditional
occupations, upgrading of technology, the dispersal of industries through the
growth centre approach and the setting up of infrastructural development
centres for tiny units in rural areas.
In the new economic order rural, industries will have to focus special attention
on technological upgrading and modernization, in order to compete efficiently
and increase productivity. Their product planning strategy must be reoriented
to enhance their share in the domestic and international markets.
Approximately 7 per cent of rural households are engaged in industrial
activities. With the increase in agricultural production and with more
availability of local resources and skills, the rural areas will provide better
scope for setting up of agro-based industries. State intervention, particularly in
the areas of strengthening basic infrastructural facilities in rural areas, will
help in creating a favourable investment climate. The central government has
also been vigorously pursuing self-employment opportunities through the
development of rural industry. The scheme of the Prime Minister’s Rojgar
Yojana (PMRY) is aimed at helping youths to set up micro-enterprises in
urban as well as rural areas. Similarly, the Khadi and Village Industry
Commission has taken up a number of self-employment schemes aimed at
promoting village and cottage industries and, at the same time, opening large
avenues of employment.
Marketing
The marketing of farm products in India, by and large, operates under the
normal forces of supply and demand. Private trade is the centerpiece of the
Indian market mechanism. Government intervention is limited through mainly
©
farm support policies and the promotion of organized marketing of agricultural
commodities. To achieve that objective, most of the State governments have
enacted the legislation necessary for the regulation of agricultural produce
markets. A number of organizations and institutions currently function to deal
with product- and area-specific problems that have a bearing on production,
pricing and marketing of agricultural products. The most important of those
institutions are the Food Corporation of India, the Cotton Corporation of India,
the Jute Corporation of India and the Commodity Boards. Agricultural
marketing is also closely linked to a network of cooperatives at the primary,
State and national levels. Marketing cooperatives are operating in almost all
mandis. Cooperative societies are functioning in the area of fruit and
vegetable processing, sugarcane crushing, cotton ginning and pressing etc.
The marketing of agriculture produce through cooperatives has registered a
remarkable growth At the national level, NCDC plans and promotes
programmes for the production, processing, marketing, storage, export and
import of agricultural produce through cooperatives. The National Agricultural
Cooperative Marketing Federation of India Ltd (NAFED) is an apex
cooperative organization dealing in the procurement, distribution, export and
import of selected agricultural commodities. NAFED is a central nodal agency
for undertaking price support operations for pulses and oilseeds and market
intervention operations for horticultural items such as onions, potatoes,
grapes, black pepper and red chillies etc. A few other organizations in the
cooperative sector are the National Cooperative Tobacco Growers’
Federation as well as the Tribal Cooperative Marketing Development
Federation of India Ltd, which attends specifically to the marketing problems
of the tribal areas. Specialized commodity boards continue to operate for
rubber, coffee, tea, tobacco, spices, coconut, oil-seeds and vegetable oils,
horticulture etc.
The National Dairy Development Board (NDDB) is also engaged in the
marketing of agricultural commodities, Separate Directorates have been
functioning for the development of raw agricultural materials like sugarcane,
jute, tobacco, oil-seeds, rice, millet, cotton, pulses, cashew nuts, cocoa,
spices etc. Various organizations are active in the field of agricultural
commodity exports, such as the State Trading Corporation, the Cashew Nuts
Export Promotion Council, the Shellac Export Promotion Council and the
Agricultural and Processed Feed Export Development Authority, all of which
also promote/boost agriculture exports. The role of cooperatives in the total
marketing of agricultural produce, although relatively small, has. been
progressively expanding. Success in raising the level of milk production and
marketing is ascribed to the Operation Flood Project. Started by NDDB, the
project is basically designed to link rural milk producers with urban consumers
and is currently in its third phase of implementation.
The following papers in this section highlight how over the years
Government of India through Ministry of Agro and Rural Industries and
Textiles have devised their schemes to activate self-employment. The
schemes initiated by NABARD to strengthen the self-employment and
micro enterprise sector also have been separately documented.
3
AGRO AND RURAL INDUSTRIES1
A separate Ministry for Agro and Rural Industries has been created in
September, 2001 to take initiatives to provide more employment opportunities in
rural areas and to promote the village industries. A package was devised in
accordance with the Government’s prime objectives of creating more jobs in
rural areas and empowering the women and backward classes in the country.
Rural Employment Generation Project Scheme
The Government is implementing the Rural Employment Generation Project
(REGP) scheme through Khadi and Village Industries Commission (KVIC) to
promote and develop village industries including agro industries in the country.
Under this scheme, till December, 2002, a total number of 19,14,397
employment has been generated by setting up of 1,52,509 rural industrial units
in the country. Under this programme, the KVIC provides margin money
assistance to rural entrepreneurs.
Khadi and Village Industries Commission
The total export of Khadi and Village Industries products were made to the tune
of Rs 21.62 crore and total sales of Rs 15.39 crore during the year 2001-02. New
Package for the Khadi and Village Industry was announced in May, 2001 to make
it viable and vibrant in the new era of globalisation. The package included,
among other things, the rebate policy for five years, option for rebate and
marketing development assistance and cluster development programmes etc. In
collaboration with UNDP, a project amounting to 2.5 million dollars was launched
for bee keeping, pottery, hand-made papers and capacity building of KVIC.
Additional funds to the tune of Rs. 1,215.85 crore have been provided for the
programmes under the package during the next five years.
Rebate Policy for Five Years
A new rebate policy was formulated for a period of five years to boost khadi
products. There would not be any change in normal rebate of 10 per cent
throughout the year. The special rebate, which used to be given at the rate of 10
per cent for a period of 90 days only has been extended to 108 days on
staggered basis i.e. 7 days in each month and for the whole month of October.
Options of Rebate and Market Development Assistance
As a measure to give incentives to the institutions for producing innovative
designs and marketable products, a new scheme of market development
assistance (MDA) at the rate of 20 per cent of the annual turnover has been
introduced as an option in place of rebate.
1 http://pib.nic.in/archieve
©
Additional Working Capital
To tackle the problem of lack of credit, the term loan of Rs. 300 crore was given
to khadi institutions, was converted into working capital and a fresh line of credit
of Rs. 250 crore as working capital has been provided.
Insurance Cover to Khadi Artisans
Group Insurance Scheme for khadi artisans was introduced on July 27, 2001.
The scheme, namely Janashree Arogya Bima Yojana, covers up almost 4 lakh
artisans engaged by khadi institutions, death, disability and disease.
Quality Improvement
In order to make the marketing of khadi products more attractive, the focus
henceforth is on quality. National Institute of Design of Ahmedabad, was roped in
for better designing and development of khadi products. Mahatma Gandhi
Institute for Rural Industrialisation at Wardha, through linkage with IIT, New Delhi,
is coming up with product development, standardisation, quality control and
research for khadi products. The quality of products will be certified through labs
accredited by NABL.
Cluster Development Programme
In order to strengthen khadi and rural industry, a scheme of cluster development
has been initiated. At these clusters, common facilities will be created for
innovation, technology upgradation, packaging, processing, testing and ecommerce. Setting up of a marketing company for boosting the sales of products
both in India, as well as abroad, has also been taken up.
Focus on Core indigenous Areas
An amount of Rs. 275 crore as assistance has been earmarked for a few
selected indigenous areas, namely, herbal cosmetics and medicines, honey,
organic foods, edible and essential oils. These employment intensive areas will
not only be provided financial assistance, but also technical support.
Comprehensive Policy Package for tiny Sector
The Prime Minister announced a comprehensive policy package in August, 2000,
which includes preferential allocation of plan, power facilities, technological
upgradation, liberal institutional finance support and priority in Government
purchase.
Credit Support to Tiny Sector
Composite loan upto Rs. 25 lakh to tiny sector at 1 per cent concessional interest
rate by National Small Scale Industries Corporation is being provided. The
project cost limit has been raised from Rs. 25 lakh to Rs. 50 lakh and 30 per cent
of the investment has been earmarked for the tiny sector.
Investment limit for the tiny sector under Prime Minister’s Rozgar Yojna to
generate employment for the educated unemployed, continues to be Rs. 25 lakh,
5
and the family income eligibility limit of Rs. 24,000 has been revised to Rs.
40,000 per annum.
Infrastructural Support to Tiny Sector
Integrated Infrastructure Development (IID) scheme will now to cover all areas in
the country. Under the scheme, 50 per cent of the plots have been earmarked for
setting up tiny sector, as against 40 per cent earlier.
Technology and Marketing Support
Capital subsidy has been provided to tiny sector for technology upgradation,
organising buyers and sellers meet, vendor development programmes and
exhibitions. On March 16, 2003, the KVIC signed MoUs with several IITs, NITs,
IISC, IGNOU and some other research scientific institutions to help rural
industrialisation as well as value addition to its products.
Coir Sector
Export of coir yielded Rs 450 crore during the year 2002 (till November) in
comparison to Rs 320 crore in 2001-02. The demand for Indian coir products is
increasing globally. As a result, India has exported 1,825 tonnes of coir
geotextiles worth Rs. 8.65 crore (till February. 2003) as compared to 1,752
tonnes worth of Rs. 7.80 crore during the year 2001-2002. The Coir Board has
been reconstituted to provide better infrastructural support through cluster
development, consortium market and assured supply of quality raw material.
Steps have been taken for market promotion, technical upgradation, and skill
development through bilateral cooperation with other coir producing countries.
The Board is continuously focussing on product development and diversification
to meet customer preference through R&D.
SMALL SCALE INDUSTRIES
Ministry of Small Scale Industries is the nodal Ministry for the formulation of
policy, promotion, development and protection of Small Scale Industries in India.
The Ministry of Small Scale Industries and Agro and Rural Industries (SSI&ARI)
was created on October 14, 1999 and was bifurcated into two separate Ministries
namely, Ministry of Small Scale Industries and Ministry of Agro and Rural
Industries on September 1, 2001. The Ministry of SSI designs and implements
the policies through its field organisations for the promotion and growth of smallscale industries.
While development of SSIs is primarily the responsibility of the State/UT
governments, the Central Government has taken several steps to improve their
performance by implementing various schemes, such as integrated infrastructure
development,
technology upgradation,
marketing
and
entrepreneurial
development.
On August 30, 2000 the Prime Minister announced a comprehensive Policy
Package for the promotion and development of small-scale sector to/enhance its
competitiveness, both domestically and globally. The policy package consists of
enhanced fiscal and credit supports, better infrastructure and marketing facilities
and incentives for technology upgradation.
(G)
Technology Upgradation
In the changing scenario of economic liberalisation, National Small Industries
Corporation Limited (NSIC) has increased its training capabilities by entering into
high-tech areas such as computer application, electronics. It has set up Software
Technology Parks (STPs) for the SSI units to facilitate software export. NSIC also
provides concessional terms in its lending for development of rural and backward
areas and also extends this facility to units promoted by entrepreneurs from the
weaker sections of the society.
Credit Guarantee Fund
The Credit Guarantee Fund Scheme for Small Industries is being implemented
by the Government through the Credit Guarantee Fund Trust for small industries
with the corpus fund shared by the Government of India and the Small Industries
Development Bank of India in the ratio of 4:1. The objective is to extend
guarantee cover for mitigating credit risk upto 75 per cent of the collateral free
credits subject to a maximum credit of Rs. 25 lakh per unit The scheme is being
operated all over the country.
Rehabilitation of Sick Units
The Government has taken various measures to facilitate timely identification and
rehabilitation of potentially viable sick units, which inter-alia include institutional
mechanism in the form of State-level Inter-Institutional Committees (SLIICs),
special rehabilitation cells in banks and state financial institutions and elaborate
guidelines issued by the RBI for extending rehabilitation assistance to eligible
units.
Khadi Package
The Prime Minister announced the Khadi Package on May 14, 2001 involving an
outlay of Rs. 1,215.85 crore for the accelerated development of Khadi and Village
Industries (KVI) programmes. The package components include long-term rebate
policy, insurance for artisans and working capital assistance.
Initiatives for North Eastern Region
The Government has announced a number of initiatives for the development of
SSIs in the North Eastern region at the national convention on SSIs on August
30, 2001. A task force comprising all North-Eastern State Ministers in-charge of
SSIs has been set up specifically for that region.
Marketing Assistance Scheme
SSIs face problems in marketing of their products. To help small-scale industries
in marketing their products, NSIC has been acting as facilitator to promote
marketing of SSI products. NSIC has, over a period, devised a number of
innovative programmes for the support of SSIs in the field of marketing, both in
and outside the country. These include raw material assistance, internal
marketing, and consortia approach for small units producing the same products.
u
Export Marketing
The NSIC has adopted a 'single window' assistance approach for the export of
products of small-scale industries. The Corporation has concerned itself with
development of small units, which have gradually acquired the capability to
independently handle exports of their products. Many small units, which had
started their export business with the assistance of the NSIC, have now acquired
sufficient experience so as to be able to export directly.
Loans for SSIs
With a view to providing loans in time to SSIs, the Reserve Bank of India (RBI)
has advised the banks that all loan applications upto Rs. 25,000 should be
disposed off within two weeks and upto Rs. 5 lakh should be disposed off within a
period of four weeks provided the loan applications are complete in all respects.
Access to SSI Information
Steps' have been taken to improve access to SSI information included
comprehensive knowledge portal launched for SSIs on August 30, 2001
(www.smallindustryindia.com ) and (www.laghu-udyog.com) .
Handicraft Sector in India1
The Handicrafts sector enjoys a special significance in the country’s economy in terms
of employment generation as well as earning of foreign exchange through exports.
Estimates based on the population census, survey (NSSO), NCAER survey and other
studies and information available for the unorganized cottage industry sector reveal that
the annual growth rate of employment (both direct and indirect) in the handicrafts sector
could be around 2.5%. Based on this, it is presumed that during the 9th Five Year Plan,
employment in the handicrafts sector increased from 52.92 lakhs in the year 1997-98 to
56.99 lakhs in 2000-2001 and is estimated to reach 58.41 lakhs by the end of 9th Plan
i.e. 2001-2002. Out of the total work force in this sector, women constitute 46.8%, SC/
ST (37.11%) and minority (23.89%) Handicrafts being a state subject, its development
and promotion is the primary responsibility of the State Governments.
However, the Office of the Development Commissioner (Handicrafts) has been
supplementing their efforts by implementing various developmental schemes at the
central Idvel for the handicrafts sector. This office was implementing 34 schemes during
the 9th Plan and based on the zero based budgeting principle, this number has been
brought down to 8 generic schemes in the 10th Plan. Out of 8 new generic schemes to
be implemented in thelOth Plan, 7 schemes namely Baba Saheb Ambedkar Hastashilp
Vikas Yojana, Design and Technical Up gradation. Export Promotion, Marketing
Support and Services, Research & Development, Training & Extension, Financial
Assistance to State Handicrafts Development Corporation/State Apex Societies have
been approved for implementation so far.
The other scheme titled “ Infrastructure Projects - Societies of Central Government
working under the overall control of office of Development Commissioner (Handicrafts)”
is under consideration/submission for in principle approval from Planning Commission.
The brief of the 7 schemes is as undec
BABA SAHEB AMBEDKAR HASTSHILP VIKAS YOJANA. (AHVY)
This scheme aims at promoting Indian handicrafts by developing artisans’ clusters into
professionally managed and self-reliant community enterprises on the principles of
effective member participation and mutual cooperation. The thrust of the scheme is on a
prioritized need based integrated approach for sustainable handicrafts development
through participation of craftsperson leading to their empowerment. The package of
support under AHVY can be clubbed under the following components.
Social interventions
• Diagnostic survey and formulation of project plan
• Mobilization of artisans
Technological interventions
• Assistance for training the trainers
• Assistance for design and technological up gradation
• Financial assistance for development and supply/ dissemination of modern
improved tools, equipments etc.,
• Documentation, preservation and revival of languishing crafts etc.
1 Annual Report (2002-2003), Ministry of Textiles, Government of India.
irri"p ' // -K- x m i n ■ n i c. ■ -n
Marketing interventions
•
•
•
•
Marketing events
Marketing infrastructure
Publicity
Marketing Services
Welfare interventions & financial interventions
Development of workshed and provision of margin money.
Eligibility: Financial assistance under this scheme can be given to/ through the Reputed NGOs/
Cooperatives/ Apex cooperative societies/ Trusts/COHANDS/ EPCH/ CEPC/ MHSC/
IICT/ NCDPD/ NIFT/ NID/ University Deptt., DRDA/ NISSIET, EDIs, Central/ State
Handloom and Handicrafts Development Corporations and other related Govt.
Corporations/ agencies, Federation of NGOs/ SHGs Consortium etc. registered under
proper statute, for sustainable development of identified craft clusters.
MARKETING SUPPORT & SERVICES
The main objective of this scheme is to create awareness of Indian handicrafts among
the masses by organizing a number of marketing events in big and small cities, to
provide financial assistance to State Handicrafts Corporations, Apex Cooperatives and
prominent NGOs for opening new Emporia at suitable places to enable the craft
persons to have permanent sales outlets for their products, to popularize and publicize
handicrafts sector, to provide services in the form of entrepreneurship development
programme etc.
ELIGIBILITY; GRANT-IN-AID
The financial assistance under the scheme shall be extended to the Central/State
Handicrafts Corporations, COHANDS, Apex Societies, NGO’s registered under Society
Act, Trusts and such other organisaztion engaged in the development and promotion of
handicrafts sector registered under any other statutory Acts. During 2001-2002, a sum
of Rs. 412.55 lakh has been released under the scheme.
DESIGN & TECHNOLOGY UPGRADATION
Design & Technology up gradation scheme aims at upgradation of artisans’ skills
improvement and diversification of products,
The schemes comprises of five main components as under:
COMPONENTS SUB-COMPONENTS
Marketing Events:
a) Holding of National Handicrafts Expos.
b) Holding of Crafts Bazars
c) Holding of Exhibitions
Marketing Infrastructure:
a) Setting up of Urban Haat/Crafts specific Haat/Local Haats.
b) Opening of new emporia/ renovation/expansion of existing emporia.
c) Setting up of Craft Development Centres.
io
Marketing Services:
a) Holding of Marketing Workshops at National/State/Local Levels programme.
b) Entrepreneurship Development.
c) Publicity: Internal Publicity development of new design and prototypes. Supply of
improved/modem equipments to the craft persons, revival of rare crafts to preserve the
traditional heritage, preservation of traditional art & crafts of high aesthetic value. The
scheme has been sub divided under six distinct components as under
Components
Financial Assistance to institutions for design and technology development in
handicrafts sector
Skill up gradation
a) Departmental activities
i) Regional Design & Technical Development Centres.
ii) Activities of Regional Design & Technical Development Centres.
iii) Departmental Training Centres in Carpet in J&K and Cane & Bamboo in the Country.
b) Grant-in-aid
i) Assistance to Shilp Gurus (Heritage Masters)
ii) Assistance for training under Guru Shishya Parampara
iii) Assistance for training the trainers (A type of certificate or diploma course for
trainers/master craftpersons who can work in close cooperation with clusters)
Financial assistance for development supply/ dissemination of modem improved tools,
equipments, products and process technologies.
Assistance for design & technology upgradation
i) Integrated Design & Technology Development Project
ii) Design & Technology Development Workshop
Documentation, Preservation and Revival of old and rare and languishing crafts.
National Award for outstanding contribution in designs in handicrafts sector.
Eligibility
Financial assistance under the Design and Technology Upgradation Scheme is
extended to the Central/State Handicrafts Corporation, Apex Cooperative Societies,
NGOs registered under Societies Act, Trust, Handicrafts Societies, EPCH, CEPC,
COHANDS, NCDPD, MHSC, IICT, Crafts Council of various States, NID, NIIFT, IIT and
other reputed institute dealing in handicrafts, renowned designers, technologist,
National Awardees, Master craft persons, experts having experience in handicrafts.
During 2001 2002, a sum of Rs. 108.17 lakh has been incurred for undertaking various
design development activities. During 2002-2003, an amount of Rs. 2600 lakh has been
allocated including NER and Sikkim under these schemes. Total expenditure incurred
upto December 2002 is Rs. 1465 lakh.
EXPORT PROMOTION
The objective of the scheme is to promote export of handicrafts including hand knotted
carpets and floor covering from India. Initiatives such as identification of handicrafts
concentration area for development of exportable products, undertaking research and
studies in order to identify markets abroad, taste and fashion, prevailing designs etc.,
L
participation in exhibitions etc. and addressing the issues emerging out of the liberalized
and post WTO era would be undertaken under this scheme.
The details of components covered under the scheme are as under:
Product Development
a) Workshop and Training Programme in Packaging in Export Procedures/
Management
b) Training of Artisans /Master crafts persons/Designers
c) Workshop/Seminar in India and Abroad
d) Selection of Designers, Artists for development of prototypes for exports and
invitation to foreign Designers.
Publicity and Marketing,Social and other welfare measures
Eligibility
The financial assistance under the scheme is extended to the central/state Handicrafts
Corporations, Council of Handicrafts Development Corporation (Cohands), Apex Coop.
Societies, NGOs registered under Society’s Act, Trusts, and such other oragnisations
engaged in the development and promotion of handicrafts sector registered under any
other Statutory Acts, EPCH, CEPC, NCDPD, IICT, India Exposition Mart, Registered
Handicrafts exporters, reputed designers/technologists approved by CEPC/EPCH/Office
of the DC(H).
RESEARCH & DEVELOPMENT
The main objective of the scheme to have a regular system of feedback of economic,
social, aesthetic and promotional aspects of various crafts and artisans in this sector
and to address the issues arising out of WTO stipulation case.
Scope of the Scheme
Conduct surveys/Studies of specific crafts for which adequate information is not
available. Research in the areas of problems relating to availability of raw material,
technology, design, common facilities and so on. Living and working conditions of
artisans in specific areas or crafts. Market evaluation studies of specific crafts for either
domestic or overseas markets. Techno-economic feasibility studies and post evaluation
of the various promotional projects or programmes undertaken in the handicrafts sector.
Areas requiring special study for uplift of the weaker sections viz. Scheduled Castes
and Scheduled Tribes. Financial assistance for preparation of legal, para legal,
standards, audits and other documentation leading to labeling/ certification. Financial
assistance to organizations for evolving, developing a mechanism for protecting crafts,
design, heritage, historical knowledge base, research and implementation of the same
enabling the sector/segment to face challenges for utilizing the opportunities of post
WTO regime. Financial assistance for taking up problems/issues relating to brand
building and promotion of Indian Handicrafts. Any other problems/issues of specific
nature relating to handicrafts sector.
Eligibility:
Assistance under the scheme will be extendable to an organization registered under
any of the statutory Acts (Companies Act 1956, Societies Registration Act 1860,
Cooperative Act etc.) or registered with any bodies like DCSSI, Office of the
Development Commissioner (Handicrafts), etc. or universities and recognized research
institutions. Generally, such assistance would not be extendable to any particular
individual unless he is an eminent scholar or a person associated with promotion of
handicrafts for a long time.
TRAINING & EXTENSION
The main objective of this scheme is to enhance the capacity building of the artisans,
NGO etc. and to meet the administrative expenditure closed departmental training
centres under various crafts.
Component of the Scheme.
Departmental
Incurring expenditure to cover establishment cost including Pay & Allowances of the
staff of closed departmental training centres in various crafts.
Grant-in -aid
a) Incurring expenditure for conducting field visits/study tours in India and abroad to give
exposure to designers and master craftsperson working in handicrafts sector with a
view to enable them to learn and adopt best practices prevailing for promotion and
development of handicrafts sector in India.
b) Financial Assistance for capacity building and to conduct awareness cum- training
workshops/seminars for artisans, NGOs etc. in various spheres related to handicraft
sector.
Eligible Organizations
The. scheme shall be implemented departmentally as well as through reputed research
institutions, registered organizations/public sector units, experts etc. specializing in
concerned areas.
FINANCIAL
ASSISTANCE
TO
STATE
CORPORATIONS/STATE APEX SOCIETIES
HANDICRAFTS
DEVELOPMENT
The scheme envisages to help the State Handicrafts Corporations/Apex Cooperative
Societies by providing them grants so that the corporations can utilize the money for
any developmental, promotional and welfare activities of urgent nature concerning the
craft persons of their State.
Component
To enable the Corporations/Apex Societies to increase, their capital base in order to
enable them to take programmes which will directly benefit the craftspersons.
13
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schemes for the development of this sector. The schemes aim at design and technical
upgradation, export promotion, marketing support and services, research and
development and training and extension.
An important initiative taken by the Government has been the launch of a new scheme:
Baba Saheb Ambedkar Hastshilp Vikas Yojana (AHVY) during the year 2001-02. This
scheme aims at promoting Indian handicrafts by developing artisans’ clusters into
professionally managed and self-reliant community enterprises on the principles of
effective member participation and mutual co-operation. The package of support under
AHVY has social, technological, marketing, welfare and financial components. During
2001-02, 222 project proposals were sanctioned under the scheme involving an
expenditure to the tune of Rs. 355.62 lakh. For the year 2002-03, the outlay for this
scheme was Rs. 880 lakh.
Export earnings from handicrafts including hand-knotted carpets were to the tune of Rs.
5835 crore during the first year of the 9th Plan. It increased to Rs. 9205.63 crore during
the terminal year of the Plan. The export target for the year 2002-03 was Rs. 10,470
crore. Exports to the extent of Rs. 7511.42 crore had been achieved by December 2002
itself.
Sericulture
India continues to be the second largest producer of silk in the world. It produces all the
four varieties of silk, namely, mulberry, eri, tasar and muga. Sericulture is an important,
labour-intensive and agro-based cottage industry providing gainful occupation to more
than 5 million people. Silk production increased from 7600 metric tonnes (MT) in 1985
to 17347 MT in the year 2001-02, and the estimated production during 2002-03 is
18700 MT. Silk items being exported comprise natural silk yam, fabrics, made-ups,
ready-made garments, silk carpets and silk wastes. The earnings from exports of these
items amounted to Rs. 2235.38 crore during 2001-02
Woollen Textile Industry
The woollen industry in the country is comparatively small in size and widely dispersed.
Most of the units are located in Punjab, Haryana and Rajasthan. Some of the larger
units are located in Maharashtra, Punjab, Uttar Pradesh, Gujarat and West Bengal.
There are 718 registered woollen units in the country. The number of persons employed
in this industry is approximately 12 lakh.
The production of indigenous wool in the country is estimated to have risen from 47.91
million kg in 1999-2000 to 52.11 million kg in 2001-02. Since indigenous production of
fine quality wool required by the organised mills and the decentralised hosiery sector is
very limited, India depends largely on import, mainly from Australia. New Zealand wool,
which is rich in lustre, is imported primarily for the carpet sector. The total imports of
wool during 2000-01 and 2001-02 were to the tune of 53.75 million kg and 72.49 million
kg respectively. (PIB Features)
15
INDIA’S HANDLOOM SECTOR1
With a long tradition of excellence in its craftsmanship India s handloom textile
sector occupies a place of eminence in preserving its heritage and culture. The
level of artistry and intricacy achieved in the handloom fabrics is unparalleled and
beyond the scope of modern machinery. It caters to the needs of a diverse cultural
ethos ranging from exquisite fabrics, which take months to weave to popular items
of mass production for daily use. Hand weaving is one of the richest and the most
resilient media of ethnic expression.
The number of handloom weavers and others engaged in weaving and allied
activities is 65.50 lakh. It is estimated that this sector provides livelihood to 124 lakh
people. Despite the unrestricted scope and opportunities, the dispersed and
unorganised nature of handloom industry has been facing constraints on its
sustenance such as traditional production technique, low level of technology and
skills; lack of modernisation, quality upgradation, and research and development,
lack of adequate, even and timely supply of inputs; lack of product and desi9n
innovation; non-availability of adequate and timely credit facilities, lack of skill
upgradation of weavers in designing, dyeing, printing and processing, and
inadequate organisational, marketing and technical support.
To equip the handloom sector to cope with these constraints, the Government has
been implementing several central sector and Centrally-sponsored schemes. On
these schemes, the Central Government had spent Rs. 478 crore from Plan budget
and Rs. 251 crore from non-Plan funds during the 9th Plan. An outlay of Rs. 625
crore has been fixed for the 10th Plan period.
Schemes
The Government launched an integrated and comprehensive Centrally-sponsored
scheme called Deen Dayal Hatkargha Protsahan Yojana (DDHPY) to take care of a
wide gamut of activities, such as, product development, infrastructure and
institutional support, training of weavers, supply of equipment and marketing
support both at micro and macro levels in a co-ordinated manner for an overall
development of the sector and benefit to the handloom weavers. This scheme
came into effect on April 1, 2000 for implementation. The total cost of the scheme
is Rs 690 60 crore. Out of this the States’ share is Rs. 327.80 crore. The balance
amount forms the Central outlay for this scheme. So far 20 States have
implemented this scheme. An outlay of Rs. 310 crore has been provided for this
scheme during the 10th Plan period.
A National Centre for Textile Design was set up in Delhi in January 2001 with a
view to providing design, technical and market intelligence support to the textile
sector in general and handlooms in particular. The Centre also organises
exhibitions of exclusive handloom fabrics for the benefit of weavers and exporters.
The Government has been spending nearly Rs. 75 lakh per annum on the activities
of this Centre.
The pattern of assistance under the Workshed-cum-Housing Scheme was revised
and during the last three years of the 9th Plan alone, sums amounting to Rs. 37.25
1
crore were released by the Central Government for the construction of 31,064 units
of Worksheds/Worksheds-cum-Houses for handloom weavers.
The Government had already been implementing a scheme through the National
Handloom Development Corporation (NHDC) for supplying yam to weavers at
prices at which it is available at mill gates. During the 9th Plan period SUP^S were
stepped up from a quantity of 118.69 lakh kg in 1997-98 to 195.58 kg in 2001 -02.
Keeping in view the problems faced by the weavers in some States on account of
unsold, accumulated stocks with them, the Prime Minister, in his address to the
nation on August 15, 2002, had announced a scheme with an outlay of Rs. 100
crore for the grant of a special rebate @ 10 per cent of the value of the stock sold,
so as to enable the weavers or organisations to liquidate the stock by organising
sales at discounted prices and to kick-start their production cycle.
The Prime Minister also announced another scheme with an outlay of Rs. 125
crore for imparting training to one lakh handloom weavers and artisans in technical,
managerial and marketing skills to enable them to produce and market high value
and diversified quality products in keeping with the current trends in domestic and
international markets. He had also further announced the implementation of a
Special'Contributory Insurance Scheme for the weavers and artisans.
The impact of these schemes has been quite significant. The production of
handloom fabrics increased from 6860 million sq. mtrs in 1997-98 to 7585 million
sq. mtrs in 2001-02. Today, this sector contributes 19 per cent of the total cloth
production and 15 per cent of the total export of fabrics from India. Over 125
countries are now buying handloom products from India. There is a growing
awareness among the weavers about the technological improvements available for
increasing production and productivity and reducing fatigue of the weavers. There
is a growing realisation that the handloom sector should tune itself for continuous
diversification and innovation reflecting the trends and fashions in home textiles
and clothing as it is a growing and expanding market favoured by high end
consumer segment. There is a visible effort to revive the traditional designs and
introduce innovations to meet the emerging trends.
The Central Wool Development Board (CWDB)1
The Central Wool Development Board (CWDB), Jodhpur was constituted by the
Government of India, Ministry of Textiles in 1987 to promote growth and development
of wool and woollens through various activities like marketing intelligence, marketing of
wool and woollens, price stabilization, standardization of wool and woollen products
and quality control. The board started its functions since the year 1989 and was
registered as a Society under the Societies Registration act of Rajasthan in 1996.
The Central Wool Development Board has been reconstituted under the chairmanship
of the union Minister for Textiles on 26 June 2001 for a period of two years with a total
membership of 29 including its chairman and member secretary. The activities of the
Board are supported by grant-in-aid by the Ministry of Textiles, given through and
regulated according to the Five Year Annual plans. For the Annual Plan 2001-02, as
um of Rs. 800 Lakhs was allocated to the board for its various schemes and
programmes. The allocation includes UNDP's share of Rs. 300 Lakhs and
Government of India's share of Rs. 73 Lakh under UNDP CCF-1 Angora Wool
Development Project. The Ministry of Textile released Rs. 325 Lakh during the current
year. The Board has utilized Rs. 200.02 Lakh till 31st December 2001 on the
implementation of vanous schemes and projects of the Board.
The Board has been administering the following schemes for development of wool
industry either with the help of the State Government Departments/Bodies or through
non-governmental organizations:
a) Integrated Sheep & Wool Development Project
The Project has integrated approach to improve quality & increase production of
wool and contained following components
- Health Coverage
- Breed improvement
- Product Development
- Marketing Assistant
- Training to the sheep breeders.
b) Integrated Angora Rabbit Development Project
- To follow integrated approach for development of Angora Rabbit Farming to
increase production & productivity of Angora Wool.
- To provide basic facilities in terms of Rabbit management, shearing and
marketing of wool.
- To provide basic training in Rabbit Farming so that educated unemployment
1 http://woolboardindia.com/html/schemes.htm
youth can take up this profession and traditional farmers can supplement their
income.
- To create opportunities for employment generation in rural areas.
The scheme components would include establishment of Angora Farming Units,
Health care, Marketing assistance and Training for selected families. State
Government Organisation engaged in Angora Rabbit development in the concerned
state will implement the project. All beneficiaries of the project are to be encouraged to
form one or more co-operative societies or are to be taken as member in existing co
operatives.
c) Machine Shearinq-cum-Traininq Project
-To popularize it through demonstration and training.
-To tram enough candidates to take it up as an economically viable activity.
-Employment generation among the rural youth from sheep breeders
-To shear sheep through machine to adopt modem techniques
-Avoid double cuts of staple.
Total 106 Shearing Machines have imported and 99 Machines have
distributed in following states:
been
d) Wool Scouring Plant
- To provide raw wool scouring facilities to wool growers, wool merchants and the
industry.
- To improve quality of wool by removal of burrs and by scouring
- Value addition to fetch better prices for the wool produce
e) Wool Testing Centre
- Testing wool for fineness, length, yield, colour vegetable matters,
content etc.
- Diving (he grading to the woo).
- Collecting data of different types of wool.
- Keeping the marketing record in the computer.
- Testing of yam for count, twist and strength.
- Suggesting blend for carpet yam.
- Creating awareness of quality for wool and yam.
moisture
f) Industrial Service Centre
- To provide testing facility to industry.
- To create quality consciousness among the manufacturers.
- To suggest ways and means to improve quality and product range as per changing
needs of the market.
- To provide designing and finishing facilities to the industry.
q) Weaving & Designing Training Centre. Kullu
To train 45 weavers and dyers, annually,
production activities in rural and hilly areas.
engaged in woollen handloom
h) Market Intelligence Network
To create Market intelligence Network in the country and build up reliable
information system for furnishing information prevailing market rates & trends of
wool & woolens. The Board has established 10 functionary centres in main mandies of
the wool producing states of the country. These Centres are functioning at Bikaner,
Beawar, Panipat, Lucknow, Jamnagar, Mehboobnagar, Hubli, Mirzarpur, Shimla
and Jammu.
(I)
Woollen Expo
Promote sales of woollen products
Increase awareness in favor of woollen products
Expose weavers/manufacturers to the new woollen markets.
Launch new wool products/designs for trial and promotion.
j) Human Resources Development
- For undertaking training programme in the country as well as abroad in
collaboration with other wool producing countries in the following areas.
a) Farm management
b) Sheep shearing
c) Testing and report writing
d) Wool marketing
e) Processing of wool & woolen products
f) Quality control/assurance
Woollen Expo:The Board has taken up the programme of the organising woollen expos
to promote the sale of wool and woollen products and to provide better marketing
facilities to weavers and spinners. During 2001-02, the Board has decided to organise
two Woollen Expos at Ahmedabad and Jodhpur during the winter season with a
financial provision of Rs. 19.00 lakh. The Board has incurred an expenditure of Rs.
12.83 Lakh up to 31 December 2001.
Promotional Activities: Since inception of the Central Wool development Board, it has
been carrying out various important activities for promotion of wool and woollens in the
country like organising seminars and workshops, conducting survey and studies,
publication of quarterly news magazine WoolWays, Organising fairs, sales cum
exhibitions. For this purpose, a provision of Rs. 4.00 lakhs has been kept during the
current financial year. The Board has incurred an expenditure of Rs. 1.06 Lakh up to
31st December 2001.
20
Schemes Undertaken By NABARD1
RURAL NON-FARM SECTOR (RNFS)
RURAL ENTREPRENEURSHIP DEVELOPMENT PROGRAMME (REDP)
NATIONAL PROGRAMME FOR RURAL INDUSTRIALISATION (NPRI)
DISTRICT RURAL INDUSTRIES PROJECT (DRIP)
RURAL NON-FARM SECTOR
Rural Non Farm Sector (RNFS) holds the key to faster economic development of
the country. It has potential and promise for generating employment and
increased income in the rural areas. Hence, NABARD has identified financing,
development and promotion of RNFS as one of its thrust areas. NABARD has
evolved several refinance and promotional schemes over the years and has
been making constant efforts to liberalise, broad base and refine/ rationalise the
schemes in response to the field level needs. The focus has been on greater
credit flow and provision of linkages for small, cottage and village industries,
handicrafts and other rural crafts in the decentralised sector in the rural areas.
NABARD refinance schemes for financing NFS activities
The refinance facilities available from NABARD can be broadly classified as
under: Investment Credit and Production credit.
INVESTMENT CREDIT
NABARD provides refinance to eligible banks for a wide spectrum of
manufacturing, processing and service sector activities under Rural Non-Farm
Sector (Investment Credit). Refinance upto Rs.15 lakh is available under
Automatic Refinance Facility (ARF) and beyond that under pre-sanction
procedure. Refinance under Rural Housing Sector is available upto Rs. 5 lakh for
construction of new houses and upto Rs. 1 lakh for repairs.
1. COMPOSITE LOAN SCHEME (CLS) - under ARF
Borrowers
Rural artisans, handicraftsmen, small entrepreneurs, groups of individuals,
partnership firms, co-operative societies, NGOs, etc.
Project Components
The block and/ or working capital requirements of small/ micro enterprises.
Refinance ceiling
Maximum of Rs. 10 lakh per borrower.
Repayment period
3 to 10 years with suitable need based moratorium not exceeding 18 months.
1 Downloaded from http ://w\v\v.nabard.org/roles/promo_rural 1 .him
Eligible activities
All manufacturing, processing, and approved service activities. The following
activities covered earlier under separate schemes are now merged with the
Composite Loan Scheme:
• financing mobile/ static sales carts and kiosks.
• financing of storage godowns (larger units beyond CLS can be
covered under ILS).
• Traditional sector, viz., handlooms - modernisation and acquisition
of looms, construction of work sheds, handicrafts, coir, sericulture,
etc. and powerlooms upto CLS limit.
INTEGRATED LOAN SCHEME (ILS) - under ARF
Borrowers Individuals, artisans, groups of individuals, associations (formal and
informal), proprietary/ partnership firms/ co-operative societies, registered
institutions/ trusts, voluntary agencies, private and public limited companies, etc.
Project Components Block capital (e.g., cost of land to the extent of borrowers’
down payment, workshed, plant and machinery, equipment and tools, computers,
technology upgradation, project formulation and consultancy charges, preliminary
and pre-operative expenses, etc.) and working capital for one operating cycle.
Refinance ceiling Maximum of Rs. 15 lakh per borrower.
Repayment period 3 to 10 years with suitable need based moratorium not
exceeding 18 months.
Eligible activities Manufacturing, processing and approved service activities in
the cottage, village and tiny industry sector and modernisation/ renovation/
expansion/ diversification of existing units. The following activities covered earlier
under separate schemes are now merged with the Integrated Loan Scheme :
• Financing mobile vans.
• Acquisition/ Modernisation of handlooms and Construction of
worksheds.
• Modernisation/ renovation of powerlooms (MANTRA Scheme).
• JEAS Scheme for jute development.
• Setting up or renovation of marketing outlets.
• Support to mother units/ satellite units.
• Setting up of Common Service Centres.
• Opening/ renovation of handloom/ handicraft emporia.
• Acquisition of powerlooms (Individuals and Societies).
• Redeployment of NTC Workers - Acquisition of old powerlooms.
• Installation of coir/ defibering units.
• Setting up / renovation of showrooms / sales depots, emporia for
coir.
• Sericulture.
Small Road and water Transport
Operators SCHEME (SRwTO) - Under ARF
Borrowers Individuals, groups of individuals, including partnership/ proprietary
firms and co-operative enterprises. The borrowers should be from the rural areas
and should utilise the vehicle mainly for transportation of Rural Farm and Non
Farm Products and inputs and passengers to/ from marketing centres. The
borrower or his employee should possess a valid driving licence and the vehicle
should be duly registered with the Regional Transport Authority as public
transport vehicle.
Project Components Besides cost of vehicles, the loan component may include
cost of chassis, body building expenses, initial taxes, insurance, etc.
Refinance ceiling Maximum of Rs. 15 lakh per borrower.
Repayment period 5 years with moratorium of 6 months.
Eligible vehicles Transport vehicles including Light Motor vehicles, Jeeps,
Autorickshaws, Water transport units (boats, launches etc.), small refrigerated
vans, bulk carriers for carrying edible oil/ petroleum, etc. Private vehicles, second
hand vehicles and two wheelers are outside the purview of the scheme. Number
of vehicles to be financed will be subject to RBI ceiling under priority sector
[endin
Schemes under pre - sanction procedure g which at present is 10 vehicles
(i) Term Loan to SSI units (through CBs & Scheduled PCBs)
Borrowers
Individuals, Proprietary / Partnership concerns, Private/ Public Limited
State
Level
Companies,
Promotional/
Developmental
Organisations,
Federations/ Corporations, Joint Sector Undertakings.
Purpose
Setting up of new units and modernisation/ renovation/ expansion/ diversification
of existing units (other than agro-industries).
Eligible items for investment
• Land and Site Development (including cost of land upto margin
money required to be brought in by the borrower).
» Construction of workshed (including civil structure, godowns for
storage, market outlets and other essential amenities).
. Plant & Machinery, (including machinery/ equipment required for
packaging and preservation)
• Equipment and tools.
. Delivery van.
• Project formulation and consultancy charges.
. Preliminary and pre-operative expenses.
. Margin for working capital.
Repayment period
3 to 10 years with moratorium of 12 months.
2-5
%
It should have the required minimum training infrastructure to conduct the
programme effectively.
• It should have good rapport with banks, local administration/ people and
possess grass-root level linkage.
• It should be prepared to conduct REDPs in the approved manner so as to
achieve good success rate.
RECENT INITIATIVES IN REDP
With a view to accelerate the process of REDP and to achieve the desired
objective at a faster pace, NABARD had initiated the following steps,
Corporate Goal
NABARD has set a corporate goal of training atleast one lakh unemployed youth
over a period of five years, ie. 1999-2000 to 2003-2004.
Institutionalisation of REDP
In order to have a focussed direction in the implementation of REDP, NABARD
has decided to forge long term collaboration with 3 or 4 selected VAs / NGOs in
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each state.
Technical REDPs
With a view to ensure setting up of units as well as their successful management,
it has been decided to encourage Technical / activity based REDP.
Consequently, select ITIs have also been included as eligible institution for
conducting REDPs.
Incentive based REDPs
To ensure continued follow-up/ monitoring and escort services to the trainees
with a view that all the trainees end up in establishing their own units, an
incentive scheme has been evolved whereby the REDP implementing agencies
will be suitably rewarded with cash incentives based on the number of trainees
setting up their own units, preferably with bank loan.
Participation fees
For ensuring total involvement/ commitment of the participants of REDP, the
implementing agencies are permitted to charge a nominal fee from the trainees in
addition to the grants given by NABARD.
FINANCIAL ASSISTANCE - COMPONENTS
NABARD provides promotional assistance to select agencies to meet the
recurring expenditure in conducting REDPs. Under institutionalisation of REDP,
the select institutions are provided with need-based capacity building support and
long-term assurance by way of continued financial assistance, for conducting
REDPs.
PROGRESS AND IMPACT
. Extended grant assistance to over 300 local NGOs to conduct REDPs.
• Identified 38 VAs / NGOs under Institutionalisation of REDP
• A total of 4249 REDPs were assisted till 31 March 2003, enabling about
120234 rural youth to be trained satisfactory success rate.
. The average success rate of the programme is estimated to be around
.
50%.
Supported capacity building of partner agencies,
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Sponsored number of Trainers' Training Programmes, NGO-Bankers'
Interface Workshops.
NATIONAL PROGRAMME FOR RURAL INDUSTRIALISATION (NPRI)
NPRI for development of Clusters
The National Programme for Rural Industrialisation (NPRI) was proposed by the
Union Finance Minister in his budget speech for the financial year 1999-2000,
with a mission to set up 100 rural clusters every year for the next five years to
give a boost to rural industrialisation. As a part of its commitment to NPRI
programme, NABARD has decided to take up the development of about 50 rural
clusters during a period of 5 years from 1999-2000 to 2003-04.
What is a Cluster?
A cluster is generally defined as a geographically bounded concentration of
similar, related or complementary businesses with shared infrastructure, markets
and services and faced with common opportunities and threats.
Importance of Clusters
Micro enterprises in rural areas face competition from each other as well as from
the organised sector. Development of clusters helps in deriving benefits of
economies of scale in procurement of raw materials, production and post
production operations.
'Cluster Development Approach' enables the small scale enterprises to withstand
the challenges thrown up by competition and globalisation. It is estimated that
there are around 350 modern Small and Medium Enterprises (SME) clusters and
about 2000 artisan based rural clusters in India. NABARD has been advocating
cluster approach to lending since long and its various programmes/ schemes like
Area Programme for Rural Industrialisation (APRI), District Rural Industries
Project (DRIP), Mother Units, Common Service Centres, Artisan Guilds, etc.,
involve development of clusters.
Cluster Philosophy
• Focussed assistance.
• Demand based assistance.
. Flexible instruments of assistance to meet specific needs of cluster.
. Close monitoring to spur continuous development and innovation.
Constraints in rural cluster development
. Lack of education, awareness, organisation, marketing skills among rural
entrepreneurs.
. Lack of infrastructure facilities such as electricity, roads and limited
development assistance and dependency on Government.
Objective
Strengthening of existing clusters and development of new clusters in
exceptional cases towards sustainable competitive advantage through
technology upgradation/ transfer, raw material access, skill development,
managerial inputs and credit support, market support.
Cluster Development - Strategy
• Identification of clusters.
. Diagnostic study and preparation of cluster status and action plan.
29
Identification of solutions to problems/ issues.
Selection of NGOs/ VAs/ Developmental Agencies.
Constitution of Cluster Development Committee
Assignment of clear roles to various partner agencies
Approval of Action Plan
Launching of the Programme
Sensitisation for the partners of the programme, Group mobilisation/
motivation.
• Awareness/ Skill development of artisans.
• Increasing product range and improving quality and productivity.
. Supporting technology upgradation/ transfer.
• Implementation of credit linked promotional programmes through NGOs/
VAs/ Developmental Agencies.
• Monitoring the progress closely through the Cluster Development
Committee at regular intervals.
• Development of Management Information System.
Preparation of Cluster Status
Number of people/ families employed, nature of activity, age of the cluster,
source of raw material, skill levels, marketing strategy, credit linkages and other
details of the activity/ product line constitute Cluster status.
Action Plan
Cluster development Action Plan broadly covers expected credit/ refinance
requirement; year-wise for three years and promotional intervention suggested
during each year.
Cluster Development Committee
The suggested composition of the Cluster Development Committee is the District
Collector or Head of the DRDA as Chairman and AGM(DD), NABARD as
Member Secretary and the following persons as Members.
. Lead Bank Officer
• General Manager, District Industries Centre.
. NGO/ VA/ Developmental Agency.
• Artisan/ Entrepreneur representative from the Cluster.
• Representatives of Local Banks, other local Govt, agencies such as KVIC/
KVIB/ SISI and any other suitable local Resource Person.
• Representative of SIDBI, if available.
The Committee will have to review the cluster status and action plan
suggesting stage-wise action for a period of 3 years so that total strategy
for skill development, resource mobilisation, raw material supply,
marketing strategy, organisation and management, etc., could be covered.
The Committee may meet atleast once in a quarter to monitor the
progress.
Role of different partners
NABARD
AGM (DD) will oversee the implementation of the programme in the identified
cluster. Besides providing refinance support to the eligible units under various
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refinance schemes of NABARD, need based promotional support may also be
considered.
VAs/ NGOs The identified NGO will act as the nodal agency for implementing
the project. Its close rapport with them is very important particularly in
identification, planning, monitoring and assessing the development of clusters
from the artisans' point of view.
Govt. Departments/ Promotional/ Developmental Agencies
The involvement of these agencies is to be ensured right from the beginning and
efforts may also be made for deriving support from higher level officers.
Banks
• Integrating Cluster Action Plan into Service Area Plans.
• Identifying potential entrepreneurs/ enterprises.
• Ensuring focussed attention to meet the credit needs of the entrepreneurs.
• Ensuring qualitative lending with close supervision and support services.
• Sponsoring potential entrepreneurs to participate in the Rural
Entrepreneurship Development Programmes (REDPs).
• Deputing field level functionaries to various training programmes, meets,
workshops.
• Associating with Cluster Development Committee, monitoring the progress
of Cluster Action Plan and maintaining proper data base.
National Programme on Rural Industrialisation (NPRI) DISTRICT RURAL INDUSTRIES PROJECT (DRIP)
NABARD as an Apex Developmental Financial Institution in the country,
committed to rural development, has identified Rural Non-Farm Sector (RNFS)
as a thrust area and evolved a number of refinance schemes for financing the
manufacturing, processing and service sector activities including infrastructure.
As a useful adjunct to its core financing function, NABARD has also introduced
several credit- linked experimental promotional programmes/concepts for
developing rural enterprises and entrepreneurship in a cost-effective,
demonstrative and sustainable manner. NABARD on a pilot basis had launched
an integrated area-based credit intensification programme in collaboration with
Government, Banks and other development agencies with district as a focus
known as District Rural Industries Project (DRIP) during 1993-94 in 5 districts
with a view to evolving a role model for rural industrialisation.
Creation of significant number of sustainable employment opportunities in rural
areas through enhanced credit flow to RNFS with complementary financial and
non-financial promotional support.
On a pilot basis the project was launched in 5 select districts in the country viz.
Ganjam (Orissa), Gwalior (Madhya Pradesh), Kumool (Andhra Pradesh),
Sabarkantha (Gujarat) and Sawai Madhopur (Rajasthan). Encouraged by the
success achieved in the pilot districts and keeping in view the overwhelming
support received from all the Project Partners in development of RNFS in the
DR-IP districts, NABARD has extended the project to 17 more districts, during
1999-2000 and 2000-2001 in Phase II & III.
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At this juncture, the project has assumed greater importance in the context of
replication possibilities at the national level. Hence, NABARD has decided to
expand DRIP to 100 more districts over a period of 5 years. Consequently, the
project has already been extended to 20 districts during 2001-02 under Phase-IV
and had decided to launch the project in 20 more districts during 2002-03 under
Phase V, of which the project has been launched in 18 districts as on 31 March
2003. Thus, the project is now under implementation in 61 districts
DRiP PHILOSOPHY
• Focused Attention
• Systematic Planning
• Participatory Process
• Coordinated efforts
• Credit plus Approach
J'lP - MAJY FEA-TURES
. A participatory programme of State Govt., Banks, NGOs and
Developmental agencies for credit intensification towards development of
RNFS.
• Facilitates convergence of the experience, energy and resources of all
project partners to harness the potential for rural development.
• Realistic assessment of potential for growth of RNFS and gearing up the
entire district machinery committed to rural development.
• Facilitates adequate, timely, qualitative and need- based credit support
through banking channel for setting up of new units as well as for
expansion/ modernisation of existing units.
• Envisages promotional, infrastructural and linkage support from various
project partners.
• DRIP is not a target-oriented programme. Does not envisage provision of
any new subsidies other than the normal facilities (including existing
subsidies) available for setting up of RNFS units in the district.
• A flexible programme open to adoption of new ideas and innovations.
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Conduct of Detailed Potential Survey of the District.
Strategy meets at District & State level.
Sensitisation of the Functionaries of Project Partners - Govt / Banks/
NGOs/ VAs/ DAs.
Goal Oriented Project Planning (GOPP) Workshop at the District Level.
Training of the officials of Primary Lending Institutions (PLIs).
Preparation of DRIP Action Plan.
Dovetailing of DRIP Action Plan with Service Area Plans (SAPs) of banks.
Adoption of Cluster Approach.
Awareness creation/ skill upgradation amongst Entrepreneurs.
Technology Upgradation/Transfer.
Focus on . implementation of Credit-linked Promotional Programmes
through NGOs/VAs/ DAs.
Encouraging Credit Delivery Innovations.
•
Monitoring the progress closely through Project Coordination & Guidance
Committees (PCGCs) at the district and state level.
NEW INITIATIVES
RURAL HAAT SCHEME
Realising the fact that marketing has a crucial role in development of rural non
farm sector and rural haats being an integral part of a rural market system, it is
felt that the strengthening of these haats will have a positive impact on marketing
of rural non-farm products. NABARD has, therefore, decided to support two
Gram Panchayats (GP) in each DRIP district for development of infrastructural
facilities in the existing/ new haats by providing grant assistance to GP @ 80% of
the total project cost or a maximum ceiling of Rs.2 lakh per haat whichever is
less.
NABARD has enhanced the maximum ceiling of grant-assistance for rural haat to
Rs. 3.00 lakh from the existing limit of Rs. 2.00 lakh for providing minimum
infrastructural facilities and financial support beyond Rs. 3.00 lakh will be
extended by way of soft loan through Panchayati Raj Institutions ( PRIs)/ Primary
Cooperative Societies (PACS) for providing some additional facilities in terms of
10-15 permanent shops with shutters for bringing in other essential services.
Soft loan extended to Gram Panchayat/ PACS shall be repaid to NABARD in 5 to
7 years including an initial moratorium period of one year on half yearly basis.
The rate of interest on the soft loan will be such as may be determined by
NABARD from time to time. At present the soft loan will carry interest @ 9% per
annum payable at half yearly rest on 30 September and 31 March every year on
the principal loan outstanding.
Salient features of the scheme
• Project Holder - Gram Panchayat (GP)
• Project Components - Sufficient land owned by GP, Compound wall with
barbed wire fencing, raised platforms covered with semi-permanent
roofing, drinking water, sanitary arrangements, cycle stand, notice board.
• NABARD’s Assistance - 80% of project cost or maximum ceiling of Rs.2
lakh whichever is less.
• GP/ Zilla Panchayat Share - At least 20% of project cost.
Conclusion
DRIP has amply demonstrated that with clearly defined objectives, identified
potentials, coordinated operational strategy, orientation/ sensitisation/ training,
participatory approach and close monitoring, intensification of credit for setting up
of NFS units and employment generation are feasible even without subsidy.
Demand-led production could be accelerated within proper entrepreneurial
environment, institutional linkage and synergic efforts. Many of DRIP tools/
strategies/ experiments have potential for successful replication.
Section II
This section deals with analyzing the issues affecting marketing
of rural products and strategies to overcome the same.
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THREATS AND STRATEGIES IN RURAL MARKETING1
Marketing is an essential postulate of production. In rual industries, where the
production is, by and large, demand-based, the marketing factor possesses
considerable importance. The market for the rural industrial products is
unorganised and dominated by the middlemen to a large extent. The tiny sector,
consisting of village and cottage industries, has to face a variety of problems, of
which, the acute problem of marketing is products at better remunerative prices.
The rural industries can be broadly classified into three categories, viz., resource
based, demand-based and skill-based. They significant employment and
production potential as well as the demand for export. They can teke any form to
withstand the market competition and to enlarge frontiers. However, the problems
confirming the unorganised segments of market, exploited through the organised
sector since long, need to be exploited. The present discussion attempts to focus
the existing market network of the rural industries and its economic viability from
the entrepreneur ’s point of view. The marketing of rural industrial products, such as
slate and tiles, pottery, footwear, woolen articles, handicrafts and agro-based
industries are analysed to explore the organisational strcture of the marketing. The
problem areas in the marketing of rural industries products are also identified.
The broad perspectives of the marketing network of rural industries can be seen in
two dominant sectors, namely, private sector and cooperatives. The private sector
comprises trader, commission agent, master craftsman, exporter, retail dealer and
fording agent. Besides cooperatives, there are government corporations and
development agencies which promote the marketing activities. The pressure of
marketing is created often by the private sector on the rural artisans exploiting their
economic conditions, such as debt trap, low income and dependency on the
external outlets for the turnover of their products.
Rural entrepreneur may be identified in many dimensions, viz., social, cultural,
economical, and to some extent anthropological toolhough an important change
agent in every society, he is one of the most engmatic character in rural economic
development. It is his dynamism that paves the gap between the conspicuous
demand of urban people and the real life in villages, but precisely his role is often
unclear. The rural entrepreneur or rural artisans may be either an individual or a
group, both are equally significant in less developed countries, a rural artisans
belongs to a family, a religious sect, a political party, kinship, a caste and so on.
These are value determinants and constraints, fashioned by his own way.
The ruraf artisans are economically backward, because of un certain market and
lack of adquate income from value added price. The loss minimisation, therefore,
becomes the dominant concern for the rural artisans rather than profit
maximisation. By and large, neither buyer nor seller has developed notions of fair
1 Information compiled by NIRD, Hyderabad
and good price as both operate under hopes of optimum realisation of profit in
buyiong or selling. In rural areas, to some extent, ‘barteri is common. However, the
pattern of exchange of goods is often established by ling-standing custom, inter
class, inetr-factor dependences or beliefs. tHe community of rural artisans has a
strong dependence on the elite group, may it be rural or urban and so it excercises
the ‘priceievy’ on the artisans. Most of the traders belong to such elite groups. In
two of these groups, it is observed that there is a talent device to dominate
economically or to take aggressions out on others. As such, in the process, the
artisans group tilts towards the authoritarianism of the traders and suffers from
exploitation.
The fundamental question now arises is that given this trade pattern, what is the
potential for income generation through marketing for entrepreneurs in rural areas.
To begin with the answer, firstly, an unorganised market in the rural industries
products is the major problem. Secondly, lack of remunerative prices which causes
the economic discouragement to the artisans in product marketing. Finally, the risk
factor involved in the rural industries product marketing is more as compared to the
organised sector, due to unawareness of shifts in demand for products from the
elite group, who forms the core of potential buyers.
Sociological Barriers
In the Indian contex , the village has been defined in many ways. It is defined for
the purpose of the census which may not been the same as village recognised by
the revenue authorities. Sociologically, a village can be determined as a cluster of
homesteads in close proximity to each other and usually separated from each other
by open spaces. The village can be termed economically as a unit of production of
various foodgrain and non-foodgrain products managed by various occupational
groups. In real world, however, there are exceptions. In some parts of India, one
cannot distinguish clusters of homesteds: they are found to be scattered over the
countryside in a continuous stretch. In other areas, a village may consist
exclusively of upper class and adjacent settlements of labourers, poor peasants
etc. By and large, village means more than its synonym of which the political shape
of the country stands on its definition side and the economic development of the
country on its interpretation side.
The rural areas in Indian show much higher variety in their pattern of distribution
and internal structure. There are four types of rural settlements found in the country
These are: (I) nucleated villages; (ii) linear villages; (iii) irregularly clustered
villages; and (iv) scattered homesteads. The most Common typesof the village
settlement are of nucleated and clustered ones. The linear type villagesare usually
arranged on both sides of the street and are common in south India. Scattered
homesteads are found in Kerala and some parts of Assam and West Bengal.
135
In the villages, there is commonly class stratification, which governs the rural
economy at the grass roots. The village society is composed of two parts of which
the people who possess marginal or no means of production and who live by
exchanging their labour power against money or live in the capacity of agricultural
labourers comprise the first part. Generally speaking, these people are agricultural
and non-agriculturai labourers who constitute the majority among the villagers. The
second part of the social atratum consists of a minority of property owners who
derive income by appropriating a surplus out of the use values produced by the first
group of people. The big landowners and moneylenders who ocupy a pocket of the
village form the latter part of the society . The property owned group is termed as
upper class and the group of agricultural labourers, marginal, small and medium
farmers has been termed as suppressed class.
In the given rural social structure, the upper class bargains over the suppressed
class to optimise their profit , it is discussed in the following text as to how the
marketing pattern is controlled by the upper class. This class consists of capitalists,
moneylenders, rural political elite, and rich farmers. This group provideds the
backwardlinkages Viz., credit in terms of cash and kind, employment, and to some
extent, technical and extension assistance to the producers. In case of household
industries, the types of backward linkages are diofferent from the agricultural
sector. The former group provides artisans the credit, raw material and market for
their products as backward linkages. But the confict satrts for better price when the
surplus of farm products is brought into the market for sales. This is also the case
with the products of the rural industries. The producers find themselves unable to
strike trade agreement with alternative channels other than the upper class group
in the village because of indebtendeness and the social power of the capitalist
group. The farmers and artisans. Therefore, sell their produce under economic
compulsion. This leads to the consequence of distress sales on their income
savings and investment. The capitalist group also provides credit to traders who in
turn sell the products processed from vilalge markets to the capitalist group for
forward trading. The traders, by and large, act as commission agents and purchase
the products from producers in periodic markets locally known as shandi or haat.
These consitions form the cycle of social power configuration which reflects on
marketing in rural areas to the cycle of social power configuration which reflects on
marketing in rural areas to a large extent.
Infrastructure
Efficient and improved marketing system is one of the important factors in the
development agriculture in any region. Abbott has discussed that agricultural
production is generally confined to the primary markets due to inadequate transport
facilities. However market for other products may have access to other channels.
This may perhaps be possible by developing low cost transport facilities. This
would help in economizing the marketing cost per unit at micro-level. Liang argues
in a manner, to produce more income to the farmers, he state that higher farmstead
'3€
prices which accompany improved transport and marketing facilities encourage
specialization in cultivation of cash crops. The weakness or strength of marketing
depends on the level of transport efficiency. Thus, Kulkarni considers
transportation and marketing as the integral part of the trade economy. Lotuth adds
that hifher developed transportation system eliminates the need to produce
proccessed food products very near to the settlement location; however, such
circumstances, in turn may evolve high degree of regional specialisation in
agriculture.
Infrastructure is an important factor in measuring the economic worthiness of a
region. It may be described as “Social overhead capital to distinguish from the
direct productive capital. “Sundaram states that the infrastructure, therefore^
belongs to the category of public goods. In practice, infrastructure refers to such
services like transportation and communication storage and physical amenities.
May studies have highlighted that the infrastructure in the developing countries has
been neglected in the national planning and only production aspects have been
given care which ultimately lead many bottlenecks, such as marketing ,
technological adoption etc.
Roads are one of the important issues to be discussed in context of infrastructure^
A study conducted by Rajagopal reveals that the length of roads in India, with
reference to the net sown area and geographical area to cater the hinterland, is
feeble which accounts 1.296 km and 2.326 km per thousand hectares of above
categorized areas respectively. Though special emphasis was laid during the fiveyear plans and the outlay for the construction of roads was increased in
subsequent plan years, the construction schedule was often far slow and piled up
the overhead costs. Further enhancing the need of the rural roads, the Working
Group on Rural Roads cites that the rural roads must be competent to form efficient
transport system required for the movement of agricultural supply in the
countryside.
The discussions in the Indian society of agricultural Economics pinpointed the
emerging constraints in marketing infrastructure against the backdrop of increasing
marketable surpluses, particularly with regard to transportation, storage and
processing.
Thus, he need for developing infrastructure for effective market economy is
evident. It is observed that in most of the backward regions, the infrastructure
particularly roads and communication, have yet to make headway. The
produce is obstructed during early PQ^^stpenod
rural roads and bridges, linking'to the regulated markets.
due to lack of proper i_.„
‘ ce,’ are
Apart from roads, the amenities, which hive to be provided at the^market P'^
■
of commodities
through,
elevated platform for display C
—
_1'.. ’ for sales, shed,1 cattle rhrr..
observed
drinking water, etc. It
I.was
------------— in a study. conducted in Chhattisgrah,
. Madhya
‘ ' an
Pradesh that over 80 per cent of periodic markets in villages are organised' irr
open space without shade for buyers and sellers. Further, the factors of time,
distance, and infrastructure are highly correlated. It results into an unprofitable
stroll to marketplace for buyers and sellers if any of these factors are de-linked.
Periodic Markets: Major Issues
The periodic markets may be explained as the agglomeration of buyers and sellers
in villages, semi-urban and some parts of urban areas for marketing of the produce
grown in the hinterland at a given place, title and day. The periodic markets are
held weekly, biweekly and fortnightly according to local traditions. Weekly market is
the main channel of distribution of local products and goods brought from outside
the area. The weekly markets serve the villages failing in the radius of 16
kilometers on an average.
In the weekly markets, the firm, non-farm and
manufactured goods brought from their areas of its hinterland and urban areas are
sold and purchased. The transactions in the markets are predominantly in cash,
though barter system also exists incase of sale and purchase of local products like
pottery, ironware, forest products, etc. The main unifying features of the periodic
markets are that it these are attended by a common group of professional traders,
mainly coming from urban places. Every weekly market exhibits almost common
agricultural products other commodities of rural industrial sector and goods brought
from urban areas. The quantity of foodgrains, manufactured goods, provision etc.,
is demand-oriented. To analyses the nature of demand, the analytical aspects may
be taken separately. However, for the purpose of simplification, the commodity
specific shops are grouped into main categories as below: 1. Food grains, 2.
Cloths, 3. Ornaments 4. Vessels,
5. Provision 6. Vegetable and fruits, 7. Sweetmeat, fried rice, grain etc., 8. Hotel 9.
Cosmetics, and 10. Earthenware.
The periodicity of the weekly markets is a function of various modes of
transportation available to the traders and visitors. The movement of the it inerrant
traders to the weekly markets is in hexagonal direction which covers the minimum
distance between the two points and forms a network of weekly markets.
In the weekly market, a firmer or an artisan is really a buyer, not a seller. His main
aim is to procure certain necessities, which he cannot produce, such as sail,
kerosene, clothes and the like. For buying these commodities, he has to part with
certain portion of his produce is homegrown, manufactured by skill, or collected
from forest. The rural sellers have no choice in the product market with regard to
trade channel for many reasons as discussed earlier. In early post harvest period,
the traders to make higher profit, unless government regularizes procure in an
effective way pay the producers. Similar conclusions have been drawn in other
studies, which also paid attention towards tile prevailing inefficiency of the market
system dominated by traders and also towards the ineffective market regulation.
38
The problems faced by the rural sellers in farm and non-farm sectors arc exhibited
in table 5.1, which explores weakness and inefficiency of the marketing with
reference to various aspects. The traders indulge in exploitation through various
underhand dealings resulting into huge marketing costs and low prices to the
producers.
Table 5.1
Major Marketing Problems faced by Rural Sellers
Farmers
Entrepreneurs
!______________________
1. Low price
1. Low price due to lack of value added.
2. * Non-availability of storage
time follow
facilities at the
prices in open market.
3. Lack of competition and
for
alternative
channels
procurement.
due
to
sales
4.
Distress
social
and
indebtedness
obligation.
2. Frequent changes in demand and
product specification
5. Problems of transportation and
communication.
6. High marketing costs.
5. Problem of selling in potential
markets
due
to
distance
communication and transportation
problems._____________ __________
6. High marketing hosts.
7. High rate of commission
agents.
8. Lack of cooperatives and
regulated markets. _________
9. Delayed payments.
7. High rate of commission to
intermediate traders.___________
8. Lack of government agencies
emporia and cooperatives.______ ___
9. Partial payment with long intervals.
3. Lack of
channels.
alternative
marketing
4. Sales at low prices because of work
contract on advanced payment and
sales agreement to particular trader.
!
All these problems show the weaknesses and inefficiencies of the marketing pattern,
which also bars to adopt the modern marketing methods of improving the quality of
the products and sales realization.
33
Future Threats
Conceptually, marketing is a function of demand and supply for the products
produced in a given space and time. It has different area specific, product-specific,
and socio-cultural characteristics, which determine the product's standing in the
market. These factors, by and large, govern the trade practice in the markets held in
a particular region. However, this may change with time and according to the
buyer's and seller's perception towards the marketing efficiency. The rural
entrepreneurs, who the basic suppliers of raw materials to the firm and non-firm
industries, largely transact in rural markets with small quantities of marketable
surplus. They could earn small margin of profit, which covers their subsistence
needs. Such economic conditions limit the extent of capital investment; through it
may be potentially profitable to invest more. However at the same time, the business
ventures are more risky. This is one of the consequences of the area- specific
characteristic the market. Likewise, product- specific market conditions reflects
highly favorable opportunities for maximum sales realisation when the buyers are
elite and the sellers have more prolific ways of communicating the product. Besides,
the branding and packing of the product is also important in marketing and this can
be popularized through communication approaches. In modern marketing system,
the approachability constitutes the core strategy for product marketing.
The three A’s determine efficiency of product marketing, irrespective of area
specification, rural or urban. The urban markets, largely in private and corporate
sectors, have been fast developing ever since the marketing communication devices
emerged in the trade- world. Apart from strong communication approaches, the
product markets are capital- oriented and can withstand short-run and casual market
risks.
The use of selling method by price mechanism has been another important aspect of
penetrating the products into the competitive markets. The urban markets, with such
manifold characteristics, impose social and economic threats to the rural
unorganized markets. Of these, the major threat is of the product salability in urban
market environment. The threats to the rural product market are also on their viability
and sustainability.
Table 5.2 exhibits the broad areas of threats to rural markets and concerned issues
that effect thereby.
The rural markets which are conventional and in developing condition, and
concentrate around marketing and product movement, face many threats: In fact, a
rural market is an assortment of different variables within the subsistence economic
system from the point of view of grower-seller. They are not capital-oriented and
unable to shift their product designs at par with the urban markets.
<4-°,
In fact the fashion advertisements (FAds) have the dominant role in stimulating
buyers’ perceptions and selling their brand in competitive markets. Such stimuli are
short span and create a lot of demand shifts in the product market. The rural
markets, thus, may have a greater threat of Fads in selling their products even in
their hinterland. It is an effective instrument in creating consumer awareness.
Table 5.2
Broad Areas of Market Threats with Reference to Rural Products.
Inclination towards
Popular brands
Three A’s
Consideration
Higher consumer
Awareness
Impact of
advertisements
Non-conventional
Dumping effect
Low profit
Mechanical
financing of
Products
Branding and
Packaging
Sustainability
New design and
Durability_______
Limited Resources
Pricing techniques
Unprotected market
Lack of Skills and
Enterprenuership
Systematic
product and
Distributing______
Well Knitted
operation Strategy
impact of FAds
In management terms, the fashion advertisements are called FAds. Advertisement is
an effective tool of communication, particularly in rendering the market awareness.
Advertising a product helps to mobilise the information on its utility and adaptability
among the consumers. The impression on buyer's perception for the advertised
product is deep rooted and attempts inclination towards the same. However, the
intensity of the buyer's inclination depends upon the frequency of communication
and the type of media. It is observed that the impression on product buying lasts
long if the communications are brought out in periodic intervals. The impact of shortrun advertisement may be seen, provided the communication is withdrawn in short
time with-high frequency. Thus, for an effective and long run business plan, the
advertisement of products should be representative and periodical. The short-run
impacts are noticed in the situation of changing fashion or buyers' perceptions
towards a product.
There are some products, particularly conspicuous ones, which attract products'
sales realisation will be more for a short while and recede quickly. However, there
i
4.
are other products, which need periodical announcement to withstand the market
competition and keep intact the consumer’s taste. The products of regular use like
washing powders, soaps, food products etc., for which there is a neck-to-neck
competition, an effective and frequent communication network is required. By and
large, such characteristics are noticed among the products of private sector. In rural
areas, the product communication system is weak due to many reasons. Firstly, the
communication skill and approach is lagging among rural products and sellers.
Secondly, there are financial constraints for issuing frequent advertisements in the
market. Finally, the products produced in rural areas are of traditional nature and
need perceptional changes among buyers, which is difficult task. It needs storming
communication system, as the rural industries are much unaware of such measures.
The FAds coming from private and corporate sectors have considerable influencing,
background. To assist in reviewing this background and pricing the product in
markets there are two acronyms-PEST and SWOT. The initial letters for PEST
represent four areas with direct implication on product, area and clientele. They are
political/ economical, sociological, and technological background. The political
decisions have immediate business implications. The economical and sociological
aspects, of course, overlap with the political decisions. However, the FAds backed
with technological merits of the product have larger-acceptability among consumer
as compared to the other backgrounds.
SWOT is another well-known marketing analysis, which has equal-application on
advertisement and its impact on the clientele. The analysis is made bearing in mind
many factors with reference to PEST and likely future trends. The FAds present
strength of their product, weaknesses of the competing products, opportunities for
product advancement, and threats facing in absence of their proposed products.
Thus, the SWOT analysis in FAds stands for strength, weakness, opportunity, and
Threats. The FAds extensively and intensively use these two backgrounds for
making the marketing communication more effective and acceptable. The rural
entrepreneurs to sell their product do not adopt such methods. It is one of the
reasons that they are facing the market threat prone, the private and corporate
sectors.
Market planning
Marketing in rural areas is a complex phenomenon. It has a greater bias towards the
social and behavioural aspects rather than business economics. The various factors
affecting the dimension of rural marketing have been discussed in the pretext. An
effective marketing system is one of the major determinants for generating better
income levels in rural areas. Since most of the entrepreneurs are also sellers of
their products in rural market, an improved market condition will have a direct
bearing on their income level and so also on the socioeconomic condition.
i
I
The product-market planning needs to be done in a phased manner.
extensive survey of the following is required:
• available infrastructure,
•
commodities produced,
•
consumer behaviour towards the existing products,
•
technology, resource
•
distribution pattern
Initially, an
This would be helpful to device an appropriate marketing system.
The basic considerations in evolving a marketing system are detailed in
Diagram 5.1 on the next page.
In improving the marketing conditions of rural entrepreneurs of small entrepreneurial
firms (SEFs), the state had to play an important role till the SEFs overcome the
organisational and financial conflicts of embryonic stage. However, in this process,
it is expected that the role of state should be sympathetic towards the Entrepreneurs
marketing economy but need not make it dependent on state.
This may lead to many behavioural changes and attitudinal problems in the long run
from the entrepreneur's point of view. The first and foremost requirement in planning
product-marketing system in rural areas is to develop a non-conventional technology
for product marketing.
This may be developed in the areas of product packaging, branding, market
communication through FAds, and distribution planning. The state patronage is
necessary for the breakthrough of such technology in rural areas.
However, the most important aspects that have to be kept in view are the
accessibility, approachability and adaptability of the technology in rural
entrepreneurial conditions, In this regards, there is need for generating extensive
social awareness and attitude towards development in a competitive economy.
Diagram 5.1
Major Considerations for Market Planning
^ARKETIUOv
COMMUNICATION*
PACKA6>|NGr
AND
&RANl>IN4
Realisation
Expansion
Tg^Noio^y
t
pko(X)CTION
AND
MA&ceriNCt
PRODUCTIONS
CONTROL
5ALK
PklC^IN^
PRODUCT
■DiCtRiBotioni
>^TATe
PATRONAAB
MARke r ---------- > CCieNTBL^
£7ATlip action
Approach a Bi uiy
7>eNTR.Ep£.e(\ieUR|AL
Acceptance
> ^OC/AL------AVJAP-CNESS
Pg -
Physical Factors
There regional geographic perspectives and spatial location with refere"ee to
product on and marketing prospects have an jmportanrbeanng on estaH^sh ng the
centers may be defined as growth centers.
Table 5.3
Management of Infrastructural Factors
Development Stage
Information Analysis
I
Location Decision
Physiography and
Seasonality
Plant and Machinery
roads, transportation
and
Availability
of
raw material,
anticipated influence sphere of the
communication, range or <
market.
Topography of the area, climate, marketing seasons of different
commodities, urban influence.
Energy component, availability of skilled workers, responsibility.
Industrial extension services and communication, prospects of
Extension and
Communication
General Amenities
advertisement, choice of mass media
Basic needs, institutional network, other physical amenities.
__________________
Table 5.3 above exhibits the required analysis of the information at different levels of
ItTeX^^
,s an important iS3ue. Which, in fatt
2- ™
at thS
industries, an appropriate
^'Son
could be developed with well-knitted infrastructure. Establishment of increasing
number of units, without proper management approach, may lead to serious cost
push explosion at the regional and national level, as most of units would become
sick due to supply and demand constraints.
Institutional Factors
Institutionalizing the credit has an effective impact in promoting the cottage and
village industries. The financial assistance and grant provided by the Khadi & Village
Industries Commission has proved its worthiness in generating enough working
capital support to the rural artisan. In turn, although it has augmented the production,
but not made significant progress in promoting the product market. The rebate,
provided to the consumers through cooperative, bhavans and bhandars, does not
give a price incentive to the artisan's economy. However, such incentives create
more demand for the produce, keeping the price level less fluctuating. Under such
circumstances, the unit may not be in a position to reap the cost effective returns on
the production in long run and its dependency on the institutional credit may be
increased. The ideal policy to promote cottage and village industries should be
adopt a strategy considerate to the artisans but which does not create dependency.
Hence, the price support may be thought of for the catalytic promotion of product at
the artisan's level. The argument can be conceptualised as a percentage of the
rebate, which is approved by the government, may be diverted as price support and
the price incentive may be given to the artisans directly.
Project financing is one of the important task to be managed in t proper way. The
basic issue in project financing, is the assessment of economic liability which, by and
large, depends on The fixed cost, variable costs, incidental costs, rent and interest
on capital etc.These determinants, in an integrated manner, aid the extent to
desired income of per unit production.The product design, plant and machinery,
infrastructure, availability of skilled and unskilled and unskilled workers etc.,
comprise the factors affecting technical feasibility of the production unit. These
factors have to be considered while financing a unit. While planning institutional
support, it is also essential to ensure credit marketing linkage for efficient financing
and prompt recovery to the borrowed money.
Distribution Planning
Product distribution has major significance in marketing. In the age of modern
marketing devices, distribution planning plays an important role in performing trades
at various hierarchies from wholesaling to retailing. There are seven important
stages, which set the whole approach of product distribution. These are: (i) product
characteristics, (ii) market area, (iii) existing methods of product distribution followed
in the region, (iv) size and value of anticipated sales, (v) overhead costs, (vi)
monitoring, and (vii) additional efforts in arranging effective distribution. An essential
criterion for product distribution is the consumer recognition of the product. In
absence of this, there would be spatial blockades in product mobilisation. On
A6
assessing the popularity of the product, the nature of trade competition has to be
analyzed to draw an appropriate distribution plan. The impact and loopsides in the
competing trade channels would help in building up strategies for the sales
realisation. However, the operational expenses on distribution network need to be
carefully considered to avoid escalations in overhead costs. The distribution plans
needs to be appraised and monitored to streamline the distribution according to
demand, cash flow and price trend. The additional efforts in consumer
approachability and cost effectiveness would bring a fair opportunity to maximize the
firm’s profit.
Rural Trade Policy
In the developing countries, the trade policy is open with view to provide goods and
services in rural areas adequately and at reasonable prices. However the implication
of this open trade policy has liberalized the market forces and the urban products
spread over rural markets, through a network of private traders. Besides trading, it
has also affected the production sector, by taking over the rural products on the
mechanised unit set up in private and corporate sectors. Such trends of production,
and market control have intensively and extensively affected the performance of
rural markets from the point of view of entrepreneur's profit. Thus, there is need for
developing a protected trade policy lot rural products to safeguard the
entrepreneurial interests of rural industries sector and to withstand the open market
competition. In this regard, the following considerations need to be made while
formulating the trade policy:
(i) There should be a clear demarcation is what items have to be produced in rural
industries sector and such items should not be allowed to manufacture in large scale
at mechanical units in urban areas.
(ii)The State patronage needs to be provided to the products of rural industries, and
for marketing the products through government/ cooperative network.
(in) There is an emerging need to provide sufficient media exposure for the rural
products. In this regard, a schedule needs to be fixed on controlled media for
covering the FAds-of rural products. However, with a liberal policy with low cost,
FAds can be formulated for insertion in press and Theatres.
(iv) The low cost technology may be made available for packaging and branding of
rural products. In providing technology, the approachability and adaptability level
should be kept in view.
(v) The products of rural areas need to be graded and appropriate quality control
measures may be imposed on them before release to the market. The state agencies
may initially provide financial support for quality control, which may be imposed upon
them compulsorily.
Besides, the delivery system in rural areas for inputs needs to be strengthened by
way of organizing more outlets in central and service villages. The cooperatives are
being advocated as an effective alternative channel for support of input and also
output marketing, howeverer,while planning for a cooperative structure, exhaustive
inquiry needs to be Made about its viability and sustainability.
Planning Retailing
Retailing is complex phenomenon in products marketing. It caters the needs of
consumers of different behavioral dimensions In rural area s, when
commercialization was not deep rooted, there were localized markets for specific
commodities produced in the hinterland, such as food grains, pottery, vegetable, etc.
These trade practices had change and an interesting modem deveiopment is the
consolidation of variety goods in a given place and time as permanent retail outlets.
However, in rural markets, which are held periodically, out of the wider variety of
goods being moved from place to place to satisfy the growing needs of community
emerge^ a new specialist known as the ‘retailer* with his occupation as 'retailing'.
There are three main ways of retailing the consumer goods in their finished or semi
finished state. These are: firstly, the manufacture, i.e., entrepreneur, grower or
importer of urban goods can sell directly to the consumers: secondly, the sales to the
consumer through retail outlet; and finally, the producer or entrepreneur can sell to
the intermediary who in turn may resell to a retailer who sells to the ultimate
consumer. Apart from these direct links often sales between similar types of
organisations lengthen the chain, such as producer to producer, wholesaler to
wholesaler, etc. These may be the discrete linkages, which are established, in
specific economic conditions.
The relationship of the wholesalers with retailers is maintained by supply factor to
the large extent. However, the price is also a factor, which governs the dynamism of
these trade channels. The bulk of the retail trade is dependent on the supplies
obtained through the wholesalers. Retailers, dealing in food grains, vegetables,
sweetmeats, cosmetics, clothes; and general merchandise, thus prove their entire
stock from the wholesalers. In retailing the direct contact with producer for supply of
goods is more or less if an unique state, since the wholesaler inevitably procures his
supplies from the producer in most of the instances reaches the final consumer attar
having handed by at least two sets of intermediaries - local wholesaler and retailer.
The wholesaler general differentiates the goods in terms of their quality and fixes
tentative trade levels. The final price charged by retailer includes the commissions
taken on the product it upper two level as well as his margin of profit. In this process,
the risk is with the speculation of supply at the wholesaler’s level, which, in turn,
generates supply gap at the retailer's level.
The rate of margin for a particular product depends on number of factors including
cost of handling of the product, extent of price risk and other cost; attributes to make
the business profitable. For example, if the demand for a particular product is less,
the stock will remain immobilized for a longer period. The cost of handling such
commodities, therefore, exceeds than that of some other commodities used at a
relatively rapid rate of turnover. This is the reason, the gross margin on conspicuous
goods, such as photo material, toys, domestic electrical appliances, pressure
cookers, etc., ranges between 18 to 36 per cent of the sales price in rural markets. It
may, therefore, be noted that the cost effect on retailing also depends on the extent
of stock position. The quantities which the consumers demand in a given
periodically, weekly, fortnightly or monthly — vary from trade to trade. In general,
larger the quantity demanded, greater will be the average purchase of the retailer
and so the lower the cost of per unit purchase or sales. Therefore, the retailers
selling provisions or foodgrains in rural markets charge a loan rate of margin (5 to 9
paise on sales) than those retailing in general merchandise, clothes, metal
ornaments or cosmetics. In all, the risk in stocking and distribution prevails in the
retailing in rural markets. The element of risk operates as a formative influence in
determining retail costs in two different ways: (i) with the sales of perishable
commodities, and (n) with the sales of goods, the demand for which is influenced by
the chahging fashion. The latter may be the dumping effect of urban products into
the rural market leading to the change in the consumer behaviour or interest thereof.
The retailers follow very close approach nipping psychosocial behaviour of the
consumer, that is, by disposing the goods on credit. This practice, on one hand,
develops inclination of the consumers to the particular retailer, and the other hand,
most of retail itinerant traders and peddlers who visit the village markets round the
week transact a substantial portion of their business through credit sales. The usual
amount of credit allowed by the peddlers is Rs. 150 to the extent and maximum
Rs.400 by the stationed retailers. To operate the trade and at time, his financial
limitations also need to he considered. Thus the lending of goods and services and
credit becomes necessary. The character of retail trade is, therefore, greatly
influenced by the nature and consumption of its patrons, their preference, shopping
practices and pattern of consumption.
There are both traditional and modern ways of retailing commodities. The personal
selling is the popular method of retailing in traditional manner. It is cost-effective
and flexible approach, which can be drawn according to buyers’ behaviour. But, such
retail trading does not provide scope to deal with large variety of products and
expansion of business through setting up branches at appropriate places. However,
in rural areas, the personal sales through retail outlets are very common for village
industries products. Such retailing takes place either in artisan's workshop or in
village markets held daily /periodically. The modem techniques of retailing include
through departmental stores, super markets, cooperatives societies, mobile shops
platform displays, and sample sales. The text below presents approaches for
planning effective retailing, of village industries products and management there of.
It also delineates the conventional pattern of retailing and its impact on product
marketing in rural areas.
Planning Retail Outlets
Establishing retail outlets without appropriate planning results in various economic
setbacks. There are some physical and financial parameters for planning retail outlets.
Marketing is the function of demand and supply. Both the factors are governed by
different sets of characters -buyers and sellers or producers - cum - sellers - and are
drawn from different demographic clusters spatial locations. Thus, it can be stated that
first step in planning retail outlets is an area approach. Succeeding to the first step, the
task of selecting the type of retail outlet has to be attended. There are some
approaches recommended to realise tile tasks in planning for retailing. The types
outlets, often suggested in rural areas are assertive in nature which may cater the
requirements of different categories of the people distinguished by, income group and
preference of buying. The turnover of the unit needs to be estimated on the basis of
data analysis pertaining to statistically significant period, say seven to ten years of the
existing retail outlets or the outlets catering in the hinterland determine the size of the
outlet and budgeting accordingly. To acquire good market for the retailing, dumping
technique pay be adopted by selling new products and also routine consumable goods
at lower prices as compared to other competing outlets. This approach is growth oriented at the take off stage of the firm.
Budgeting is another aspect of planning, which determines the resource mobilization
cycle of the firm. Depending on the size retail outlet opted by the entrepreneur; the
investments have to be earmarked for physical assets and infrastructure. The working
budget may form the financial allocation for recurring expenditures like stock purchase,
wages, transportation, and revenues. The outlets for village industries are as observed
to function successfully if planned on cooperative basis.
The experiments and
experiences of KVIC in setting up the bhandars on cooperative basis have added new
dimensions in marketing of village industries products. Therefore, while working on
budgetary privisions, considerable attention is required for capital generation through
shares, grants and subsidies on one hand, and allocation for distribution of dividends
etc., on the other.
Personal Selling
This is a very common practice of selling the commodities produced by rural artisans,
which establishes direct relationship with the customer. The organisation of personal
selling is limited to a maximum of five assistants and a minimum of two, depending
upon the intensity of business, population of the area, market coverage of the product
and the nature of the product. The edible products of village industries, such as
processed foodgrains, spices, oil and other consumable items have to a large extent,
fixed outlets in rural areas while clothes pottery, baskets, mats, etc., possess the
itinerant character and are being sold in different periodic markets round the week. The
transaction in personal selling is a three-cornered relationship involving the customer,
the merchandise and assistant. These three characters need to be considered to learn
the skill of salesmanship and to get the optimum economic returns. Of these, the role of
merchandise in promoting the sale, keeping in view the customers’ needs, seems to be
most important
C56:
Sales Management
In retailing the village industries products, the basic problem that arises is of quality in
comparison to the finished products of urban origin. Therefore, the merchandise or
retailer needs to follow a strategic approach in selling his home-based products, the
dimensions of customer behaviour and management thereof is explained in Table 5.4
It is important to note that an entrepreneur can develop skill in retailing through the
service to customers and an important part of this service is advising customers in
widening their choice. The product information that has to the customers should cover
the physical Status of the product, such as size weight or measure, colour, type of raw
material used, strengthening material / chemicals used etc., original price, discount,
durability, resistance (for fire, heat, sunlight, water dampness etc.), maintenance cost in
case of non-consumables, nature and quality of competitive products and the like. The
efficiency in retailing will depend on various factors pertaining to both retailer and
customer. The basic factor for both the groups remains same but the perception differs.
A proper match in these perceptions will have to the efficiency in retailing as well as
consumer's satisfaction. Table 5.5 exhibits the levels of perceptions on various
behavioural and economic factors that affect retailing. It reveals that for successful
selling, a through understanding of people and merchandise is needed. There is no
real advantage in examining the selling process, such as packaging, cash terms etc,
but there is a greater value in looking at a sale as a four-stage process, viz., reception,
discovering customer needs, helping in selection and closing of sales. Each of these
stages provides wider scope of making the retail operations more effective.
Table 5.4
Behavioural Dimensions of Customers and Management in Retailing
Window Viewing
Intermediate Approach
Welcoming customer
Decisive Customer
Providing more Options
offering further invitations
Uncertain
Customer Suspicious
Customer Silent Customer
Explaining the merits of
products and comparison
with other products of
similar nature in terms of
price quality, measure etc.
I Merchandise Decision
Allowing freely inspecting,
explaining salient feature of
selected product in case of
interest._______________
Handling over the gods
assuring better service and
quality______________
Provide more options,
offering samples,
assurance to take back the
goods if it does not suit to
customer.
•I&O
-
r
WS Bangalore s“"'
Table 5.5
Conflict and Perception in Retailing
Indicators
Need
Awareness
Accessibility
Selection
Economy
Durability
Maintenance
Complimentarily
Risk
Sellers conflicts
Variety of commodities with
good quality_____________
Place of product
availability, channels of
marketing comparative
advantages._____________
Transport sources,
availability, road_________
Wide range, comparative
advantages over similar
products________________
Higher marketing margin,
low marketing costs
popular brand extension
services, disposable,
resaie-repurchase value.
Higher level of clientele,
Prompt service. Popularity
in media, satisfactory
turnover________________
Convincing to consumer
Availability of parts, related
products and appliances
Insurance, Consumer's
fault in the product, transit
losses, weather exposure
etc.
Buyers Perceptions
Specific commodity with
good quality
Products quality cost
benefit function.
Approachable all seasons
low fares and fright
Scope for choice,
attractive, long lasting,
satisfactory____________
Low maintenance cost resalable
Conspicuous, classic, rare
product, masterpiece.
Low maintenance cost,
easily serviceable, quality
assurance.______________
Availability for relative
quality products._________
Realizing the cost, low
resale value in serviceable.
Notes
1. Commet, Cultural Values in India’s Economic Development, Annals of American Academy
of Political and Social Sciences, 305, 1956, pp. 81 -91.
2. Me Callend and David, C; Power: The Inner Experience. Irvington Publishers, New
York, 1975.
3. Kulkami, K.R. Agricultural Marketing in India, Somaiya Publications, Bombay, 1956.
4. Sundaram, R.N. Development Economics: A Framework for Analysis and Policy,
John Wiley and Sons, New York 1983, pp. 118-136.
5. Rajagopal: Op.cit, 1989.
6. Arvidsson R : Perspective planning in Retailing. A Sweedish experiment,
International co-operative finance, Regional Office, New Delhi.
7. Thomas P G : Modern Retailing Techniques, Mac Donal & Evans Limited, London,
1963.
8.
Gupta Ranjit: Retailing in Metropolitan tndia, Indian cooperative Union, New Delhi,
1964.
MARKETING CHANNELS FOR RURAL INDUSTRIES1
Rural business is the key element in the economic development of farm and non- farm sector.
The rural markets are largely dominated by the traders and often criticized for shadowing the
economic interests of the rural entrepreneurs. However, with reference to recent
developments some institutional channels of marketing like cooperatives and District Supplies
and Marketing Societies also co-exist in the rural areas. The entrepreneur has to make a
logical exercise to strike a profitable bargain among the existing network of marketing
channels. In this process the role of village level functionaries, District Rural Development
Agencies, financial and economic judgments are very vital. This paper diagnoses the
dimensions of decision making like choice of channel, government intervention, and profit
judgments with empirical data. It is found that the economic judgments comprising price paid
by the private and institutional agencies, disposal guarantee of the products, marketing
assurance of institutional agencies, quantum and frequency of supply orders and the turnover
are the major factors affecting the business decisions of the entrepreneurs as compared to
other parameters like village level coordination, market decisions and financial implications.
The management of rural business activities is one of the important aspects in
the overall performance of rural development. The rural business activated by
Rural Entrepreneurial Firms (REFs) largely undergo the problems of decision
making for a profitable bargain in the open and competitive market economy.
In the recent past, the government has come forward with a scheme of
providing institutional support for marketing of the products of REFs.
However, it has not been implemented uniformly in all states due to
administrative constraints and strong competition. The District Supplies and
Marketing Societies (DSMS) have been planned to emerge as an
independent agency for marketing of the products manufactured by the
beneficiaries assisted under various rural development programmes.
However, the need for a separate organisation to emerge as DSMS to cater to
the needs of marketing of the rural products, as there are large number of
organisation already existing for the similar purpose, has been a long debated
issue. In this regard, some of the research studies show that these institutions
have not been able to function successfully due to lack of intersectoral
coordination, innovative techniques, and marketing contacts with the
beneficiaries in periodical phases. The major setback of DSMS has been
noticed as the functional isolation. They can only give market preferences and
market where possible.
The policy on rural marketing need to be drawn on symbiosis model to
support (activity-activity) coordination in production and marketing activities to
achieve an integrated development in the true sense. It is found in the study
area that the development of handloom industry in rural areas is also
dependent on the carpentry sector, as the looms have to be provided by the
skilled carpenters. In this process, the carpentry industry can be provided with
essential infrastructure, training and finance to manufacture the looms for the
1 Rajagopal; Assistant Director, Centre for Agrarian Studies, NIRD. Article published
in Journal of Rural Development, Vol 13(4) pp 593-601
C5
handloom industry. Such an integrated network will deyetep a scope^f
production and marketing in various industries which will !ead to
comprehensive production and marketing implications with resut to
employment, and income generation in the rural villages. Th®J^ad
village Industries Commission has experimented such economic n®^or^9
some parts of the country. Of late, the Handloom Board has al"°
such interlinking scheme. The VISWA programme in Karnataka has also
endorsed such activity linkages in integrated economic development.
The rural business is a complex phenomenon and many dimensions in
making business decisions such as selection of marketing channe
understanding the intervention of government and making aPP'°Pr^® Pr°^
judgements These crucial issues of product marketing largely affect the
overall business efficiency of (REFs) in the long run. These dimensions have
been discussed in this paper with an empirical database collected and
analysed, taking a set of 40 beneficiaries assisted under various rural
development programmes.
?he study has been conducted in the Amalapuram mandal of ^st Godavari
district of Andhra Pradesh where a substantial number of benef'caries h
been provided assistance under rural industries sector. The data have been
collected from 40 beneficiaries engaged in various rural 'ndustr'e®
the mandal by administering a questionnaire. The data were coi'e^ed
various indicators and analysed with weighted scores to understand the
behavioral aspects influencing the rural marketing activities.
Table 1 shows that the innovative income generation and
activities are adapted by the beneficiaries with an approach following from
DRDA - BDO - VLW (68.7 per cent) but the replication and continuation m
the administrative set - up (43.7 per cent). It is observed that tl"ie IDRDA
advocates more feasible income generative schemes, depending on the local
needs and available resources like manufacture of drip irrigation pots and
coconut shell handicrafts. Such innovative schemes are motiyatecI under Ihe
dynamic leadership of officials. However, they are very vo ati e schemes and
often become defunct with the change of leadership. The VLW B®n®f1®'
inter - sectoral coordination for development of product design and marketing
techniques stood at a lower score of 65 per cent. There are various indicators^
which affect the marketing decisions such as the mclmation towards.the
private and institutional trade channels, marketing assistance provided y
DRDAs and the practice of selling products on consignment basis with private
and institutional channels (Table 2). Among these indicators, '^dependently
selling to private traders scored 81.87 per cent which is a par with he
marketing assistance provided by DRDAs through fairs and institutional| sa es
orders. The DRDAs participate in local festivals and fairs organisedI y
local authorities like ‘Godavari Pushkaram’ in Andhra Pradesh and cksptey he
products of IRDP and DWCRA beneficiaries. This wiI help in promot ng
demand and market for their products in the region. It 'ndicates that
DRDA, despite being a government agency, can also compete with
private trade channels provided innovative market techniques are adopted
among the beneficiaries to get such effect. It is essential for the DRDAs to
percolate substantial awareness about marketing techniques among the
beneficiaries. The economic judgements that affect the rural product
marketing are exhibited in Table 3 which show an interesting picture that the
price paid by the private traders is not satisfactory to a large extent but the
rate of product - market turnover result is very high. It is observed that the
mobility in product sales is very dynamic as compared to the static sales
conditions of institutional channels like emporia. Table 4 shows the financial
implications of rural product marketing which reveal that the own capital
investment by the beneficiaries in product marketing is very low (32.5 per
cent) which in turn leads to high institutional borrowings (63.12 per cent). In all
it can be concluded that the gaps in capital requirement are bridged through
non- traditional borrowings (52.5 per cent).
Table 1: Coordination of Village Level Functionaries
N=40
Effec
tive
Weights__________
VLW - Beneficiary
contact on the issues
of common interest
(4)
21
(3)
8
VLW - Beneficiary
contact on innovative
interest for income/
employment generation
activities
13
11
9
BDO - VLW - Beneficiary
inter - sectoral coordination
for development of technology
and marketing
18
16
6
DRDA - BDO - Beneficiary
approaches for innovative
income and employment
generation activities
24
9
4
Replication/continuation
of innovative programme
after the change
of executives
5
3
9
Overall
Score
% Res
ponse
2.9
72.5
2.4
60.6
2.60
65.0
3
2.75
68.7
23
1.75
43.7
2.48
62.0
Some Not
What effe
ctive
effe
ctive
(2)
(D
4
7
Very
effecTive
Indicators/
Parameters
7
56
Table 2: Scores of Marketing Decision Indicators
N=40
Score
% Res
ponse
3
3.27
81.87
15
4
2.75
68.75
12
5
5
3.07
76.87
12
7
1
3.27
81.87
11
10
19
1.80
45.00
2.83
70.8
Not
effe
ctive
Very
effecTive
Effective
Some
What
effe
ctive
Weights
(4)
(3)
(2)
(D
Selling independently
to the private traders
24
6
7
Marketing through
institutional
channels
13
8
Guidance by BDOVLW - DRDA on
business activities
18
Marketing Assistance
provided by DRDAs
(through institutions,
fairs etc.)
20
Indicators/
Parameters
Selling on consignment
basis to private
traders/institutions
Overall
The factor efficiency in making business decisions by REFs is stated in Table
5. The final ranks of the factors are calculated on the basis of composite index
analysis using the following formula:
R = Ri/Ni Where R = Final Rank
Ri = Sum of Ranks
Ni = Number of indicators
The data reveal that the rate of village level functionaries in promoting
business environment of REFs is negligible. However, the analysis reveals
that marketing decisions are largely influenced by the economic judgements
than any of the logistics.
Table 3: Scores of Economic Judgements in Rural Products Marketing
N = 40
Indicators/
Parameters
Weights
Satis
factory
Some
What
Satis
factory
Not
Satis
factory
(4)
(3)
(2)
(1)
4
14
22
1.55
38.75
6
16
12
7
2.47
61.87
6
19
12
3
2.70
67.5
4
11
18
7
2.30
57.5
2
14
22
2
2.40
60.00
6
33
8
3
2.80
70.00
2.37
59.25
Price paid by the
private traders
Price paid by the
institutions/DRDAs
Disposal guarantee
for the products in
private sector
Marketing assurance
in institutional
channel for products
of Rural Orgn.
Frequency and/
quantity of orders
placed for the
products of rural
origin by institutional
marketing
Agencies
Product turnover with
private traders
Overall
Score
Very
Satis
factory
%
Res
ponse
<58'
Table 4: Scores of Financial Implications in Rural Marketing
N =40
Score
% Res
ponse—
7
1.92
48.17
24
4
2.20
55.00
2
18
10
1.30
32.5
26
9
5
2.52
63.12
9
6
13
2.10
52.5
2.008
50.2
Indicators/
Parameters
High
Medium
Low
Marginal
Weights
(4)
(3)
(2)
(D
Profit with selling
Through private traders
4
29
Profit level with
Selling through
institutions
12
Own capital
Investment
Institutional
borrowing
Non - institutional
Borrowings
8
Overall
Table 5: Scores of Financial Implications in Rural Marketing
N =40
Indicators/
Parameters
Very
Effec-
Effec
tive
Some
What
effe
ctive
Tive
Not
effe
ctive
Final
Score
Final
Ranks
Weights
(4)
(3)
(2)
(1)
Village level
Coordination
1.62
(3)
3.25
(4)
1.75
(3)
0.92
(3)
3.25
(4)
Marketing
Decision
7.5
(1)
3.67
(3)
2.20
(2)
0.80
(4)
2.50
(3)
Economic
Judgement
2.3
(2)
6.52
(1)
4.3
1.25
(1)
(D
1.1
(1)
Financial
Implication
0.8
(4)
0.8
(2)
3.97
(1)
4.3
(2)
0.97
(2)
Figures in Parenthesis indicate ranks
3
I
Conclusion
Since the rural development programmes are largely production - oriented,
an action plan should invariably be drawn to provide marketing support to the
target group at the government level. There is a need for evolving a common
approach for marketing support for the products of REFs at the national level
and such policy should be implemented in various states by the Panchayati
Raj Institutions. The basic inference that can be drawn from the survey
analysis presented in this paper is to reorganise an institution for marketing
activities at the grassroot level and generating substantial awareness of
various behavioral and economic factors involved in appropriate decision
making among REFs. The existing institutions like DSMS are not effectively
functioning due to lack of demarcated work norms and a set state level policy.
It is the basic weakness delineated in this study. Besides, the sustainability of
the rural products in open competition is almost insignificant. Such conditions
largely obstruct the product marketing and income generating process and
bogs down the economy of the target group to the below poverty line.
Establishment of inter - departmental coordination and clientele services by
DSMS are essential in order to gain marketing efficiency and to set up
profitable forward linkages. The Marketing Support System (MMS) should be
considered as an integral part of the IRDP to claim the net benefits to the
beneficiaries, helping them to cross the poverty barrier.
1
!
»
i
6 c?
Net Working For Market Access
Gramin Information Center
Introduction:
India has a sound agriculture base. But with the traditional way of cultivation, it
can neither keep pace with global crop average nor can produce enough to feed
the local population in certain crops. Rural India is real India. Unfortunately the
technological growth in the country has remained urban centric.
This scenario has to change if the fruits of the progress have to reach the
masses that live in the rural areas. For Rural Centric growth Information
Technology can make a big impact to such a population.
Updated knowledge about weather forecast, crop cultivation practices,
postharvest technology, water management through satellite tracking,
commercial information, market information for grains, fruits and vegetables,
processed food, low cost technology, government schemes and policies on
Agriculture and Agribusiness can be made easily accessible to rural masses
through
information
technology
development
at
Rural
places.
Mahratta Chamber of Commerce, Industries and Agriculture has proposed a
concept for setting up a Gramin Information Center (GIC) as a means of
providing latest information on latest technology and market access, which will
enable farmers & Rural Food Processing Industries to plan their activities on
commercial lines for realizing maximum value for their produce.
MCCIA proposes 100 Gramin Information Centers in the state of Maharashtra.
For the sustainability of the food industry it is important that it has well developed
backward linkages. Most of the food processing industries are heavily dependent
on the raw material supplied by agriculture producers in and around Pune.
Information technology can play an important role in further strengthening of
these linkages. Gramin Information Center (GIC) as a means of providing latest
information on latest technology and market access, which will enable farmers &
Food processing Industries to plan their activities on commercial lines for
realizing
maximum
value
for
their
produce.
Objective:
The basic objective of the G)C includes the following:
1. To develop a network of Agri business and food processing sector ultimately to
work as network to supply technology information, market intelligence, prices,
demand supply and international scenario.
2. Assisting the farmers and Food Processing Industries in their export efforts by
providing information regarding rules and regulations, import duties, standards,
specifications and negative list of agri-produce of the importing countries.
3. Providing information to farmers about various techniques in soil conservation,
seed propagation, hybrid seeds, integrated pest management, integrated crop
management to post harvest technologies and processing of the agriculture
produce.
4. Contributing to more efficient marketing by dissemination of price information
and fluctuation in demand globally and domestically.
5. Providing detailed commercially useful information in time.
6. To develop institutional linkages
7. Creating awareness and conducting training modules for rural masses on
computers through information technology.
Location:
The GIC is proposed to be located at the most convenient and approachable
place at Taluka Level. There should not be any problem of electricity and Internet
connectivity.
Cluster of
villages
\
'
Cluster of
villages
Cluster of \
villages
j
Cluster of
villages
QIC-III
Taluka
GIC-IV
Taluka
/
GIC-1
Taluka
GIC-II
Taluka
y
MCCIA HUB
located at Pune
z
One GIG centre will cover about 20 villages with an average population of 3000
per village.
Infrastructure:
About 200 sq.ft, built-up area is proposed for setting up of GIC to start with which
may be transferred in bigger area as per the requirement.
Management of GIC:
A model Gramin Information Center shall contain 1 server and 3 user nodes. The
management of these centres will be done by local people/ local NGO The one
center that has already been started working is being looked after by 'Gomukh' a
local NGO. The participation level of local people is gradually improving with the
increase in the awareness level of information technology in these areas. The
involvement of local youths from villages, who are well aware of the agro-climatic
conditions, soil conditions of that regions would increase to manage these
information center. These persons are generally Agriculture Graduates. Such
Graduates will be specially trained as service providers in operational aspects of
computers, use of Internet facility and search retrieval and giving the
required/relevant data to the farmers and Agribusiness Entrepreneurs in local
language. MCCIA provides basic training for setting up such centres.
Viability/Service Provider : GIC unit would mainly be self-sustaining. For the
one centre ’’Chale" which is working about 30 KM from Pune About 15 farmers
contributed Rs 1000 each towards the running cost. The services would become
more cost effective with the increase in the number of users. Ultimately services/
information
will
be
sold
on
per
page
basis.
Technical Support:
Technical support will be sort from the following agencies:
1. Agribusiness Cell, Government of Maharashtra
2. Ministry of Food Processing, Government of India
3. State Agriculture Universities
4. Central and Regional Research Institutions
5. MCCIA's Agribusiness Core Committee
6. National Horticulture Board
7. State Agriculture Marketing Board
8. Department of Horticulture, Government of Maharashtra
Project Output:
1. The bargaining position of farmers and Rural Agro-processing unit can be
improved.
2. The raw material cost for food processing industry in and around will decline
3. Knowledge on technology and products is likely to help in standardisation of
the raw material in food processing industry in and around Pune.
4. Access to information will educate farmers in shift of cropping patterns for high
value production.
5. Will create more employment opportunities in that area.
6. It will help in creating more Agribusiness Entrepreneurship.
Chart Showing Flow of Information and Services
Credit
Availability
M arket Intelligenc e
Local NGOs/
people'
Service Providers
Information
Gramin Information
System (GIC)
Policy
Infrastructure
Information
Technology
availability
Domestic and
International Trade
(Online)
MCCIA HUB located at Pune :
The core activities of the Hub will be information exchange, analysis, research
and communication. Following are some of the major opportunities that will be
covered by MCCIA to strengthen the Gramin Information Center (GIC)
1. Database. The databases on traders, farmers, millers and plants could be
leveraged to help market their products.
2. Resources from the Agricultural Universities across the states could be used
to answer queries from farmers.
3. Resources from outside as well as within the food processing units could be
used to answer queries from traders and industry.
4. Resources from the Support Institutions like Department of Horticulture,
Ministry of Food Processing, SIDBI, NABARD, KVIC, CFTRl etc. could be used
to strengthen the agribusiness activities in the area.
5. Ultimately all products in the entire agribusiness sector would form a part of
the research and analysis portfolio.
. ,
6. Agriculture Graduates from the Local NGOs to be trained on operations and
management of Gramin Information Center.
7. Coordination and monitoring the progress of Gramin Information Center.
Agriculture & Agri Business Sub-committee.
Mahratta Chamber of Commerce Industries & Agriculture
Tilak Road,
Pune -411002
Tel: 91-20-4440371 / 4440472
Fax: 91-20-4447902
Email: lalit.waYkole@foodindia.org
Website: YYVYW.foodindia.org
Section III
Effective management of marketing involves the following 6 Ms. i.e., Man,
Money, Machine, Material, Market and Motion.
Man: You should have the right person for the right job. An introvert person may not
prove to be effective in seffing a product. You should also know how to delegate work
and supervise it. Proper reporting system should be developed to keep you informed
about the marketing activity.
Money: Money is the centre point of business. If one does not want to earn money,
there is no need for marketing activities. You should be aware of where money comes
from the where it goes and must control non-productive expenses.
Machine: To ensure quality product and in a viable quantity, suitable machinery has to
be acquired and properly maintained thereafter. You must also be aware of
obsolescence and make necessary technology changes when required.
Materia/: If raw material is of poor quality, the end product will be poor. If the raw
material is costly, the end product will also be costly. A product may be good but if its
packaging material is of interior quality there may be a high percentage of rejection. If
packaging materials is very costly your cost and price would go up, a competitor may
have an advantage over you.
Market: You must identify your market segment and should try to match your product
with the needs of your target audience.
Motion: You must be aware of the movement of your sales force and your products.
You must know the movement of your advertising and promotion programmes.
To sum it, marketing is both challenging and an interesting activity. Anybody can
produce a product but there is no guarantee that he can sell it, because buying
depends on some other person. He has to accept the product. He should use it and be
satisfied with it. If he rejects the product for any reason even the best production can
turn out to be a failure.
The following section deals with basic ‘Fundamentals of
Marketing’, aspects of ‘Design and Product Development’. The section also
includes articles on Handling and Packaging of Horticulture products and
Milk
Marketing: Tool Kit1
Marketing is the art of making someone want something you have. Nonprofits do
a lot of marketing. They generally market in two ways: Direct marketing of
products or services. Indirect marketing of the organization, its programs
and its people.
Rural products can have two markets.
(1) Rural Market
(2) Urban Market
The rural product to be sold in urban areas has to be sold the urban way and not
the rural way, ottjerwise it can fail in getting a market.
In these days of greater self-sufficiency, nonprofit organizations are selling goods
and services which further their programs as well as bring in revenue to their
beneficiaries. The art of doing that successfully involves marketing. Their indirect
marketing is alternatively known as image building, fund-raising, membership
development, community relations, political activities, or citizen education.
The key to successful marketing of products is answering the following question
for your business: How will you communicate a meaningful difference about your
business idea (product or service) to the people who might be most interested in
buying it?
There are five questions that should be answered for every business:
•
•
•
•
•
What's unique about your business idea?
Who is your target buyer? Who buys your product or service now, and
whom do you really want to sell to?
Who are your competitors? As a small business, can you effectively
compete in your chosen market?
What positioning message do you want to communicate to your target
buyers? How can you position your business or product to let people know
they are special, in ways that are important to these buyers?
What's your distribution strategy? How will you get your product or service
in the hands of your customers? Often your distribution method will
provide an additional marketing channel, or give you the opportunity to
promote more products as you provide the first one.
1 This tool kit is compiled from various field sources by Dr. Meena Galliara, Associate Professor, NMIMS
,66
QI What's unique about your business idea?
Intuitively, or based on some research, you believe your business will succeed
because you are doing something different from some or all of your competitors.
The first test of any business, small or large, is its uniqueness. You may borrow a
good idea from other organizations or see what the available skill is with your
beneficiary and build a successful business around it. For example, every town
needs a certain number of soaps, candles, clothes, eatables and so on but most
of them look very much alike. However, if you examine the more successful
items in your area, you’ll notice that each one tends to emphasize and promote
something special. It may be lower prices, better satisfaction, easy availability
and so on. The point is, successful businesses find ways to make their products
or services stand out from the crowd, or at least the crowd in their immediate
geographic area.
If your business provides a product, sources of uniqueness can range from
pricing* packaging, distribution method, or feature" differences, to the mere
perception of a difference that may or may not exist.
Q 2 Who is your target buyer? Who buys your product or service now, and
whom do you really want to sell to?
Do you know precisely who your customers are? You may know many of them
by name, but do you really know what type of people or businesses they are? For
example, if you sell to consumers, do you have demographic information (e.g..,
what are their average income ranges, education, typical occupations,
geographic location, family makeup, etc.) that identifies your target buyer? What
about lifestyle information (e.g., hobbies, interests, recreational/entertainment
activities, political beliefs, cultural practices, etc.) regarding your target buyer?
This type of information can help you in two very important ways. It can help you
make changes to your product or service itself, to better match with what your
customers are likely to want. It can also tell you how to reach your customers
through advertising, promotions, fairs, melas special out-lets etc.
For an obvious example, an organization that sells home made or hand pounded
masalas or snacks then it is important for them to know that their customer is
values home made products. Thus, if it can make masalas good enough to be
2 Features are "descriptions" of a product or service (e.g., green color, pear-shaped, inexpensive, fast, slow, etc.)
Benefits are the "advantages" you receive from using the product or service (e.g:, feel better, look beautiful, more
endurance, etc.)
used even by house wives and hoteliers, it will have a convincing story about
quality to tell. It can also benefit by using well-known hoteliers as spokespersons
in its advertising, and by placing advertisements in such magazines where its
customers are likely to see them.
For marketing rural products local and regional customers include local or
regional communities, as well as tourists. This is the main target group for
marketing via short distribution channels. Reaching this group generally requires
little financial investment. Commercial activities are based on establishing a point
of sale at the farm or the craft worker’s premises, developing markets and local
fairs and setting up promotional sales activities in busy areas (supermarkets,
food halls), etc. Inexpensive local advertising (leaflets, local radio and
newspapers) is sufficient.
Remote customers, both at home and abroad, include emigrants, tourists who
have returned home and urban populations. The potential of such markets is
great, and so are the costs and risks. This type of clientele should only be
approached after having amassed a great deal of commercial experience. This
approach can only be recommended to collective craft workers, businesses or
groupings that already have significant financial resources and investment
capability. It is a high-risk form of marketing because the product sold, when
leaving its region, loses part of its direct association with the area and comes up
against direct competition with the traditional or industrial products of other
regions. Depending on the sales formula, reaching a remote clientele calls for all
or some of the following resources.
•
•
•
•
support for placing products on the market (packaging, communication
medium, sales promoters, etc.);
effective logistics (stocks and means of delivery);
a structured and costly advertising strategy;
a sales force (sales representatives, etc.)
Picking the right market segment means that it is:
•
•
•
•
Measurable in quantitative terms
Substantial enough to generate planned sales volume
Accessible to your organization’s distribution methods
Sensitive to planned/affordable marketing spending events
Remember that it’s not enough that people like your business concept. There
must be enough target buyers on a frequent-enough basis to sustain your
organization’s sales, spending, and profits from year to year.
’■
G8
How to Segment Your Market
If the universe of all potential buyers is your "market," then the market can be
divided up into sections or "segments" based on any number of factors. For
example you might divide up your customers by age group and find out to which
aqe group are you selling the product. You might divide them up by economic
status and find out their economic status. You might divide them up by
geographic location and find out to which geographic zones you are selling your
products.
Many small businesses stop there, thinking they have enough information to be
able to identify and communicate with their most likely customers. However,
larger companies will attempt to push on further and find, out even more
information about their customers’ lifestyles3, values , life stage , etc.
You can find out more about your customers through market research. Larger
companies segment their markets by conducting extensive market research
projects, consisting of several rounds of exploratory research:
Customer and product data collection: Researchers gather data from users of
similar products on:
.
.
.
.
•
number and timing of brand purchases
reasons for purchases
consumers' attitudes about various product attributes
importance of the product to the lifestyle of consumer
category user information (demographics, psychographics, media habits,
etc.)
What can smaller organizations do to segment their markets?
Smaller organizations can conduct individual interviews with key trade buyers
and consumers or end users of their products and services (qualitative research).
Often qualitative research can be accomplished for free or little expense. Smaller
organizations can segment markets by geography, loyalty, distribution, price,
3 Lifestyle refers to the collective choice of hobbies, recreational pursuits, entertainment, vacations, and
other non-work time pursuits
4 Belief and value systems include religious, political, nationalistic, and cultural beliefs and values.
5 Life stage refers to chronological benchmarking of people's lives at different ages (e g., pre-teens,
teenagers, empty-nesters, etc.).
packaging, sizes, product life, and other tangible factors in addition to
demographics6, lifestyle and psychographics7 clustering.
Q 3 Who are your competitors? As a small business, can you effectively
compete in your chosen market?
Once you've identified what's unique about your business and who are your
target buyers, you need to identify your direct and indirect competitors. This is
important before you finalize your decision about which business category and
market segment to compete in. It is vital to the success of a new or existing
business because it reduces risk, time, required resources, and expense. Find
out if there are other NGOs, small businessmen, large business groups who are
in the same product category as you are. For example, you decide to market
cane bamboo products, which has a unique, texture, appearance and price
benefits. But effectively competing with every cane bamboo manufacturer in that
segment is going to be difficult. If the competition is too strong, it's going to be
extremely difficult for a newcomer to break in. It may be more profitable to
carefully target a specific segment of a category where the odds of success are
greatest. Even established businesses need to periodically reevaluate their
direction in relation to competition. If you wish to market in that particular
segment you will have to think of an appropriate positioning strategy, which will
give you appropriate result.
Q 4 What positioning message do you want to communicate to your target
buyers? How can you position your business or product to let people know
they are special, In ways that are important to these buyers?
There are many ways for a business to be unique, from small pricing, packaging,
and service differences to significant feature and benefit contrasts with the
competition. In all cases, your business's uniqueness has to be examined in
relation to other products and services that your target buyer is currently using
(i.e., things that your business hopes to replace with its own offerings).
Differences really don’t matter unless they are important enough to the customer
to influence his or her purchasing decision. In some cases., there may actually be
little or no difference between your product or service and that of your
competitors. Or, the differences may be very difficult to communicate (think of the
difference between Coke and Pepsi.) In that case, it's up to you to create some
differences. Appropriate advertising should be done in urban areas for rural
products (e.g. Handloom cloth has got market in city)
You need to construct a unique selling proposition (USP) for your product or
business. For instance Lijjat Papad talks about ‘women’s power’ CRY
6 Demographics refers to age, sex, income, education, race, martial status, size of household, geographic
location, size of city, and profession.
7 Psychographics refers to personality and emotionally based behavior linked to purchase choices; for
example, whether customers are risk-takers or risk-avoiders, impulsive buyers, etc.
^6:
projects the concept of “Child in Need”. "Differentiation" is the collection of
differences in features and benefits versus competitive products. The key is to
determine how important these collective differences are to the buyer.
Communication of important differences is the basis for a successful positioning
strategy. "Positioning" is adding brand value to this collection of differences in the
mind of the buyer. In other words, you must solve the problem of how to
communicate a meaningful difference about your business idea to the people
who are most interested in buying it. Meaningful differences in your product or
service, compared to that of your competitors, should be created and
communicated to your target buyer via packaging, pricing, features and benefits,
product design, colors, advertising and promotion mediums, public relations
events, and even spokespersons. Everything should work together to promote a
consistent image for your product or service. You need to create unique selling
proposition (USP)
There are several questions to ask about your business to determine a
USP:
•
.
.
.
What is unique about your business or brand vs. direct competitors? You'll
probably find a whole list of things that set you apart; the next questions
will help you decide which of these to focus on.
Which of these factors are most important to the buyers and end users of
your business or brand?
Which of these factors are not easily imitable by the competitors?
Which of these factors can be easily communicated and understood by
buyers or end users?
You need to construct a memorable message (USP) of these unique, meaningful
qualities about your business or brand. Marketing tools to communicate USP
include local promotion, media advertising, promotion programs (e g., direct
mail), packaging, and sales personnel.
For examples of USP, think about different brands of products you've seen
advertised on TV. What's the main message underlying the ad? Different brands
and types of products utilize different primary themes, attributes, or ideas
associated with each brand. For example, cigarette, liquor, and perfume
advertising tends to sell brands based on emotional, "borrowed values," instead
of strictly product features. Users are encouraged to fantasize that they may
accrue the "benefits" of sex appeal or a more satisfying/fun lifestyle, perhaps
portrayed by the famous or beautiful spokespersons for a particular brand.
Similarly when you see the ad of Amul you feel a sense of pride. The simple test
of determining whether you've constructed a good USP for your business is
whether it sells for you! If it sells your business or brand, your USP is
meaningfully different. If you've been in business for a while, you may have
constructed a USP unconsciously. For example, if you decided to provide free
delivery service to your customers because no one else in town is doing it, you've
constructed a USP based on service that you are communicating to the intended
target buyer. If, however, you offer free delivery service because everyone else
in town does so and you need to provide it simply to keep up with the
competition, it's not something that sets you apart and should not be the focus of
your USP.
For many small businesses, packaging sales materials, and sales personnel may
be the only marketing tools affordable. It is even important to clearly determine
your USP to communicate with these limited means. Features are "descriptions"
of a product or service (e.g., green color, pear-shaped, inexpensive, fast, slow,
etc.) Benefits are the "advantages" you receive from using the product or service
(e.g., feel better, look beautiful, more endurance, etc.)
Q 5 What's your distribution strategy? How will you get your product or
service in the hands of your customers?
Often your distribution method will provide an additional marketing channel, or
give you the opportunity to promote more products as you provide the first one.
Distribution decisions have significant implications for:
1.product margins and profits
2.marketing budgets
3.final retail pricing
4.sales management practices
“Short” distribution channels:
•
•
•
•
•
•
•
•
•
•
Selling direct from the farm or the place of production, including selling to
tourists
Mail-order selling
Selling over the internet
Producers’ shop
Home deliveries
Selling to local restaurateurs
Selling to businesses
Selling at fairs, local markets, shows
Selling by the producer, on a separate stand, in local markets
Selling through use of sales force — salaried employees of an
organization, or independent commissioned representatives who usually
sell products for more than one organization
•
•
•
Exhibitions in urban area can help in obtaining very good market (e.g.
furniture from UP villages sold in various cities.)
More selling centers should be developed in urban areas.
Craftsmen operating in villages should be brought to the cities to
understand the requirement of the urban market and modify their other
items in order to meet the requirements.
“Long” distribution channels
•
•
•
•
Selling from hypermarket and supermarket shelves
Selling to wholesalers
Resale to retail merchants
Export
NGOs while designing their distribution strategy can select multiple channels as
per their budget and plan of reach. Two types of distribution channels are
there but many forms of marketing are evident as listed in the table below.
Adapting the form of marketing to the target clientele
Potential
Form of marketing
Type of product
customers
Tourists
• Direct farm
• Festive or typical products
sales
• Ordinary food products sold
• Tourist fair
in local tourist areas
• Distance selling
• Shop in tourist
areas
Local rural
communities
Urban populations
•
•
Direct farm
sales
Local markets
•
Ordinary consumer products
Urban shop
Gastronomic fair
•
•
Range of products
Festive products
Remember: Both distribution channels are necessary and complementary and
they provide solutions to a wide range of situations, suited to the type of product
(fresh products versus preserved or dried products, for example) and to the type
of geographic region.
Packaging and Pricing Your Product
Packaging and pricing represent a very concrete way to communicate with your
target market and express the positioning of your business.
Package design is more than just the look of the physical wrapper or outer
container that a product comes in. Packaging can be the way in which services
are bundled together for an intermediate buyer or end user. For physical
products, the package label or wrapper may represent the product’s entire
business positioning, list of features and benefits, advertising, and promotion,
especially for smaller businesses.
Remember for urban buyers attractive
packaging is required (for consumer items). Better finishing is required (e.g. arts
and crafts e.g. vase, statue etc.). If possible, a brand name should be given on
the packet (e.g. Lijjat Papad) - A Co-operative movement can be very helpful.
Products like toys should have anti-toxic colours, which do not run and comers
should be rounded for safety. Different producers or different middlemen price
Art and craft products like statues, frames, vases, etc. differently. This confuses
the customers and sometimes they give up the idea of buying.
Packaging designs should communicate the business positioning or unique set of
values. Colors are also important to product positioning. For example amongst
clothes and toys, red is considered to be the most exciting, noticeable color on
the shelf. Red is a key color component for children’s clothes, toys, blocks, and
all products that directly, or indirectly, promise stimulation, excitement, energy,
and social acceptance.
Blues and greens are considered soothing, calming, and serene. Yellow is for
bright moods and celebrations. Orange is the color of fire. Black connotes power.
Gold and silver connote high value. White is neutral or the color of purity. Many
generic grocery products are packaged in simple white or brown paper to
indicate the absence of expensive packaging and to separate them from regular,
more expensive brands.
Packaging should attract the buyers to the shelf, or wherever else your products
or services are available. Knowledge of the target buyer’s lifestyle as reflected in
the buyeris activities, opinions, interests, and demographics could be manifested
in the package names, label design, package copy, and other key
communication points. For instance fruit juice concentrate packs/bottles should
have both the features and benefits communicated on the package as illustrated
below.
Product features communicated on the package may include:
•
•
•
100 percent all-natural (ingredients)
no preservatives or additives
bio-degradable wrapper
Product benefits communicated on the package may include:
•
•
•
safe energy for the whole family! .
environmentally compatible!
no stomach upset!
PRICING
When a consumer feels that he is not getting his money's worth, the demand for
the product may diminish. It is very difficult to dictate terms in buyer's market.
Many a time the price is fixed on the basis of the competitor's price for that
product. In case of an industrial product the price is based on the difference
between demand and supply.
In India, price is often affected by excise duty, sales tax and local taxes like
octroi, thereby making it difficult to maintain a uniform price throughout the
country.
Let us take an example of how to calculate price of a readymade shirt.
The following method is generally used to decide on the pricing of a product:
(The pricing of a shirt is given as an example)
1. Direct cost of material
x
(e.g. cloth used for making a shirt)
2. Direct cost of labour
x
(sewing charges)
3. Direct expenses
x
(electricity charges, thread, buttons, etc.)
4. Indirect cost of material
(e.g. lubricant for machines)
5. Indirect cost of labour
(e.g. maintenance charges, Accountant's X
salary)
6. Indirect expenses
x
(office rent - distribution charges)
Total cost
+ Profit
+ Taxes
Price
While computing the cost of product, expenses, which are not too apparent,
should also be considered. Many a time these expenses, when not considered
while pricing a product, lead to a loss. Taxes, handling charges, packaging
charges should be considered too. For seasonal products, the profit ratio may be
high during the season when the product is in demand, e.g. kites in Utrayan,
crackers in Diwali.
Before deciding on price, it is advisable to review the following points:
(1) Potential demand for the product
(2) Time taken to attain the profit level
(3) Price in relation to demand (If by reducing the price there is no increase in
demand, it means that the demand is inelastic.)
(4) The target groups and their purchasing power
(5) Promotion policy and expenses incurred for promotion
(6) Distribution system and expenses incurred for it
(7) The stage of the product life cycle. In case of stiff competition, it will be
difficult to increase price beyond a certain point.
PRICING POLICY
Your pricing policy also depends on your objectives.
You may have to adopt any of the following policies depending upon your
objective:
(1) "Return on Investment" pricing: The price is fixed after taking into
consideration the financial aspect. "How much you have spent and how much
you want to obtain" is the key factor in deciding the price. This has relation with
the sales forecast too.
(2) "Penetrating the Market with a Low Price": You select the lowest yet
profitable price per unit so that you can sell a maximum number of units. Once
your product is in demand or is accepted in the market, you can increase the
price of your product.
(3) "Introducing a Product at a Premium" price policy: When a product is
innovative and when there is no competition, this policy can be applied. You can
make optimum profit. When you face competition later, you can lower the price.
(4) "Ethical" pricing: Price is fixed keeping the welfare of the society in mind.
For many life saving drugs, this particular policy is used. The product is sold at
the lowest possible price with either a very reasonable margin or no profit at all.
Profit may be earned from other products.
(5) "Full line" pricing: If you are selling jams, you may be offering various
flavours like orange, pineapple, mango, etc. You may earn more profit in one
flavour and less on the other. But, you cannot sell only the one that gives you
maximum profit, or else a customer may switch over to another brand since he
would be able to exercise an option for other flavours.
(6) '’Pricing on the Basis of Competition”: In this case, you follow the leader
for fixing the price. "Rasna" is the leader in the area of synthetic sherbets. Pricing
of a similar product will have to be decided based on the price of ’’Rasna".
In India, well-known companies have now accepted a uniform price policy in
order to avoid unethical competition. One watch company offers watches at the
same price throughout the country by adjusting their margin. It has become
mandatory for the price to be printed on the product in order to apprise the
customers of the price as well as to prevent middlemen or shopkeepers to
charge exorbitantly.
However, in the following four situations, pricing will pose a problem:
(a) When you are setting a price for the first time.
(b) When price change is required due to certain circumstances.
(c) When a competitor changes the price and you are affected by it.
(d) When one product has an impact on your other Products. i.e.; when you
introduce a new range of cards, you may have to reduce the price of the earlier
range of cards because the earlier range of cards may take away a chunk of the
market meant for the new range of cards.
Before you fix the price of your product, ask yourself whether you would buy that
product at the price you have decided upon if you were a customer.
You must also ascertain:
- the retail prices of competing brands
- the commission offered to traders/distributors/stockists by competitors
- the ex-factory price (including taxes) of the competing brands
- the pricing strategy you want to adopt
- the special features of your product that would not hinder the customers from
buying your products if you are charging a far higher price than that of your
competitor.
Developing and Refining Your Product
The fastest way to go out of business is to introduce a great idea, but to never
completely deliver the features or benefits that were promised. People who
initially buy and then reject a new product are almost impossible to interest in
trying the same improved brand again.
NGOs must bring clarity among all its staff members on the following:
(1) You must try to find out what people need and design a product to satisfy that
need.
(2) Think of the pros and cons of the particular product.
(3) Think of reasons why the custorhers would resist this product. Then decide
what you ought to do and how to solve the problem.
(4) Think of ways to improve that product. You can have a brainstorming (gather
varied ideas and discuss them with your friends and acquaintances) session for
the purpose.
(5) Ensure that your product is the latest as far as technology is concerned.
(6) Plan an economical production system.
(7) Plan its packing, brand name, price, and other related matters.
(8) Give a serious thought to who your competitors could be and how you would
handle them.
(9) Effectively plan your marketing system. For introducing your product in the
market, you should know about its type.
10)For rural products, after sales service is mostly not made available. But for
products like furniture, frames, after sales service may be necessary.
^8
Designing For Handicrafts - A Socio -technological Perspective1
ABSTRACT
Handicraft products constitute a significant part of the informal sector of the
Indian economy. Product innovation and improvements in design technologies is
necessary for keeping this sector economically sustainable. The present paper
discusses, with the help of some case studies, how design tools and products
can be developed for some applications. The paper also points out the socio
economic factors that need to be considered while undertaking any change of
practice in this sector. Facilities available at I IT Kanpur and project work carried
out there have been described.
INTRODUCTION
»
The economy of any nation., in general, and of a developing country like India, in
particular, consists of two parts. The formal sector, which deals in areas like
manufacturing, power generation, transportation, urban infrastructure, high
technology and communication. The second part is the informal sector Involving
areas like agriculture, handicrafts, rural services, and rural infrastructure. The
informal sector is as much a sizeable component of the overall economy as the
formal sector.
The vitality and growth of the formal sector is usually reviewed and all concerned
and appropriate actions are taken to ensure that this sector continues to be a
vibrant component of the economy. However, the informal sector does not get as
much attention. This has resulted in a wide gap of status between these two
streams in terms of economic strength as well as technological quality. The
present paper outlines a perspective for the handicraft products - a major activity
of the informal sector in India
Handicraft products maintain a commanding presence in India. The footwear and
saddlers from Kanpur are well known all over the world. The carpets from
Mirzapur attract attention from far and wide places. The glassware from
Shikohabad, the brassware from Muradabad, the carved-wooden furniture from
Saharanpur, the ceramic products from Chinhat, the CHIKAN embroidery from
Lucknow, the stoneware from Agra and the silk fabric from Varanasi are all
famous for their designs, quality and elegance. One can extend this list to every
region of India and the overall inventory of handicrafts from the country will
become an impressive collection of products. Bamboo products from northeast,
1 Sanjay G. Dhande CAD Laboratory Indian Institute of Technology, Kanpur
Kanpur, U.P. 208 016
sgd@iftk.ac.in
J3
terracotta from Central India, wood-inlays from Mysore, handloom shawls from
Himachal, handloom blankets from Maharashtra and colorful dresses from
Gujarat and Rajasthan are attracting attention as well as revenues in the informal
sector of Indian economy.
There are some serious signs of weakness in this informal sector. The novelty of
material and design had brought in the first wave of success. However, the global
competition and the continuous demand for novelty in design have slowed the
growth of this sector. As the competition becomes more intense, there is a need
to use the productivity tools of design and manufacture. Unfortunately, this sector
has not kept pace with the changes in the technology. The design culture, in
particular, depends heavily on a small set of ideas. This results in repetition and
subsequent loss of market share.
This brings me to a fundamental observation about a society. The economic
vitality of a society over a period depends on the new products and processes
introduced in that society. Some products and services survive., some products
and services flourish and some products and services die out over a period of
time. While all these events are taking place, people become entrepreneurs, start
manufacturing and marketing, employ fellow citizens and generate wealth. In
short, the economic life changes as newer products come into the market and
the old ones die out. This churning goes on at a rapid pace in the urban society.
A quick look around will prove that some products that we see today did not exist
ten years back. Some products like the manual typewriter are gone from the
scene with the result that a part of the economy associated with that product is
also not active any more. Now, if one looks at the Indian rural society, it becomes
clear that it remains away from new products and services. In some cases, the
new product may also energize the economy of the rural society.
However, by and large, the economic activity centers on the traditional base of
agriculture and Government-run rural services - handicrafts being another vital
component. In short, the basic driver of economic momentum in terms of new
products and services is singularly absent in Indian rural society. Products, which
have become successful in the urban market, get pushed into the rural society.
However, all such products have been developed keeping in mind a different
type of need.
In short, the situation in terms of economic vitality vis-a-vis product innovation is
not encouraging for the traditional handicrafts.
The primary focus of the present paper is to indicate how digital empowerment
can help the handicrafts sector. It has been felt that cost-effective design and
prototyping tools can improve the efficiency as well as productivity of artisan
designer. It has been also felt that present-day means of digital communication
can help bridge the gap between artisans who are geographically located in
remote areas of rural India and the consumers as well as designers who are
scattered all around the world. In other word, the economic vitality can be
enhanced if not only marketing but also even design information can be
transmitted between rural artisans and creative designers. It is felt that the digital
empowerment of Indian handicrafts has immense potential to bring along a
corresponding economic empowerment for the Indian artisans.
DESIGNING AND PROTOTYPING
The culture of design in India is deeply rooted in a sense of tradition. All designs
whether of carpets or of sarees or of shoes are based on traditional motifs and
patterns. Lack of innovation and experimentation produces repetitive designs.
Another reason for keeping the same patterns is related to the tooling required
for production of designs. For example, in case of CHIKAN embroidery, a stamp
block is required to print a design. These blocks are not made quickly and are not
made available for any design. With this constraint, the designer works around
only those options for which the stamp-blocks are available. It is the same case
in jewellery. The overall culture of keeping same traditional design is a strong
factor for loosing markets. In case of handicrafts, the artisan should be able to
undertake bold experiments in design. For this purpose, it is necessary to provide
tools and processes, which provide the necessary freedom to a designer.
Lack of visual tools is another handicap with designers. Most of the designs are
described with some samples. The data is not in a form, which can be
transmitted or communicated between different groups. The designers are
dealing with graphic information. However, they are not able to use a graphic
language nor are they able to use any of the graphics capabilities available today
on a computer. Several sophisticated design and graphics packages are
available in the market. However, they are beyond the reach of handicraft
designers in terms of price as well as knowledge. In short, it is necessary to
develop a library of software that is available in public domain and that can be
used by an artisan for expanding the design envelope in an application area of
handicraft.
Design automation has made rapid advances in the past two decades. The
techniques of wire frame, surface and solid modeling provide a powerful
modeling tool for an aircraft or a vehicle designer. The intent of most of these
computer aided design tools has been on modeling and automation of the design
process. The issue in case of handicraft design is quite different. Automation is
certainly not the goal. The priority is for providing tools of synthesis to designers.
Using these tools, one should be able to explore new designs. The second area
of concern is the field of design for manufacturability. It is necessary for a
designer to see that all the information required for realizing a design is
generated quickly.
In case of a handloom weaver, it is necessary to develop a pattern of holes,
which can be used to make a card that can be put on the loom. In the absence of
8
any intelligent help,; a weaver relies on his or her knowledge base and makes
■several iterations before a final pattern of holes is approved. Similar situations
arise in many other applications. It is necessary to provides of software tools to
handicraft designers in an affordable manner.
Most of the designers are talented in their art. However, they are not educated in
a formal sense. Any communication with such a group to encourage them to see
and use any software tool is always a difficult task. Consider the case of a tailor. I
have wanted him to use simple software, which- can give, flat-patterns of a dress
for a given set of dimensions. However, the person is in the awe of a computer to
such an extent that he is afraid to use the software, let alone understand it. The
psychological barrier is a real challenge with the designers of informal sector.
Developing simple user interfaces is a prerequisite for any software that can be
used by handicraft designers. The training of these designers is necessary.
Some senior designers need, to be involved in the development of software. The
software should not only be in a shareware form but it should have language
independent interfaces. The ability of a designer to create new works is based on
the world of his or her experience. If a designer is able to interact with the outside
world, with the potential customers, with the national and international community
of fellow designers, it will enhance the bandwidth of communication. This, in turn,
will provide new ideas for innovation. It is felt that with the use of Internet
technology, the handicraft designers can broaden their field of experience and
communication.
Finally, it is necessary to provide the tools of rapid prototyping in an appropriate
form to handicraft designers. The technology of rapid prototyping as it is available
to designers is very expensive. However, if simple tools are available for
handicraft designers in terms of prototyping and tooling, it will certainly help in the
overall cycle of product development.
SOCIO-ECONOMIC ASPECTS
Even though the informal sector of the economy in India is large, it is not growing
in a sustainable manner. This state of affairs is due to several socio-economic
factors. The technology and practices of design and production are outdated and
training mechanisms are informal. This results in a gradual shrinkage of the
number of skilled workers. It is necessary to keep the design and production
means as good and affordable as possible. Product innovation is a key driver for
sustainability. This factor remains singularly absent. Fear of technology is
another factor. Many designers have got their training in their trade in an informal
manner. They are usually very good in their skills and understanding. However,
any new approach or any new methodology is plways looked upon with
reservations.
In many cases, some pilot projects were carried out to convince the designers
about the new design tools. Even after seeing the results and agreeino to the
advantages, the designers continued to use the traditional methods. The cultural
inertia to change is a major hurdle in this informal sector. Another psychological
factor against any introduction of a new technology is the fear that it will make the
human designer obsolete or redundant. The fear of automation in terms of
machines replacing humans plays on the minds of many artisans.
There is a long chain of middlemen in the supply chain in the informal sector. It
has been found that the economic returns to the designer and manufacturer of
handicraft products are less as compared to a host of in-between agencies who
bring these products to market and sell them successfully. The co-operative
movement has helped to alleviate this situation. In case of handlooms and textile,
a number of local and regional co-operatives are able to give the appropriate
returns to weavers. However, it still remains unsatisfactory in many areas.
Some of the reasons why the business model of a handicraft designer
manufacturer is not good are related to the credit policy, cash-flow problems,
prices 'of raw materials, lack of knowledge about market conditions and similar
such socio-economic reasons. It is felt that if the awareness of a person who
actually produces the goods is enhanced and if that person is empowered with
cost-effective tools, the economic sustainability of the handicraft sector will
improve. The macro-economic situation for the informal sector including the
handicrafts component remains subdued. The state and central governments
have set up several agencies for promotion of this sector. However, most of
these agencies are not in good financial health.
Their own survival becomes critical rather than these agencies helping the
individual entrepreneurs. There are several successful traders and middlemen
who are able to market these products successfully. However, these agencies do
not invest in either technology or product innovation or infrastructure. This results
in some sort of economic stagnation. In order to bring in innovation and improve
the infrastructure, the handicraft sector needs to evolve an appropriate macroeconomic model. For white goods, electronics, cosmetics, and similar such fast
moving consumer goods category, one sees the macro-economic model in place.
However, the situation is not similar for the handicraft sector.
S5
IITK CASE STUDIES
At CAD Laboratory, IIT Kanpur, a facility for product design and prototyping has
been established. It consists of facilities for computer aided design, rapid
prototyping, rapid tooling and reverse engineering. Two rapid prototyping
systems - fusion deposition modeling and solid ground curing - are available.
Three rapid tooling systems - silicone vacuum casting, epoxy molding, metal
spray - have been established. A robotic arm is available for reverse
engineering. Several design workstations are available along with a number of
software packages. In the initial phase of work, the CAD Laboratory worked with
several automotive and aerospace agencies. Since these industries are
intrinsically inclined to absorb the high technology practices, it was easy to
undertake and complete the projects sponsored by these industries of formal
sector.
Around 1996, it was decided to see if technology and product innovation can be
brought about in the footwear industry in Kanpur. We are presently working with
several small and large footwear and saddler manufacturers in Kanpur Some of
our case studies show that product development is a weak area in this sector. As
the market demands are changing from formal footwear to casual and sports
footwear, the industry is not able to either come up with new designs nor able to
cope up with the changes taking place in the materials technology.
The designers use so much of thumb-rule technology that any change in a
product style poses difficulty for them. It is necessary to provide some simple
shareware software tools for these designers. In a similar manner, tailors also
need a set of design tools, which can be used effectively. Take the case of a
simple computer like Pengachu. It can be used for developing some specific
applications for footwear and apparel design.
Along similar lines, IIT Kanpur is working on CHIKAN embroidery project with the
Physics and Media Group of MIT Media Lab. The project is aimed at developing
a design tool and a plotter which can be used by rural artisans engaged in the
production of this fine embroidery work. Designers from all over the world can
use the design tool. The artisan should be able to download a design pattern at a
rural location and print it on a piece of cloth. The workers can then do the
embroidery work on these designs. We are also trying to see if a channel of
communication can be established effectively between artisans and designers
irrespective of their geographical locations.
CONCLUSIONS
Product innovation and improvements in design as well as manufacturing
technologies occur in the formal sector of economy on a routine basis. In the
case of the informal sector, the concept of product innovation remains subdued.
A detailed socio-economic analysis is needed to see how the economic
empowerment of rural societies can be brought about with the introduction of
modem technologies of design and product innovation. In particular, the
handicraft sector in India presents an appropriate case for introducing the tools of
design and product development. It is felt that several segments of the handicraft
sector will be benefited if such tools and products are available at an appropriate
price. In order to overcome the cultural inertia of change, it is necessary to
provide an appropriate environment of training and education. Since the
economic size of this sector is large, any effort in the direction of technology
improvement will yield significant dividends.
Detailed Guidelines for implementation of Product Development, Design
Intervention and packaging (PRODIP) in KVIC, as per “DESIGN
PACKAGE” APPROVED BY GOVERNMENT 1
BACKGROUND:
Role of design:
There is a pressing need for product development and design interventions
in the Khadi and Village Industries (KVI) Sector. With increasing competition
to the traditional KVI products from alternate materials, organised industries
and imported goods, attention to product quality and design issues has
become a most essential requirement to strengthen this sector.
A well designed quality product would mean and include consistency in quality
of the product which is functional, user friendly, consumer-sensitive,
aesthetically satisfying and also, as far as possible, eco-friendly.
Proper ‘design’ is required not only for products (output) but also has to be an
integral part of inputs that is in production processes, tools etc. In as much as
the pillar of the KVI sector is the artisan, KVI lays great emphasis on this area,
that is in improving hand tools and small machines, reducing drudgery and
improving the quality of work environment and the productivity of artisans.
The role of visual design and brand-identity for sales outlets is also important.
There is need for common logos, shop and layout design, proper labelling
and packaging of KVI products.
In the last few years, KVIC had/has initiated a number of design related
projects, more of a pilot nature. They include:
(a)
‘Khubsoorat’ Khadi -an effort to sell designer khadi products
(b)
Developing packaging for ‘Sarvodaya’ brand KVI products through
National Institute of Packaging, Mumbai.
(c) Involving nationally reputed star textile designers in
wear for display and sale in selected Delhi outlets.
designing khadi
(d) Associating with National Institute of Design, Ahmedabad (NID) under
UNDP project for design intervention in khadi production, processes and
garments in nine institutions of Maharashtra and Gujarat.
1 Downloaded from http://kvic.nic.in
£6
NATIONAL CONSULTANT ON DESIGN:
KVIC has identified the National Institute of Design, Ahmedabad, the premier
institution for design, (under the Ministry of Industries), as its national
consultant. The national consultant will give appropriate hand holding support
to KVIC in evolving systems, procedures and norms for design projects, so
that ‘design’ becomes an integral part of KVIC working in a matter of few
years. KVIC has already entered into a MOU with NID for this purpose, and a
special ‘KVIC Cell’ has been opened in NID campus to exclusively address
problems and challenges of KVI sector.
PREPARING PANEL OF DESIGNERS & PRODUCT DEVELOPERS:
Identification of designer is a specialized task. For this purpose NID has
prepared a panel of institutions and individuals who could be contacted and
used for design intervention projects, as and when necessary.
The list of such identified designers who are in the panel is being sent
separately. It will be updated by NID from time to time and circulated.
The list is also available at:
(i) Website of KVIC (www.kvic.org.in)
(ii) KVIC Cell, NID Office, Ahmedabad
(iii) Design Cell, IT Directorate, KVIC Mumbai
All Local Resource Institution (LRI’s) can also take up design
projects.
As the LRI’s plus identified designers in NID panel is quite a wide list, projects
should be entertained for sanction only if the designer is from this panel.
Should a designer want to enrol himself in the NID panel, he may contact
KVIC-NID Cell directly.
THE SCHEME:
To operationalise design related initiatives KVIC is now commencing a
scheme called ‘Scheme for Product Development, Design Intervention and
Packaging in KVI Sector’ (PRODIP)
BASIC APPROACH:
KVIC operates this scheme on ‘Project Approach’ basis that is activities will
be approved as individual projects.
SOURCE OF FUNDS FOR SCHEME:
For this purpose, funds have been presently earmarked from existing Khadi
Grant, Village Industries Grant, G & M Grant and S&T Grant. State/Regional
Directors have been/are being intimated the budgets separately.
In future, funds may also be sourced from MDA, special grant from the parent
or other Ministries, which will be intimated from time to time.
ACTIVITIES THAT CAN BE TAKEN UP UNDER THIS SCHEME
Projects relating to improvements of raw material, products, process, tool
improvement, packaging, retail outlet improvement, layout design etc can be
taken under this envisaged scheme. Preference should be given to schemes
which have a multiplier effect rather than which go to support only a particular
institution (for example: a project for training and developing of natural dye
processing in khadi for a group of Khadi institutions in a contiguous area
would, be given preference vis-a-vis readymade dress design project for a
particular institution). Likewise, preference should be given to projects that fit
into identified properties/themes identified by KVIC-NID from time to time.
Activities that cannot be taken under this scheme:
□
□
Any proposal for Civil Construction work in general
Any proposal for construction work or major interior decoration work in
retail outlet.
□
Any proposal for purchase of furniture or fixtures or other items
exceeding Rs. 40,000/- from scheme.
□
Any proposal for purchase of capital equipment exceeding Rs. 40,000/from scheme.
□
Any proposal, which gives indication that it is substantially an activity
for capital item purchase or installation rather than design or outlet
upgradation. (However, reasonable expenditure - upto limits prescribed above
- relating to shop window improvement, purchase of simple display frames,
hangers and small tools, equipments etc. are allowed)
WHO CAN APPLY:
DEPARTMENTAL PROJECTS:
Funding for a project could be on the application of a KVIC Department or
KVIB. This would be then called a KVIC Departmental project or KVIB
project.
INSTITUTIONAL PROJECTS:
Public Institution Project: A Govt, agency, quasi-government agency,
research institutions recognised, University or an affiliated college, that is
public institutions, which receives funds fully or partly from Central or State
Governments, can also apply under this scheme.
KVIC Institutions Project: Funding for a project could also be on the
application of:
(a) directly aided or Board aided Khadi Institutions
(b) directly listed V.l. institutions of KVIC/KVIB
REGP Beneficiaries Project: Institutions or Individuals who have availed
bank finance under the margin money scheme of KVIC can also apply under
this scheme.
Preference would be given to major institution and to first time projects.
institutions will get opportunities to submit projects.
All
FINANCING PATTERN
Institutions:
Assistance will be limited to Rs.2 lakh or 75% of the project cost whichever is
lower in case of KVI institutions
Individual:
Assistance will be limited to Rs.1 lakh or 75% of the project cost, whichever is
lower in case of individual.
Note : There is no limit placed on the project cost but assistance from KVIC
cannot exceed above limit per project.
PAYMENT NORMS
KVIC will cost/pay projects on ‘actual expenses and Designer Fees (AE + DF)
principle. Actual expenses will be broken into various cost heads like:
Preparing prototypes
Training
Making samples
NID in consultation with KVIC, has prepared a standard proforma, showing
how to work out the cost of the project. This is available as a part of the
application form and needs to be filled in by the applicant institution very
carefully, with guidance from designer. The format of application form is being
sent separately.
Norms have also been fixed for paying the designer fees. Designers or
product developers are graded by NID as:
Senior designers
Junior designers
Trainee designers
depending upon their seniority, and repute. A mechanism has been put in
place for grading them. Fees will be fixed according to their grades.
Thus fees would be on the basis of project and the personal grade of the
designer. However, for Senior Designers a share of the increased sale of
products developed can also be considered. Separate guidelines in this area
will be adopted and issued by KVIC in consultation with NID.
OPERATIONAL ARRANGEMENTS
Nodal Agency:
National Institute of Design, Ahmedabad works as the Nodal Agency for the
scheme. NID will give handholding support to KVIC in various aspects of the
scheme. State/Regional Directors may contact KVIC - NID Cell at NID or
Design Cell at KVIC for any specific clarification.
Local Resource Institutions (LRI)
Local Resource Institutions have been identified by NID (in consultation with
KVIC) in various parts of the country. To begin with some institutions have
been identified, based on their willingness so to facilitate start of work. These
design institutions are geographically dispersed all over the country and their
number would be increased, as per requirements, in phases. The object of
identifying local resource institutions (LRI’s) is that they would provide design
services and takes up design projects (wherever possible) and also be part of
the local Empowered Committee to sanction the project. Thus KVI institutions
wishing to benefit from the scheme can get their support and sanction at
local/regional level itself.
PERIOD OF PROJECT
The period of project should normally not exceed nine months from date of
sanction. The Empowered committee while meeting will also fix the time
frame in which project is to be completed.
DESIGN ACT
The Institution, designer or LRI and KVIC would hold the tripartite Intellectual
Property Right of the selected design, which appears to have market
potential. The registration amount can be a part of the project cost and the
3d
design will be duly registered by KVIC and in the case of other designs on the
Payment of the whole amount to the designer or the LRI, his or their design
rights shall be deemed to be passed on to the Khadi institutions.
Designs, which are duly registered, would come under royalty scheme where
the designer, LRI and the KVIC would get royalty on the sales. NID can assist
in the royalty scheme norms on case-to-case basis.
PROCEDURE FOR PREPARING. PROCESSING AND SANCTIONING
PROJECTS.
(i) Preparation of Projects
Any institution/individual who is eligible to apply under this scheme (see para
6) willI have to forward their/his application with a project proposal in
prescribed application form to the Convener (i.e. concerned State/Regional
Director of KVIC).
The application duly scrutinised will be placed by the Convener (i.e. the
State/Regional Director) before the Empowered Committee.
The Empowered Committee will evaluate the application and sanction them if
fa?Ory’ : ShOU'd available funds be 'imited, the Empowered
Wl priori!ls1e them and sanction in sequence. The following points
uld be given special weightage while sanctioning the projects.
(i) Multiplier effect of the project - i.e. whether there is possibility of many
individuals/institutions benefiting.
(n)The initiative and drive shown by the applicant for this project reflected by
PreV,°nS °Yn afforts in this line (") additional financial contribution
steps taken or willing to be taken for this effort.
(in) First time projects - i.e. first time applicants will be given priority over
applicants who have already been given a project.
(iy)) Proposals, which fit into the themes identified from time to time by KVICRelease of funds and monitoring of the Project:
On sanction of projects by the local Empowered Committee, the State/
Regional Director, will (i) release the first instalment of 30% to the beneficiary
Pd COf3y °f th®. aPProved proposal and sanction order to KVIC Cell in
ID for monitoring (in) send one copy of the approved proposal and sanction
order to Design Cell, IT section, Central Office for record. NID shall through
their mechanism monitor projects and instruct the State Director to release the
second and third instalments of 30% each, totalling 90%.
NID shall also send completion report to the State/Regional Director who shall
place it in the Empowered Committee and after their approval release the
balance amount of 10%. The project thus comes to an end.
In very small projects of less than Rs.50,000/- the NID may compress the
second and third instalment into one instalment to reduce the paper work.
Tasking & Evaluating Designers & Projects
At the end of a project, a Designer Report would be essential. NID will
prepare standard reporting formats covering material used, process
techniques used, skill & adaptation level. This is to be filled in by the
Designer, and sent to NID. Formats on this are being sent by NID separately.
Maintenance of Records
Records relating to the entire scheme will be maintained at two levels :
(i) At the State/Regional Offices, by the State/Regional Directors in his
capacity as Member-Secretary of the Empowered Committee.
(ii) At NID who shall monitor the projects and control their performance and
output.
Grievance & Review Cell :
The Grievance and Review Cell would be at KVIC Headquarters at Mumbai
and Chief Executive Officer would be the Chairman of the Cell who would be
authorised to conduct any enquiry for any grievance.
(ix) Guidelines to applicants, designers, State Directors & Members of Expert
Committee.
For further information contact
(a) KVIC Design Cell (Shri L.G. Israni)
IT Directorate, Khadi & V.l. Commission,
3, Irla Road, Vile Parle (west), Mumbai 400 056.
Tel/Fax: 628 7397, E-mail: ditkvic@bom3.vsnl.net.in
(b) Ms. Geeta Dave/Dr. Himadri Ghosh
KVIC Cell
National Institute of Design, Paldi, Ahmedabad
Ph:079/664 2221 (Direct)/6605240/6639692 - Ext 4009,
kvicnidcell@icenet.net
9
Why Standards Matter1
What if standards did not exist?
Standards make an enormous contribution to most aspects of our lives - although
very often, that contribution is invisible. It is when there is an absence of
standards that their importance is brought home. For example, as purchasers or
users of products, we soon notice when they turn out to be of poor quality, do not
fit, are incompatible with equipment we already have, are unreliable or
dangerous. When products meet our expectations, we tend to take this for
granted. We are.usually unaware of the role played by standards in raising levels
of quality, safety, reliability, efficiency and interchangeability - as well as in
providing such benefits at an economical cost.
Bureau of Indian Standards (BIS)
1. In India we have the Bureau of Indian Standards (BIS), the National Standards
body of India, which is a statutory body set up under the Bureau of Indian
Standards Act, 1986. The Bureau is a body corporate and responsible for laying
down policy guidelines for BIS.
It comprises of members representing the Industry, Consumer Organizations,
Scientific & Research Institutes and Professional Bodies, Technical Institutions,
Central ministries, State Governments and Members of Parliament.
2. STANDARDS FORMULATION
Indian Standards are formulated keeping in view national priorities, programmes
for industrial development, technological needs; export promotion, consumer
welfare, health, safety, etc.
So far over 17000 standards have been formulated in different technology areas.
3.CERTIFICATI0N
3.1 Product Certification
The product certification scheme is basically voluntary in nature and aims at
providing quality, safety and dependability to the ultimate customer. Conformity is
ensured by regular surveillance of the licensee’s performance by surprise
inspections and testing of samples, drawn both from the factory and the market.
' www.bisiorg.in
I
3.2 Eco Mark - The Government of India had instituted a scheme in February
1991 known as ECO mark Scheme for labelling environment friendly products.
The
Bureau
of
Indian
Standards
administers
this
scheme.
3.3 Quality Management Systems Certification (ISO 9000) - BIS is a national
agency authorized to operate Quality Systems Certification in India. It has
adopted ISO 9000 series of standards as IS 9000 series Indian Standards,, and
aligned the procedure for operation of Quality Systems Certification, based on
international criteria and is comparable to any other such systems being
operated.
3.4 EMS Certification - With the growing concern for environment friendly
industrial activity, ISO 14000 series of standards have been developed. BIS, after
adoption of these standards as national standards, has launched Environment
Management
System
(EMS)
Certification
(IS/ISO: 14001).
3.5 HACCP Certification - BIS launched HACCP (Hazard Analysis Critical
Control Points) based Quality System Certification Scheme as per the
requirements of IS 15000: 1998 standard (equivalent to Codex ALINORM 97 /
13A).
3.6 Hallmarking of Gold Jewellery - In order to protect consumers against
victimization of irregular gold quality. Hallmarking of gold jewellery was launched
under BIS Act,
1986.
This
scheme
is
voluntary in
nature.
4.
LABORATORY TESTING, CALIBRATION
AND MANAGEMENT
4.1 The Bureau has a chain of laboratories located in different parts of the
country for conformity testing of certified products and samples offered by
applicants for grant of license which is an essential feature of BIS Certification
System. Modernization of BIS Laboratories has also been taken up.
5.STANDARDS PROMOTION
5.1 For a wider adoption of Indian Standards by the industry, organized
purchaser, statutory bodies and universities,
BIS has formulated a plan which emphasizes on:
- Development of complementary level of standardization, namely, company
standardization and association level standardization
- Effective implementation of standards through sectoral committees, such as,
steel, food, textiles, information technology, automotives and power.
- State Level Committees on Standardization and Quality Systems to ensure
better implementation of Indian Standards.
- Use of Indian Standards in legislation
- Greater interaction with public and private sector undertakings
-.Bulk public purchases based on standards and standard marked products
- Use of standards in education systems
- Intensified media campaign to create awareness
6. INTERNATIONAL COOPERATION
BIS as a founder member of International organization for Standardization (ISO)
and continues to take an active part in international standardization. BIS is also
actively involved in International Electro technical Commission (IEC) and has
participation status or observer status on all the important Technical Committees.
7. NATIONAL TRAINING INSTITUTE
To provide training in the field of standardization, quality control, quality
management system,
environmental
management system,
laboratory
management, etc. to industry personnel, the National Institute of Training for
Standardization and Quality Management has been set up. A large number of
participants from many developing countries have been trained in several such
programmes covering standardization and Quality Systems.
8. BIS AND CONSUMERS
Service to consumers and creating quality consciousness among them BIS has
set up a Consumer Affairs and Public Grievances Department at headquarters.
Nominated Public Grievance Officers at Regional and Branch Offices to deal with
consumer complaints against BIS services and ISI marked products
9. ENFORCEMENT
To keep an eye on misuse of standard mark, an Enforcement Department is
functioning at HQs, with designated coordination officers in ROs and BOs.
Complaints on misuse of Standard Mark are investigated by the Enforcement
Department
and
appropriate
legal
action
is
taken.
10. WESTERN REGION The operation of the Bureau in the Western Region
comprising of Maharashtra, Gujarat, Goa, Daman and Diu is looked after by the
Western Regional Office located atMumbai and the branch offices at Pune,
Nagpur
and
inspection
offices
at
Aurangabad.
What 'international standardization' means
When the large majority of products or services in a particular business or
industry sector conform to International Standards, a state of industry-wide
standardization can be said to exist. This is achieved through consensus
agreements between national delegations representing all the economic
stakeholders concerned - suppliers, users, government regulators and other
interest groups, such as consumers. They agree on specifications and criteria to
be applied consistently in the classification of materials, in the manufacture and
supply of products, in testing and analysis, in terminology and in the provision of
services. In this way, International Standards provide a reference framework, ora
common technological language, between suppliers and their customers - which
facilitates trade and the transfer of technology.
Where to find information on standards
ISO's entire portfolio of standards is listed in the ISO Catalogue, which, can be
accessed online. The site also provides access to the World Standards Services
Network (WSSN), which is a network of publicly accessible Web servers of
standards organizations around the world.
It contains links to international, regional and national standardization bodies,
and also to other international and regional organizations, which develop
standards in their specialized subject area, in addition to their principal activity.
In fact, there are several hundred thousand standards and technical regulations
in the world containing special requirements for a particular country or region.
Finding information about these, or about related conformity assessment
activities, can be a heavy task. ISONET, the ISO Information Network, can ease
the problem. This is a worldwide network of national standards information
centres, which have cooperatively developed a system to provide rapid access to
information about standards, technical regulations, and testing and conformity
assessment activities in operation around the world. The World Trade
Organization's Agreement on Technical Barriers to Trade (WTO/TBT) calls upon
its signatory countries to establish a national enquiry point to answer questions
on these same areas in relation to that country. In many countries, the ISONET
and WTO enquiry points are one and the same.
BUREAU OF INDIAN STANDARDS
The industry is invited to avail the services offered by the Bureau from its various
offices in Maharashtra :
Regional Office :
* Manakalaya, E - 9, MIDC, Marol, Andheri (E), Mumbai - 400 093
* Tel. : 8329295 / 7891 / 7892 / 7858* Fax : 022 - 8364820 * E - Mail :
biswro@bom.nic.in
* Website : www.bis.org.in
Branch Offices :
* 1st Floor, Plot No. 657 - 660, Market Yard, Gultekdi, Pune - 411 037 * Tel.:
4268659
* NUT Building, 2nd Floor, Gokulpat Market, Nagpur - 440 010* Tel.: 525171
Sales Offices:
Novelty Chambers, 3rd Floor, Grant Road, Mumbai - 400 007 * Tel. : 3096528 /
3002921
i.
!■
Post harvest Handling of Horticulture Produce1
introduction
Horticultural crops not only provide us with nutritional and healthy foods, but also
generate a cash income to growers. Appropriate production practices, careful
harvesting and proper packaging, storage and transport all contribute to the good
produce quality. Once a crop is harvested it is impossible to improve its quality.
The horticultural crops, because of their high moisture content are inherently
more liable to deteriorate especially under tropical conditions. Moreover, they are
biologically active and carry out transpiration, respiration, ripening and other
biochemical activities, which deteriorate the quality of the produce.
Losses during post harvest operations due to improper storage and handling are
enormous and can range from 10-40 percent. Post harvest losses can occur in
the field, in packing areas, in storage, during transportation and in the wholesale
and retail market. Severe losses occur because of poor facilities, lack of know
how, poor management, market dysfunction or simply the carelessness of
farmers. Proper storage conditions, temperature and humidity are needed to
lengthen the storage life and maintain quality once the crop has been cooled to
the optimum storage temperature.
Causes of Post Harvest Losses
Physiological and Biochemical Aspects
The quality of the harvested fruits and vegetables depend on the condition of
growth as well as physiological and biochemical changes they undergo after
harvest. Fruits and vegetable cells are still alive after harvest and continue their
physiological activity.The post harvest quality and storage life of fruits appear to
be controlled by the maturity. If the fruits are harvested at a proper stage of
maturity the quality of the fruits is excellent. Poor quality and uneven ripening are
due to early harvesting and late harvesting which results in extremely poor shelf
life.
Respiration p/ays a very significant role in the post harvest life of the fruits. In
most of the fruits, the rate of respiration increases rapidly with ripening. The
sudden upsurge in respiration is called the 'climacteric rise', which is considered
to be the turning point in the life of the fruit. After this the senescence and
deterioration of the fruit begin. The fruits such as banana, papaya, mango,
guava, jackfruit, fig, sapota, etc. belong to the category of climacteric fruits. While
litchi, pineapple, grapes, pomegranate, lemon, orange, lime, etc. belong to the
non-climacteric group. To extend the post harvest life of the fruits its respiration
rate should be reduced as far as possible. Thus an understanding of the factors,
1 Dow nloaded at http.'//ww vv.foodmdia.org/postliarvest.asp
i
which influence the rate of respiration, is indispensable to post harvest
technologies for manipulating the storage behaviour of fruits.
Mechanical Injury
Owing to their tender texture and high moisture content, fresh fruits and
vegetables are very susceptible to mechanical injury. Poor handling, unsuitable
containers, improper packaging and transportation can easily cause bruising,
cutting, breaking, impact wounding and other forms of injury.
Parasitic Diseases
High post-harvest losses are caused by the invasion of fungi, bacteria, insects
and other organisms. Microorganisms attack fresh produce easily and spread
quickly because the produce does not have much of a natural defence
mechanism and has plenty of nutrients and moisture to support microbial growth.
Post harvest decay control is becoming a more difficult task, because the number
of pesticides available is falling rapidly as consumer concern for food safety
increases.
Post harvest Technologies
Precooling
Good temperature management is the most effective way to reduce post-haiyest
losses and preserve the quality of fruits and vegetables. Products harvested from
hot fields often carry field heat and have high rates of respiration. Rapid removal
of field heat by precooling is so effective in quality preservation that thi
procedure is widely used for highly perishable fruits and vegetables Currently
used precooling methods include room cooling, forced-air cooling, water cooling,
vacuum cooling and package icing
Room cooling is a relatively simple method, which needs only a refrigerated room
with adequate cooling capacity. The produce is packed in containers, which are
loosely stacked in the cooling room, leaving enough space between containers
for each one to be exposed to circulating cold air. The rate of cooling is rather
stow compared to other methods of cooling, because the heat inside each
container needs to be transferred to the surface of the container by means o
conduction before being carried away by the refrigerated air. It may take hours or
even days to cool a product, depending on what kind of product it is, the size an
nature of the container, and the temperature and velocity of the circulating air.
Forced-air cooling is a more rapid way of using air to cool produce. Cold air is
forced to flow through the inside of each container, so that it carries away heat
directly from the surface of the produce rather than from the surface of the
container. The airflow is produced by creating a pressure difference between the
two perforated sides of each container. The containers are stacked inside a
covered tunnel with an exhaust fan at one end. Highly perishable and high-value
products such as grapes, strawberries and raspberries may be cooled in less
than an hour using this method.
Hydro cooling is a rapid and less expensive method. Produce is exposed to cold
water by means of showering or dipping. The required cooling time is often a
matter of minutes. However, not ail kinds of products tolerate hydro cooling.
Hydro cooled products inevitably have a wet surface, which may encourage
decay in some kinds of produce.
Vacuum cooling is the most efficient way to cool leafy vegetables, particularly
headed ones such as head lettuce, cabbage and Chinese cabbage. The produce
is placed inside a vacuum tube in which air pressure is reduced. When the
pressure is lowered to 4.6 mm Hg, water "boils” off at o 0°C from all over the leaf
surface. The boiling effect draws heat for vaporization, and hence cools the
produce. The cooling time is usually in the order of 20 to 30 minutes.
Unfortunately, the equipment needed for vacuum cooling is very expensive, and
may not be a good choice for small-scale farming systems.
Ice bank cooler is a new development in refrigeration with positive ventilation. In
this system ice cool air is passed through the boxes containing horticultural
produce. This facilitates quicker cooling and large amount of heat is removed in a
relatively shorter period. The store maintains a temperature of 0.5 - O.80C and
relative humidity of 98 percent.
Package icing or top icing is the simplest way of cooling. Adding crushed ice,
flake-ice or slurry of ice in containers can cool the produce. However, this
method is not suitable for produce, which is very sensitive to ice-cold
temperatures. Cooling by ice also inevitably wets both the produce and
container, and generates water, which needs to be drained.
Sanitation
Sanitation is of great concern to produce handlers, not only to protect produce
against post harvest diseases, but also to protect consumers from food borne
illnesses. E.coli 157:H7, Salmonella, Chryptosporidium, Hepatitis and Cyclospera
are among the disease causing organisms that have been transferred via fresh
fruits and vegetables. Use of a disinfectant in wash water can help to prevent
both post harvest diseases and food borne illnesses.
(lo^
Chlorine in the form of a sodium hypochlorite solution or as a dry powdered
calcium hypochlorite can be used in hydro-cooling or wash water as a
disinfectant. For the majority of vegetables, chlorine in wash water should be
maintained in the range of 75-150 ppm (parts per million). The antimicrobial form,
hypochlorous acid, is mostly available in water with a neutral pH (6.5 to 7.5).
Organic growers must use chlorine with caution, as it is classified as a restricted
material.
Ozonation is another technology that can be used to sanitize produce. A naturally
occurring molecule, ozone is a powerful disinfectant. Fruit and vegetable growers
have begun using it in dump tanks as well, where it can be thousands of times
more effective than chlorine. Ozone not only kills whatever food bome pathogens
might be present, it also destroys microbes responsible for spoilage. A basic
system consists of an ozone generator, a monitor to gauge and adjust the levels
of ozone being produced and a device to dissolve the ozone gas into the water.
Hydrogen peroxide can also be used as a disinfectant. Concentrations of 0.5% or
less are effective for inhibiting development of post harvest decay caused by a
number of fungi. Hydrogen peroxide has a low toxicity rating and is generally
recognized as having little potential for environmental damage.
Presizing and Storage
For many commodities fruits below a certain size are eliminated manually or
mechanically by presizing belt. Undersized fruits are diverted for processing. The
sorting process eliminates cull, overripe, misshapen and otherwise defective fruit
and separates produce by colour, maturity and ripeness classes.
Grading
Essentially all fruits and vegetables sold in modem markets are graded and sized
into two or more grades according to trade standards. Sophisticated marketing
systems require precise grading standards for each kind of product. More
primitive markets may not use written grade standards, but the products are
sorted and sized to some extent.
Typical grading facilities in large packinghouses include dumpers and conveyors.
Produce is graded by human eyes and hands while moving along conveyor belts
or rollers. "Electric eyes" are sometimes used to sort produce by colour. In small
scale packing operations, one or a few grading tables may be enough. Dumping,
conveying and grasping can cause mechanical injury to some products.
Equipment should have a smooth, soft surface and dumping and grading
operations should be gentle to minimize injuries.
10
Many products are sized according to their weight. Automated weight sizers of
various capacities are used in packinghouses. Round or nearly round fruits are
often sized according to their diameter, using automated chain or roller sizers or
hand carried ring sizers. An inefficient sizing operation can also cause significant
injuries.
Waxing
Food grade waxes are commonly applied to replace some of the natural waxes
removed in the washing and cleaning operations to reduce water loss and to
improve appearance. It also provides protection against decay organisms.
Waxing may be done after grading and fungicides may be added to the wax.
Application of wax and post harvest fungicides must be indicated on each
container where the refrigerated storage facilities are not available Protective
skin coating with wax is one of the methods for increasing the storage life of fresh
fruits.
Packaging
Packaging of fresh fruits and vegetables has a great significance in reducing the
wastage. Packaging provides protection from physical damage during storage,
transportation and marketing.
There are variety of packages, packaging materials and inserts available.
There are two types of packaging. The first is when produce is packed in
containers for transportation and wholesale. The second is when produce is
packed into small retail units. Ideal containers for packing fruits and vegetables
should have the following attributes. They are easy to handle, they provide good
protection from mechanical damage, they have adequate ventilation and they are
convenient for merchandising. They should also be inexpensive and easily
degradable or recyclable. Many kinds of containers have been used but the
"ideal" is yet to be found. Users often put economic considerations first is
selecting containers. Fancy containers such as fiberboard boxes or wooden or
plastic crates, are often used for high-value products. Inexpensive containers
such as bamboo baskets or nylon net sacs are used for low-priced produce.
Methods of packaging can affect the stability of products in the container during
shipping, and influence how much the container protects their quality. In
fiberboard boxes, for example, delicate and high-priced products are often
packed in trays, while other products are simply put in the box in groups.
Prepackaging or consumer packaging generally provides additional protection for
the products. It is also convenient for retailers as well as customers, and
therefore adds value to produce. However, over-use of non-biodegradable plastic
trays and wrapping materials, as often seen in modern supermarkets, which
creates an extra burden of waste disposal and damages the environment.
1
.0
Factors Affecting Storage Life
Relative Humidity
Transpiration rates (water loss from produce) are determine by the moisture
content of the air, which is usually expressed as relative humidity. At high relative
humidity, produce maintains salable weight, appearance, nutritional quality and
flavour, while wilting, softening and juiciness are reduced. Leafy vegetables with
high surface-to-volume ratios; injured produce and immature fruits and
vegetables have higher transpiration rates. High temperatures, low relative
humidity and high air velocity increase transpiration rates. Relative humidity
needs to be monitored and controlled in storage. Control can be achieved by a
variety of methods'
1. Operating a humidifier in the storage area.
2. Regulating air movement and ventilation in relation to storage room load.
3. Maintaining refrigeration coil temperature within the storage room.
4. Using moisture barriers in the insulation of the storage room or transport
vehicle.
5. Wetting the storage room floor.
6. Using crushed ice to pack produce for shipment.
7. Sprinkling leafy vegetables, cool-season root vegetables and immature fruits
and vegetables with water
Temperature
Respiration and metabolic rates are directly related to room temperatures within
a given range. The higher the rate of respiration, the faster the produce
deteriorates. Lower temperatures reduce respiration rates and the ripening and
senescence processes, which prolong the storage life of fruits and vegetables.
Low temperatures also slow the growth of pathogenic fungi, which cause
spoilage of fruits and vegetables in storage.
Producers should give special care and attention to proper storage conditions for
produce with high to extremely high respiration rates, as these crops will
deteriorate much more quickly.
It is impossible to make a single recommendation for cool storage of all fruits and
vegetables. Climate of the area where the crop originated, the plant part, the
season of harvest and crop maturity at harvest are important factors in
determining the optimum temperature. A general rule for vegetables is that cool
season crops should be stored at cooler temperatures (0 to 1.7oC) and warm
season crops should be stored at warmer temperatures (7 to 13oC).
05>
Freezing injury
Temperatures that are too low can be just as damaging as those too high.
Freezing will occur in all commodities below OoC. Whether injury occurs depends
on the commodity. Some can be repeatedly frozen and thawed without damage,
while others are ruined by one freezing. Injury from freezing temperatures can
appear in plant tissues as loss of rigidity, softening and water soaking. Injury can
be reduced if the produce is allowed to warm up slowly to optimum storage
temperatures and if it is not handled during the thawing period. Injured produce
should be marketed immediately, as freezing shortens its storage life.
Chilling injury
Fruits and vegetables that require warmer storage temperatures (4.5 to 13oC)
can be damaged if they are subjected to near-freezing temperatures (OoC).
Cooler temperatures interfere with normal metabolic processes. Injury symptoms
are varied and often do not develop until the produce has been returned to
warmer temperatures for several days. Besides physical damage, chilled
produce is often more susceptible to disease infection.
Ethylene
Ethylene, a natural hormone produced by some fruits as they ripen, promotes
additional ripening of produce exposed to it. The old age saying that one bad
apple spoils the whole bushel is true. The damaged or diseased fruits produce
high levels of ethylene and stimulate the other apples to ripen too quickly. As the
fruits ripen, they become more susceptible to disease. Ethylene "producers"
should not be stored with fruits, vegetables, or flowers that are sensitive to it. The
result could be loss of quality, reduced shelf life and specific symptoms of injury.
Ethylene producers include apples, apricots, avocados, ripening bananas,
honeydew melons, papayas, peaches, pears, plums and tomatoes
Storage Facilities
Crops that require different storage conditions will need three different storage
facilities.
•
•
•
Cold Storage (temperatures 0 to 2.2oC)
Cool Storage (temperatures 4.5 to 13oF)
Warmer storage (temperatures 13 to 15.6oF)
A recording thermometer can be helpful in determining whether storage facilities
are maintaining ideal conditions and are not fluctuating. A maximum/minimum
104!
thermometer could be substituted. Relative humidity also should be monitored
with a hygrometer. Controlling and monitoring temperature and relative humidity
will enable a grower to maintain optimum storage conditions for maximum
storage life of the crop and to minimize crop damage from chilling, freezing or
high temperature injuries and water loss from the crop.
Air-Cooled Common Storage
This is widely used for storing horticultural products, particularly those that have
good keeping quality even without a precise low temperature. However, its use is
generally limited to cool seasons in temperate and sub-tropical regions, or high
altitude areas where there are low ambient temperatures at night. An ideal
storage room is adequately insulated and has a good ventilation control system,
which draws cool air inside during night and keeps warm air out during the day.
Refrigerated Storage
Refrigerated storage is a well-established technology widely used for storing
horticultural crops all over the world. Its application is limited only by cost and
benefit considerations. Essentially, all crops can benefit by being stored at a
suitable low temperature, which extends the storage life and preserves quality.
Many horticultural crops have storage life spans ranging from less than one
month to several months when refrigerated. Therefore, refrigerated storage can
be used continuously only if different crops with different harvesting seasons can
share the facility. There are other important reasons why this method is not used
in many tropical and sub-tropical countries, where refrigeration is needed most.
The initial investment cost is too high and its energy consumption too large for
many countries.
Hydrobaric Storage
In this system the horticultural produce is kept in a vacuum-tight and refrigerated
container and the air is evacuated by vacuum pump to achieve desired low
pressure. The low pressure retards ripening by decreasing respiration. However
this is more expensive method.
Controlled Atmosphere Storage (CA)
The fresh horticultural produce consumes oxygen for respiration and releases
carbon dioxide and ethylene. The ethylene further enhances ripening. Reducing
oxygen and increasing carbon dioxide can increase the shelf life. In CA storage
the levels of CO2, 02 and N2 in the storage room are monitored. CA storage
combined with refrigeration reduces respiration and delays yellowing and quality
changes. However the tolerance of individual varieties of horticultural crops
needs to be considered. Commercial application of CA storage is limited to only a
few crops, apples and pears being the most popular ones. It is not used for other'
105
crops because the benefit is too slight to cover the cost. The technologies
involved are complicated and sophisticated. The cost of building, facilities, and
management for CA storage is considerably higher than for refrigerated storage.
Therefore it should not be recommended for any crop without a thorough cost
and benefit analysis.
Transportation
Inland transportation of horticultural crops is usually by rail or by truck. Overseas
transportation is by sea or by air. A limited amount of high-valued produce is
sometimes transported overland by air. The basic requirements for conditions
during transportation are proper control of temperature and humidity and
adequate ventilation. In addition, proper packaging and stacking, to avoid
excessive movement or vibration, should immobilize the produce. Vibration and
impact during transportation may cause severe bruising or other types of
mechanical injury.
Refrigerated containers and trailers are more often used for long distance
shipping, whether by sea, rail or truck. Shipping by refrigerated trucks is not only
convenient, but also effective in preserving the quality of product. However, both
the initial investment and the operating costs are very high. Another possibility is
insulated or properly ventilated trailer trucks. Precooled products can be
transported through well-insulated non-refrigerated trucks for up to several hours
without any significant rise in product temperature. There are considerable cost
savings without any sacrifice of quality if trucks are only insulated, rather than
refrigerated, for short-distance shipping. If the product is not precooled or if the
shipping distance is long, a ventilated truck is a better choice than an insulated
truck without ventilation and without refngeration. Ventilation alone does not
usually provide a uniform cool temperature, but it may help dissipate excessive
field heat and respiration heat, and thus avoid high temperature injury.
Reference
Hardenburg, R.E., A.E. Watada, and C.Y. Wang. 1986. The Commercial
Storage of Fruits, Vegetables, and Florist and Nursery Stocks. U.S. Dept of
Agriculture, Agricultural Handbook No. 66. 130 pp.
Kader, A A (ed ). 1992. Postharvest Technology of Horticultural Crops. Uni
of Calif., Div. of Agri, and Natural Resources. Oakland, California, USA. 296 pp.
Janet Bachmann and Richard Earles, NCAT Agriculture Specialists August 2000
Postharvest Handling of Fruit & Vegetables By ATTRA Ozark Mountains at
the University of Arkansas in Fayetteville at P.O. Box 3657, Fayetteville, AR
72702.
Fu Wen Liu Horticultural Crops Abstract Department of Horticulture, National
Taiwan University
!
06.
Packaging of milk and milk products1
Packaging means placing a commodity into a protective wrapper or container for
transport or storage. Package has three fold functions of containing, protecting
and merchandising. Package should be large one with proper constructional
features so as to avoid leakage and spoilage. It provides protection of the
product against contamination or loss and damage or degradation due to
microbial action, exposure to heat, light, moisture and oxygen, evaporation etc. It
also helps in selling the products.
In old day's, for packaging of milk and milk products, traditional methods and
containers like earth ware cups, wooden baskets with leaf lining were in use. But
as a result of globalization newer marketing systems like super markets, self
services stores etc started and packaging technology in this sector has risen to
great heights. Newer and better packaging materials, development of packaging
machinery and appliances have all advanced in an integrated manner.
While packaging of milk and milk products care should be taken to avoid
spoilage. Packaging machinery should be suitable and in good condition for
filling, sealing. Gas packaging is properly done, keep head space and seal
properly to avoid entry of microbes. With rapid industrialization and improvement
in transportation methods, packaging standards would have to be reviewed
periodically so as to effect an economy in packaging-which is so vital, particularly
in international trade.
Packing materials and forms
Following are the packing materials used for packaging different milk products.
A) Materials
Paper and paper based products
The papers are used commonly in the form of wrappers, cartons, boxes, bags
etc. The merits of paper are its relative weightlessness, low cost and easy
disposal, its availability in various types etc while disadvantages are it is of low
tear and wet-strength (unless treated or coated). But for packaging of cheese
coated or lined papers are used.
Plastics
A wide variety of rigid plastics can be used as thermoformed, such as bottles,
cartons etc. Flexible plastic packaging films are used as wrappers/bags/pouches.
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These are of two types namely low polymers which includes cellophane (coated
with polyethylene) and high polymers which includes polypropylene, polystyrene,
polyester etc. The merits of rigid plastic containers are its low cost and ease of
fabrication, and demerits are lack of product compatibility, plastic deterioration,
lack of resistance to high heat and fragility at low temperatures.
Aluminium foil
Aluminium foil has good barrier properties, is greaseproof, non-sorptive, shrink
proof, odourless and tasteless, hygienic, non-toxic, bright in appearance etc. The
common thickness of this medium for use in products is 0.012 to 0.015mm.
Disadvantages are it has low tear strength, is attacked by certain strong alkalis
and acids, and it does not heat-seal by itself.
Timber
Timber is used in the form of box, tub or barrel. It should be free from odour,
have an attractive appearance and necessary mechanical strength. It may be
treated with casein-formalin, or spread with paraffin wax or plastics, to make it
more water resistant and prevent the passage of the timber-taint to butter.
Wooden boxes are commonly used for film packaging of green cheese to
preserve their shapes.
Glass
Glass may be transparent or opaque. Used in the form of bottles, jars, jugs etc.
Glass has the merits of strength, rigidity, and an excellent gas and water vapour
barrier while the disadvantage is of heavy weight and fragility.
Tinplate
This consists of a thin sheet (0.025mm thick) of mild steel coated on both sides
with a layer of pure tin. Tinplates have the merits of good strength, excellent
barrier properties while the demerits are of high cost, heavy weight, difficult
reclosure and disposal. It is used in the form of cans.
Laminates
Laminations are made for following reasons: To further strengthen the film
material; to improve barrier properties; to improve grease-resistance; to provide a
surface that will heat-seal; etc. Some typical laminates are paper polythene,
cellophane-polythene, and polyester-polythene.
B)Foms
Bottle
The glass bottle still continues to be the most frequently used package for milk in
the world. Rigid plastic bottles are in use for packaging milk and liquid milk
products.
Cartons
Cartons play a significant role in the bulk packaging of milk. Cartons are
commonly used for liquid, frozen and coagulated milk products. They are
commonly available either as performed containers or as precut blanks ready to
be formed into containers. Fibreboard cartons with overwrap of foil or inner lining
of foil laminated to paper are used for dry milk powder packaging.
Cup
It is made up of paper with wax or plastic coating on the inside. It is used for
frozen and coagulated products, like ice-creams. Also plastic/ plastic coated cups
are used for packaging of curd.
Sachet/pouch
The bags may be formed from either a reeled or flat film. Generally it is a
form/seal system. Ultra-violate light may be used to sterilize the film. Dry milk
products like dry whey, cream powder, cheese powder, ice-cream powder, khoa
powder, shrikhand powder etc. are packed in conventional bags with polythene
liners. Plastic film bags/pouches, laminated pouches are used for packaging
chhana.
Can
This is a commonly used for all types of solid, semi-solid and powdered products.
Recently aluminium cans have been introduced. Cans are the most convenient
for gas packing. Tin cans are used for packaging the cream, butter, butter oil etc.
For retail market fillers like cans are used to package condensed milk.
Barrel
Commonly made of wood and coated with wax on inner surface. Used for bulk
packaging of sweetened condensed milk, semi-solid buttermilk etc.
Collapsible tube
It is made up of aluminum and lacquered on the inner side. Its merits are low
cost, light weightedness, is of handling, product protection etc. It is used for semi
fluid products such as sweetened condensed milk, processed cheese spread etc.
Section IV
Crafts are an integral part in the life of an Indian, despite the rapid social and
technological changes that are taking place. In India like many other developing
countries it is the main source of employment for a vast majority of the
population, next to agriculture. The value of exports has shot up ten times in the
last ten years from Rs 700 crore in 1991 to more than Rs 8,000 crore in 2002.
What’s more, Indian handicrafts are now showcased in the chic lifestyle stores of
Europe and the US such as Terance Conran, Hermitage, Pottery Bam, Manuel
Canova and Pier I.
The government has worked out a long term strategy for increasing India's share
in the global handicraft export market. This includes introduction of specialized
export marketing programmes, design development, technical upgradation of the
sector, revival of languishing crafts and creating an atmosphere conducive to
exports.
The following section deals with “Export Promotion Strategies and
Processes to promote rural products”
Export marketing strategies1
In the handicraft trade, it would be reasonable to say that marketing issues and
strategies have generally been overlooked. While the handicraft market is
expanding continuously, intense competition among an increasing number of
developing countries suggests that marketing superiority can create real
advantages in the trade. The importance of marketing efforts at the national or
industry level was highlighted in Chapter 4. Discussion in this chapter focuses
on marketing strategies for the individual handicraft enterprise, be it a producer,
intermediary or exporter.
Nature and Importance of marketing
Marketing encompasses all activities leading to and including mutually beneficial
exchanges between buyers and sellers. As markets become more complex and
more competitive, marketing activities such as product planning, packaging and
physical distribution assume greater importance. Enterprises excelling in these
activities have an edge over their competitors, provided the business functions of
production; financing and management are performed satisfactory. On intensely
competitive markets, efficient marketing activities are indispensable.
In international trade, marketing performs the additional function of bridging the
physical and cultural gap between producer and consumer. This function is
particularly critical to the handicraft enterprise. The professionalism with which it
carries out the marketing activities of obtaining and assessing customer feedback
and adapting production, packaging and physical distribution to customer
requirements will determine its competitiveness on export markets.
How customers view handicrafts
Awareness of a customer's perception of handicrafts is a prerequisite for
developing effective marketing strategies. The following statement can be offered
as a customer-oriented definition: Handicrafts are artistic, creative expressions
of a group of people with unique arts and skills who apply their talents to the
production of material goods, which reflect their culture and heritage.
The definition implies, first, that probably the most important characteristics of
handicrafts is their association with an individual artisan or a group of people
possessing unique skills. This association distinguishes handicrafts from massproduced products. Second, a handicraft item gains value in the customer's
mind to extent that it symbolizes a culture or heritage.
In the marketing context, these are some of the characteristics to be highlighted
among consumers. These products should not only display these unique
characteristics, but they should also be marketed as expressions of particular
1
*
'
International
Trade Centre, Geneva, 1991
10)
cultures. The promotional literature should convey the “story behind the
handicraft” and emphasize its uniqueness.
Why handicrafts appeal to consumers
Handicrafts products are attractive to customers for two basic reasons. The first
is their uniqueness, a characteristic discussed above. The second is their utility
to the consumer in terms of meeting his/her needs or complementing his or her
life-style.
Most handicraft items have both these characteristics, but to varying degrees.
Figure 3 provides a graphic illustration of this idea. The more the handicraft item
incorporates both characteristics, the more attractive it will be to consumers. By
contrast, the less it has of these characteristics, the weaker its appeal to
consumers.
A handicraft product possessing neither characteristic to a
significant degree may not have much export potential.
The above conceptualization should be helpful in developing marketing
strategies for handicrafts. The decision on a product’s marketing image should
be based on an analysis of its strengths. This may reveal that the product falls in
one of the four categories presented in Figure 3, Cell 1 for products that are
weak on both counts, represents the worst position to be in. The product neither
responds to any needs nor offers a distinctive or novelty feature. Many so-called
“souvenir” items belong to this category.
Figure 3 Perceived appeal of handicrafts
DOMINANT APPEAL
1
Strong
2
3
4
Weak
q-H li
Enterprises seeking export markets will obtain hardly any return from such
products. The only option open to them is to explore whether the products can
be transformed into functional or novelty items.
Cell 4 represents the best situation to be in. The product is likely to make a
strong impression on the consumer because it is both novel and utilitarian..
Some examples of such products are wooden screens and printed silk scarves
ii
from India, hand-knitted pillowcases from the Karen tribe in Northern Thailand,
embroidered blouses from the Philippines and Turkish carpets. Here them
marketing task is relatively simple essentially one of reminding the consumer of
these special features.
Products falling into cell 2 are strong on the novelty aspect but weak from the
point of view of utility. Examples are tribal facemasks, woodcarvings and
polished rare stones. Creativity is required to refashion the product into one that
will fit the prospective buyer’s life-style. Cell 3 is the reverse of Cell 2. A strong
utilitarian appeal is combined with a weak novelty appeal. Many leather goods
from developing countries, place mats, coffee mugs and jute carpets belong to
this category. Here, the marketing manager’s task is to enhance the unique
features of the handicraft and identify it with the artisans or with particular
regions, skills, and life-styles. While its functional aspects alone should sell the
product, better returns can be expected if its novel features are brought to the
fore. .
Creating a “product-plus” Image
One of the major challenges facing handicrafts exporters from developing
countries is how to embellish a product’s physical and symbolic features and thus
to make it distinctive. A utility product that is different will often command
premium prices.
In the jargon of the trade, the challenge is to project a “ product-plus” image
rather than that of a “ me-too” product. “Me-too” products lack features that
distinguish them from competing products. A product with a “product-plus” image
is one that customers prefer over others and which they seek out. Making the
product more attractive to the end-user as well as to importers and to others in
the distribution chain can create this image. Improving the following features or
aspects of a product will make it more attractive to consumers:
•
Quality characteristics.
•
Novelty and/or utility.
•
Creativity of design;
•
Packaging;
•
Informational inserts, labels,
•
Brand or trade-mark;
•
Warranty;
Harmony with a current trend or fashion.
X12.
A product with a “product-plus’ image is likely to avoid price competition. The
consumer will buy it because of its distinctive features rather than because it
is cheaper than similar products.
In addition, handicraft producers offering the following conditions of sale are
more likely to do business with importers and other distributors than those
who fail to do so:
•
Consistent quality;
•
Minimum handling requirements;
•
Timely delivery;
•
Provision of ready-to-use sales promotion materials;
•
Consignment sales;
•
Exclusivity, etc.
Appreciating the value-adding chain
Figure 4 presents the chain of value-adding activities applicable to handicraft
and cottage industries.
Export
Physical
distribution
Identification of
market
opportunities
Costing and
Pncing
Prototype design
and development
/adaptation and
refinement
t
Production,
quality
control,
t
Test marketing
Enterpreneurial,
hiring, training
and managing
Upgrading
equipping
facilities
>
Securing inputs
Raw materials,
finance etc
Market
Development
Customer
Service and
Sales
The sequence of value-adding activities begins with the identification of
marketing opportunities and ends with the provision of after-sales services to the
customer. In between is a complex set of entrepreneurial, managerial, and
technical functions. A business gains competitive advantage to the extent that it
can perform this chain of functions smoothly and competently. All functions must
be performed; no omissions are possible.
While a vertically integrated business enterprise in an industrialized country can
perform most of these functions independently, this is not possible in the
handicraft and cottage industry sector in developing countries. This is precisely
why partnership arrangements are proposed in this book.
Under such
arrangements, responsibilities are shared among four principal partners: the
artisans, intermediaries, exporters and government agencies. Each party brings
its unique strengths to the partnership, creating synergy. For example, the
artisans and master craftsmen facilitate product adaptation. The intermediaries
gather the required inputs. The exporters handle packaging arrangements.
Handicraft agencies promote the establishment of common facility centres.
When a handicraft sector is in the process of being established, in the sense that
harmonious working relationships are being formed among the four partners, a
leader may be required. The role of the leader would be to convince all parties
that partnership is mutually beneficial and thereby to encourage them to co
ordinate their operations. The leadership may be assumed by one of the
stronger partners. This may be the handicraft agency, an export house or a
trade association. Once the alliance has been set up and is operational, mutual
economic interests of the partners will hold it together. The need for leadership
should then decrease overtime.
Developing links at home and abroad
The world market for handicraft and cottage industry products is becoming
increasingly competitive. Today, more than a handful of developing countries are
attempting to market their goods in Western Europe, North America, Japan and
other areas.
One of the keys to success on this intensely competitive
international market is the development of global links with buyers, intermediaries
and facilitating agencies.
Strong ties to customer groups, merchandisers,
fashion houses, and other strategic partners can be the greatest asset of
handicraft exporters. There is thus a need for forming strategic alliances with
overseas partners. The links with foreign partners may be formal or informal,
and may cover marketing and financial or technical collaboration. Links with
foreign partners evolve and mature overtime. Therefore, efforts to identify
foreign collaborators and forge a relationship with them should be seen as
investments that will pay off in the long term. Figure 5 lists various bodies at
home and abroad with which handicrafts agencies may want to establish links.
International partners (outer circle) should include the International Trade Centre
UNCTAD/GATT. With its technical assistance, and information and other
services. ITC can be a valuable partner in promoting handicraft exports. It can
also help disseminate among developing countries lessons gained from
experience in other developing countries.
Conclusion
There are a number of encouraging developments on the international market
for handicrafts and cottage-industry products. First, consumers in industrialized
markets have developed an appreciation for handicrafts from developing
countries. Second, novelty seeking is widespread. Third, the western consumer
has a larger discretionary income at his disposal. Fourth, global purchasing is on
the rise; retail chains in major importing countries are constantly and
aggressively looking for suitable products and reliable suppliers. It is therefore
opportune for handicraft enterprises in developing countries to embark upon or to
intensify international marketing activities.
Nevertheless, challenges remain. Perhaps the most critical is the development
of a systematic and professional approach to export marketing. The marketing
concepts and strategies discussed in this chapter, as well as the overall scheme
for developing the handicraft sector elaborated earlier, are relevant in this
context. In addition, handicraft exporters must be reminded that markets for
handicraft products must be created and maintained. There is also a need to
define “handicrafts” in broader terms, emphasizing the utilitarian aspects of these
goods. Hence, handicrafts can be described or projected as ‘wall hangings”,
“floor coverings”, “living-room accessories”, “fashion items” and so on. It is also
important to portray handicrafts as artistic expressions of a particular culture and
heritage.
♦
15
Export packaging1
Packaging is increasingly important to the success of the export trade in
handicrafts.
It is also an aspect on which small and medium-sized
enterprises require assistance. This chapter offers some guidelines on the
subject.
General Observations
The following observations can be made regarding SMEs2 and the
packaging of handicrafts:
Many SMEs are unable to assess, understand and comply with the
packaging, marketing and distribution requirements of highly
‘sophisticated export markets.
• Many SMEs are unfamiliar with the basics of packaging technology and
promotion.
• Many of these enterprises are unable to afford even the simplest
equipment and tools for packaging.
• SMEs are unable to obtain packaging materials at competitive prices
because of the small quantities they require.
•
It is important to keep in mind that packaging frequently affects the
importers perception of the overall quality of goods from a particular
country. The “country-of-origin” image is often a factor in the purchase
decision, and country-of-origin bias may prevail for long periods.
Unless handicrafts meet stringent quality and packaging requirements,
serious damage can be done to the producing country’s image, especiafiy
when simultaneous efforts are being made to introduce manufactured
industrial products into the world market. Expensive measures over a long
period might be required to improve the image a country has established as
a producer of primitive or low-quality goods. The transformation of the
image of Japan as a supplier of industrial goods after the Second World War
is a good -and successful- example of this. Hong Kong, the Republic of
Korea and Singapore are in various stages of this process of transformation.
Quality packaging obviously plays an important role in this context.
The packaging of goods from developing countries often falls short of
requirements on the highly competitive markets in the industrialized world.
This is true form both a purely technical point of view (protection provided,
’international Trade Centre, UNCTAD/GATT, Geneva
2 Small Manufacturing Enterprises
structural design) and from a promotional point of view (graphics, sales
appeal). The current quality levels of packaging vary widely form one
developing country to another, depending mainly on their stage of
industrialization. To a certain extent it is easy to adapt the supply of
packaging materials to quality requirements on domestic markets. However,
packaging requirements for export are more stringent.
Goods destined for other developing countries must be able to withstand the
stresses of being transported over longer distances, often under difficult
conditions. Packaging requirements on sophisticated industrialized markets
are much higher. A product may be of excellent quality but unless it is at
least adequately packed, it will never obtain consumer acceptance.
People concerned with package planning are often unable to assess the
difference in packaging requirements for products for the domestic market
and those destined for export. This weakness can usually be attributed to
inexperience and unfamiliarity with the needs and requirements of their
customers abroad. It is therefore very important to convince all those
involved- government officials, trade promotion organizations and exportersof the need for technically adequate and sales effective export packaging.
I
I
Trends In export packaging and consequent requirements
There seems to be a growing demand, particularly from new importers, for
conducting the export trade in handicrafts on GIF rather than FOB terms.
Switching to GIF pricing will automatically force exporters to pay more
attention to shipping volumes and weighs. This will give them an opportunity
to improve their packaging and therefore their competitive position on world
markets.
i
Container shipments and other types of unit loads are becoming more
popular for sea (and air) transport. Handicraft exporters must familiarize
themselves with the advantages and limitations of these new handling
methods and adapt their export packaging accordingly. For instance,
container transport offers exporters opportunities for poolinf consignments
destined for one importer into full container loads, reducing transport and
packaging costs. In order to take maximum economic advantage of this and
other possibilities from the start, it will be necessary for the exporter to have
two different types of export packaging until break-bulk cargo and the
heavier and more expensive packages it requires can be completely
abandoned in favour of fully containerized transport.
Packaging technology, materials handling and distribution systems are
becoming more mechanized and complex.
Handicrafts producers will
therefore need to have current information on packaging requirements and
1
to keep themselves up to date on these requirements.
Indigenous
packaging materials might well find practical applications in the export trade
in the future, but exporters need to be aware of environmental issues, which
are a growing concern in many industrialized societies.
Pre-packing for the convenience of both retailers and final consumers is a
requirement for many exports markets. It is true that many handicrafts do
not lend themselves easily to pre-packing. However, even those that do are
often so poorly presented that this completely obscures the quality of the
handicraft items themselves, which may be excellent. It is important to
mention in this context that handicraft products sold as gift items compete
not only among themselves for the consumer’s attention but also with
manufactured products presented in sophisticated promotional gift
packages. To ensure sales, many importers therefore carry out the pre
packing operation themselves despite labour rates that may be 30 to 40
times higher than they are in producing countries.
There is also a need to convey more information about the origin of the
products, their traditional or ethnic background, how they are produced, etc.
In most instances, utilizing the communication potential of the consumer
package can convey these messages to the consumer efficiently and
economically.
Many of the above market trends and requirements tend to increase
packaging costs. In most instances, however, raising prices can offset these
additional costs. The rise will be justified by the fact that the handicrafts will
be easier to handle and display and will be more attractive to the final
consumer. In any case the accelerating tendency for non-food items to
appear on supermarket shelves and for department stores to switch to selfservice operations will force producers of handicrafts and other cottage
industry products to go into quality packaging to survive on world markets.
is
Table 1
Classification Of Handicrafts By Raw Material And Guidelines For Packaging
Classification
Examples
Textiles
tableLinen,
cloths,
embroidery,
printed
cotton,
carpets,
dolls
Carvings, tables,
tableware,
screens
(some
products
are painted)
Wood
Preparation
product
of
for
packaging
Drying
Removing
dust.
Cleaning,
Drying.
Lacquer ware
Tableware;
decorative items
Cleaning
Stoneware
Marble items, etc
decorative items
Cleaning
Jade, ivory and
bone
Can/ings,
personal
ornaments_____
Personal
ornaments, gems
Cleaning
Imitation
ornaments and
jewellery
Removing
dust
and
fingerprints
Metal
Bronze
sculpture, silverwa
re '
pewter products,
decorative items
Removing
dust
and
fingerprints.
Glass
Flower
vases,
decorative items.
Cleaning.
Drying.
Straw
fans,
Baskets,
decorative items
etc_______
Handbags,
decorative items
Lamp
covers,
fans
Cleaning.
Drying.
Leather
Paper
Shells
Dishes,
decorative items
Cleaning
Drying
Cleaning.
Drying
Cleaning.
Factors/requirements to
considered in packaging.
be
Protection from mould & insect
damage.
Protection from discolouration
by light.
Protection from dust.
Transparency___________
Protection from scratching.
moisture,
Protection
from
microbes & insects
Preservation of aroma.
Cushioning of delicate products
against compression & damage.
Protection from discolouration
by light._______________________
Requirements similar to those
for wood. Protection of surface
lustre.________________________
Stone articles are often fragile &
heavy. Some are very expensive
because of their artistic value.
Fragile and very expensive.
Require presentation packaging
for sales promotion as well as
transport packaging to protect
fragile contents.
Protection against pilferage.
Protection from tarnishing and
corrosion (air, moisure and salt
water) for some products.
Protection
from
pressure
causing distortion.
Fragile.
Impact between articles is as
damaging
as
impact from
outside._______________________
Soft, easily squashed.
Protection from moisture.
Regulation of in-pack moisture
levels to keep products flexible.
Soft, easily squashed.
Need
protection from
light and water.____________ •
Fragile
and
heavy.
Compartments needed within
pack.
±13
Guidelines for export packaging
Jn general, handicrafts can be classified into 12 subgroups on the basis of
their raw materials (see Table 1). Handicrafts can also be divided into two
groups according to their principal packaging requirements (Table 2).
Table 2
Classification Of Handicrafts According To Their Need For Moisture Protection
Handicrafts requiring moisture-proof
packaging and in some cases, physical
protection
Handicrafts
packaging
for
protection only.
Metal products
Textile products
Leather products
Wooden products
Paper products
Glass products
Ceramics
Lacquer ware
Shell products
Stone products
requiring
physical
Finally, handicrafts can be classified by their size, weight and physical
strength. This classification is helpful in deciding the sequence and type of
packaging required.
Handicrafts should be correctly prepared for
packaging. Hygroscopic handicrafts made of wood or textiles should be
dried. Fingerprints on the surface of metal handicrafts should be cleaned off
since they hasten rusting and reduce product value. Suitable preparation
increases both packaging efficiency and the commercial value of
handicrafts.
Depending on the nature of the product being packed, a decision must first
be taken as to whether water/moisture-proof packaging is needed. Items
should then be categorized according to their dimensions (eg., one
dimensions =10 cm, under 10 cm, over 10 cm); weight; and physical
strength (e.g., rigid, fragile, and delicate). The classification based on
physical strength is useful for determining cushioning needs (Table 3)
It is recommended that the traditional patterns/ designs of the country be
used on packages whenever possible. Explanations of the origins and
peculiarities of the handicrafts should be given, together with an illustration.
In general, two-colour printing should be used.
The following information should be indicated on the packaging.
• Name of the product;
• Identity of the manufacturer/ distributor
• Country of origin.
128)
The structure and the surface design of retail packaging should suit
marketing conditions in the importing country.
As the saying goes,
“packaging is a silent salesman”: the package itself has and important
function to perform. Valuable handicrafts are products sold at high prices
because of their nature or because of their scarcity. Some require packaging
for safety, others can be sold unpacked. In India, highly priced carpets are
packed in six to eight layers of packaging, though packaging costs do not go
beyond 1% of the price of the product. Whatever the packing methods used,
high-performance/ high-cost packaging of valuable handicrafts is justified
when protection is essential. In view of the generally poor quality of
paperboard materials in developing countries, the use of wooden boxes is
normally required for heavy handicrafts including large-sized ceramics,
bronze products and wooden sculptures.
Table 3
Classification For Cushioning
Categoiy_____
Rigid handicrafts
Examples______________
Wooden & metal products
with simple configuration
Fragile handicrafts
Glass,
ceramics,
brittle
plastics.
Delicate, high value
Tin metal products, delicate
sculptures, items with much
ornamentation.
Note: Flexible products such as textile and leather handicrafts can be classified
as rigid items since they do not need cushioning.
Properties
and
Physically
robust
strong
Easily broken or cracked by
slight shocks
Commercial value affected
even by slight damage
Bulk packaging is used for handicrafts, which are too small to justify unit
packaging. The use of separators is recommended when necessary to
protect the products.
Arrangements for export packaging
The above discussion implies that owing to its costs and its technical
aspects, packaging for export is beyond the capabilities of most artisans
and intermediaries. This suggests that initiatives for improving export
packaging must originate from export houses, perhaps in collaboration with
the government agency responsible for the development of the handicraft
sector. The partnership between the public and private sector is also valid
here. Where enterprises are unable to cope on their own with packaging
requirements, a common packaging assistance centre should be
established. Export houses and the handicrafts agency should play a
major role here. However, the government should provide the initial
investment. The packaging assistance centre should keep abreast of
current packaging techniques; gather information on buyers requirements;
engage in joint bulk purchasing of packaging materials; encourage the joint
use of basic packaging equipment; standardize packaging specifications;
consolidate shipments; and centralize the provision of assistance in export
procedures.
The centre can delegate some of its functions to a central packing station,
which could offer the following services:
•
•
•
•
•
•
•
•
•
•
Provide centralized packing and container-loading services;
Provide joint purchasing services for packaging materials;
Standardize box and crate sizes;
Develop indigenous packing materials for cushioning;
Advice exporters who prefer to carry out the packing operations
themselves;
Provide machinery and other equipment for co-operative use such as
packing tables; shrink, stretch, skin and blister packing equipments;
.corrugated box-making equipments; heat sealers for plastic films; and
marking and labeling equipment
Provide advice and services on package construction and on the graphic
design of both transport and consumer packages
Assist exporters on export documentation, insurance, estimation of GIF
and FOB costs, and customs procedure.
Assist exporters in negotiating freight rates, securing shipping space,
consolidating shipments and loading containers.
Provide visiting handicraft buyers with facilities for consolidated container
shipments.
To enable the industry to benefit fully from the establishment of common
packaging facilities, it will be necessary to standardize. For instance, bottles
and jar caps used for many of the specially food products manufactured in
cottage industries should be bought jointly to save costs. Since the initial
costs of making glass bottles and jars in special sizes and shapes are
extremely high, only stock items provided by glass producers should be
used and efforts to achieve individuality should be concentrated on label
design. This also applies to other packaging materials particularly when
deviations from stock specifications would raise costs.
Generally speaking, buyers of packaging materials should be familiar with
basic purchasing techniques to enable them to carry out meaningful
discussions with their suppliers and reduce packaging costs. For instance,
they should know that increasing quantities ordered would normally reduce
unit prices and that changing their packaging specifications to suit their
suppliers’ machinery and raw material sizes would likewise reduce
22
IDENTIFICATION OF EXPORT MARKET1
It is observed that most of the new entrants into the exports always look for
known and conventional markets like Dubai, USA, etc., to market their products.
It is this factor, which restricts exports or causes failure of a new export venture.
What is not realized by most of the new exporters is that there are many markets
in the world, which are less competitive, easily accessible and rewarding. A new
exporter while identifying markets must consider following factors. It will surely
work as blue print for success.
1. Market Segments:
The world market can be divided into following segments:
a) Countries economically advanced and technologically backward.
b) Countries economically backward and technologically advanced.
c) Countries economically advanced and technologically advanced.
d) Countries economically backward and technologically backward.
You will appreciate that the product, which can be marketed in each of the
above, referred segments, differ. For instance, USA and Europe are markets for
industrial intermediates, low-tech products and raw materials. While USA is
market for bulk drugs, Russia is a market for formulations. Dubai is not a market
for raw materials and industrial intermediates, since there are hardly any
industries to use the same. There is definitely a synergy between product and
the market segment.
2. Regulations:
The scope of entry in many markets is restricted because of local regulations.
Many under developed and developing countries though appear lucrative
markets, may not be so, due to Exchange Control Regulations or restrictive
policies. There may be product specific restrictions, too, in a particular country.
For instance, many countries do not permit import of product manufactured in jail.
3. Location:
When identifying the country or market, due consideration must be given to the
geographical location of the country. If Dubai or Middle East market is preferred
by the Indian Exporters, it is due to its locations. Latin American countries,
inspite of being good markets, are not preferred, again due to their location.
1 Information compiled by S.M. Chatunedi,, Management Consultant, Mumbai
4. Accessibility:
This factor must be analyzed and understood in conjunction with location. There
may be many markets, which though are conveniently located, are not easily
accessible. For instance, Pakistan, Myanmar (Burma) and China, though are
very conveniently located are not preferred destinations of Indian exporters.
5. Preferential Treatment:
Indian exporters should prefer those countries where goods imported from India
enjoy concessional rate of import duty. This reduces the landed cost of Indian
products into those countries. This factor confers natural price advantage to an
exporter from India. The list of such goods is finalized between the Government
of India and such other countries form time to time. For instance, there is a list of
over 4000 products, which do not attract an import duty in Sri Lanka. Likewise,
all 54 Common Wealth Countries (CWC), accord preferential treatment to the
goods imported from other CWCs.
6. Cultural aspect:
This is an important part of buying behaviours in the target market and country. It
may relate to the preference for particular shades and colours, sizes and shapes,
etc. For instance, children’s garments exported to Middle East and Arab
countries have to be different colours and shades as compared to those
proposed to be exported to Europe and Australia.
7. Logistics:
This may relate to facilities such as Banking, Insurance, Shipping, Transportation
and Communication. Near absence of banking channel in Russia and Myanmar
(Burma), is an inhabiting factor for Indian Exporters.
Likewise, poor
communication and shipping facilities to countries like Brazil and Argentina are
also the factors restricting trade between India and these countries.
8. Incidental factors:
As an exporter one must be able to identify and capitalize on these factors.
These may include political, economical factors, etc. For instance, restoration of
peace in Afghanistan and lifting of embargo on Iraq by UNO may open vast
markets for Indian exporters. Signing of bilateral trade agreements between
India and China, India and Vietnam are other examples in this regard.
To conclude, we must realize that perhaps Syria, Lebanon, Turkey, Cyprus are
as lucrative markets as South Africa, Dubai and Europe. The prospects of
success are better in an unconventional and less competitive market.
TIPS IN SELECTING MARKETS ABROAD
Generally, new entrants into export business prefer for conventional markets like
Middle East, Europe, USA, etc.
Since, these are highly competitive and
saturated markets, for desired results, it is preferable to look for other promisino
markets, as well.
■
Following are some of the factors, which a budding exporter may keep in mind,
while selecting overseas market:
1. Ensure that your export business is going to be profitable
It goes without saying that once you make up your mind to enter export
business, the same has to be viewed as profitable venture. Quite often,
people tend to experiment with export business with thoughts like ‘ I can
afford it1, or' let me try my hands at exports, at most, I will not succeed1,
etc. Such halfhearted approach results into disillusionment. Most of the
corporates diversify into exports and give it up, as well, because this
activity is treated as ' Cost Center1 and not ‘ Profit Center1
2
Initially, approach one or two markets
The reasons are not difficult to fathom. In the beginning there are
resource constraints and organizational constraints, which prevent you
from spreading out to many countries, simultaneously. Be focused on one
or two target markets and then branch out into other markets.
3
i
As part of your marketing strategy, pay due attention to smaller, less
competitive and Jesser known markets
i
These markets can be developed at much lower cost and will ensure your
stay for longer period. For e g. Turkey may be preferred over South
Africa; Morocco may be preferred over Egypt and so on.
4
i
Plan your strategy and identification of markets based on knowledge
about the countries and not merely on information :
i
This will necessitate your sparing some time and money on overseas
visits. Such visits when undertaken make you familiar with difficulties
which earlier you thought of to be “problems”.
i
12.5
5. Do not over commit your self in accepting the orders :
There is no point in running for foreign business which cannot be catered
to or where your quality of services is going to be compromised.
6. A void markets which practice restrictive policies
There are many countries where still there are restriction on imports and
remittances and have high tariffs. Entry into such markets is difficult and
results are uncertain. Avoid such countries, as far as possible.
7. Evolve a good organization which is responsive to the demands of
international business
The reasons for failure of most of the reputed local Indian companies in
international markets are mainly due to their failure on this count. Most of
the Indian exporters extend local business culture overseas and fail.
8. Be innovative:
Try to identify the customer needs abroad and develop products
accordingly It is aptly said that, ‘ Find a need and fulfill it - This will
ensure success.” The success of Japan in exports can be attributed
mainly to their innovativeness and understanding of customer needs.
Based on the above parameters the countries worth considering are
Vietnam, Morroco, Turkey, Cyprus, Cyria, Jordan, Sri Lanka, Portugal,
Spain, Bahrain, Lebanon, Ethopia, Brazil, Ghana, etc.
SOURCES OF MARKET INFORMATION :
In the process of identification of export product and market, a new entrant to
export as well as established exporters, need continues information on overseas
market. To establish and succeed in international trade one needs information
on areas like countries, their culture, logistics, local regulations, main items of
export and import, currency, people’s tastes and habits, buying behaviour,
climate, etc. The information so collected helps an exporter in formulation and
implementation of his business strategies and plans.
The aforesaid information is not easily available. One needs to have information
on sources of information and an eye for details. Some major sources of
information are as under:
2.G
1. Government Sources
Though it may come as a surprise to many, maximum information and reliable
data in available from Government sources. It is suggested that an exporter
must continuously update himself, by subscribing to and reading on regular
basis, a publication titled, “Indian Export Bulletin. ” This magazine is published
by Indian Trade Promotion Organization (ITPO). It is a fortnightly publication
containing vital information about countries, overseas rules and regulations,
delegation visits, exhibition, trade fairs and exhibitions, etc.
The second most important publication is, “Country Profiles”, published by the
“Department of Scientific and Industrial Research”, based at Delhi. This
publication is economically priced and contains vital information on each country.
One can buy the “Country Profile” of the country to which one plans to export his
product to. These country profiles give the reader a complete insight into every
aspect relating to that country.
Another vital sources of information are Indian Embassies and Consulates
abroad. Many of these are well equipped in terms of information relating to the
country where they are based. While commercial consideration and outlook is
found missing with most of the overseas Indian missions, there are quite a few
missions, which are quite alert to exporter’s requirements. Nonetheless it is the
cheapest and reliable source of information. One can also source information
from overseas Trade mission/ Embassies operating from cities like Hyderabad,
Bangalore and Ahmedabad.
Primary Research
This comprises personal visits, trade fairs and trade missions, survey and
product studies, etc. While personal visits are indeed the most reliable source of
information, they are prohibitive in terms of cost. Moreover, unplanned visits
yield desired results. There is also limitation in terms of the countries to which
one can make a visit due to constraints in terms of finance or time. This source
is more effective for exporters who are already into business rather than new
comers.
From time to time, announcements are made by various magazine and bulletins
regarding trade fairs and exhibitions. Many of these are products specific. While
participation, in such trade fairs and exhibitions is an expensive proposition, in
terms of usefulness, these events deserve highest attention from exporters. New
comers of participate indirectly through their Trade Associations, Chambers of
Commerce and Export Promotion Councils.
These bodies take product
catalogues and trade samples at very nominal cost from their member and pass
on the enquiries generated from such events to the concerned members.
Survey and product studies are published as research articles in financial dailies,
business magazines and other trade bulletins. Interested exporters must keep
compiling such information as and when they come across it. For instance,
World Trade Centre at Bombay has published very exhaustive study on “Egypt”.
The compilation could be of use to all those exporters who are looking at Egypt
as their prospective market.
2. Private Sources
These include general references publication, Trade and Business
Association, Trade Journals, personal contacts. A special mention may be made
to the exemplary efforts made by the organizations like Indian Merchants
Chambers (IMC). The chamberis “Weekly Bulletin” contains particular of
overseas buyers, who approach the chamber for sourcing their requirement form
India. In a year, one can easily compile 400 to 500 names and addresses of
prospective buyers for different commodities from different countries.
In addition, the chamber organizes meetings with overseas trade delegations
visiting Mumbai. On an average, over 150 such meetings are held in a year.
The participants to such meetings get an opportunity to interact with the
members of delegations. Such interactions ultimately pave way for business
deals. Attending such events must be practice with exporters, both new as well
as established.
Likewise, journals and bulletins published by various Export Promotion Councils,
Chambers of Commerce and Trade Association provide vital information for
exporters.
EXPORT PRICING
There is a fundamental difference in pricing a product for local market and that
for international market For local market purpose, price is determined by taking
into account all direct and indirect overheads such as raw materials, labour,
power and fuel, salaries and wages plus all elements of Indirect taxes such as
Central Excise, Sales tax, Octroi etc. Further to these components of cost,
elements like distribution commission, profit, etc are added. Sum total so arrived
at represents maximum retail price. Since, all manufacturers follow similar
practice to arrive at the cost, prices in domestic market, more or less tend to be
similar.
In international market, the prices are buyer driven. The seller has very little say,
in the matter. The buyer having determined the price, the seller has to match his
cost to the price; the buyer is prepared to offer.
While arriving at an export price, the exporter must begin with a very simple
equation, viz. “Cost + Profit = Price
While devising the pricing strategy, the
exporters must consider the following factors:
❖ Status of the exporter.
Under this, exporters are divided into categories namely, ‘Beginners',
‘Established’, and ‘Veteran’. The approach to pricing differs in all the 3 cases. A
beginner in his anxiety to get the export order generally compromises on profit,
which an established exporter doesn’t.
*> Nature of export product
In those products, where exporter sells a monopolistic product, he can get away
by charging a price he wants. For instance, an exporter of Alphonso mango or
handicraft gets his price, which an exporter of ready-made garments does not.
<* Export incentives:
An exporter to device has pricing strategies needs knowledge on pre-export and
post export incentives. These comprise of incentives like Advance License,
Packing Credit, Duty Drawback, Refund of Terminal Excise, etc. The exporter
has to loam the art of applying hts knowledge of pre-export and post-export
incentives to computation of export price.
<♦ Country of exports
The countries, which are highly developed, represent competitive markets. For
instance, Japan and USA, though prosperous economies do not offer
remunerative prices to exporters.
In contrast, countries like Kenya and
Bangladesh, though undertake into consideration, the country to which, he is
exporting or is likely to export. An export order to Japan on cost-to-cost basis is
worth entertaining, since; it is an indirect certification of quality of export product.
Such reference inspires immediate confidence in the minds of buyers from other
countries who are prepared to pay a higher price for a quality product.
*> Terms of Contract.
FOB (Free on Board) prices are generally lower than C&F (Cost and Freight) and
GIF (Cost, Insurance and Freight) prices. Thus, an exporter has to work out 3
sets of prices depending on terms of contract i.e., FOB/C&F/CIF.
v Currency
The currency in which exporter is to realize his export proceeds., too, influences
pricing decision. The advantage arising out of fluctuations in exchange rate-
1
either accrue to the overseas buyer or to exporter. Such advantage when
accrued to an exporter, help him in lowering his price to a competitive level. An
exporter must also have good knowledge on different international currencies,
their exchange rates and currency blocks like Asian Clearing Union (ACU).
Taking into consideration the above factors an exporter must work out his prices;
generally, it is preferable that the export prices are “Country Specific”. Reasons
being different countries levy different types of import duties and at different
rates. The overseas buyer takes decision to import based on landed cost of
imported product. The landed cost comprises of GIF value plus import duties.
For instance, due to preferential treatment accorded to select Indian goods in Sri
Lanka, an exporter to Sri Lanka will be more favorably placed than say in
Pakistan of Bangladesh, where such duty preference is not available.
Likewise, an exporter must have separate set of prices for those countries where
antidumping duties are imposed on goods imported from India.
Thus having devised a country wise export price the exporter will find himself
comfortably placed in each of the markets he is tapping. A well-thought and
scientifically evolved export price helps an exporter in competing even among
fiercely competitive markets. Therefore, due attention must be paid by all
exporters in mastering the art of export pricing based on all factors enumerated
above.
5o
Steps in Exporting
Most of you are budding entrepreneurs and have the dream of exporting your
product/s. It is good to be ambitious, to have a long-term goal of going beyond
the national boundaries. Besides, globalisation of the economy means that as
an entrepreneur of the 21st century, you think global and do not be a "frog in
the well".
But just thinking about exports will not suffice. You have to know the export
environment and procedures of not only India but also of the country or
countries to which you want to export your products or services. You should
possess knowledge of not merely the needs and wants of people of that
country, but also their culture and customs.
First, of course, familiarity with India’s own:
1. Export Environment
2. Export Procedures
3. Export Documentation
is necessary; and in this chapter, we give you basic idea about these.
The Foreign Trade (Development and Regulation) Act, 1992 defines export as
taking out of India any goods by land, sea or air. It means taking out of India
any goods to a place outside India.
This definition does not specify as to what form of goods. Hence, it includes
re-export of imported goods in any form or condition.
There are two categories of export:
(i) OUTRIGHT (SALE) EXPORTS:
Normally, most of the exports are made on outright sale basis
against a firm price and no return of the unsold goods is made.
(ii) CONSIGNMENT EXPORTS:
Here the importer abroad is at liberty to return the unsold goods,
although exports may or may not be against firm price.
Exports can be of goods, projects or even services. Project exports include
turnkey projects and civil construction contracts abroad.
Services-consultancy/technical or other services are categorised as a
separate class of exports. ,
EXPORT ENVIRONMENT
The liberalisation policy of the Government since July 1991 has created a
most congenial atmosphere for export. Both export and import are almost free
from being subject to negative lists. Many items, therefore, can be exported
without licence.
Foreign Exchange For Export Promotion
The Foreign Exchange rules have been totally liberalised. The exchange is
now available for business visits, participating in fairs and exhibitions,
remittances and purchase of documents, etc. All exporters other than Export
1
Houses, are allowed to open an office overseas or have a representative
abroad; the condition being that this would lead to the earning of additional
foreign exchange.
Foreign Industrial & Technology Agreement
The Reserve Bank of India (RBI) is now empowered to grant approval for
foreign investments upto 51% of foreign equity in high priority industries and
trading companies primarily engaged in export activities. The RBI will also
automatically approve foreign technology agreement involving payment upto
one crore rupees.
Export Incentive Schemes
The system of export incentives or assistance like CCS (Cash Compensatory
Support) or EXIM (Export Import) scrip licences have been abolished.
Procedural Simplification
Simple procedures both for exports and imports have been introduced.
Regional licensing authorities have been empowered for the purpose. A
number of documents have been standardized. The new documents are
fewer. There is now only one application form for export licences.
New Markets
In tune with the new liberalisation policy, India has opened new markets by
allowing trade with South Africa, entering into new agreements with the new
CIS (Commonwealth of Independent States) countries i.e. former USSR
members and also by resumption of rupee trade to a limited extent with the
Russian Federation.
Strategy and Preparation for Export Marketing
When you decide to export, you must formulate an export strategy. This will
tell you where you are going and how you should get there. You should also
make an export marketing plan to implement the strategy. This should outline
the operational actions, target dates and indicate detailed budgets for each
step. Before making the plan, you should gather the basic data and analyse it.
It should focus on your marketing objectives, market segment and positioning
of your product.
You should also do an analysis of your strengths, weaknesses, opportunities
and threats (SWOT). This would help in knowing your competitive advantages
as well as prospects for sales and profitability.
Market Segmentation
It is important that you decide to whom you want to sell your product/s.
Different consumer groups exist according to level of income, age, life style,
X3 2.
occupation and education. You have to identify the group, which you intend to
reach.
Market Research
You, as a small-scale entrepreneur, cannot afford to collect data on export
markets and export potential; so, you should use published data to assess the
market, after evaluating it for reliability and accuracy.
Product Characteristics
Next, you should consider the product you want to export. Many products
must undergo significant modifications if they are to satisfy customer and
market requirements abroad. Some products require changes to increase
their appeal in export markets.
Export Pricing
You should consider additional costs like international freight and insurance
charges, product modification costs, import duties, commissions and foreign
exchange risk coverage, which are not there for domestic market, while
setting an export price.
Distribution Channel
You should also consider the distribution options like:
1. Exporting through a domestic exporting firm; or
2. Setting up own export organisation; or
3. Selling through representative abroad.
The choice will depend on your export strategy, resources and the export
market.
A Working Document
Merely formulating a marketing plan will not help you. A working document
should be constantly reviewed and revised as you acquire more experience,
data and feedback from the export market.
PROCEDURES, FORMALITIES & DOCUMENTATION
Procedure for Registration with Export Promotion Councils (EPCs),
Federation of Indian Export Organisations (FIEOs) etc. under Exim
Policy
The new Export-Import Policy 1992-93 requires the necessity for obtaining a
licence to export or import certain specified items. One has to thus obtain a
Registration-Cum-Membership Certificate (RCMC) number for getting such
export licence or avail of benefits/concessions under the policy. Such
registration will, however, be given after the exporter/importer has become a
member of an EPC. The registration as exporter will be of two kinds, namely ;
Manufacturer Exporter 2. Merchant Exporter
An exporter may obtain RCMC from any one of the EPCs relating to his main
line of business. Hence, only one registration is required even if the exporter
is engaged in exporting products falling in more than one group.
Obligations
The registered exporters are under certain obligations:
1 To furnish monthly returns of their exports
2 To abide by such other conditions including floor price condition and export
obligation, if any
3 To avoid indulging in any fraudulent, unfair or corrupt practices/commit a
breach of any law
4 To fulfill or utilise satisfactorily any quota allocated for export, etc.
Facilities and Benefits
The exporters are entitled to such facilities and benefits as may be provided
under the export-import policy. They are also given a number of facilities to
accelerate their effort by the Export Promotion Councils e g. raw materials,
spot disposal, trade information, foreign samples, trade promotion, brand
publicity, export assistance, to be on trade delegations, study-cum-sales
teams, attending seminars and conferences, consignment wise inspection etc.
Applications and Application Forms
Application for allotment of code number has to be made in "Form CNX"
which includes a "Declaration for Exporters" code (RBI) number about the
applicant s not being on caution list, undertaking about income tax permanent
account number/GI number for exporters (RBI) code number of associate
firms RBI code number and Bank’s Certificate to be sent with application for
IEC number (Importer/Exporters Code)
Application for Registration with Export Promotion Councils has to be made in
an approved format. There are separate formats required for registration with
each different Export Promotion Council, and separate proformas of
undertaking for registration.
So, only after completing all these formalities, you should venture i.
in exports. It
is required to take a token acceptance by the buyer, on the proforma'Tnvoice
given by you and confirmation by you as an exporter, after:
-you
have
identified
product/s
and
market;
- discussions with any buyer have materialised and reached to a point of
confirmation of an order
or receipt of an order form
- a request to you to send a Proforma Invoice to enable to buyer to open
a letter of credit according to your terms and conditions receipt of the
proforma invoice signed by the buyer only completes the formalities.
13|
Pre-shipment Formalities
Export (quality control and inspection) Act was enacted by the government to
ensure that the image of Indian made products in overseas market is not
spoiled by any exporter by supply of sub-standard material. Certain items
covered under compulsory quality control and pre-shipment scheme are not
allowed to be exported without a certificate from the Export Inspection Agency
by the custom and shipping formalities.
These formalities are more or less the same at all the major ports in the
country but for some minor variations related to port trust rules and
regulations.
A general idea about different stages of custom examination and
procedural/documentation formalities to be observed for clearance of export
cargo for loading on vessel and final shipment are as under:
"After the documents are passed by the customs department and necessary
charges are paid, goods could be shipped and you should send ‘Shipment
Advice’ in the prescribed Format to the importer."
Submission of Documents to Bank
For Purchase/Collection/Negotiation under L/C, you must after shipping the
goods, hand over the relevant documents to your bank for onward despatch
to the overseas correspondent bank, who will arrange payment of the same to
your banker. No payment can be received by you directly except in cases of
general permission granted by RBI.
Documents are handed over to the bank with a request either to negotiate the
documents if they are drawn under the letter of credit or to purchase the
documents where the bank has granted pre-shipment facility to you etc.
Documents Required
1. Bills of Exchange
2. Bills of Lading
3. Commercial Invoice
4 Original Letter of Credit, if any
5. Customs Invoice
6. Insurance Policy/Certificate
7. Packing List
8. Foreign Exchange Declaration Forms
9. Bank Certificate of Export Realisation
10. Other relevant documents
Export marketing is a highly specialised activity which requires organisational
support at various stages, including selection of product/s, identification of
overseas markets and customers, selling techniques and incentives,
assistance and facilities granted against export.
There would also be a need for orientation of different policies concerned with
export and import etc. The various organisations or institutions given in the
13S
chart at the end of the chapter are mainly connected with foreign trade. These
organisations are grouped together as follows :
1. Policy and Service Support Organisation
2. Commodity Specialisation Organisation
3. Training and Research Institutions
4. Trading/Service Corporations
5. Financial Institutions
Policy & Service Support Organisation
a) Ministry of Commerce
It has, with active co-operation of Ministry of External Affairs, created a
network of commercial sections in Indian Embassies and High Commissions
in variouscguntngs^
It has set up "Exporters Grievances Redressal Cell" to assist exporters in
dealing with grievances affecting exports. The Ministry, carries out its
responsibilities and activities through advisory bodies, organisations, etc.
b) Ministry of Textiles
The Ministry of Textiles is primarily responsible for policy formulation,
development, regulation and export promotion of the textile sector including
sericulture, jute and handicrafts. It also has a separate export promotion
advisory board. There are four advisory boards under the Ministry of Textiles :
i) All India Handloom Board
ii) All India Handicrafts Board
iii) All India Powerloom Board
iv) Wool Development Board
Besides, there are Development Commissioner-Handicrafts, Development
Commissioner-Handlooms, All India Handloom Fabrics Marketing Co
operative Society, Textile Commissioner, Jute Commissioner, Development
Council of Textile Industry, Jute Manufacturers’ Development Council &
Textile Committee.
2. Commodity Specialisation Institutions
The Government has established a number of organisations for improving
production and promoting export of commodities and products which make a
considerable contribution to our foreign exchange earnings. These specialised
institutions are in most cases financed/controlled by Government.
These are :
i) Export Promotion Councils (EPCs) -19 EPCs at present
ii) Commodity Boards (CBs)
iii) Development Authorities
iv) Miscellaneous Organisations
Federation of Indian Export Organisations (FIEOs), though not counted
among the EPCs, has the same functions as any EPC.
3
EXPORT PROMOTION COUNCILS (EPCs)
The main activities of the EPCs are:
a) registration of exporters and issue of registration-cum-membership
certificate
b) providing a forum and link between the government and their members for
consideration and
implementation of schemes for export production and
marketing
c) collection and dissemination of information primarily on export opportunities
d) sponsoring and inviting business delegations, sales teams, study teams for
developing exports
e) arranging distribution of raw materials, marketing assistance or allocation of
scarce items for exports production
f) allocation of export quotas for items like textiles
g) fixation of floor price (minimum export price)
h) arranging buyer seller meets
i) foreign publicity .through schemes
j) any other issue covering production and marketing of products under their
purview
Commodity Boards
Commodity Boards are also to be regarded as an Export Promotion Council.
Development Authorities
There are two Development Authorities namely; a) Marine Products Export
Development Authority and b) Agricultural Products Export Development
Authority.
3. Training and Research Institutions
i) Indian Institute of Foreign Trade (IIFT)
IIFT, Delhi is the primary institution which gives training in export marketing
techniques. It has several programmes including full time post graduate
diploma in International Trade and a Master’s Programme in International
Business. It conducts a number of training programmes of short duration from
2-3 to 15-21 days for executives.
ii) Indian Institute of Packaging
IIP at Bombay organises programmes on packaging technology. It also
provides technical advice on the problems of packaging faced by industry and
trade as well as facilities for testing and evaluation of packages and packing
material.
iii) National Institute of Fashion Technology (NIFT)
NIPT, New Delhi, works under the Ministry of Textiles for human resources
development for the garment industry. It conducts professional programmes
for Apparel Merchandising and Marketing, Fashion Design and Garment
Manufacturing technology. It also provides consultancy services.
Besides, there are other institutions for training relating to production or
marketing, like Chamber of Commerce, S I S.Is, NIESBUD etc.
X3 i
4. Trading/Service Corporations
A number of trading and service corporations are working both under Ministry
of Commerce and Textiles dealing especially in exports/imports.
The State Trading Corporation Ltd. (STC) was primarily established to
conduct foreign trade in an organised and collective basis with trading
companies in Eastern Europe and the former USSR. Now, due to
liberalisation of foreign trade and disintegration of the USSR and opening up
of new CIS states etc, its functions have undergone as seachange. The STC
in Delhi and several regional and foreign offices have a special scheme for
business associates and exporters, to provide them with financial and
marketing assistance to sell abroad. Some of the other corporations are ;
i. Minerals and Metals Trading Corporation Ltd. (MMTC)
ii. Mica Trading Corporation (MITCO)
iii. Spices Trading Corporation Ltd.
iv. Tea Trading Corporation of India Ltd.
v. Project and Equipment Corporation of India Ltd.
vi. Central Cottage Industries Corporation of India Ltd.
vii. The Handicrafts and Handlooms Export Corporation of India Ltd.viii.
National Textile Corporation (NTC)
ix. Cotton Corporation of India (CCI)
x. National Handloom Development Corporation and such others
5. Financial Institutions :
For providing credit and finance and justifying export credit risk, there are two
primary institutions, Exim Bank and ECGC. Besides, these, other commercial
banks and institutions like IFCI, ICICI, IDBI also provide finance for export and
import.
(i) Reserve Bank of India
The RBI with its headquarters in Bombay and several regional offices is the
apex and central bank to authorise, extend and regulate export credit and
transactions. It has framed and administers several schemes for export
promotion by providing relending facilities, and authorising other banks to
extend credit.
All export activities start from registration with RBI, by obtaining Exporters
Code Number.
(ii) Exim Bank
The Export and Import Bank of India is the Apex institution for project finance
and provides direct finance and coordinates the working of institutions
engaged in financing export/import of goods and services. It has headquarters
in Bombay and several regional offices.
The Exim Bank’s lending emphasis is on deferred export credit for medium
and long terms. It extends suppliers’ credit, overseas buyer credit, lines of
credit and relending facilities to banks overseas.
The Bank is also an intermediary between an Indian exporter and the
overseas forfeiting agency. Forfeiting is an export finance option for suppliers
credit.
X3 8;
(iii) Export Credit Guarantee Corporation Ltd. (ECGC)
ECGC also has its head office in Bombay and several regional offices. It is the
only institution which provides insurance cover to Indian exporters against the
risk of non-realisation of export payments due to commercial and political risk
involved in export on credit terms.
These are various other export promotion organisations especially for the
small industries which directly contribute about one third of India’s exports.
These organisations are at the central as well as state level. The
Development Commissioner, Small Scale Industries (DCSSI) at New Delhi
and a network of SISIs (Small Industries Service Institutes) and extension
centres located in almost all states provide export promotion services to SSI &
Cottage Units.
The others are Directorates of Industries, which are departments of State
Governments, National Small Industries Corporation (NSIC) and exclusive
export corporations in various states.
Export Processing Zones (EPZs)
The EPZs are set up to provide an internationally competitive duty free
environment for export production at low cost. This enables the products of
EPZs to be competitive, both quality-wise and price-wise in the international
market. There are seven EPZs in India, at:
EPZ
Kandla
Santacruz
Falta
Noida
Kochi
Madras
Vishakapatnam
State in which located
______ Gujarat______
_____ Mumbai_____
West Bengal
_______ UP_______
______ Kerala______
____ Tamilnadu____
Andhra Pradesh
EXPORT MARKETING - BUYER/SELLER EXCHANGES
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EXPORTER
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13J.
Export Promotion Councils
Apparel Export Promotion Council
NBC Tower, Bhikaji Cama Place
New Delhi - 110 066
Tel : 688830, Fax : 6888584
Cotton Textiles Export
Promotion Council
Ashoka Estate,
Barakhamba Road
New Delhi - 110 001
Tel : 3316168
Basic Chemicals, Pharmaceuticals &
Cosmetics Export Promotion Council
Jhansi Castle, 4/F1
7, Cooperage Road, Mumbai
Tel : 2021288, Tlx : 011^1047
Fax : 2026684, Cable : ‘CHEMEXCIL’
Cotton Textiles Export
Promotion Council
Engineering Centre
9, Mathew Road
Mumbai - 400 004
Tel : 3632910-13, Fax:
3632914
Carpet Export Promotion Council
110-A/1, Krishna Nagar Street No.5
Safdarjung Enclave
New Delhi - 110 029
Tel : 602742/ 60124
Fax : 601024
Council for Leather Exports
6-G, Gopala Tower
Rajendra Place
New Delhi - 110 088
Tel : 5718516
Cashew Export Promotion Council
in India, Chittor Road
Ernakulam South
Cochin -682016
Tel : 316459, Tlx : 8856677
351973, Cable : ‘PROMOTION’
Council for Leather
Exports
53, Sydenhams Road
Chennai - 600 003
Fax : Tel : 33198, Tlx : 41-7354
CLE-IN
Cable : ‘LEXPROCIL’
t
Chemicals and Allied Products
Export Promotion Council
8, S. Bhagat Singh Marg
New Delhi - 110 001
Tel : 310 346
Engineering Export Promotion Council
World Trade Centre, 3/F1, 14/1 -B
Ezra Street, Calcutta - 700 001
; Tel : 263080, Tlx : 021-5109
Fax : 266302, Cable : ‘OCEANBORNE’
Electronics & Computer
Software
Export Promotion Council
PHD House, II Phase, 3/FI
Sri Fort Industrial Area,
Hauzkhas
New Delhi -110 016
Tel : 655103/ 655206/
654463
Tlx: 031-73333 ESC IN
Fax : 6853412 Cable :
SPICX’
Overseas Construction
Council of India
Commerce Centre
Tardeo Road
Mumbai - 400 034
s
I
i
Export Promotion Council for Handicrafts
6, Community Centre
Vasant Lok, Vasant Vihar
New Delhi - 110 057
Tel : 600 871/6875377
Tlx : 031-72315 EPCH IN
Fax : 606144
Overseas Construction
Council of India
Flat No. H-118, 11/FI
Himalaya House
Kasturba Gandhi Marg
New Delhi-110 001
Gem and Jewellery Export Promotion
Council
Diamond Plaza, 5/FI
391A, Dr. D.B. Marg
Mumbai - 400 004
Tel : 388004
Tlx : 75360 GJEC IN
Plastics and Linoleums
Export Promotion Council
World Trade Centre
11/FI, Cuff Parade
Mumbai - 400 005
Tel : 2184474/2184569
Tlx : 83940 PLXL IN
Fax: 2184810, CABLE
:‘PLEXICONCIL’
Gem and Jewellery Export Promotion
Council
F-33, Jhandewalan Flatted
Factory Complex
Rani Jhansi Road
New Delhi - 110 055
Tel : 514197
Shellac Export Promotion
Council
14/1-B, Ezra Street
World Trade Centre
Calcutta - 700 001
Tel : 265288
Handloom Export Promotion Council
18, Cathedral Garden Road
Chennai - 600034
Tel : 478879/476043
Tlx : 41-7158 HEPC IN
Fax : 44-471671
Sports Goods Export
Promotion Council
IE/6, Jhandewalan
Extension
New Delhi-110 055
Tel : 525695/529255, Fax :
7532147
Handloom Export Promotion Council
XVIZ784-85, Deshbandhu Gupta Road
Karol Bagh, New Delhi - 110 055
Tel: 511524
Indian Silk Export Promotion Council
62, Mittal Chambers
Nariman Point
Mumbai -400 021
Tel : 2025866/ 2027662
Tlx : 011-3190 SILXIN
Fax : 2874606, Cable : ‘INSILKEXPO’
Synthetic & Rayon Export
Promotion Council
87, Veer Nariman Road
Mumbai - 400 020
Tel : 2048797/2048690
Tlx :83703 SEPC IN
Fax : 2048358, Cable :
‘SYNRACIL’
Wool & Woollens Export
Promotion
Ashok Estate, Barakhamba
Road
New Delhi - 110 001
Tel : 3315512/3315205
Tlx: 031-6673, Fax: 3314
626 Cable : ‘WARMTH’
Commodity Boards
1.
2.
3.
4.
5.
6.
7.
8.
The All India Handicrafts Board
West Block No.7
Ramakrishnapuram
New Delhi-110 022
Tea Board
14, Braboume Road
Calcutta - 700 001
Coffee Board
' No. 1, Vidhan Veedhi
P.B. No. 302
Bangalore - 560 001
Coir Board
P.B. No. 1752
Cochin - 682 016
Central Silk Board
Meghdoot
95-B, Marine Drive
Bombay —400 002
All India Handloom Board
Office of the Textile Commissioner
Government of India
Mumbai - 400 020
Rubber Board
Rubber Board Office
P.B. No. 507
M.G. Road
Kottayam - 686 009
Cardamom Board
Chittoor Road
Cochin - 682 016
National Small Industries Corporation1
The National Small Industries Corporation (NSIC) through its export development
programme is playing a vital role to promote the SSI sector in exporting their
products/projects in international, markets by providing following assistance to
the small enterprises. NSIC is a recognised Export House. NSIC is involved in
exporting product and projects of Small Scale Industries of India to other
countries. The major areas of operation are: Export of Indian products like
handicrafts, leather items, hand tools etc. Supply of Small Industry Projects on
turnkey basis. Export of IT solutions from India. Export of Relief supplies from
India to UN and other International associations. NSIC assists small scale
industries to market their products in the international market and has adopted a
single window assistance approach for export of small industries products
abroad.
Why Export Through NSiC?
Exporting through NSIC has following advantages:-
A) Absorption of marketing overheads & export promotion.
B) Raw material assistance programme.
C) Development of samples & procurement of orders.
D) Pre-shipment credit.
E) Post-shipment credit.
F) Assistance for shipping.
G) Claiming Export incentives.
H) Export documentation.
I) Exhibition/Trade Fairs.
J) Buyer seller meets.
The Indian small and medium enterprises constitute an important segment of the
Indian industrial sector. This sector is highly dynamic and has long been the
backbone of India's economy. The sector exhibits an amazingly range in terms of
products, sophisticated technology and size. Over 75,000 productsconfirming to
ISO 9000 / ASTM / DIN / BIS standards are being manufactured in the Indian
small and medium sector. NSiC has strong linkages with this supplier base. The
small industry/enterprise account for 40 percent of India's total exports. NSIC is a
recognised Export House and offers a complete package of export services to
importers to ensure :
The following assistance can be secured from NSIC
A) Marketing and Promotion
1.Exhibitions / Trade Fairs & Buyer Seller Meets
The products of the small-scale sector are displayed in specified Trade Fairs /
Exhibitions at concessional charges. Enquiries, specifications & samples
received directly or through its specified indenting agents are passed on to the
1 Down loaded at http://www.nsicindia.coni
1^3
concerned small scale units for development and final offer. NSIC assists units to
do costing and pricing for international markets and also assists them by
providing technical information.
2. In Market Support NSIC assists in :
Organising International Exhibitions
- Organising and participation in Buyers-Sellers meet
- Sponsoring delegation from different SSI sectors to various countries
- Providing information related to sales opportunities available in international
market
- Product specific catalogue preparation
- Advertising and publicity in various countries through Indian High
- Commissions, Offices abroad and Internet
- Publication of Exporters Directory
- Participating in Global Tenders
- Providing assistance in deemed exports
- Organisation of Seminars and Workshops to upgrade and update SSI with
regard to international developments.
S.Absorption of Marketing Overheads & Export Promotion
NSIC also assists the small-scale sector by providing assistance in negotiations
with the overseas buyers by sending samples and for subsequent
correspondence for procuring export orders at our cost.
b. Raw Material Assistance Programme
The export orders received by the corporation are passed over to the concerned
associate units for shipment. For such order NSIC also provides raw material
assistance at concessional rates of interest as notified by RBI within specified
norms & conditions of the corporation.
c) Financial Assistance from NSIC
- Pre and Post Shipment finance at concessional rate of interest
- Financial assistance for procurement of indigenous and imported raw material
- Financial assistance for upgradation and modernisation of SSI unit
- Assisting in the process of claiming exports incentives
d) Technical Assistance from NSIC
- Laboratory and Testing assistance for improving quality of products
- Providing assistance in packaging
- Providing assistance for obtaining, inspection documents
- Conducting various programmes related to technology upgradation
- Assisting SSI Sector in Technology assimilation
- Imparting technical training
4
e) Effective product improvements by NSIC
NSIC has been instrumental in developing a large number of small scale units to
export high quality products such as builders hardware, locks, light engineering
products, giftware and novelties, readymade garments and textile products.
Export Incentives
All exports benefits are claimed and passed onto the export units without any
deduction or else NSIC gives the option to units to claim the benefits themselves.
Export Documentation
All exports documentation with respect to shipping, claiming incentives,
negotiations of documents and post shipment activities are done entirely by NSIC
and the units need not register itself with other export related agencies.
Pre-shipment Advances
NSIC also provides upto 80% of the invoice value on proof of dispatch, as pre
shipment advance at RBI notified rate of interest.
Assistance for Shipping
Assists the small scale units in making shipments and assists them to prepare all
related / shipping documents.
1.
2.
3.
4.
5.
Following activities are also undertaken by NSIC for Export Promotion through
SSI
Study visit to various developed countries to identify the product range and their
market demand.
Arrange visits of delegations consisting of representatives of small scale
industries/Associations to different specialises exhibitions and buyers-sellers
meets.
Collect samples during the above export promotion visits and to identify suitable
small scale suppliers to develop counter samples.
NSIC has already opened two offices abroad at South Africa and Dubai, U.A.E.
These offices will be utilised for generation of business for the small scale sector.
Publication of a directory of identified products and possible buyers for
circulation to the small scale industries.
Nominal Service Charges
A nominal service charge is levied on case-to-case basis.
For further details please visit
:,7nsic.!i]o.iii
Corporate Office
The National Small Industries Corporation Ltd.
(Govt, of India Enterprise)
NSIC Bhawan, Okhla Industrial Estate, New Delhi - 110 020
Tel: ++91-11-26926275, 26926145
Fax: +91-11- 26926820, 26920907
E-Mail: info@nsicindia.com
Regional Offices
Ahmedabad
Regional General Manager
202, 203, Samruddh Building, Opp. Gujarat High Court,
Ahmedabad - 380014, Gujarat
Tel. :++91-'79-27543228/27541320
Fax : ++91-79-27540159
Email:roamd@nsicindia.com
Kolkata
Regional Director,
20-B, Abdul Hamid Street, (7th Floor)
koikata - 700069, West Bengal
Tel. :++91 -33-22480015/22488288
Fax : ++91-33-22487359
Email: rocal@nsicindia.com
Chennai
Regional General Manager,
615, Anna Salai, Chennai - 600006, Tamil Nadu
Tel. :++91-44-28268874/28271943
Fax : ++91-44-28255791
Email: rochen@nsicindia.com
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Guwahati - 781024, Assam
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Hyderabad
Regional Manager
Kushi-Guada Electronics Complex,
P.O. ECIL Kamla Nagar,
Hyderabad - 500062, Andhra Pradesh
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Mumbai Regional Director
Presitge Chamber, 3rd Floor,
Kalyan Street, Masjid (East)
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Maharashtra
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Email: ronoida@nsicindia.com
I
Section V
The emergence of Information Technology in the last century as a prime driver
and facilitator of change in the socio-economic development of the people has
revolutionized lives across the globe. Aggressive investment in research &
development in areas of Compunication (Computer and Communication) has
yielded highly positive results. With the advent of Internet, international
boundaries have melted away and the dream of a global village is eventually
becoming a reality.
Electronic Commerce or e-commerce, as it is commonly known, over the Internet
is becoming a very attractive proposition for any entrepreneur including the rural
poor.
The following section carries information about possibilities to
market rural products through E-marketing'
E-marketing -- A New Concept1
This paper attempts to contrast e-marketing with traditional brick and-mortar
marketing by proposing the 7 Cs of e-marketing. These 7 Cs are fundamental to
understanding the intricacies of Internet marketing and to transforming a venture
from being a mere web presence to a highly successful e-venture. They are also
instrumental in shaping the overall business strategy and the economic model that
an organization needs to adopt.
The value propositions of products and services offered in the physical world are
essentially limited “point solutions” that meet only part of a consumer’s need or
want. In the online world, even a simple banner advertisement can be both an
advertisement and a direct marketing service. The banner raises the passive
consumer’s awareness of a product. Yet it also encourages the consumer to
pursue action by clicking on it.
E marketing must be defined to include the management of the consumer’s online
experience of the product, from first encounter through purchase to delivery and
beyond. Digital marketers should care about the consumer’s online experiences
for the simple reason that all of them - good, bad, or indifferent - influence
consumer perceptions of a product or a brand. The web offers companies’
ownership and control of all interactions with customers and thus
creates both the ability and the need to improve their overall experience.
There are two reasons for building the concept of e marketing around consumer
experiences. First, this approach forces marketers to adopt the consumer's point
of view. Second, it forces managers to pay attention to all aspects of their digital
brand’s interactions with the consumer, from the design of the product or service
to the marketing message, the sales and fulfillment processes, and the after-sales
customer service effort.
The 7 Cs of E-Marketing
The Internet allows for the entire sales cycle to be conducted on one medium,
nearly instantaneously. From making the consumer aware of the product to
providing additional information to transacting the final purchase, the Internet can
accomplish it all. The Internet is like one big point-of-sales display, with easy
access to products and the ability for impulse shopping. Impulse shoppers have
found a true friend in the Internet. Within seconds from being made aware of a
product, consumers can purchase it online. Further, with the targeting techniques
available to advertisers, consumers who turn down a product because of the price
can be identified and served a special offer more likely to result in a purchase. In
the right hands, with the right tools, the Internet really is an advertiser’s dream
comes true. As opposed to the 4 Ps of brick-and-mortar marketing, the changing
outlook in the area of e marketing can be explained on the basis of 7 Cs of e
marketing.
1 Prashant Sumeet
prashant_sumeet@rediffmail.com
This paper was down loaded from wwrw.brandchannel.com
IMS
Contract: The e-marketeris first goal is to communicate a core promise for a truly
distinctive value proposition appealing to the target customers.
Content: refers to whatever appears on the website itself and on hot linked
websites. If chosen appropriately, it can increase both the rates at which browsers
are converted into buyers and their transactions.
Construction: The promises made by e-marketers are not unique to the Internet,
but the medium’s interactive capabilities make it easier for them to deliver on their
promises quickly, reliably, and rewardingly. In practice, this means that promises
must be translated into specific interactive functions and Web design features
collectively giving consumers a seamless experience. Such design features as
one-click ordering and automated shopping help deliver the promise of
convenience.
Community: Through site-to-user and user-to-user forms of interactivity (such as
chat rooms), e-marketers can develop a core of dedicated customers who become
avid marketers of the site too.
Concentration: Targeting through online behavioral profiling. Advertisers have
known for some time that behavioral targeting (a.k.a., profiling) is vastly superior to
simple ’demographic targeting. Knowledge of a consumer’s past purchases
interests, likes/dislikes, and behavior in general allows an advertiser to target an
advertisement much more effectively. Department stores have long kept track of
consumers’ past purchases. They are thus able to project what other types of
products a consumer might be interested in and then send an appropriate coupon
or sale offer.
Credit card companies are the ultimate gatherers of behavioral targeting
information. They maintain vast databases of cardholders’ past transactions, and
they sell lists of this data to advertisers. The same type of behavioral model is
forming on the Internet. Publishers and advertisement networks monitor the items
that a consumer has expressed interest in or purchased on a site (or network of
sites) in the past and target advertisements based on this information.
Convergence: We will soon enter the next round of the E-marketing battle as
broadband reaches the masses. The Internet will become more ubiquitous and
wireless; televisions will become more interactive; video/data/voice appliances will
converge; brand advertising and direct marketing practices will integrate; domestic
brands, commerce and marketing will become even more global; and big marketing
spenders will spend more money online. Many companies that are well positioned
today will need to continue to evolve to take advantage of the opportunities. The
success of Internet advertising companies will largely be driven by how they
maneuver among the coming developments. Rich media, brought on by broadband,
will allow advertisers much greater creativity by bringing in new types of advertising
to the Internet, as well as enhancing some of the more traditional forms. Broadband
technology will allow the convergence of television and the Internet. Dubbed
“interactive TV,” in its simplest form, will consist of a television with some interactive
capabilities. Basically, a user will see a television screen that is three-quarters
traditional television, but with a frame that has Internet capabilities. This frame will
allow users to access up-to-the-minute sports scores or news on the Web, for
example. More importantly for E- marketers, it would allow viewers to immediately
leap to the website of an advertiser whose ad was being shown. The user could find
out more information or order the product right there.
Commerce: The last emerging fundamental of e-marketing is commerce, whether it
includes offering goods and services directly, or marketing those of another
company for a fee, thus helping to cover the fixed costs of site operations and to
offset customer acquisition costs.
To be successful on the Internet, e-marketers will have to do more than reproduce
their off-line business models on line because these business models work only at
considerable scale. Interestingly, It is possible for online marketers to be profitable
even at lower sales volume if they exploit efficiencies in e-Emarketing and synergies
with the off-line business, with examples as follows.
Exploiting more than one channel to close the transaction:
Although early winners on the web might belong to an exclusive club of Internet
start-up companies, established players in the off-line industry can catch them and
even overtake them by offering a choice of channels.
Leveraging low customer acquisition costs: Traditional brick-and mortar
companies can bring their existing customers online at a much lesser cost than
Internet start-up companies who must lay out a hefty amount per head to acquire
customers.
Exploiting alternative revenue streams: An online presence offers an E-marketer
a wider variety of sales opportunities. For web-based retailers, acting as an agent
on behalf of the customer can become a revenue source in the future.
Purchasing scale at low volumes: E-marketers can cut down on their purchasing
cost and shorten their procurement cycle by replacing EDI tools with Internet based
ones that facilitate product comparison, streamline logistics, and help B2B vendors
aggregate their retailer’s back office purchases.
Reducing customer chum: Given the high cost of replacing established customers,
losing them is expensive. A web presence supplies the personalized attention that
could keep customers loyal.
Maximizing the pricing potential: It has been reported by consumer researchers
that buyers shop online more for convenience than for cost. In view of this relative
indifference to price, e-marketers can capture some margin premium, at least in the
eariy days of their sites.
Challenges in e-marketing: Every online fulfillment operation, large or small, faces
four main challenges: controlling customer data, integrating on- and off-line orders,
delivering the goods cost effectively, and handling returns.
Controlling customer data: As outsourcing arrangements proliferate and delivery
services become more expert in using information technology, e-marketers risk losing
their lock on consumer data. In an economy where knowledge is revenue as well as
power, e-marketers must consider how to strike a balance between the efficiencies
offered by the out-sourcing of fulfillment and the confidentiality of keeping data in
house preserves.
Integrating on and off-line orders: When the volume of orders is high, companies
must decide how much integration they need. In a totally integrated system, Internet
orders would be automatically transmitted through a processing center and
transferred to the supplier's manifest. An integrated system with full ERP (enterprise
resource-planning) capabilities, for example, can ensure that surges in demand don’t
retard key fulfillment operations such as data entry, inventory, and packing. Although
the problems of rapid growth are complex in themselves, the lack of a fully integrated
order management system compounds them. In the future evolution of the Web,
however, integration will become essential for building effective customer service and
package-tracking systems.
I5o
Delivering the goods cost-effectively: At present, every single transaction
challenges e-marketers to deliver the goods quickly, cheaply, and conveniently. But
this is largely a technical and logistical problem, and it will be possible (though
perhaps expensive) to solve it by developing new sorting and scanning equipment
and by deploying larger delivery vehicles. Making contact with the recipient is a
trickier problem but one that must be resolved if the full potential of “eimpulse” orders
is to be realized, for an impulse purchase loses its power to gratify if the product or
service takes too long to appear. But since each missed delivery adds as much as a
full day to the fulfillment process, spanning that “final mile” to the home can take
longer than traveling the rest of the fulfillment loop.
Handling returns: E- marketers, with their emphasis on convenience and
customization, must match the high standard of service exhibited by some physical
marketers regarding returns. At present, they do not. To begin with, few ecommerce
retailers (or mail order companies, for that matter) design their packaging for easy
returns. Customers often have to find new packing materials, call to arrange credits
and refunds, and physically take packages to delivery services. Each step represents
an inconvenience that, however minor, can combine with others to create negative
feelings’about the vendor. Even if a convenient solution for returns were developed, emarketers might discover that impulse sales carry hidden costs. The implication is that
fulfillment costs must be driven down to preserve profitability.
Choice of Marketing Strategy
An online company’s choice of marketing strategy will depend on four main variables:
the nature of the customer’s interaction with the product and seller; the current
capabilities of the business; the capabilities that are (or will become) “commodity”
operations, in which competitive advantage cannot be sustained; and the trade-off
between time and control.This is essentially a value chain concept (as propounded by
Porter) whereby e-marketers look at each component of the value chain and the
support activities to determine where and in what form can they add value to the
customer. This translates into their competitive advantage. And in this entire process,
it is the 7 Cs of e-marketing that act as fundamental guiding principles.
Rethinking the business model
As e-marketers align the “contract” and the “construction,” they must also align the
economic model that will sustain their businesses. For most of them, the very process
of taking the brand online will force a fundamental reconsideration of the business.
Digital brands offer a richer consumer experience than their physical world
counterparts, so they can and should make money by tapping into broader revenue
and profit pools than any single physical-world business might enjoy. The economic
model must be expanded because building digital brands around consumer
experiences is expensive. A number of different sources of revenue ultimately make it
possible for an e-business to deliver a richer experience to the consumer. Since online
consumers expect combinations of product types and functional benefits different from
those expected by off-line consumers, marketers must adopt several different
economic models to succeed.
There are four basic economic models. The success of an e-marketing foray rests on
the skill with which two or more of them are combined.
15 i
Channel supporter: E-marketers can use the Internet more to support their existing
channels than to generate additional sales. Beyond cross-channel promotions, many
brick-and-mortar companies can use the web to increase their customers’
understanding of their products and services. Others can harness the web’s
interactivity to improve their product development and product mixes by inviting
customer responses on their web sites.
Advisory and information service providers: An expert (such as an investment
adviser or a personal shopper) can offer consumers unbiased advice for a fee. A
business can also collect, process, and sell information through the Internet.
Retail model: Vendors or products can be aggregated to facilitate transactions for
buyers. Many companies can also achieve success as online auctioneers. Sellers of
goods and services can provide the content; community may come from matching
sellers with buyers and setting bidder against bidder, and commissions on sales and
advertising revenue can generate the commerce.
Vertical model: The business model that may take the greatest advantage of the
Internet is the vertical model, which specializes, in a particular category or a product. It
might provide specialized information and advise as well as access to a community
with common interests. Creating winning e-marketing strategies would require
managers to reconsider how they view both Internet and marketing. Off-line Marketers
have long thrived by delivering narrow solutions to limited customer needs. Online,
however, customers have learned to expect that the companies they patronize will
meet a much fuller spectrum of their needs and desires. To succeed online, those
companies will have to create full-fledged Internet businesses, or digital experience,
that can fulfill this expectation.
.1 '>?
1
15 2.
Rural Bazar - Ideas of today for a better tomorrow1
Abstract
This paper discusses the prevailing marketing scenario in the rural areas
for products made by rural artisans and the associated process
limitations, as part of domain analysis. It then analyzes the existing IT
framework to overcome the stated limitations & enhance the product
reach. RuralBazar, a web based software product from NIC, MIT, GOI,
based on the stated framework addressing the problem, is then
introduced. The paper concludes with a discussion on issues related to
infrastructure & methodology required to sustain the operationalisation of
the system. The IT based solution, for rural artisans, has also been
recommended by Working Group on Information Technology for Masses
setup by Ministry of Information Technology, Government of India
(http://itformasses.nic.in/vsitformasses/repg3.htm#1).The further details of
product and processes are given in http://crisp.nic.in/ruralbazar.
Domain Analysis
A majority of our country's population lives in the rural areas and any
development efforts made in the rural areas significantly impacts the
country's development. Various governmental and non-governmental
agencies have contributed significantly to improve the lot of the Indian
rural poor and with good results. These efforts have attempted to address
different needs of the rural poor. One such effort has been to provide
sustainable self-employment to the rural poor by engaging them in micro
enterprises.
Serious attempts are made to exercise care while selecting the activities
on which these micro-enterprises are based. In general, the focus is on
selecting those activities that exploit the existing skill set of the rural poor
and for which resources are available locally. However, the importance of
a marketing infrastructure for these products cannot be wished away. In
fact, the impact of a near non-existent infrastructure to market these
products on the rural poor will be far more severe as he/she cannot
sustain the loss even for short periods.
1 D.C.Misra, Avijit Dutta, Omkar Rai, Rama Hariharan, Rajiv Goel, Manie Khaneja The authors are
members of Rural Development Informatics Systems (RDIS) Division, National Informatics Centre(NIC),
Ministry of Information Technology(MIT), Government of India (GOI), A - Block, CGO Complex, Lodi Road,
New Delhi - 110 003. The division is dedicated to strengthen the Rural Informatics in the country. Any ‘
further dialogue with authors regarding the paper, could be done using e-mail: crisp@hub.nic.in or tel: 0114360563.
Current Scenario
A look at the current marketing scenario indicates that many of the
marketing issues such as demand assessment, brand identification,
product promotions etc. have not been extended the desired attention.
However, a few attempts have been made which merit attention. First and
foremost is that most of the products, produced by rural artisans, are sold
in local rural haats. Besides these haats, NGOs and the governments at
various levels have also helped in promoting the sale of these products
outside the confines of the local environs. For example., exhibitions and
melas are organised in major urban centres to publicize and promote the
sale of these products. In many states, the State Government bodies
have made contribution to the sale of these products by extending
preferential treatment to these products at the time of procurement. Even
in the above cases where an attempt has been made to address the
issues, the results have not been very forthcoming.
Challenges
AS an entrepreneur, the individual or group of rural poor engaged in
manufacturing activities of the micro-enterprise faces a number of
challenges. Some of these are given below
•
Most of the products are still sold at the local rural haats. This means
that the products may not fetch a good price as there is limited demand
for the products in the limited local market. Limited demand also
implies a low turnover, resulting in turn in, low income for the producer.
Also, as these consumers are not overly conscious of the quality, the
chances for product improvement remain bleak.
• There is limited awareness in the global market either about the
availability of these products or about the existence of these micro
enterprises and their activities. With limited publicity, the products can
hardly hope to build a market for themselves,
• The exhibitions and melas are not a frequent phenomena. Also, their
venues keep changing and are limited to a few towns/cities. Thus, the
products are not available all the time in most of the places.
•
There is no denying the fact that an intelligent market analysis goes a
long way in sustaining the market for any product. Though a formidable
task in itself, it assumes gigantic proportions in the present context as.
the rural poor, with his limited knowledge and finances, can hardly be
expected to carry out this exercise. Not only this, the existing marketing
infrastructure is equally ill equipped to undertake the task.
Nevertheless, such an exercise will help in analyzing the market for
customer preferences and accordingly sensitizing the rural poor
producers to the demand patterns of the market.
15
Requirements
In order to meet the challenges outlined above, there is an urgent need
for a marketing infrastructure that is designed to address these very
challenges.
First and foremost requirement is that the proposed infrastructure
should be durable in terms of time as return-on-investment may span a
longer time frame in view of expected low turn-over of rural products,
atleast in the initial phases.
Next in the line of requirements comes the facility for publicizing and
promoting the products. Not only should the marketing infrastructure
facilitate the publicity and promotion of the products to the widest
possible customer base, it should facilitate this for any and every kind
of product.
• , Publicity and promotion exercises will be grossly undermined for want
of accessibility to the sale centres. The infrastructure should provide an
any time - any where access to the customers.
To further enhance the sale of products, an understanding of the
potential demand for existing as well as new products is an absolute
essential. The marketing infrastructure must support this through a
built-in mechanism that reveals and analyzes customer preferences.
Lastly and probably a very important requirement, particularly in the
context of rural producer, is that the financial benefits, generated from
the sale of products must flow unhindered to the producer. This is of
paramount importance so as to ensure that the rural poor is not
exploited and is assured of his/her share of profits.
The above analysis of the domain leads us to the question: Is it
possible to put forth a viable and self-sustaining solution that addresses
the issues outlined above? If yes, how cost-effective is it?
Information Technology, a facilitator
Elements and Characteristics of IT framework
The emergence of Information Technology in the last century as a
prime driver and facilitator of change in the socio-economic
development of the people has revolutionized lives across the globe.
Aggressive investment in research & development in areas of
Computation (Computer and Communication) has yielded highly
positive results. And, with the advent of Internet, international
boundaries have melted away and the dream of a global village is
eventually becoming a reality. The Internet characteristics of simplicity,
openness, availability and global ubiquity are starting to impact all
•55
aspects of life, be it governance, education or business, in ways that
were neither comprehended nor imagined a few years ago. Internet
more than any other infrastructure of IT, has introduced unprecedented
changes in our daily lives so that even mundane activities are carried
out in whole new ways.
India's contribution and participation in this revolution has been
commendable, to say the least. However, most of the efforts have been
service oriented and less at adoption of IT for benefit of Indian citizen.
The last few years have witnessed a phenomenal growth in the country
with respect to the usage of IT in almost every aspect of the lives of
people, primarily in urban and organized sections of the society.
However, despite this widespread usage of IT in the urban areas of the
country the IT wave has failed to touch the shores of rural India,
keeping it marginalized, from modern digital highways and the
benefits associated with it.
But the rural people in general, and the poor in particular, are in no way
to be blamed for the situation. Though successful attempts have been
' made to exploit the power of IT and the Internet for the benefit of the
rural poor, most of them have had an indirect and delayed impact, not
resulting in any direct, tangible and immediate benefit. For example.,
the creation of information kiosks (like Warana and Gyandoot projects)
in the rural areas to disseminate information to the local rural people
has proved to be a very effective means of disseminating information of
importance to the local people. However, such information kiosks can
hardly help the rural poor who suffer from want of basic literacy and
livelihood. As rightly observed in the Background Report of Information
Technology for Masses, focused attempts must be made to exploit the
power of IT to provide new opportunities, preferably in a form that
translates into financial benefits, for these people so that they are able
to better confront the poverty. With their daily bread & butter assured,
the rural poor will be in a better position to appreciate and reap the
benefits of the information kiosk.
Intellectual wealth associated with Internet has been one of the major
factors that has propelled its popularity and growth. Another factor that
is assuming equal importance is the enormous growth potential that
Internet holds for small and big businesses alike. Electronic Commerce
or e-commerce, as it is commonly known, over the Internet is becoming
a very attractive proposition for any entrepreneur including the rural
poor. The advantages of conducting business over the web are many.
The ones that specifically appeal to the problem domain at hand are
outlined below:
•
The major advantage that the Internet offers for a business is its
global availability. Even a little known enterprise can realize the
vision of expanding its market reach beyond geographic
boundaries and local customer segments.
i
136
•
The Internet allows an enterprise to conduct its business at a
very low cost.The cost for operating and service support can be
reduced greatly through the use of internet.
•
It facilitates greater visibility; once the enterprise and its products
are better known, more business flows in.
Accuracy,
speed and availability have remained prominent
characteristics of the various elements of IT and Internet framework.
These offerings must be carefully picked up, seamlessly assembled
and relentlessly sustained to strengthen and enrich the endeavors of
the rural poor while at the same time overcoming the limitations
confronted by them.
RuralBazar - An Internet based solution
NIC, MIT, GOI is committed to strengthen the efforts of other groups
.and agencies working for the benefit of rural poor and to that end,
offers a solution in terms of an IT based marketing infrastructure to
provide better visibility & sale of products produced by rural artisans.
NIC addresses the problem by adopting the e-commerce approach,
suggested earlier, through its product RuralBazar. RuralBazar is a web
store that allows customers to carry out the complete business
transaction starting from browsing the products to paying for the
chosen products. It offers several services to its users who may be
broadly classified as the producer, the content manager, the
business manager, the technical manager and the customer.
The following paragraphs highlight the services offered by RuralBazar
to each of its users.
Customer Services
o
Allows a customer to browse a product catalog online or offline
(by downloading the catalog from the web-site or through email)
o
Accepts orders online or offline (through email)
o
Accepts payment online using credit/debit card and offline
through demand drafts
o
Allows the customer to track order status
o
Automatically confirms an order through e-mail
o
Accepts customer feedback
o
Maintains customer data bn profile, preferences, bill & shipping
addresses etc
IS}-
o
Provides individualized customer services on the basis of
customer profile and preferences
o
A host of other services and help facility
Producer Services
The producer is the individual or group who is responsible for
producing the products. Keeping in mind the literacy standards of the
rural poor and with a futuristic view, RuralBazar offers the following
services to the rural poor:
It automatically generates letter or e-mail (whichever is desired) in
the local language, intimating the producer of any new order placed
for his products. The same information can be viewed over the web
o
also, again in the local language.
o
Once payment is received for an order, RuralBazar offers a facility
to automatically credit the earnings to the respective producer's
account, thus eliminating the role of any unwanted intermediaries.
o
The producer can also choose to be educated/updated, through
reports, about the demand for his products as well as for any new
products. This will help the producer in modifying or changing his
product line. 3.3 Business Manager Services The role of business
manager is to manage the whole business of marketing the
products. RuralBazar provides an interface to the business
manager through which he/she can
o
Conduct an on-line market survey either by posing questions
directly to the customers or collecting data from customer profile,
preferences and behaviour.
o
Analyse the data collected from the market survey through a no. of
pre-defined textual and graphical reports.
o
Launch advertisement and discount campaigns for the products
Content Manager Services
The content manager is responsible for maintaining the content of the
web site. RuralBazar provides a user-friendly interface for the content
manager to do the following:
o
Updating and maintenance of the product catalogue such as
modifying the price and other info about products
o
Updating and maintenance of producer information
o
Automatic generation of letters that may be required to be posted to
a customer, a producer or a bank
158
Technical Manager Services
Technical Manager of the web store is the key person maintaining the
technical aspects of managing the equipment and software and
ensuring the smooth functioning of the same. RuralBazar helps the
technical manager modify the functional capability of the site on the fly
without requiring re-development of the software.
Special Features Besides the above services, RuralBazar has certain
features that are unique and therefore merit special mention.
o
It may be configured to market the products of the rural poor
belonging to a particular state or a particular district in a state.
o
RuralBazar can be configured to act as a simple advertising
medium that displays product images and their info Or as a site that
accepts orders but accepts only offline payment (through demand
draft) Or as a total e-commerce site that accepts orders as well as
payment online. RuralBazar allows such high-level customization
on the fly.
Operationalization Issues
NIC is responsible for problem analysis; design, development and
training activities associated with software preparation and will extend
support on maintenance of the application software to client
organization. However, it is upto the client organization to ensure the
availability of the recommended computing/networking environment,
adequate manpower & other infrastructure and sustain the operations
that includes activities such as content collection, preparation, entry,
updation and software utilization as per the stated needs of application
software package.
RuralBazar is built using the latest technology to provide an enabling
marketing infrastructure for the products produced by the rural poor.
However, the journey doesn't end here. Several issues need to be
addressed before the fruits of the efforts are reaped.
Technical Requirements
To maintain and sustain the operations of the web site, the following
hardware, software and communication environment must be made
available:
o
o
One strong server (with very good RAM, Hard disk and clock
speed) where the web-site will be hosted
Another server with the same configuration to act as the backup for
the first server
<53,
o
A few client machines (depending on the data load at the site)
which will be used by content managers and business managers to
carry out their activities
o
A few scanners (again depending on data load) to capture the
images of the products
o
High-bandwidth connectivity to the internet for the web server
o
SQL Server 2000 to host the database
o
Commerce Server
o
Round-the-clock availability of power with UPS support or through
other adequate means
o
IT professionals
•o
Digital Certificate, to enable online payment and legalise any
electronic communications made through RuralBazar
Operational Requirements
Once the technical requirements are satisfied, several non-technical
issues arise which must be suitably addressed for successfully
operationalising and sustaining the infrastructure. These issues are
highlighted below and need to be addressed by client organization
before proceeding further.
o
The location of the computing environment for RuralBazar must be
decided. In view of the technical requirement highlighted above, it
appears that the location of RuralBazar web store has to be urban
centric (away from Rural Area). This could be the state capital or
district headquarters or wherever the client organization can ensure
the availability of the above stated facilities.
o
A means for collecting product profile from the rural poor (who is
located remotely in a village) and sending it to the web store
regularly for updation needs to be worked out.
o
Once an order is placed (on WebStore), arrangements must be
made to intimate the producer (located in a remote village) about
the order requirements.
o
It must be determined, with focus on cost-effectiveness, speed and
ease of shipment of products, whether maintaining an inventory
would be cost-effective or just-in-time ordering. In case maintaining
an inventory seems a better solution, then where should the
warehouse be maintained?
o
If it is desired to enable on-line payment, a tie up withan acquiring
of merchant bank and a payment gateway is required.
/So
Conclusion
The paper has discussed at length all aspects of the problem domain;
possible stakeholder and IT based Rural Bazar Web Store. The rural
poor, the rich products produced by them, the unexplored but
promising global market and Rural Bazar are all necessary units of a
possible solution. What is required is a few government agencies or
NGOs that are committed to the cause of the rural poor and are willing
to provide the binding force required to strengthen and realise the
entrepreneurial dreams of rural poor.
6l
Section VI
This section provides eight case studies, which highlight how NGOs have
been able to strengthen the micro enterprise units and develop marketing
strategies
Case 1
Galicha Making - A Small - Scale Rural Industry1
Background
Galicha (carpet) making is a highly labour intensive activity. Jaipur is one of the few
important centres for producing export quality carpets. For quite a long time the
activity was concentrated on the outskirts of the city but in a recent years it has
spread to villages as far as 100 km away.
Jagdeep belongs to a Regar dhani hamlet, which specializes in leather products and
is located about 45 km. from Jaipur. Regar dhani is one of the eight dhanis village
inhabited by a single sub —caste (Regars) — a traditional cobbler community. The
dhani has electricity, a drinking water pump, television sets and upcoming pucca
houses. There are about 40 households in the dhani of which 12 are engaged in
galicha making. Most of the households have a small piece of land on which largely
rain fed agriculture is practised. Some of the household also keep buffaloes and sell
a small quantity of milk. With technological developments, the demand for the
services of the Regars has been on decline. In this background, galicha making has
come as a boon to many.
Jagdeep, 25, had schooling for three years. He owns two bighas of land and one
buffalo.
Origin
Jagdeep started working on galicha making at the age of 13 with a relative in a
distant village. He worked there as an apprentice for about two years on a nominal
wage and acquired the necessary skills. He returned to his own village with a desire
to work independently and contacted a trader in a nearby market who was an
important intermediary in this activity. The trader provided a wooden loom and the
raw material for galicha making. The payment was on a piece basis. Three years
back Jagdeep was able to buy his own loom. A wooden loom costs Rs. 1,500 but the
iron loom purchased by Jagdeep costed about Rs. 5,000. He got a loan for this from
the RRB under the soft loan scheme of NABARD. The iron loom is efficient, causes
less tiredness and leads to more smooth finish. It provides strength to the thread in
the carpet and thus increases durability.
1 S.L.Bapana, P.M.shingi
J^2-
Product
Carpets very in size, colour, design, texture, and weight. The trader to whom
Jagdeep sells his carpets takes the decision about the final product. The contractor
on a rectangular piece of cloth provides the design and Jagdeep monitors its
copyright. The usual product produced by Jagdeep is 12’ x 9’. The smaller carpets of
size 6’ x 3’ can be produced three at a time.
Finance
The total capital needed for an operation of this sort is Rs. 10,000; Rs.5, 000 as the
cost of the loom and Rs. 5,000 for working capital, assuming there is no stock of
finished goods. But as Jagdeep was dealing with one trader, working capital needs
were avoided, and sales were assured, Jagdeep invested only Rs. 5,000 on the
loom.
The loan of Rs. 5,000 was taken from a bank in January 1990. It was due for
repayment from 1 April 1991, Jagdeep hoped to repay as per the schedule.
Organisation of the Job
The loom engages four persons at a time. Jagdeep and his wife work on the loom
along with labourers from the village hired on a daily wage basis. The labourers are
mostly young boys/girls 8-15 years old. The manoeuvrability of fingers by children
is easy and therefore they are more deft in carpet making. Female child labour is
common. Since girls get less priority in education they get engaged in carpet making.
Jagdeep complained about the labourers taking leave often. This could be because
of the monotonous nature of the work. In about two months, one carpet of 12’ x 9’
can be produced.
Procurement of Raw Material
Two important raw materials in galicha making are wool and cotton. These are
produced from the trader in the nearby village to whom Jagdeep sells his carpets.
The trader purchases the wool from Jaipur where it comes from Bikaner. The
material is purchased on credit and the trader fixes the price for the raw material.
Jagdeep feels that this relation is based on faith between both parties and this helps
avoid uncertainty.
The price charged for the raw material is also believed to be competitive. It was also
stated that the required colour combination and quantities could be obtained from the
trader. But if one went to the market, a minimum quantity of each colour had to be
bought and this might result in unwanted stocks of different colours or a shortage of a
particular colour. The experience of one of his friends in the open market in this
respect was not so good.
J6 3
Cost of Production
For a 12’ x 9’ carpet, the cost calculation is given below in the table.
Rs.
Variable costs
Wool 27 kg. At Rs. 95 per kg.
Cotton thread 14 kg. At Rs. 45 per kg.
Design cost
Labour 100 mandays
Interest on working capital
Total variable cost
15,390
3,780
1,500
9,000
600
30,270
Fixed Costs
Interest on investment
Depreciation
Wages for family labour
Total Fixed costs
1,200
I, 200
9,000
II, 400
Total cost
Per sq. ft. cost
Sales price Rs./sq.ft.
Margin (85.00-65.00)
41,670
64.3o
or
say
65
85.00
20.00
I 6 Lw
Case 2
Catching the Tiger by the Tail:
Fostering Entrepreneurship Among Craft groups in Orissa2
Time is long past when ‘entrepreneurship’ was confined to the portals of the
academia, when the major concern was to understand and explain conceptual
parameters. During the last few decades, attention has shifted to efforts to ‘create’
entrepreneurs, and the principal actors in this sphere have been governmental and
non - governmental agencies, training institutions and social activists, rather than
scholars and thinkers. Their experiments have not only brought new entrepreneurs to
the force, but have also provided new inputs for theoretical formulations. This paper
describes one such experiment conducted in one of the states in India.
If you catch a tiger by the tail, the animal is in your control. Whether this is true or
merely a story of a tiger - tamers is not known. The idea, however, summarises the
reality wfe explore in this article: an effective means of promoting group
entrepreneurship amongst rural producers is to take care of the marketing of their
goods in an organised manner. Our account is based on our own experience during
the past four years with the Orissa Rural and Urban Producers’ association
(ORUPA), which in many ways typifies the transition from ‘group entrepreneurship’ to
‘foster entrepreneurship'. It is necessary to first clarify what we mean by these terms.
From Group to Foster Entrepreneurship
Group entrepreneurship has been talked about in India for more than a decade, but
the idea has not yet caught the attention of scholars. For most of them group
entrepreneurship remains a contradiction in terms, or at best a utopia.
Entrepreneurship, they maintain, results essentially from a set of personal
characteristics, found in rare individuals or small teams joined in partnerships. To
develop a group of poor people - although they may share an economic interest and
become entrepreneurs - to learn the skills of management, to carve out for
themselves a niche in market, and to sustain such an effort is far more difficult, if not
entirely impossible, than to promote entrepreneurship among underprivileged
communities by selecting and training individuals. The latter is a slow and expensive
process, but till now is the only valid route to the goal. The failure of group
entrepreneurship, they assert, is evident in the remains of thousands of small
cooperatives started with great enthusiasm, but which never had the chance to get
the ground.
Going by the classical view of entrepreneurship propounded by Joseph Schumpeter,
group entrepreneurship would seem to be an aberration indeed. The picture,
however, will be different if we change the paradigm, and see entrepreneurship as a
’2 MICHAEL V. D,
BOGAERT S.J., S.P.DAS and S.S.BARIK, Faculty members, Xavier Institute of Management,
Bhubaneswar, and S.S. Barik is Marketing Officer, Orissa Rural and Urban Producers’ Association, Bhubaneswar.
set of interrelated functions, which have to be accomplished if a business venture is
to get going.
To explain this, let us first look at basic characteristics of entrepreneurship. These
can be grouped into four major categories: (i)self-employment: being on one’s own,
making one’s own decisions, and owning responsibility for them; (ii)innovation:
producing a new product or service, including, at least in the Indian context, taking to
an avocation not engaged in previously; (Hi) risk - taking: responsibility for the
possibility that the innovation may not succeed; and (iv) responsibility for financial
investment: equity contributed by the promoters themselves and funds secured from
financial institutions.
Wherever these four characteristics converge, entrepreneurship occurs, whether an
individual or a group is behind the venture or whether the venture is in business,
industry, environment protection, or the management of any other asset.
Similarly, three factors are found in all manifestations of entrepreneurship:
1. Drive, or the initiative out of which the activity originated and which continues to
hold the enterprise together and replenish the capacity to innovate, to take
risks, and to organise. This is the core of entrepreneurship, whether in a
company, a partnership, or a group venture. It is an expression of leadership.
2. Ownership of the venture, in a legal sense, enjoying the sanction of society, but
also expressed in the behaviour pattern of owners - caring, nurturing, and
protecting against possible dangers. Ownership is also manifested in an
ethical sense: owning responsibility for one’s decisions, being accountable
for one’s actions.
3. Management, reflecting the concern that the venture is properly structured and
processes flow smoothly.
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In brief, Drive - Ownership - Management (DOM) holds the key for the success of
any enterprise. Should any of these factors fail to function, the venture falls apart.
All this is as much applicable to enterprises promoted by a group as to those set up
by individuals. In the case of group ventures, the three factors outlined need not
necessarily be found in the group as a whole, or among the individual members of
the group, with the exception of ownership, but can be induced from outside - by a
person, a team, or an agency possessing the characteristics of entrepreneurship.
The person, team, or the agency concerned may function as an escort in the process
of passing on these characteristics to another group, which does not have them or
has lost them. The enabling agency may continue to nurse or foster the new group till
it is able to proceed on its own.
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The enabling agency may also help the group develop the three factors of
entrepreneurial manifestation. The group of producers can never be divested of the
legal ownership of assets, but behavioural and ethical dimensions of ownership, if
decayed through non - use, can be restored by escorting agency. This applies to the
drive and management factors as well. These may have been lost because of
dormancy or may never have existed in the group being escorted, but can be
induced.
While one or two members of the producing group may provide the leadership or
drive, the management factor may be shared with a larger team of members, or even
non - members who may be temporarily engaged as consultants. The ownership of
I gg
course is participating in the decision - making process. There may be situations,
however, where active workers are simply employees without any stake in
ownership. This is true of many craft groups, or so - called registered cooperative
societies.
There are hundreds of examples in India, and other parts of the developing world,
where group entrepreneurship is present in rudimentary or more developed forms. A
sizable portion of sal forests in West Bengal, for instance, is now being protected by
village forest committees, which have obtained legal sanction from the state
government. The Ford Foundation has documented this case. Orissa is not much
behind in this matter and can boast of similar achievement, but the movement is
somewhat sporadic and has not been documented as thoroughly as in the case of
West Bengal.
In Karnataka, there is a water users’ group, which was originally escorted by a non government organisation (NGO) started by retired joint director of agriculture in the
state government. In Kerala, farmer groups have gone a step further and effectively
engaged in-group farming.
In the Thuamul Rampur block of Kalahandi district of Orissa, tribal farmers have
retrieved from traders the trade in niger, an oilseed they once sold merchants to
whom they were indebted, this happened with the intervention of large NGO working
amongst them. The tiger is now being marketed directly to the National Agriculture
Cooperative Marketing federation Ltd. (NAFED) by their cooperative. It is too early to
say, however, whether this case will emerge into a stabilized situation. Still another
example of group entrepreneurship is reported from Karnataka where farmers are
taking over the management appropriate technology equipment, such as biogas
plants and wood gassifires, built by technical agencies of the state government.
Women have not lagged behind. In Southeast Asia, they have demonstrated how
they can save money in groups when they are escorted by an effective banking
organisation and thus pull themselves out of dire poverty. In Bangladesh, the
Grameen Bank has acquired worldwide renown and the model is being transferred to
other countries. In India, SEWA Bank is well - known, but there are many more
cases.
There are several examples of group marketing in India: there is the case of the
Tribal Handicraft Cell in Ranchi; in south India, a federation of south India Producer
Associations (SIPA) has sprung up and is spreading; and there is the Orissa Rural
and Urban Producers’ Association, which will be described later in more detail.
An imaginative venture is the Trickle Up Programme started by an American couple,
Glen and Mildred Leet, who, by providing a start -up grant of not more than US $ 100
to small ventures in the developing world have by now helped 28,646 poor
individuals and groups all over the world to start viable ventures. They have caught
the attention of the United Nations Development Programme (UNDP), which has
sought their help to rehabilitate refugees in Laos.
Stages in Evolution
All these cases have one feature in common: they all enjoy the support of an outside
agency which injects into them the drive and management, enabling them to
164-
effectively own or acquire assets, and administer them such that they could establish
their presence in the market. It is extremely rare to find a group, which stirs it self out
of slumber unaided.
The following stages can be identified the evolution of foster entrepreneurship:
1.
Stages of Dormancy and Frustration with the Existing Situation:
This is the stage before foster entrepreneurship commences. A group may own
certain assets or have control over them, but the assets are utilized or grossly
underutilized, or may have slipped into the hands of a moneylender through the
process of mortgage. There is no proper leadership or management. The
members are frustrated and look for a way out.
2.
Encounter with an Outside Person or Agency:
For this encounter the group itself may claim responsibility; it may consciously
search for an agency. There may be cases where an agency itself looks out for
people who need help. Encounters may also purely fortuitous.The parties get to
know each other, trust develops, and the agency is willing to commit itself to a
more than casual encounter - a prolonged relationship of assistance. This result in
a ‘social contract’ between two parties, at times expressed in a formal
memorandum of understanding (MOU).
3. Awareness - building and Injection of Drive:
In the second stage of the process, the enabling agency helps the receiving group
to wake up from its slumber by generating hope that if the members organise,
change is possible. Training in skills may take place at this stage or later.
The fire provided by the escorting agency lights the flame of decision - making,
innovation and risk - taking, which may have been extinguished for years, again.
As already mentioned, the initiative taken by the escorting agency finds a nesting
in the minds of only a few leading figures who see opportunities arising out of
encounter. Obviously, in such a process entrepreneurship, present in the enabling
agency, gets shared with a group, which had lost it. Or never possessed it.
4. Activating the Ownership of Assets and Resources:
During this stage appropriate Management structures are set up. In the case of the
Grameen Bank in Bangladesh, for instance, the rules of the game, under which a
group of local women collect and manage credit generated from amongst
themselves in a self - reliant manner, are extremely simple. The same applies to
rules for forest protection. The members know that as long as these rules are
observed, the benefits will be equitably distributed. Social pressure to enforce the
rules is, therefore, generated by the members themselves. The sponsoring agency
attends to those functions, which the foster group cannot undertake, such as
correspondence with the government, foreign agencies and buyers. It also pays
appropriate attention to forward and backward linkages, and relationships with
district authorities, power suppliers, banks, support agencies and the like. There is
a clear understanding, however, that group members would learn the skills, and
take over from the fostering group the task as soon as they are ready to handle it.
5. Marketing:
This is an integral part of the stage just described. A very vital task of the enabling
agency is to establish marketing channels at local, regional, national and even
ICS
international levels. An effective market link, which brings in regular orders for
products, is what appeals to the producers most. It is the tiger's tail, as it were.
Once the sponsoring agency has helped to establish this link effectively and the
members begin to enjoy the tangible benefits, the development of other attributes
and qualities can start backwards from the tail - end - such as acquiring and
numeric values without which the members cannot function effectively in the
market.
6. Awakening the Behavioural/Ethical Aspects of Ownership:
The market link provides the carrot and stick to activate amongst the members
proper behaviour patterns that go along with a responsible use of the assets which
they already own or may acquire in future. Members learn that they are
responsible for their decisions, and accountable for the way money earned from
the market is utilised.
The ethical aspect can hardly be over - stressed. Members learn that without
honesty, integrity, and mutual trust, the venture cannot survive. They, therefore,
formulate appropriate rules and enforce their faithful observance irrespective of
personality. The foster agency plays a vital role in strengthening the moral fiber of
the group, and in ensuring that rules once made and found adequate are
observed, and the culprits punished. Too early a withdrawal in this matter might
spell the collapse of the group being escorted.
7 Withdrawal and Federation:
This is the last stage in the process. An enabling agency has eventually to
withdraw, lest the relationship with the producer group becomes one of
paternalism - a new bondage. The group begins to show signs of maturity when it
increasingly takes over the management of the forward and backward linkages of
its production activities, is able to enforce the rules of the game, and the members
become market - wise.
There are certain functions, however, which can be carried out effectively only in a
federated manner, such as marketing at national and especially international
levels, interaction with government agencies, and training and development. It is
therefore, necessary for the groups to realise the usefulness of federating under
an umbrella. The federation may also take over the tasks, which were originally
performed by the fostering agency. Experience suggests that to set up a functional
and organisationally strong federation, a period of eight to ten years is not
excessive.
t
The fostering agency, however, cannot withdraw totally even after the federation is
formed. Members may want it keep an eye on what happens, and to be available
for help when they are faced with major problems.
Foster entrepreneurship is, thus, concerned with developing the latent
entrepreneurial capabilities of a group of producers with the help of an enabling
agency, during the formative period. The enabling agency must have a
pronounced entrepreneurial culture; one cannot instill in others what one does not
possess oneself. This is a logical extension of the concept of group
entrepreneurship.
IG3
Gue 5
Case 3
Orissa Rural and Urban Producers’ Association (ORUPA)
The story of the Orissa Rural and Urban Producers’ Association illustrates in
many way how foster entrepreneurship can be dovetailed into group
entrepreneurship. The idea of the association germinated rather fortuitously when
the authors, who had earlier published a book on group entrepreneurship, were
told in a casual encounter by a senior executive of the Industrial Development
Bank of India (IDBI); 'Don’t merely write about it, or teach it to others. Do it yourself
and show in the field that it can be done. Others will follow.’
The second nudge that proved decisive came from the primary producers
themselves at a workshop on group entrepreneurship sponsored by the IDBI and
the Centre for Development research and training (CENDERT), Xavier Institute of
Management, Bhubaneswar, between 9 and 11 March 1989. A small number of
craft persons had come to exhibit their products on that occasion. They were not
content with being merely silent listeners but wanted to participate in the
discussions. On the second day, they moved from a marginal position to center
stage and stole the show. Their message came across loud and clear: ‘Help us
start a shop at Bhubaneswar to market our products and set up a marketing
federation in the voluntary section.’ A resolution to this effect was passed at the
workshop and a task force was set up to implement it.
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The task force consisted of some craft persons from the vicinity of Bhubaneswar,
representatives of the IDBI and other financial institutions, development agencies
such as the local office of OXFAM, and training centres including CENDERET.
This group met several times during 1989-90. A memorandum of association and
rules and regulations were drafted and ORUPA was registered under Societies
Registration act XXI of 1860 on 11 March, 1990. The members, however, regard
26 January 1990 as the date of birth of their organisation, when the first meeting
took place. Significantly, the association was not registered under the Cooperative
Societies Act.
f
Objectives and Membership
The following are the aims and objectives of ORUPA:
1. to provide a sound marketing structure for the sale of products at local,
national
2. and international levels;
3. to obtain a living income there from so as to stabilise the economy of the
4. producers;
5. -to secure inputs necessary for carrying out the producers’ activities;
6. to assure the supply of high quality products at reasonable price;
7. to associate and network with other bodies, official and non — official; and
8. to promote the overall development of the members and their families through
9. education, health care, housing and other facilities that improve the quality of life.
I lo.
There are different categories of members: group or institutional members consist
of producer or NGOs, promoting producer groups; individual members are
producers themselves; associate members comprise well - wishers of the
organisation, persons or groups; and the advisory members are admitted for their
specialised knowledge, experience and contacts to further the interests of
ORUPA. Associate and advisory members have no voting rights.
Applications for membership can be accepted or rejected by the Council of
Management and the Board of Advisors. Those admitted have to pay admission
and annual membership fees. ORUPA has been careful not to admit
commercialised persons or groups, and to refuse admission where there is an
evidence of gross exploitation.
Activities: Forward Linkages
The activities of ORUPA can be divide in two categories: (I) those that look
towards the market, the forward linkages - development of products, their
marketing, networking with other agencies, and promotion; and (ii) those that look
towards the members and their groups, the backward linkages - recruitment and
training of members, formulating rules and their enforcement, networking, and
securing various inputs including finances.
Marketing of goods is the most important among the activities comprising forward
linkages. This is promoted through a variety of methods, some of which are
described here.
Participation in Exhibitions and Melas (Village Fairs):
A large quantity of handicrafts are sold at melas. A number of such melas are held
every year in villages as well as in cities. ORUPA feels that one of the best ways
of marketing products is through across - the - counter sales at such melas.
Although all members groups have the freedom to participate in the mela sales,
only the better organised ones feel confident to come forward. They send bundles
of products to Bhubaneswar with their workers who are briefed thoroughly about
the rules of the game. A team including a functionary of ORUPA is constituted to
supervise the operations. The ORUPA stall, already booked at mela, is manned by
the producers’ representatives. All goods, tagged with price and code number, are
sold under the brand name of ORUPA and money receipts are also issued in its
name. ORUPA claims a service charge of 10 per cent on all sales. Accounts are
settled at the end of each day.
Exhibitions at which ORUPA participates are sponsored by ORUPA itself or by
other agencies such as the council for the Advancement of Peoples’ Action and
Rural Technology (CAPART), the Government of Orissa, the Government of India,
the International Trade Fair Authority, and OXFAM Bridge. At the metropolitan
exhibitions and melas, orders are taken from exporters.
1
Till December 1992, ORUPA had participated in twenty-one exhibitions, including
the India International Trade Fair at Delhi in 1990 and 1992, the Indian Grameen
Services fair at Noida in 1991 and OXFAM Bridge fairs at Bombay and Bangalore
in 1992. Initially the progress in this respect was slow so that the total number shot
up to ten in 1992 alone. Of these, seven were local and three were held at
•i
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metropolitan centres of Delhi, Bombay and Bangalore. Significantly, even though
ORUPA as an organisation did not participate in the OXFAM Bridge fair at
Bangalore in 1992, its members felt confident to utilise this opportunity to market
their products.
Participation in melas does involve risks, and there are occasions when even the
costs are not recovered by the sales. Small size or bad location of stalls, inefficient
organisation of the fair itself, unfavorable weather conditions, local disturbances,
or natural calamities may depress the sales.
But the benefits are also considerable. The hustle and bustle of melas stimulates
the producers’ representatives to come out of their limited rural scenario and
become market — wise they pick up new ideas from other more experienced
exhibitors. Direct interaction with consumers provides valuable feedback about the
products, a sense of interdependence among members gets reinforced as they
help to sell one another’s goods. Besides, ORUPA gets known in a wider
environment. A marketing federation in the voluntary sector appeals to many
visitors, which makes the members feel good about the organisation. Exhibiting
goods at fairs where state - sponsored agencies also display their wares
strengthens ORUPA’s boundary relations with the government and the
organisation gains in legitimacy. In more practical terms, orders are secured from
commercial exporters, and coverage by electronic media results in ORUPA
becoming better known in the state.
Direct Sales and Promotion of Products: This started in a rather fortuitous
fashion. The previous regional representative of OXFAM and his wife great
collectors of artifacts and used to receive many friends visiting Orissa. Some of
these visitors placed orders for the items they saw in his home but more important
was the fact that the reputation of the organisation spread far and wide through
these visitors, and ORUPA became part of a network extending beyond their way
to Western Europe, and contacts were established in the European market for
handicrafts.
From late 1991 onwards, ORUPA started keeping small stocks of micro articles in
its office buildings where the customers began to place their orders. This
eventually led to the opening of a showroom eariy in 1993. This was the fulfillment
of the first demand the producers had made at the workshop in March 1989. An
increasing number of customers come to the showroom to place orders, to
discuss, to seek advice several measures have been taken to promote direct
sales, such as appending price tags on all articles, giving purchases to the
customers in printed plastic bags, and bringing out an attractive catalogue of
available products.
In the group of activities comprising what we have called ‘forward linkages’, the
importance of establishing a close nexus with development agencies in India and
abroad is next only to that of marketing. The two foster parents of ORUPA,
OXFAM’s regional office and CENDERET, attract a number of visitors from India
and abroad. Most of them evince great interest in the work of ORUPA as an
imaginative, innovative experiment in gross-roots development. The officers of the
state government too appreciate the significance of ORUPA and send a large
number of visitors.
a
A few developments - mfhded bankers belonging to various institutions such as
the IDBI, the Small Industries Development Bank of India (SIDBI), the National
Bank for Agriculture and Rural Development (NABARD), and the State Bank of
India (SBI), have been supportive of ORUPA’s activities in their individual
capacities. Various difficulties, however, have prevented these organisations from
being more helpful. For instance, even though the IDBI encouraged ORUPA to
submit a proposal for financial support fortraining - cum marketing centre, nothing
tangible happened when the application was actually submitted. For, by that time
the policies of the IDBI had become more commercial. Likewise, the industries
department of the state government invited ORUPA to offer consultancy to rural
cooperatives and groups of handicrafts in Orissa. However, by the time the
proposal was ready and approved by the COM, the officer concerned was
transferred and nothing more was heard of the application.
Backward Linkages
Notwithstanding some bottlenecks, ORUPA is at the point of a breakthrough in its
forward linkages with the market. But this presupposes that the backward linkages
have been strengthened and the gross - roots members of the organisation are
ready for such a leap forward.
Backward linkages include efforts to: (I) establish networks of members groups in
the four zones into which the state has been divided, and to ensure the
participation of members in the decision-making and rule-framing process of the
organisation; (ii) undertake studies and documentation of activities of members
and their products; (iii) train members in management and entrepreneurship, and
upgrade their technical skills and ability to innovate; (iv) secure finance for
member groups, and (v) promote thrift and saving amongst them.
Promotion of zones: Zones were set up in the first year of operation. The Zonal
Coordinators appointed in that year had to be replaced, however, with more
qualified personnel in 1992. In the course of that year, three zonal meetings were
held which a total of ninety participants; both member groups and other interested
producers, attended. These meetings help spread the message of ORUPA. Senior
members of the COM or BOA make it a point to attend such meetings with a view
to exploring the needs of the members, discussing the rules and explaining the
rationale behind them. In this fashion they get first-hand information about the
needs at the grass-roots level.
Rules are framed with the active participation of the members. Except for the
original memorandum of association and rules and regulations, drawn up in 1989,
all other rulers are framed in a participatory manner. The interaction between
members and professionals from the foster agencies or visiting consultants
ensures that small members have a say and rule-making is not unduly influenced
or implemented to benefit the ‘bigger brothers’ who are already better organised.
Studies and Documentation: Since its origin, ORUPA has paid attention to
stupes on the problems of handicrafts in rural areas. In 1991, CENDERET
completed a study funded by the IDBI on ‘Group Entrepreneurship arriongst Rural
Handicrafts People’, based on ten cases in Orissa. This yielded a great deal of
information on why cooperatives of rural producers become sick. To this study was
attached a proposal for follow-up action which generated ideas that were taken up
for the backward linkage work of ORUPA..
This study was followed by a similar study undertaken on behalf of a donor agency
in Delhi, focusing on its backward linkages in Germany. During the same period,
1990-91, OXFAM Bridge assessed the training needs of members and a freelance
consultant did a study on the marketability of ORUPA products in European
countries.
Finally, during the latter part of 1992 a baseline survey was undertaken of each of
the fifty-odd members of ORUPA And their products with a view to drawing up a
catalogue. This was the first documentation undertaken by ORUPA itself as an
organisation, although the Zonal Coordinators and office workers of the
organisation felt that this was too strenuous.
Training and Up gradation of Technical Skills: ORUPA gives very high priority to
training office bearers, executives, and members in management and
entrepreneurship. Every year persons belonging to the organisation are deputed to
various courses offered by one of its foster parents, CENDERET. During 1992,
nearly forty persons attended five training programmes, lasting from five to thirty
days. Subjects covered included motivation, leadership, communication, planning,
monitoring and evaluation, accounts, development management for grass-roots
development agencies, commercial principles, marketing, financial management,
banking, production system, quality control, business opportunities, micro
enterprise development by NGOs, and marketing of handicrafts and rural
products. Senior executives of ORUPA functioned as resource persons in some of
the programmes.
For skill up gradation, ORUPA has no internal resource personnel and depends on
technical organisations such as OXFAM Bridge, or freelance consultants. They
acquaint the producers with matters relating to the changing tastes of customers,
opportunities for developing new products, the need to bring out new designs and
such other matters.
Funds from Financial Institutions: Most of the efforts to obtain working capital
for members have met with failure because development agencies and banks
have, during the last two years, become more commercial in outlook and have
stopped loans for development purposes. Only one agency, the Rashtriya Gramin
Vikas Nidhi (RGVN), which opened a regional office at Bhubaneswar in 1991, was
sufficiently responsive and agreed to advance small loans, charging only a service
fee of 6 per cent. ORUPA itself obtained a credit line for up to Rs. 5,00,000 as
working capital. One member organisation engaged in brass metal work obtained
a credit line Rs. 2,50,000 and another member of Rs. 39,000. ORUPA has not
pursued the promotion of thrift and credit amongst its own members as yet, though
it is in that line that the solution of credit needs ultimately lies.
Financial Performance
ORUPA has four financial statements since its inception. The picture emerging
from these is summarised in Table 1.
TABLE 1
Orupa: Financial Performance
Period
Total
Sales
Grants
ToW
Covered
Turnover
(Rs.)
Of
Products
by
ORUPA
(Rs.)
And
Donations
Received
(Rs.)
1 Jan.-30 Sep.91
38,698.00
7,120.00
18,000.00
1 Apr.-31 Dec.91
136,829.00
84,600.00
18,000.00
1Apr.-31 March 92
295,229.00
78,974,00
192,758.00
Initially, the principal sources of funds for the organisation were contributions from
the members and fostering agencies. Small grants also came from IDBI, the
Industrial Finance Corporation of India some local charitable organisations. The
first nine months of 1991 were difficult times, as permission to receive funds from
foreign donor agencies did not come. Some of the local sponsors also lost interest
and dropped out. Only the two fostering agencies continued to stand by the
organisation.
Things began to look up from September 1991. Between that date and March
1992, there was a marked improvement thanks to the arrival of grant of Rs.
1,22,000 from a foreign donor agency, which committed itself to helping ORUPA
financially for a period of three years. Permission to accept foreign donations had
been received from the government of India earlier.
The calendar year 1992 witnessed a quantum jump in grants received from the
same donor to build, among other things, office and infrastructure facilities, and
meet the training fees of members. The value of sales also went up nearly four
times. This was due to the increased participation by the organisation in
exhibitions and melas. One exhibition held at Bhubaneswar by ORUPA itself in
November generated sales of Rs. 1,05,000, a record till now. The figures for 1992
include a sum of Rs. 48,000from sales at the ORUPA office itself.
It must be remembered that ORUPA is only a facilitating agency, which receives a
service charge of 10 per cent of the value of sales affected through its mediation,
the balance going to the member groups themselves. The members also make
sales directly the value of such sales was estimated to be about Rs. 5,00,000 in
1992. The promotional activities undertaken by ORUPA do, however, have an
indirect impact on direct sales. It is not possible at this stage to determine how
much each group is making. But some products obviously sell better than others.
Sales figures do not mean everything, but they do suggest that ORUPA, after a
difficult start is gradually gaining momentum, thanks to the massive help received
from a donor agency and the efforts of the members, assisted by the foster
agencies. If this growth is sustained, it may be possible for the organisation to pay
for its ordinary recurring expenses from its own earnings, but not for training and
promotion activities. This could be considered the stage of relative self-reliance
and sustainability.
i
Lessons from the Experience
As stated earlier, the mission of ORUPA is to promote group entrepreneurship
amongst rural producers by providing for the marketing of their goods in an
organised manner. An integral aspect of grass-roots development in the Third
World is to help people relate themselves to the market, not only local, but also
national and international. Or else, the market would continue to exploit them and
keep them in perpetual poverty. An organisation is required for this purpose, but
this must be an organisation of a particular type, a cooperative venture in which
the producers get a fair part of the price paid by the final buyer.
The challenge of creating such an organisation, however, turned out to be more
formidable than expected. In a state like Orissa, where industrialisation is still
limited to a few areas and centres, the values, relations and customs of producers
are rather inconsistent with the culture a marketing cooperative would demand of
them. Some of the problems on account of this are discussed here.
Attitudes, Practices, and Habits: Persons in handicrafts are, and perhaps want
to remain, primarily artists. They manufacture to express their perception of
beauty. Whether an article sells or not is of secondary importance. The market, on
the contrary, demands that one produces what the customer is willing to buy, and
the taste of the customer changes continually. A number of groups represented in
ORUPA, however, are hesitant to give up traditional designs, to try out something
new, and to produce articles of utility rather than of beauty alone. The resistance
to change is perhaps due to their anxiety about their identity, stability, and roots.
How fast and to what extent they will accept the discipline of the market cannot be
predicted with any degree of certitude.
The artisans’ perception of time poses another problem. Theirs is a rhythmic
concept marked by festivals for celebration and labour; not a year divided into
months, weeks, days and hours. They are not willing to submit to tyranny of the
watch. Commitments to observe deadlines are not considered serious, and
excuses for delay are plentiful. They are poor in time management in the modem
sense.
The producers work with a minimum of instrumentation, in spaces — often parts of
the house - that poorly lit or ventilated, insufficiently protected from the weather,
animals, dust, and vermin. Work is most frequently done sitting cross-legged on
the bare floor. In such a situation one cannot expect consistent quality.
Standardization is out of the question. The local market still takes such objects, but
external customers remain lukewarm. Related to this is the lack of attention to
presentation and packaging which today plays an important role in boosting
demand for a product.
There is no concept among the artisans of ploughing back. If some money is
earned from production, this is not invested to improve the apparatus for
production — workplace, tools, etc. the result is that compared with the products of
many neighboring countries, Orissa handicrafts still lack the finish which the buyer
looks for. Further, the producers are grossly deficient in documentation and record
keeping, resulting in inefficient costing and pricing of products. Craft persons still
go by estimates, and rough ones at that. Their attitude to maintaining accounts is
equally casual.
A bad custom, which producers have learnt from their interaction with the market,
is to charge whatever price the buyer is ready to pay. In this way, an unsuspecting
buyer from outside there or from abroad may be heavily overcharged. The
intention is not to exploit or cheat; it is just commonly believed in the informal
sector that one must make hay while the sunshines. The danger of losing a
potential customer does not easily occur. Passing off a damaged or totally sub
standard article is also not uncommon.
Group Organisation: A cooperative from of grouping consists of members who
are all owners of assets, and are equal in status. They elect the management and
control the performance. The concept is a far cry for the handicrafts’ producers of
Orissa. The only form of organisation universally known among them is the family
where the father has complete authority over wife and children. Most group
members of ORUPA consist of a master craftsman, or the head of a large family,
or a more educated and experienced person, around whom rotates a set of junior
persons —sons, daughters, relatives, trainees, disciple. They often live, eat and
sleep in the house of the leader. They execute whatever they are told to do, and
payment, if made at all, is often a pittance.
ORUPA is aware of the gross exploitation of child workers inherent in this kind of
situation. But being aware of the reality, of the grinding poverty in which many
incipient groups function, it does not think it wise or humane to stamp out the
smoking wick. As and when the groups get better organised, they themselves
would exact accountability from the leaders of groups. Likewise, the pressure of
change would in due course reduce and eventually eliminate the impact of
practices, peculiar to these groups, on their professionals’ activities.
.
To be this change is the sole purpose of ORUPA. It is working to create a work
situation in which members participate fully in the decisions- making process, to
develop an environment in which work is experienced as joy, and to generate in
them an appreciation of the value of their work. The rest would follow.
The authors of this article on the basis of their own experience are convinced that
group entrepreneurship does succeed if it is backed by foster entrepreneurship.
ORUPA has been set up at the state level for the marketing of handicrafts. In the
coming years it should be able to help hundreds of groups, instead of just fifty. The
challenge of marketing the goods will grow in complexity. There is no reason why
these cannot be handled, if ORUPA recruits a highly competent team of
professional marketers trained in management. If ORUPA succeeds, it would have
held the tiger firmly by the tail.
?
IT-
Case 4
LEARNING TO STAND ON ONE'S OWN FEET3
It's hard to imagine that anyone in the hamlet of Vanwasi in Raitale village of
Thane cluster in Maharashtra wakes up earlier than Deo Gavali. At three am, he is
on his feet, milking the two crossbred cows and buffalo he received through BAIF
and the Government Squeezing six and a half liters of milk from his BAIF cow,
three and a half from his government cow, and two and a half from his buffalo,
Deo mixes the milk into two large metal milk barrels already half full from last
night's milking. At 5.15 am, he and his wife Jana are off. They carry the milk on
their heads for three Km up a windy, gravel hill road out of the village. Guided by
the light of the moon and a weak flashlight beam, they make haste for the nearest
paved road to Vanwasi, where a bus will pick them up at six o'clock and drop them
off in Jawahar.
It is all part of the daily schedules that Deo, an illiterate farmer with a keen
business sense, invented for himself six months ago. Tender care "I don't have
any land," explains Deo, who is tall and sinewy, in excellent shape from his
rigorous routine. "I thought if I get some cows, I might do some good business."
Now he and Jana make three thousand rupees per month delivering milk to a
handful of customers scattered across western Jawhar. After receiving a
crossbred cow from BAIF three years ago, Deo got a second cow last year
through a government scheme he found out about through BAIF. Then he bought
a buffalo with his milk money to complete a trio that now comprise the family's sole
source of income. While he and Jana used to migrate two months per year to earn
6,000 rupees between them doing construction work, they now make that same
amount at home in Vanwasi. "Now I can keep in close contact with my family,"
says the Vanwasi native. "And I can be at home, so I have time to do other work
and relax." When the bus stops in Jawhar, Deo and Jana split. Deo carries 12 to
13 liters of milk, Jana 8 to 9. Stepping over sleeping bodies on front porches, Deo
slips in and out of his rubber slippers only long enough to dip his
liter ladle into
the barrel and pour milk into waiting metal pots. Sometimes no one is there to
collect. He places the lid back on his milk barrel and scurries over to his next stop.
"I come at the perfect time every day," says Deo, who claims his early doorstep
delivery is one of the reasons he has customers. People also like his price; 10-12
Rupees per liter (depending on thickness), versus the plastic packs in Jawhar
stores which cost 14 Rupees. "At first I was only delivering to my relatives in
Jawhar. Then their neighbors came and asked if the milk was good, and now they
buy from me."
A blossoming capitalist, Deo adds water to his milk every day to stretch it far
enough to reach every customer. So far he has received no complaints. While he
hands some customers special 1-litre Bisleri bottles full of "pure milk," he refills
those same bottles with milk from his barrel for the next customer. This technique
is one of the reasons why he is not involved in BAIF's milk co-op, which only
accepts pure milk. BAIF pays 8 Rupees per liter, and comes to Vanwasi twice
daily to collect milk and bring it to their chilling plant, where they will eventually sell
3 BAIF Journal
it for 14 Rupees a liter. With overhead, the plant is currently operating at a loss of
2 rupees per liter. But since the Government's chilling plant scheme shut down.
BAIF has been forced to continue operation so that participants will have a place
to sell in Vanwasi. Not everyone is as enterprising as Deo. "He's doing a lot of
hard work," says Dr. Girish Patil, Veterinary Development Officer for BAIF. After
finishing their delivery around eight-thirty, Deo and Jana meet in the vegetable
market behind the Jawhar bus station. Deo sits next to a bald, middle-aged
cucumber and cauliflower vendor and helps the man prepare his cauliflowers
heads, cutting the leaves off the sides to expose a dirty white product. Then Deo
puts the leaves in an empty sack he brought from home. The veggie vendor's
trash is Deo's meal ticket - he'll feed the vestige to his cows back home to
increase their milk production. "BAIF told me to get vestige for my cows. I take
good care of them, feeding them this and the feed from BAIF. If I serve the cows
well, they will serve me well," he smiles. Dr. Patil applauds Deo's care for his
cows. "His self-interest is the most important thing." says Patil, who believes Deo
will cross the poverty line within the next year. "He comes to all the BAIF meetings,
and takes care to cut grass after the monsoon to store for the dry period." Without
land himself, Deo has to buy green grass from landowners. Each animal ideally
eats 15 kg of dry grass and green grass per day, along with fodder, rice meal, and
ground-nut.
Though other BAIF livestock participants have had trouble learning to take care of
crossbred cows, which require completely different type of care than traditional
local cows, Deo has taken to it well. "It's because of my hard work. Others don't
give their cows fodder - they free graze them. If we humans only ate one thing
every day, we'd get bored. It's the same with cows. We give the cows a variety of
foods so that they give better milk. He says that BAIF doctors, like Patil, have been
very helpful. On a shelf in his kaccha house, he has green tubes of medicine he
received to treat inflamed udders. And just last week. Patil made a visit to feed
sulpha drug to Deo's BAIF cow. which had an upper respiratory tract infection.
"They do a good job of coming when we call them," Deo says of BAIF's
Veterinarians. "And they don't charge money, like the Government." At four o'clock
in the afternoon. Deo and Jana begin the evening milking. Deo squeezes a liter of
milk from his BAIF cow into a metal pan, and feeds it directly to the baby heifer
himself. "He thinks I'm his mother," Deo jokes. The rest of the milk is kept in the
metal jugs, where it will stay until tomorrow morning's delivery. Without any land to
give his two young sons, who are currently away at an ashram school, Deo hopes
his kids will eventually live outside Vanwasi. "I want them to have Government
jobs. Secure jobs." "If I can stand on my own feet, then anyone can," Deo claims. "
Case study 5
Rural Marketing and Enterprise4
Bhagavatula Charitable Trust (BCT)
JUST ABOUT EVERY NGO at some point of time would have tried introducing
income generation activity as an agent for financial empowerment. Considering
the efforts that have been taken, the success rate is quite dismal. Bhagavatula
Charitable Trust (BCT) is no exception. Over the years it has worked with lace
making, papads, leaf plate making, pickles, tamarind de-seeding, cotton yam
spinning, etc.
The basic problem we were facing was that money, which comes into the village,
was quickly getting out if it. We started with papad making. It sounds pretty
simple, but it is one that is giving so many problems. Everyone said, it is so easy,
just ask some women who know how to do it. We did that. But if you go to a
village* and ask people to buy a papad, they say, it is too red, it is not crispy
enough, it does not expand enough on frying. We tried adding various things. It is
now at a stage that women are selling in the local areas, but it is not creating very
much employment. 6 women are working on this.
Out of our numerous trials leaf plate making has been the most successful. In
this project, BCT procures dry Adda Leaves (one of the many non timber forest
product) from the forests through the government run cooperative society (which
has the sole purchasing rights from the tribals in the district of Visakhapatnam).
However, with regard to the other products the success has been quite limited.
There are many reasons for the failure of the NGOs in enterprise development:
•
Inadequate training
•
Unavailability of raw materials
•
Lack of proper know-how or technology
•
Poor quality of the products
•
Inferior packing and packaging technology
•
Improper preservation and storage facilities
•
Poor transport facilities
•
Lack of professional marketing expertise
Over and above these, the NGOs tried doing everything by themselves. They did
not involve the local traders nor did they make conscientious effort to involve
primary stakeholders in running of the activities. Based on the experience drawn
upon the past and on the successful income generating models like
Operation
Flood (formation of milk cooperatives based on Amul) and Lijjat Papad (made by
thousand of women in their homes and in their leisure), etc we decided to start a
1 Suresh Bhagavatula. Downloaded from \vww.aidindia.org
ISO
unit which would have a holistic approach to rural micro enterprise creation. The
role of the Enterprise & Rural Marketing Unit (ERMU) is:
•
Procure know-how for establishing micro enterprises
•
Train few women and conduct a pilot run of the enterprise
•
Design of proper packaging
•
Prepare project report based on the pilot run
•
Assist women in securing bank loan, where necessary
•
Setting up of the enterprise
•
Insistence on strict quality control
•
Purchase the entire raw material
Market under brand name
What is the current status of EMRU?
We have now identified four products: coir rope making, papad making, screen
printing and pickle making. Few of these are in the pilot phase and few of them
are being produced regularly. In all about 27 women from four villages are
involved in these activities.
Coir rope making: The people from the Coir Board, Government of India, have
trained 15 women from one village. They are using hand-operated spinning wheel
as against the mechanised unit due to the appropriateness of the technology. The
hand operated unit is more labour intensive, does not require power which is a big
problem in this remote village and finally the raw material is in abundance in the
local area. Efforts are being taken to diversify the product range by training the
women in making doormats, brushes, etc.
Screen Printing: Four women from two villages are involved in this activity. As it
was not possible for them to spend some time in the city and leam the technique,
couple of day trips were organised in which they interacted with the local screen
printers. In this short time it was possible to leam just the theory. The actual work
was learnt on the job. As and when there were problems, the screen printers were
consulted. We have been able to produce greeting cards, bags and many job
orders.
Papad Making: Ten women from one village have been trained in the technique
of papad making. (Papad are wafer thin crispy circles of dough which can be
eaten either by frying or roasting). Out of these three dropped out. Currently
seven women are working on this activity. This unit was beset with problems due
to the remoteness of the location. All the raw materials as well as products need
to be carried by foot for about 3 kms. To add to this the product was unacceptable
to both the urban as well as to the rural markets.
After a year of experimentation and approaching various food research
organisation but still we could not produce acceptable product. Ultimately we
decided to approach a small institute, which has a degree course in Home
1*1
unit which would have a holistic approach to rural micro enterprise creation. The
role of the Enterprise & Rural Marketing Unit (ERMU) is:
.
Procure know-how for establishing micro enterprises
•
Train few women and conduct a pilot run of the enterprise
.
Design of proper packaging
•
Prepare project report based on the pilot run
.
Assist women in securing bank loan, where necessary
.
Setting up of the enterprise
.
Insistence on strict quality control
.
Purchase the entire raw material
Market under brand name
What is the current status of EMRU?
We have now identified four products: coir rope making, papad making, screen
pnnting and pickle making. Few of these are in the pilot phase and few of them
are being produced regularly. In all about 27 women from four villages are
involved in these activities.
Coir rope making: The people from the Coir Board. Government of India, have
trained 15 women from one village. They are using hand-operated spinning wheel
as against the mechanised unit due to the appropriateness of the technology. The
hand operated unit is more labour intensive, does not require power which is a big
problem in this remote village and finally the raw matenal is in abundance in the
local area. Efforts are being taken to diversify the product range by training the
women in making doormats, brushes, etc.
Screen Printing: Four women from two villages are involved in this activity. As it
was not possible for them to spend some time in the city and learn the technique,
couple of day trips were organised in which they interacted with the local screen
printers. In this short time it was possible to learn just the theory. The actual work
was learnt on the job. As and when there were problems, the screen printers were
consulted. We have been able to produce greeting cards, bags and many job
orders.
Papad Making: Ten women from one village have been trained in the technique
of papad making. (Papad are wafer thin crispy circles of dough which can be
eaten either by frying or.roasting). Out of these three dropped out. Currently
seven women are working on this activity. This unit was beset with problems due
to the remoteness of the location. All the raw materials as well as products need
to be carried by foot for about 3 kms. To add to this the product was unacceptable
to both the urban as well as to the rural markets.
After a year of experimentation and approaching various food research
organisation but still we could not produce acceptable product. Ultimately we
decided to approach a small institute, which Has a degree course in Home
IS 2.
Case Study 6
Dignity through Papad making5
Lijjat Papad does not turn its women into millionaires, but it’s the realization of
dignified self-employment that is its success. The success of Shri Mahila Griha
Udyog Lijjat Papad (now onwards Lijjat) lies, among other things, in its ability to
offer self-employment opportunities to women at all its 61 branches. Any woman
looking for work can approach any of Lijjat’s branches and join the 40,000 plus
strong team of Lijjat’s sister-members without any fuss, and earn Rs 2,000 to Rs
3,000 every month for her roughly six hours of work everyday from home. That
such a system did not collapse under the weight of its growing number of workers
but, on the contrary, gathered strength from them and became a shining example
of a business based on the sound but apparently impractical Gandhian concept of
Sarvodaya and trusteeship is the biggest surprise element in Lijjat s success story.
The company has grown into a corporate with an annual turnover of Rs 300 crore
for many years.
How does it work?
After a woman has signed the pledge form, which serves as her formal entry and
introduction to the formal working environment, she is considered as a sister
member. The branch office normally operates from 6.00 to 10.30 am during which
time some sisters prepare the dough, while others receive ready papads from
those who had taken the dough home the previous day. Payment, called vanai
charge, is made straight away, before fresh dough is given for the days work.
Accounts are never kept pending even for a day nor is any credit given to a dealer
no matter how big or important he is.
Success in their hands: Lijjat has fired the imagination of women and rural
folk
Every branch is headed by a sanchalika (branch head) who is chosen from among
the sister-members by consensus. Similarly, allotment of different works like
dough-making, distribution of dough, weighing and collection of papad, packaging,
etc. are all decided by the sister-members by consensus. The wage pattern is
such that the same amount of work fetches almost the same wages. In any case, it
is the collective responsibility of the sister-members to manage all branch activities
efficiently and profitably. Apart from production, the branch is also responsible for
marketing its products in the area allotted to it. The wide network of dealers and
the goodwill that Lijjat products enjoy with customers make the marketing relatively
easy. To maintain the high quality and standard of Lijjat products and uniformity in
Arun A Snvastav is a freelance reporter. He can be contacted at arunasrivastav'a.redifimail.com. This article comes to India
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taste for the same product from different branches, the central office supplies the
raw material - mung and urad flour - to all its branches. This remains the only
involvement of the central office in the entire production and marketing exercise of
the branch office.
Vanai charges (rolling) differ from branch to branch, between Rs 14 and Rs 18 per
kilogram depending on the profit of the branch. Each sister-member is expected,
as also bound by the pledge, to roll out at least three kilograms of papad everyday.
A new member, after about 15 days of on-the-job training, starts achieving this
target in about five to six hours and goes on to roll out one kilogram per hour after
some months. Helping hands at home shoot up production and accompanying
monetary returns. If there is any loss, sister-members, as the owners of Lijjat
enterprise, absorb this by taking less vanai charges. Similarly, profits are
distributed among the sister-members as extra vanai charges at the discretion of
the branch concerned.
Challenges and potential
The story of seven illiterate and poor women who borrowed Rs 80 to start a papad
business, and took its turnover from Rs 6,196 in the first year to Rs 300 crore in
the next four decades, involving over 40,000 women on its revolutionary march, is
fanciful at any rate. But to say so would be undermining the contribution of a well
thought-out Gandhian business strategy, equally well executed by his followers,
late Chhaganlal Karamshi Parekh and Damodar Dattani, who worked tirelessly
from behind the scene. Their vision was clear - an exclusive women’s
organisation run and managed by them, a quality product that these women had
the expertise to make, and, finally, a work environment which is not competitiondriven and mechanised but based on pure labour and love for the organisation and
its people.
Lijjat is today guided by separate divisions of advertising, marketing, sales
promotion and exports. There is greater coordination between branch offices
(different production and marketing units) and centralised marketing, advertising
and exports departments. Transfer of finished products to centralised marketing
offices from different branches was worth Rs 113.52 crore and ad-spend stood at
Rs 2.55 crore for 2000-2001.
But more than its much-hyped sales figure, Lijjat’s experiment in the realm of
corporate governance stands out as one of a kind. All the centres are
autonomous, profits remain with the respective branches and are normally used to
augment the business after a due share is distributed as extra vanai charge to
sister-members. Employees, numbering about 5,000 including the chairperson
herself, are in no way superior to sister-members, and are therefore expected to
behave accordingly. Besides, the phenomenal growth and expansion of Lijjat into
a multi-product company has opened up new employment opportunities for the
sister-members; eligible candidates are chosen and trained to work in its modem
Polypropylene, Sasa detergent & cake and printing divisions.
Lijjat’s Ranchi branch was established in November 1997 bifurcating it from the
only branch in Bihar at Muzaffarpur. It pays Rs 11,000 per month as rent for the
building, which houses its office and workshop. A “trekker” i(thirteen-seater
passenger vehicle) has also been purchased for the conveyance of sister-
19
members from home to the Lijjat office and back. This branch has 165 sister
members and sold papad worth Rs 0.65 million in November 2002. Vanai charge
is Rs 14 per kilogram of papad and each sister was paid Rs 250 as extra vanai
charge on Dipawali this year. The Muzaffarpur branch, according to Lijjat sources,
paid Rs 2,500 as extra vanai charge to its sister-members. Similarly, the Mumbai
and Thane branch distributed gold coins of five grams to each of the 4,056 sister
members a couple of months ago. The branch averages around four rupees as
gross profit and one rupee as net profit from per kilogram of papad.
“As an experiment, Lijjat has insulated its sister-members from joblessness. These
women also work from their homes, where help from other family members not
only adds up to the income but also makes the work more enjoyable. At the
workplace they are self-respecting, hard working and sisterly to one another. More
importantly, besides the strength of womanhood, Lijjat is also an experiment in the
restoration of the essence of womanhood. The Lijjat women offer an alternative to
the highly competitive and stressful work environment defined and dominated by
men in which a woman competes with a man more as a man than a woman,” says
an elderly Gandhian, T K Sumaiya, of Bombay Sarvodaya Mandal.
How is Lijjat placed in the market?
As a business enterprise, the declining sales figure for three consecutive years Rs 298 crore (1999-2000), Rs 288 crore (2000-2001) and Rs 281 crore (20012002) - is a matter of concern for Lijjat management. A growing competitive local
market has captured some of its home turf in Maharashtra and Gujarat. But Lijjat
has also expanded to the North - Delhi, Punjab, Himachal Pradesh and, with the
latest branch in Jammu, to the Kashmir market as well.
Though each branch is responsible for the marketing of its products in the areas
allotted to it, the new centralised marketing offices now procure surplus production
from different branches and market it at an all-lndia level. This coupled with a
healthy upward trend in the export of Lijjat papad positions Lijjat as the strongest
brand in the papad industry. The other big brands in the papad market are
Bikaner, MDH and Saktibhog, but none seem to be able to make any dent in
Lijjat’s share of the industry, as their core business is not papad.
Lijjat markets its products through a wide network of dealers and distributors all
across the country, and has never chosen to sell or push its products directly
through the vast network of its offices and sister-members even during the initial
years. Rather, over the years, Lijjat has developed cordial and mutually beneficial
relationships with its dealers. Sisters claim they believe in doing the business
wisely and on sound business ethics. Dealers are given a set commission of
seven per cent and retailers’ earnings are fixed between Rs 2.25 and Rs 26 on the
investment of Rs 14 for 200 grams and Rs 150 for 2.5 kilogram packs respectively.
There are 24 dealers for Ranchi branch in cities like Ranchi, Jamshedpur,
Dhanbad, Bokaro, Patna, Gaya. During the month of November 2002, around
40,000 packs of 250 gram pack of papad were sold and the total income crossed
Rs 0.65 million. According to the accountant at Lijjat’s Ranchi branch, who wishes
to remain unnamed (as that would shift the attention from sister-members to
employees and thus violate Lijjat’s principles and traditions), from 2003 Lijjat is
aiming at a sales target of a million rupees every month.
f85.
Thanks to sound advertising, Lijjat has already become a household name as a
symbol of women’s strength and resurgence, and its recipe combining udad,
moong, pepper and hing has conquered the papad-eateris palate.
Appeal of the strategy
9
Can the formula work again with another product and in another region? Says Dr
Suresh Kumar Agarwal, a Ranchi-based doctor with MBBS, MS degrees, a herbal
medicine practitioner, a researcher and leading supplier of medicinal plants, who
has also experimented with the running of a co-operative hospital for five years,
"Ninety per cent of health problems do not require a visit to a doctor or the
consumption of allopathic pills, but can be prevented, checked and treated with
locally available medicinal plants in the house itself by informed family members or
local vaids for no money. But the fact that there is no money to be made from it
has resulted in the poor growth rate of home-grown medicine systems.”
The same is true about the Lijjat experiment. It makes almost equal money for all
its people and makes just enough money. No one would become a millionaire by
setting up another Lijjat. If this aspect of Lijjat’s operations is not very good news
for machine and money-driven corporates owned by tycoons, the essential
message that Lijjat’s success conveys has definitely fired the imagination of
women and rural folks. In many parts of Maharashtra and Gujarat, locally
manufactured and marketed eatables are catching on. There is hardly any NGO or
voluntary organization nowadays which does not try to create employment and
funds, small or big. along Lijjat’s line. As a business house. Lijjat itself has been
trying to rewrite its own success with another product with varying degree of
success. Grounded spices, khakhra, black pepper powder, detergent powder and
cake, vadi, bakery products, wheat flour are on Lijjat’s menu but papad with a
sales figure of Rs 288 crore remains at the top. Among similar ventures, which
came a cropper, are incense sticks, leather bags, tiffin boxes and matchsticks.
But most promising among them is the chapati division with six branches in
Mumbai. Here, the women come in to work at around seven in the morning and
make chapatis as they are prepared in homes. Packed Lijjat chapati, four for Rs
five are available at retail shops in Mumbai. These centres also procure orders
from hotels, office canteens, etc. and the clientele in Mumbai includes some big
names from the hotel and catering industry. “As the pace of life increases, little
time is available to most people in metros like Mumbai to cook their own food.
There are good prospects for women forming small groups and catering to the
local demand for homemade chapatti or similar products,” says Ashok Bhagat, a
leading social worker engaged in tribal welfare activities in the Gumla district of
Jharkhand.
Case Study 7
Producers and Markets in Rural Bihar: A Case of Tribal Handicrafts6
The production and marketing of products made by rural artisans in India is carried
out under conditions of uncertainty. The interlocking of product and credit
markets, as it exists in rural areas, adversely affects the viability and sustainability
of economic activities of poor artisans. More importantly, such interlocking has
hindered the development of the collective bargaining capacity of the producers,
which in turn, has undermined their capability to scout for markets and fetch better
prices. This paper illustrates the case of an innovative attempt by a non
government intermediary to organise marginal artisan producers in rural Bihar with
a view to give them access to a larger market.
i
The prevalent terminology and strategies of marketing can be said to be biased as
they have been evolved out of the experience of urban-based and capital-intensive
production processes. Marketing of rural produce, involving very simple, labourintensive technologies (most often hand-made) remains an area practically
ignored by the producers’ experts alike. There is equal apathy among policy
markers too.
In India, the institutional and infrastructural aspects of rural
marketing started getting some policy attention only in the 1980’3.
Most of the traditional rural industries in India face the problem of marketing in
varying intensity. To add to the woes of the rural producers, there is large-scale
exploitation by middlemen and traders. Shortage of working capital often forces
the producers to approach moneylenders who charge exorbitant interest rates to
the meagre loans that they provide. Similarly, they are compelled to enter into
contractual agreements with middlemen who supply raw material, but make it
mandatory in turn to hand over the entire produce to them at abysmally low prices.
4
i
I
Attempts at providing marketing support to rural producers can succeed only if
marketing is practiced as part of a spectrum of activities starting from raw material
procurement to processing to selling products at remunerative prices. Practiced
thus, marketing support mechanisms would ultimately take producers away from
the clutches of the middleman-cum-supplier-cum-trader and assure them of
sustainable, long run income generation activities. After all, marketing is ‘ a social
process by which individuals and groups obtain what they need and want through
creating and exchanging products and value with others’.
*
Sanjay Pal, Faculty of the Entrepreneurship Development Institute of India, Ahmedabad.
Marketing of Rural Produce: The Indian Situation
Rural producers generally produce conventional items by using traditional
techniques of production. Due to lack of exposure, they continue to produce the
same products and designs year after year. The productivity of rural industries is
also low due to technological constraints. The machinery used by rural producers
does not have the built-in flexibility to produce improved items. As a result, there
is a continuous threat of competition form products of organised modem
industries, which are not only better designed but qualitatively superior too.
Marketing of rural products is mostly performed under uncertain conditions and
does not have any organised functional pattern. Most of the rural products have a
very poor distribution network and are generally sold in isolation. They are either
sold in adjoining villages or in nearby urban markets. Because of the limitation in
reaching out to either the state or national level markets, rural artisans mostly
depend on village hats, which are usually periodic in nature.
The marketing network of rural industries is controlled mainly by private sector and
cooperatives. As we mentioned earlier, in any region, the rural market is generally
characterised by a system of 'unequal exchange’ and is dominated by the lobby of
traders, commission agents, exporters, retailers, dealers and forwarding agents.
They constitute the private sector. This sector often exploits the disadvantaged
economic condition of the rural artisans, resulting from debt trap, low income and
dependence on external outlets for sale of their products, by creating pressure to
sell the products at low prices. The most common practice among producers is to
sell the products through wholesalers or commission agents against contracts.
There is no scope for bargaining, as the producers are just price takers. As a
result, the middlemen keep a hefty margin for themselves and the poor producers
get a bare minimum return. Indeed, because of an uncertain demand and lack of
adequate income from their products, rural artisans are more concerned with loss
minimisation than with profit maximisation. By and large, neither the buyer nor the
seller has nay notion of the ‘right’ price as both operate under financial constraints
and inadequate information.
Thus, crux of the problem of marketing of rural products lies in the lack of proper
institutional linkages, which allows exploitation by middlemen. Getting rid of the
exploitative middle layer means involvement of intermediaries, either government
or non-govemment, which could provide the producers with the necessary
marketing support. This paper is based on an illustrative case study of an
innovative rural marketing experiment where a non-governmental organisation
(NGO) has been called upon to be a partner in marketing of products made by
tribals.
Swansi Weavers: A Brief Profile.
In the eastern part of the Chhotanagpur plateau there was a greater concentration
of the Swansi population who were weavers by caste. In the late 1970’s it was
found that some of the Swansi no longer followed their ancestral occupations of
weaving. They had been facing problems in marketing their products, which any
case fetched only a small return. Many groups of forest dwellers, craftsmen and
artisans were caught in the same situation. Since most of them did not have any
cultivable land, they started working as agricultural labourers or migrating to other
areas in search of jobs. Those who still continued with weaving were earning
about five to six rupees per day and were able to engage themselves only for fifty
to sixty days in a year. It was still a household activity, In many villages the
weekly hats were not able to accommodate the entire production of weavers of
that area.
The obvious result was large-scale migration of the Swansis. About 200 families
from twenty-five to thirty villages of Khunti subdivision had migrated during the late
1970s and early 1980s. Amidst such grim circumstances, a few Swansi leaders,
who had some knowledge of the outside market, began acting as middlemen.
They helped weavers to improve their production and market their products.
During the weekly hat they purchased articles from the weavers and sold them in
the local or outside market depending on the demand. But the efforts of these few
leaders were not organised enough to bolster trade on a sufficient scale. Very
often they also found it difficult to sell the products they had collected from the
weavers.
Vikas Maitri, a development organisation, started identifying Swansi'weavers who
were still operating their forlorn looms. They took the initiative by giving ambar
charkas and yam to them, purchased the woven cloth and tried to market it. But,
they failed to generate sufficient market for the products as people in urban areas
had a fascination for fine quality mill-made cloth. This trend was developing in the
rural areas too as they were becoming more and more exposed to the outside
world through improved communication and information. They did not accept the
coarse quality hand-made cloth any more. The demand for traditional articles,
therefore, did not pick up and the efforts of Vikas Maitri did not bear much fruit.
The traditional craft was thus undergoing a declining trend. Cheaper substitutes
were available in the market. Because of lack of knowledge and financial
constraints the.weavers were unable to bring about any technological changes in
their production process. Not only were they unable to produce finer quality cloth
to match the standard of machine-made fabric, their productivity was also very
low. Designs and patterns remained the same.
Too much dependence on mill-spun yarn also contributed to the gradual decay of
the hand-made weaving industry. As there was no local source of obtaining yam,
the very existence of the weaving industry was dependent on modern spinning
mills. The weavers found themselves totally sandwiched between the yarn dealer
on the one hand and the village folk on the other. For the supply of their yarn they
were totally dependent on the outside dealers, but for the sale of their products
they were dependent on village customers only. An increase in the price of millspun yam led to increase in the cost of production; but due to a limited market,
they were unable to increase the price of their hand-woven cloth.
Origin of Tribal Handicraft Marketing Cell
In the year 1982 some Swansi leaders approached the Xavier Institute of Social
Sciences at Ranchi (XISS) to help them in reviving their traditional occupation.
They were worried about the very existence of their community. The project Tnb
Handicraft Marketing Cell (THMC) started as a response to this request in 1983
with the support of the Swiss Development Cooperation on an expenmental basis.
Prior to launching THMC, XISS had organised a village seminar of
duration which was attended by weavers from twenty-five villages. The problems
and prospects of the weaving industry were discussed in the light of prevai ing
socioeconomic conditions. The utility of establishing THMC and its probable
activities were also explained.
Opportunities were explored to include other cottage and village industries like leaf
plate making, bee-keeping, poultry farming, jute products making, lac processing
and carpentry under the purview of the Cell. Villagers themselves came out wi h
several ideas on new product lines, which could be produced using locally
available raw materials.
As a part of the activities of the Cell, the Swansi leaders began to collect the cloth
woven by the unorganised weavers from the interior villages and give them to
XISS who marketed it in different places. Looms, yam, ruche, bobbins, etc. were
provided to the weavers. The sale proceeds were given to the leaders who, in
turn, distributed the amount amongst the weavers. This process continued for six
months. The total business during the late 1970s did not amount to more than a
couple of thousands of rupees, but it showed that there was a rising demand for
the products.
Incidentally, some German, Belgian and English clergy who were on an
assignment to Ranchi, visited XISS and liked the cloth woven by the Swans/s.
They purchased the Tablecloths, bags and stoles (a long narrow band used by
clergymen.) These products seem to have evoked a good reponse back iri their
respective countries. When some of them returned to India, they purchase handwoven products in much larger quantities. They also gave some financ'aJ
assistance to the weavers. Interestingly, during ordination, the Bishops of the
Catholic Church in Ranchi also wear vestments made by Swansis.
In the meantime, the Swansi leaders kept on repeatedly requesting the XISS
members to come down to see the situations of weavers in the villages to
understand the gravity of the problem. In the year 1983, some membere rom
XISS visited Marangada, Bakulda and Kitahatu villages in the Khunti block of
Ranchi They interacted with the weavers and realised the need to aggressively
market the products, which were of good quality and especially suited for rough
use They also realised that if appropriate marketing channels could be developed
and certain levels of quality control exercised, the products could earn customer
aCCOncaenmari<eting was identified as the main problem, XISS decided to deal with
it in a systematic manner. It is interesting to note that THMC started their
intervention with marketing, which is generally considered to be the last stage in
nay production process. This was not unintentional. The approach
°f
‘catching the tiger by the tail’, meaning that, if markets can be ensured, then oth
activities will automatically follow.
XISS believed that ‘an effect've ^eans o
promoting group entrepreneurship amongst rural producers is to take care of
marketing of their goods in an organised manner. It would develop a cohesive
force that would make the process (procurement-production-marketing) selfsustaining and ensure a steady flow of income.
There was some initial hesitation among XISS members regarding the precise
role XISS should play—whether it should only act as middleman and collect
articles from weavers and sell them in the market, or it should also take other
developmental measures to promote the industry. At firs XISS collected different
articles produced by the weavers and sold them to Sharba Shanti Ayog (SASHA)
in Calcutta which was involved in marketing and promoting handicraft and cottage
industry products. They had wide contacts with different buying organisations and
had a steady clientele both in India and abroad. When representatives of XISS
approached SASHA they immediately responded by purchasing all the articles
they had with them.
As the initial experience was encouraging, XISS members took the initiative in
developing new designs and patterns and also instructed the artisans regarding
overall improvement of the quality of the products. They conducted a seventy-fiveday training programme in which experts from SASHA were invited to train the
artisans on design development. Intensive training was given in skill improvement
and the development of new designs and patterns. A series of meetings were
held with weavers wherein they were made to understand the utility of their
products so that those who had already left or were about to leave their looms
could be rehabilitated in their traditional occupations. The commercial value of
their work was also explained to them. The weavers understood that if they could
develop some new designs and made technical improvements to increase
productivity, weaving would provide them full-time employment and a good
income.
A well-thought out system was developed later whereby XISS provided the
weavers with raw material (for example, yam and dyes to colour the fabric) and
then collected the products after giving them a fixed wage rate. Thus weaving
became a continuous and steady source of income for them. They did not have to
worry about selling the articles. The wage rate varied from item to item, and was
revised time and again to cope with inflation.
Contacts were also established with agencies like SASHA in Calcutta and
DASTKAR in New Delhi, which specialise in marketing village handicrafts in India
and abroad on a non-commercial basis. The Society began to exhibit fabrics in
the fairs in major cities organised regularly by these institutions. Some young
weavers went along and exhibited their weaving skills at such fairs. In 1993, the
Society set up a craft development centre in one of the villages with financial
support from the Government.
Though the basic objective of the Society was to ensure ‘incremental
remunerative return’ to weavers and rural artisans, it soon realised the need to
address issues other than marketing. For instance, since most of them were
illiterate, there was always the possibility that they could be cheated by an outside
agency. Hence it was essential that the villagers knew what their income from the
sale of their products was. The Society thus decided to impart primary education
to them and help them in maintaining simple accounts. Primary and adult
education has also been actively promoted by the Society. Seasonal illness was
also very common among the villagers, which disrupted their activity. To keep
them in good physical condition, the Society decided to take precautionary health
measures by arranging visits of doctors and distribution of free medicines. In other
words, in the case of THMC, marketing became an important part of a
comprehensive package of programmes.
1
19 I
Strategies of Marketing
The above account reveals that THMC has followed a general strategy of
developing both forward and backward linkages to realise the full market potential
of tribal handicrafts. The forward linkage activities, which focus on the market,
are—development of products and designs, their marketing, networking with other
organisations and promotion. Activities that promote backward linkages are
training and education, formulating rules, networking ensuring timely supply of
inputs. As mentioned earlier, the project initially began with organising only the
weaving activity. Later on, other activities like rope making, jute work, leafplate
making, oil crushing, bee-keeping, basket making, wooden toy making, soap
making and brass work were also taken up.
Marketing is done in three different ways: direct sales to the customers visiting
THMC, sales against orders from interested parties and through linkages with
developmental agencies, and participation in exhibitions, trade shows and the like.
The THMC tag is attached to all the articles. Exhibitions stimulate the producers’
representatives to come out of their confined rural scenario and become
enterprising and customer-oriented. They provide a platform for the exchange of
ideas.. Interaction with other participants helps artisans update their knowledge
and familiarise themselves with the latest trends and designs. They also become
aware of the changes in demand pattern in such meets. It has also developed
confidence among artisans and some of them have started participating
independently in exhibitions without the assistance of THMC. The society
ultimately wants to make the artisans self-reliant and confident, and enable them
to take decisions, develop new designs and effectively market their products
without any external support.
Moreover, XISS has a ‘display window’ where wide ranges of handicrafts
produced by the artisans are exhibited. Customers, including foreign visitors come
to the THMC office and place their individual orders. In case the quantity ordered
is large, the society gets the products made within the stipulated time period by
supplying the raw materials to the artisans. This means that the THMC have to
continually visit the villages and monitor the progress of work by the artisans.
They also have to constantly check the quality of the products. Earlier, the
practice was that each week the finished products were collected from one or two
central villages by the staff of THMC and the producers were paid on the spot.
Later, the producers started bringing the products twice a week to the branch
office, where they also collected their wages. They are also provided with the
necessary raw material bought in bulk and are given specific instructions as to the
specific items to be produced in the following week. The weavers are thus spared
worries about procurement of raw material and other inputs and marketing the
products. They can concentrate on their production.
Apart from SASHA, DASTKAR and CAPART, organisations like OXFAM(UK),
Tribal Art India (Mumbai), Contemporary Art and Craft (Hyderabad) and Central
Cottage Industries Corporation Limited (New Delhi, Mumbai, Calcutta) frequently
place large orders with THMC. THMC gets the products made according to their
prescribed norms and designs. Goods are also marketed abroad mostly through
Third World shops and marketing organisations in the USA and other developed
countries on the European continent. There are OXFAM shops in USA, UK and
other European countries and a variety of other outlets, through which the goods
produced by the Swansi artisans reach the customer. Such linkages with a
worldwide network, the artisans (especially weavers) are assured of long periods
of employment and sufficiently attractive incomes which motivate them to continue
19
their trade and stay in the villages. As a result of the intensive marketing efforts of
the society, the market for the woven cloth increased from Rs. 60,000 in 1986 to
Rs.3,29,663 in 1992-93 and to Rs.4,82,138 in 1994-95. Craft-wise income per
person varies between Rs. 25 and Rs. 30 per day except for carpenters and
weavers, who continue to earn Rs. 40 to Rs. 60 a day.
Developing Backward Linkages
Supply of Inputs: A smooth supply of inputs is the basic condition for
undertaking any productive activity on a sustained basis. For the supply of yam,
weavers were entirely dependent n modem mills, mostly located in urban areas.
Half a century ago, rough cotton was grown by the local Munda farmers. This
cotton was given to the Swansis to be woven into loin cloths, shawls, saris,
turbans, cotton blankets etc. During the 1970s, however, the Munda fanners
stopped cultivating cotton. Moreover, the womenfolk began to prefer finer mill
cloth instead of the thick hand-woven cotton. As a result, the Swansis were forced
to buy yarn from the market in Ranchi at very high prices. This led, as seen
earlier, to tremendous exploitation by yam dealers who acted as middlemen. As
the cost of raw material increased, the profit margin of the artisans shrank, but
they could not pass on the cost to the customers since they were longer interested
in buying coarse cloth and preferred the finer variety.
It is in this scenario that the THMC took the initiative to assure timely supply of
basic inputs (yam) at a reasonable price. They also developed an efficient system
whereby yam and other inputs were supplied to the weavers and once the
production process is completed the woven cloth is collected after giving a fixed
wage to the weavers depending on the output. For some activities like bamboo
work, basket weaving and bee-keeping, raw material is available locally in the
villages. In these cases, the producers give the manufactured articles to the
Society and receive the sale proceeds in return.
Product and Design Development The market survey conducted before
launching the project revealed that there was a need for bringing our changes in
the shapes and sizes of the products made by the weavers. The survey also
emphasised that a large market could be covered if enough attention was given to
produce items of utility. This is true not only in the case of hand-woven cloth, but
other rural industries’ products as well. The advantage of producing utility items is
that as they are used in the household, repeat purchase is assured. Design
development was planned right from the beginning with this perspective.
Expert designers (from SASHA and DASTKAR) are invited to impart special
design development training to the weavers. These expert designers work with
the weavers on their looms and generate new patterns and designs. The print and
sizes of the woven cloth are changed to suit customer requirement. Some
interesting and bright colour patterns were, developed in some of the training
programmes. Immediately after training, weavers often receive large orders for
the new designer cloth from organisations like SASHA and DASTKAR. The
development of new products is simultaneously carried out in the THMC. This
helps in sustaining demand for the products. There has been a continuous
change of product mix at the THMC’s ‘display window’. In its continuous search
for variety, the society has developed sixty new products.
133
Training and Technology Transfer: Training is an integral part of the project.
The society conducts training programmes on various aspects of the project. In
the earlier years, all the training programmes were organised in one or two
villages. In 1987, a permanent craft development centre (training-cum-production
centre) was established in a village where there is a greater concentration of
Swansi population.
The society conducts the following programmes:
1. Training for youth and children of the Swansi weavers: This was necessary
since the new generation had lost hope of survival because of very poor return of
the products manufactured by them. Lower demand coupled with poor price had
made their living difficult resulting in large scale migration. The purpose of this
training programme is to rehabilitate the new generation in their traditional
occupation by giving them training, supplying them with raw materials and taking
up marketing of their products. The youth have begun to understand that weaving
can be a good source of income and can provide full-time employment. Similar
training programmes are also organised for products of other rural industries
where the new generation had given up their ancestral occupation because of
financial and marketing problems.
2. Training of weavers for skill upgradation: Technical skill development training is
imparted to improve quality and productivity of the artisans. Two master craftsmen
were also sent to the Indian Institute of Handloom Technology, Varanasi to attend
an improved weaving and dyeing course of four months’ duration. Some informal
skill improvement training programmes are also conducted at the village level.
3. Design development training programme for producing secondary products:
This training is conducted specially for producing articles for export. A group of
ten tribal women were trained in this programme and they have since been
producing items for export.
4. Training in other crafts: As a part of the project training is also given to
craftsmen employed in crafts such as jute work, bamboo articles, woolen products,
dokra art (brass work), leafplate making, bee-keeping, etc, Some of these crafts
are seasonal and supplementary to their agricultural activity. Unlike weaving,
many of these activities are yet to be fully organised and developed.
5. Training to outstation groups: Some times the master trainers of the Society
are sent to other- places to conduct training programmes.
6. Extension Training programme: The objective of this training is to impart
information and training on marketing of rural products to development workers
and project executives. Training on entrepreneurship development is also a part
of extension training.
7. Legal awareness programme:
Legal awareness programmes are also
organised for the artisans.
19
Socioeconomic Impact
The THMC has been evolved over time as an integrated rural development project
for the small community of weavers and has been fruitful in preventing large scale
migrations of Swans/s from the Chhotanagpur plateau. Because of continuous
patronage of the THMC, weaving has become a lucrative source of livelihood to
the villagers. Those who had already migrated or were about to migrate, have
been rehabilitated in their traditional occupations. It has increased their level of
income, provided full-time employment and improved their standards of living as
well. The wage rate paid to the weavers is revised from time to time to match the
inflation rate.
Before the inception of the THMC., due to the increasing price of mill spun yarn
and the inability of the weavers to find a proper market for their products, weaving
was not considered a worthwhile occupation to pursue. The weavers were
earning about Rs.5 to Rs. 6 a day and were hardly occupied fifty to sixty days in a
year. Now they are employed for almost 300 days a year. The society has
provided improved looms to replace the traditional one. At present, taking uo
weaving as full-time employment, a weaver can earn about Rs 200 to Rs 300 a
week. Thus a family of four to five weavers can earn Rs 800-1,200 per week as
wages. The consumption pattern, food habits and clothing style of the villagers
have changed considerably. Improved income level has led to added confidence
and a sense of responsibility among the villagers. Some of the weavers now go to
metropolitan and other to participate in exhibitions on their own initiative.
Conclusion
The experience of the THMC clearly points to the need to approach the problem of
marketing of craft-based rural products with a community perspective. The
marketing bottlenecks faced by the artisans
arise not merely from the
imperfections in product design, but from their social and economic backwardness
and the resultant dependence on essentially exploitative networks for both
resources and markets. This latter constraint has prevented many of them from
pursuing their entrepreneurial activities. THMC’s intervention in organising the
producers around the issue of marketing has helped at least a few to cross the
critical minimum, threshold and manifest their entrepreneurial skills.
Notes
(1) The necessity for setting up an institutional outlet for the supply of inputs and
marketing support for the products produced under various rural development
programmes was mentioned in the Seventh Five Year Plan (1985-90) document.
Subsequently, District Supplies and Marketing Societies (DSMS)/Disthct supplies
and Marketing Agencies (DSMA) were established to provide marketing outlets to
target groups .
In some states the beneficiaries of the Integrated Rural
Development Programme (IRDP) were linked to voluntary organisations like
SEWA in Gujarat. See Rajagopal, Rural Marketing Administration in India (Delhi:
Kaveri Books, 1995), p.2.
(2) Philip Kotler, Principles of Marketing (New Delhi: Prentice-Hall, 1987)
(3) B.Minj, ‘Weaving Then and Now’ (Ranchi: Vikas Maitri, undated).
(a) The project aimed to Revive and promote traditional and new handicrafts in the
tribal areas of Chhotanagpur plateau.
(b) Enable artisans to sell their products at more remunerative prices by bringing
them in contact with marketing organisations, governments and others in India
and abroad, enhancing the quality of products and assuring necessary credit for
marketing handicrafts.
>35
(c) Publicise the goods produced by rural artisans of the Chhotanagpur plateau and
to promote sale of products
(d) Engage in Research and Development and encourage R& D being undertaken by
other agencies, to improve the adoption of patterns and colour combination etc. in
keeping with the demand of them market and imparting such innovative methods
to weavers and artisans.
(e) Promote professional and human development , of the artisans by orgainising
training programmes which could help artisans to start their own marketing
cooperative or other societies, so that they can directly interact with the markets.
(f) Maintain relations with other promotional organisations, government and other
agencies such as Khadi and Village Industries Centre, District Rural Development
agencies, Block authorities etc., which can contribute to the economic survival as
well as the social improvements of the artisans.
5. By September 1984, THMC was registered as a separate Society under the Bihar
Societies Registration Act XXI of 1860. Subsequently, a detailed project report
was submitted to the Council for the Advancement of Peoples’ Action and Rural
technology (CAPART), New Delhi. CAPART agreed to support the Society and
sanctioned the necessary funds. The project was sanctioned for a period of three
years and later was extended to four-and-a-half years.
6. Personal interview with Fr. Bogaert s.j. on 26.3.96
7. As explained by Mr. A.K.Sinha, Director, THMC in a personal interview on 7.4.96.
8. The society participates in about six to seven exhibitons in a year. Some of the
annual exhibitions in which the THMC regularly participates are organised by
Development Commissioner, Handicrafts (New Delhi), 'Mahila hat’ (New Delhi),
CAPART (New Delhi) and OXFAM Bridge Fair (Bangalore).
9. THMC has to face problems in making the artisans work according to schedule.
Until a few years ago, Swansis behaved like ‘homo-non-economicus ’. Once it so
happened that a commitment was made to deliver some articles within a certain
time period. The weavers, however, decided that a certain day was a day for
fishing and returned in the evening with a handful of Fingerlings the value of which
was much less than what they would have earned had they worked on their
handlooms. See M.V.d.Bogaert s.j. and S.P.Das, Group Entrepreneurship with
the Rural Poor: An idea, Whose Time Has Come,(New Delhi: Indian Social
Institute Publications),p.19
136
Case Study 8
Gauri’s Pankhi -Slipping Away7
A pankhi is a traditional fining device. It is made by interweaving the branches and
leaves of the date or palm trees. This non-farm, traditional activity is largely done
by women. The raw material comes from Ladpura, a village 70 km. from Jaipur.
Ladpum is a big village having about 7,000 inhabitants. It has all amenities such
as power, water, a school and post office. Other activities are cotton carpet
making,- (with about 150 horizontal looms in the village), semiprecious stone
cutting. There arc several service workshops as a regional rural bank in the
village.
Gauri, who belongs to Regar community (whose customary occupation is
manufacturing leather products) makes pankhis. There are 150 Regars, mostly in
joint households in the village, and 45 of them make pankhis. Gauri's household
has 13 members including four women, four men and five children. One of her
sons is a matriculate while one is studying in the sixth standard.
Two
grandchildren have just begun schooling. Her son is engaged in carpet making
while his father is engaged in traditional leather products such as shoes and other
accessories for local needs. The shoe is made generally for local customers in
traditional designs. The competition in the traditional leather product market is
very high and, therefore, panklzis supplement the family income. The family does
not have agricultural land.
When the case writers visited the household, three women, Gauti and her two
daughters-in-law were weaving pankhis with skillful speed. Gauri replied to our
questions without stopping work, so deft was she at her job! She was not shy and
replied with case. Gauri is about 60 and learnt the art of pankhi making from her
parents in childhood. Later, she taught her daughters-in-iaw.
Pankhi making is a labour-intensive, time-consuming activity requiring, flexibility of
fingers, probably most suitable for women workers who can do it besides their
daily household work. The work can be done the year round, but sometimes
shortage of raw material, particularly in the monsoon season, is experienced.
Therefore, Gauri has taken a loan of Rs. 1,000 from the RRB under the refinance
scheme. She says that bulk buying provides her a price advantage.
There are six designs for pankhis with a little variation in colours in the borders.
But special designs are made on specific orders. One branch of average size
costs one rupee and on, an average, four-to-five pankhis can be made from one
branch. Besides, there is the cost of leaves for vertical weaving (weft) and that for
colour. The total cost, as per Gauri's estimate, is 30 paise. One worker normally
makes 15 fans a day. The average comes to a dozen fans a day during a year.
Gauri and her two partners make about -40 fans, requiring Rs. 12 by way of
working capital every day. She makes purchases twice a month which means
about Rs. 400 of working capital is needed in a month.
7 S.L. Bapna & P.M. Shingi
(9
Though a pankhi can be made the year round, its demand is seasonal, i.e., during
the months say April-October. It is mainly purchased by low-income households
which cannot afford an electric fan. How ever, with the increasing supply of fans
and higher income levels, the demand for pankhis from the lower middle-income
group is declining.
As the demand is seasonal, One needs to build up stocks over six months for
supplies during summer. This means a working capital need of about Rs. 2,500
for Gauri. When asked in what ways more credit could help her, Gauri replied that
she would be able to make purchases in bulk and could store pankhis to be sold
when the demand picked up. The price range experienced by her is between 50
and 75 paise per pankhi. Thus at an average price of 60 parse, storing and selling
in the season could provide about 20-25 per cent extra returns.
As noted above, 40 pankhis can provide a net return of about Rs. 15 per day for
three persons' work. This can be enhanced by providing finance for storing, which
is done at present by the trader. The cost of finance is 10 per cent (for a soft loan)
and finance is blocked for six months. A five per cent cost is involved; storage
being done in one's own house, assuming that space is available. Finance for
Gauri can boost her activity but there are some factors to be taken into account
a. Competition can bring down the margins.
b. Demand prospects do not seem to be very bright.
There is another avenue for increasing earnings. The pankhis are collected by
traders from nearby town who transport them to Ahmedabad and Delhi where they
are sold at Rs. 1.00 -1.25. The cost of managing marketing is not known, but
looking to the demand prospects there does not seem to be adequate scope for
organisms a marketing institution. Since the consumer segment is poor people,
the chances for extra income by value addition in terms of designs are not bright
Very soon, Gauri may be out of business.
j as;
Section VII
Reference Sheets and Fact Sheets
This section provides information about important addresses and
information required to support your “ Marketing Efforts”
Reference Sheet 1
Centre for Bhartiya Marketing Development1
(A Unit of Swadeshi Jagran Foundation)
OBJECTIVE
•
•
•
•
•
To make artisan community realize the necessity of expanding their markets.
To help artisans enter export field.
To acquaint them with basic knowledge and skills of Export.
To learn the procedures and documentation of export business.
To show them the avenues and agencies, which promote Export.
Activities
CBMD promotes and propagates extensively the use of Swadeshi Products.
It functions as a forum for interaction between the consumers and
manufactures.
Facilitates Buyer-Seller Meetings.
Works for Promotion of Swadeshi Bhandars.
Aids in Market Research & Data Acquistion.
Designs Brand Networking.
Designs Quality & Packaging improvement programs.
Organizes Conferences, Conventions.
Aids in preparing Project Reports.
Conducts Surveys & Studies.
Aids in Network Creation (Distribution/Manufacturing).
Initiates Policy Suggestions to Government/Semi Government
Organizations/Regulatory Bodies.
Activates Sales Promotion through various innovative methods.
Intervenes for match making for technology transfer between R&D institutes
and manufacturers.
CBMD NETWORK
Central Office
CBMD
2-Dr. Bishwambhar Das Marg,
New Delhi-110001
Phone: -011-3356311,3739308,
Fax: 011-3710150
email: swadeshi@del3.vsnl.net.in
website: http://www.swadeshi.org/
1 www.swadeshimela.com
US
Reference sheet 2
Association and Organizations in Promoting Handicrafts
All India Handicrafts Board
The All India Handicrafts Board was originally set up in 1952 to advise the
Government on problems of handicrafts and to suggest measures for
improvement and development. The Board was also required to study
technical, marketing, financial, organizational, artistic and other aspects of
handicrafts and to formulate plans on these lines.
Its function also included advice and assistance to the state Governments for
planning and executing schemes for the development of handicrafts.
State and Union Territories
Each State and Union Territory has a department looking after the
development and promotion of handicrafts. Many states including, Arunachal
Pradesh, Daman, Diu, Delhi and Goa have public sector corporations for
marketing handicraft products.
A few state corporations dealing with small-scale industries and other
products have taken up marketing and export promotion of handicrafts.
Besides taking up direct exports, these corporations are also expected to
guide
and
help
private
exporters.
Central Corporations/Bodies
a) The Handicrafts and Handlooms Export Corporation of India (HHEC) is a
subsidiary of the State Trading Corporation of India, and came into existence
in June 1962. The corporation’s policy in the field of direct exports is designed
to develop new markets and expand traditional ones and to introduce new
products suitable to the needs of the consumers abroad.
The Corporation undertakes and executes wholesale orders, conducts retail
sale operations through retail shops abroad, and participates and sells in
major exhibitions of the world. HHEC also helps private exporters by affiliating
them as business associates. It undertakes a number of publicity and
promotional measures for the export of handicrafts and handloom products.
(b) The Central Cottage Industries Corporation, Pvt. Ltd. is a registered
society, which had taken over from the Indian Cooperative Union. It runs the
Central Cottage Industries Emporium (CCIE) at Janpath, New Delhi, and the
premier sales organization in Indian handicrafts.
The
CCIE
has
branches at
Bombay,
Calcutta,
Madras and
Jaipur.
(c) The All India Handloom Fabrics Marketing Cooperative Society Ltd., (5658 Mittal Chambers, 5th Floor, Nariman Point, Bombay, India.), is sponsored
and supported by the All India Handloom Board. This Cooperative runs
handloom houses in Bombay, Delhi, Madras, Calcutta, Ahmedabad,
Chandigarh, Hydrabad, Ernakulam, Vadodara and Vishakapatnam.
It also has branches abroad in Lagos, Singapore, Kualalumpore, New York,
Mauritius and Hamburg.
All India Associations
India has All India Organizations for three of its most popular handicrafts
items; hand printed textiles, carpets and zari. These Associations serve as a
platform for consultations among the manufacturers and exporters on one
hand and the Handicrafts Board on the other.
The Board uses these Associations to disseminate information useful to
crafts.
(a) All India Carpets Manufacturers Association; Post Box No. 63, Bhadohi,
District Varanasi, Uttar Pradesh, India.
(b) All India Federation of Zari Industry; Safe Deposit Chambers, Surat,
Gujarat, India.
(c) All India Textile Handprinting Industries Federation, 1106 Prasad
Chambers, Swadeshi Mill Estate, Bombay, India.
Social- Voluntary Organizations
A number of social organizations including non profit making registered
societies and cooperatives support the field of handicrafts. Their principal aim
is to provide work to the poor craftsmen. Many of them run training cum
production centres, while others are concerned with marketing. Certain
voluntary organizations are running Regional Handicrafts Training Institutes
for Women, under the All India Handicrafts Board.
(a) Handicrafts Teacher's Training College (The Arts and Crafts Society),
Adarsh Nagar, Worli, Bombay, India.
(b) Regional Training Institute of Handicrafts (Bharat Sevak Samaj), Dharwar,
Maharashtra, India.
(c) Regional Handicrafts Training Institute for Women, (Andhra Mahila Sabha)
Vidya Nagar, University Road, Hydrabad, India.
oi
(d) Regional Handicrafts Training Institute for Women, (Karma Kutir) 32
Ballygunge Palace, Calcutta, Bengal, India.
Reference sheet No 3
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DC
CONTROL OF
SOCIETIES
UNDER ADMINISTRATIVE
(HANDICRAFTS)
Indian Institute of Carpet Technology, Bhadohi (IICT)
Conducts industry driven short-term courses in ail relevant areas for the
carpet industry.
Conducts B.Tech course in Carpet and Textile Technology, which is
recognized both by AICTE, New Delhi and UP Technical University,
Lucknow.
Provides testing facilities in yam composition, fibre blends, colour
matching and dying, carpet testing etc.
Conducts R & D in relevant areas in consultation with industry and also
under takes specific consultancy assignments.
Provides carpet designs to the industry.
Conducts training in CAD, weaving, finishing, dying etc.
Satellite centres of IICT at Srinagar and Jaipur are proposed.
Metal Handicrafts Service Centre (MHSC), Moradabad
Provide Common Facility Services to the art metal ware industry of
Moradabad in postproduction finishes.
Provides training in finishing technologies.
Provides testing facilities for metal and finishes.
Consultant for restructuring appointed to make MHSC commercially and
economically viable, self-sustainable and to fulfill the requirement of metal
industry as per global market demand.
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National Centre for Design & Product Development (NCDPD)
Located at Okhla, New Delhi with branch office at Moradabad
Registered as society under Societies Act, 1860 with DC (HC) as its
Chairperson and a member from trade as Co-Chairperson.The objective of
the centre is to meet design and technology related needs of hard goods
sector.
Bamboo & Cane Development Institute, Agartala
Being restructured to meet the entire need and requirement of bamboo
industry in global context in the areas of HRD, technology up-gradation,
R&D and common facility services.
N.iD is coordinating the; entire restructuring plan including training
programme.
SFC proposal under submission/ consideration. The syllabus for training
programme for skill up-gradation of artisans restructured completely and
made more broad based and training programme commenced. Proposed
to be registered as autonomous society under Societies Act, 1860.
A 02.
Reference sheet No 4
Export Promotion Councils
1) The All India Handicrafts Board: (West Block VII, R.K. Puram, New
Delhi- 110022). This board acts as a Commodity Board for handicrafts and
has an Export Section with a Deputy Director (Exports) in charge. The Board
collects and disseminates information, arranges exhibitions, sponsors sales
and study teams, and invites foreign buyers. The regional offices of the Board
handle registration and process requests for any specific export promotion
measures.
2) The Gem and Jewellery Export Promotion Council: (D-15, Commerce
Centre, 4th Floor, Tardeo Road, and Bombay- 400001)
The council aims at providing facilities and incentives regarding the exports of
pearls, precious and semiprecious stones, diamonds and synthetic stones; to
assist in improving and modernising of the jewellery craft of the country.
3)The Handloom Export Promotion Council : (123, Mount Road, Madras600006) It superintends the export promotion of Indian Handlooms in the
country.
4) The Handicrafts and Handlooms Export Corporation of lndia:(Jawahar
Vyapar Bhavan, Anex-I, Tolstoy Marg, New Delhi 110001). A government of
India undertaking, it supplements the export efforts of the private sector,
besides exporting directly. It undertakes various exort promotional and
developmental measures such as publicity and Indian participation in foreign
exhibitions, and invites reputed designers for advise and assistance. It also
has
branches,
showrooms
and
warehousing
depots
abroad.
5) The Indian Institue of Foreign Trade: (Ashoka Bhavan, 93 Nehru Place,
New Delhi- 110024). Besides training courses for export executives, this
Instiute carries out surveys of various markets and publishes them.
6) The Trade Development Authority of India. (Bank of Baroda Building, 16
Parliament Street, New Delhi- 110001). Handicrafts and garments are
included in its trade promotion activities among other items.
It also has offices in New York, Frankfurt and Tokyo. Besides inviting buyers,
it
arranges
buyerseller
meets
in
selected
markets.
7) The Export Credit Gaurantee Corporation: (Head office. Express
Towers, 10th Floor, Nariman Point, Bombay-400001). It provides export credit
intelligence and issues, covers against risks. It also has branches in Delhi,
Calcutta,
Chennai
and
Cochin.
^04
8) The Export Inspection Council: (14/1-b Erza Steet, World Trade Centre,
Calcutta- 700001). This Council has especially been set up to ensure the
quality control and Pre- shipment Act.
The Council has. also set up a number of Export Inspection Agencies.
9) The Federation of Indian Export Organisation: (Allahabad Bank
Building, 17 Parliament Street, New Delhi-110001). It is a non-profit servicing
institution, set up jointly by the Government, industry and trade. FIEO is an
apex forum coordinating and supplementing the insitutions. It also gives
special attention to the export promotional activites of small sector including
crafts.
10) The Trade Authority of India: (Pragati Maidan, New Delhi-110001) The
TFA is an autonomous organisation established by the Government of India
as a company. Started in March 1977 it has today become a highly effective
organisation giving a new orientation to the country's trade promotional
activities. It unifies policy direction, controls and implements programmes of
India's participation in fairs and exhibitions, both in India and abroad.
Handicrafts continue to recieve the special attention of the TFA.
Reference Sheet 5
Regional Officers and Addresses for The Office of Development
Commissioner Handicraft
S.No.
1
2
3
4
5
6
!
Name
Address
Telephones / Fax / Email
Office of the DC
91-0522-328142 / 329759 /
[Handicrafts]
331024
Sh S.Bhattachariya B-46, J.Park
Telex: 91-0535-2442 SLIP
Mahanagar Extension,
Regional Director
IN
Lucknow
[Central Region]
Fax: 91-0522-375085
Uttar Pradesh - 226
Email:
006
__________
Office of the D C
Sh A.R.Choudhary [Handicrafts]
91-011-6175784/6109760
Regional Director West Block 8
Fax: 91-011-6168479
[Northern Region] R.K.Puram
New Delhi - 110 066
Office of the D.C
[Handicrafts]
91-044-8276321 / 823790
rd
Sh A.K.Handoo
Shastri Bhavan 3'
Fax: 91-044-827007
Regional Director
Floor
Email:
[Southern Region]
26, Haddows Road
Chennai - 400 001
Office of the D.C
[Handicrafts]
91 -022-2661959 / 2663854
Dr. P. Narayanan
204, P. Nariman Street Fax: 91-022-2660911
Regional Director
Harron House [3rd
Email:
[Western Region]
Floor], Fort
Mumbai - 400 001
Office of the D.C
[Handicrafts]
Sh S.K.Sinha
91-033-3345403 / 3346744
DF-Block, MSO
Regional Director
Fax: 91-033-3345601
Building
[Eastern Region]
Salt Lake City
Calcutta - 700 064
Office of the D.C
[Handicrafts]
Sh L.Hatzaw
91-0361-560174/566123
Kalyanpur
Regional Director
Fax: 0361-560174
Ganesh Gauri
[North-Eastern]
Guwahati - 781 006
£ XHttT
g
List of Marketing Organizations
Asha Handicrafts Association is an association of voluntary professional men
dedicated to helping craftsmen physically, financially, spiritually and ecologically
through its Resource Center and interrelated programmes. The Team of Asha
Welfare Workers stationed at different Producer Groups and cooperatives move
closely along with the craftsmen and their families sharing skills and extending
medical help and education gratis irrespective of caste and creed. ASHA in
Sanskrit means "Hope" and Asha brought hope into what was largely a
"hopeless" situation by providing a marketing outlet to the actual craftsperson.
From the beginning, Asha's thrust has been the development of the craftsperson
in his natural environment through various development projects designed to
meet the needs and standards of overseas markets. Asha today assists directly
and indirectly over 103 producer groups and 5,000 craftsperson.
Address:
28,Suren Road
Andheri (east)
Mumbai
Maharashtra - 400093, INDIA
Main Contact: Mr. Lucas Caldeira
Technical Contact: Mr Christopher Raphael
Phone: 91 -22-6718347,6704944/4481
Fax: 91-22-6289992
E m a i I: partner@bom3.vsnl.net. in
KeralCraft
A Portal for Traditional Industries of Kerala
KeralCraft is a project under taken by Keltron for the development of traditional
industries of Kerala. As part of this project an E-Commerce portal for selling
products of Grass root level producers in Kerala is being setup. This will create a
new International market for their products. The traditional industry in Kerala was
based on the locally raw material available like timber, bamboo, coir, coconut,
cashew, clay etc. Most of the products are handicraft products and have
tremendous artistic value apart from the utility value. Being based on nature, all
the products are environment friendly. More importantly, they reflect the rich
culture and heritage of Kerala.
2.06
About Keltron:
Keltron (Kerala State Electronics Development Corporation Ltd.) is a public
sector organization working for over two and a half decades in the field of
electronics and information technology. Keltron has been working on few ICT
related projects in the area of e-governance and using information technology for
rural and marginal communities. One of them has been creation of a network of
sustainable Internet access points through out the state of Kerala. These access
points act as interface between people of that location and people around the
world. It provides access to information and market and a point to publish
information that the people have.
Address:
Keltron House, Trivandrum, Kerala, 695033, INDIA
Main Contact: KeralCraft SBU
Technical Contact: Admin, KeralCraft
Phone: 91-471-724444
Fax: 91-471-724545
Email:customerservice@keralcraft.com
PARAMPARA is Marketing Facilitation Company, which is working for
the promotion of rural crafts in the state of Rajasthan, India. We are working with
collective of artisans be it Self Help Groups of artisans, or an informal alliance,
small NGO and Producers co-operatives. Till now we have worked with about 30
artisans groups and NGOs and have tried to provide them market services.
PARAMPARA serves as an exporter for these small artisans groups on a cost
sharing basis and employed fair trade practices as part of its social
commitments. The product portfolio that PARAMPARA has taken up consists
handicrafts & giftware.
Email Id is info@paramparaindia.org
D-94, Pawan Path
Hanuman Nagar
Vaishali nagar
Jaipur
Rajasthan-302021
INDIA
Main Contact: Vishal Choudhary
Technical Contact: Vishal Choudhary
Phone: +91-141-352038
Fax:+91-141-352038
Self -Help Association for Rural Education And Employment
Founded in 1991 and registered as a society in 1992. SHARE - Self- Help
Association for Rural Education and Employment is community based
organisation committed to women development in kaniyambadi, Anaicut and
Vellore Blocks of Vellore District of Tamilnadu.
Address:
33-a, Vellore, Tamilnadu, INDIA
Main ContactMr. K.MURUGESAN
Technical ContactMr. Shanmugasundaram
Phone: 91-416-264018
Fax: 91-416-263524
Email:craftswomen7@yahoo.com
SHILPA TRUST
Shilpa trust has more than 150 beneficiaries of the trust, it gives me great
pleasure to present this Sth Annual Report of SHILPA Trust for the year 19992000, covering our activities such as Product Development, Marketing Service
(both Domestic and Export), Design Development.
Address:
No. 146, 1st main 2nd Cross 3rd phase
Manjunatha Nagar
Bangalore
Karnataka, INDIA
Main Contact: Mr. M. Bhupathi
Technical Contact: Mr.S.Srinivas
Phone: 3306773X3353928
Fax: 3306773
Email: shilpatrust@net4india.com
Sasha 1is a not-for-profit marketing outlet for more than a hundred groups of
craftspeople and producers from all over India.
At Sasha, producer groups are actively involved in the total marketing process from the pricing of the product to the nature of the Sasha shop, and thus the role
that Sasha will play in their lives. By establishing alternative trade practices and
emphasizing group participation.
Some Sasha's values and targets are:
Emphasize development rather than profits.
1 To read more about Sasha, log on to web site www.sashaworld.com .
•
Revive handicrafts and support artisans.
•
Help producer groups to become economically viable.
•
Assist groups through their formative stages by helping them set up
systems and procedures.
.
.Develop inherent skills and diversify the product range through research,
design and technical development workshops.
.
Organize exhibitions in such a way, as to make the customer aware of the
'human resources' behind the product.
Forge links with groups that produce similar products so that they may work
together.
Sasha retail & wholesale
27, Mirza Ghalib Street, Kolkata 700016
Phone : 91 33 2451586
Timings: Monday - Saturday, 10:00 am - 7:00 pm
Sunday, 10:00 am -1:00 pm
Sasha wholesale
2041 HAL 2nd Stage
17th Main, 1st Cross, Indira Nagar
Bangalore 560008
Phone: 91 80 5261915
Sasha Exports
1C, Chatubabu Lane, Calcutta, West Bengal, 700014, INDIA
Main Contact: Subhasini Kohli and Roopa Mehta
Technical Contact: Pravat De
Phone: +91 33 2449761
Fax: +91 33 2449776/4756657
Email: sasha@qiascl01.vsnl.net.in
Sunderban Khadi & Village Industrial Society
Sunderban Khadi & Village Industrial Society (SKVIS) was formed in the year
1978 by five rural women of the Purba Dihgirpar Village, to overcome the socio
economic problems of the people living below the poverty line, through women
development activities. Keeping in view the above, the same five women
shoulder the responsibility and raised Rs. 800/00 from their own sources, to start
some activities for the women in their villages, then 4 more women joined and
OS;
decided to get it registered under West Bengal Societies Act, and was registered
in the year 1978.
Address:
28/21 Dhakuria Station Road, Calcutta, WB, INDIA
Main Contact: Mr. Prakriti Roy
Technical Contact: Mr. Prakriti Roy
Phone: 033.4141697
Fax: 0321860435
Email:prakriti@cal2.vsnl.net.in
SIPA2 is the collective initiative of Voluntary agencies involved in Income
Generation Programmes in South India.
SIPA offers professional support and back-up services in Marketing, Training,
Capacity-building, Information-sharing, Management-support and consultancy.
SIPA's philosophy is to facilitate People's initiatives through "Learning by
Sharing" towards mutual support and socio-economic development of the
Needy.
Contact:
HD Raja Street, Eldams Road,Teynampet,Chennai, Tamilnadu, 600018, INDIA
Main Contact: K. PANCHAKSHARAM (PANCHU)
Technical Contact PL. RAMASAMY (RAM)
Phone: +91-44-4352313/4353084
Fax: +91-44-4342326
Email: sipa@vsnl.com
Sahayata3
We are an organization working for Gender Equality and Economic Stability for
the Deprived including Physically Handicapped people of the society. Sahayata
was started by a group of social workers and established social-minded
professionals having an experience up to 20 years in the field of Fair Trade
Activity, in response to the need of the Economically Deprived and Oppressed
Women and the Physically Handicapped of the Society.
The organization was founded in the form of a Society under the State Govt.
Societies Registration Act where Governing Body has all the powers including
2 For more details look into our Website : www. sipacrafts.com
3 For more information and products, please visit us at www.sahayata.org
Z-ic?
setting the organizational policy and goals. It has the Chairman on the top
followed by the Vice-Chairman, Secretary, Treasurer and other members. The
Director is the Chief Professional who administers day-to-day functions e.g.
General Administration and Production. The main object of this organization is to
make these disadvantaged groups of the society economically self-reliant.
To achieve this goal the organization has started with production of various types
of handicraft items such as:
• Artistic Perfumed & Non-Perfumed Candles
■ Incense Sticks, Cones, Cubes, Blended natural Essential Oils
■ Soft Toys, Home Decoration / Utility items made of soft toys e.g. Curtain
Holder etc.
■ Kantha Stitched / Hand Embroidered Items like Cushion Cover, Table Mat etc.
Neem products e.g. Insect Repellent Candle, Toilet / Liquid Soap, Floor
Cleaner etc.
• Expeller Grade Neem Oil
■ Hand Printed Greetings Cards
• Packaging of Organic / Regular Tea
Address:
170, Sarat Ghosh Garden Road, Calcutta, West Bengal, 700 031, INDIA
Main Contact: Dhirananda Biswas
Technical Contact: Dhirananda Biswas
Phone: + 91 33 467 0218
Fax: + 91 33 467 6055
Email: sahaYata@sahayata.org
Tara Projects4
(Trade Alternative Reform Action Projects)
Tara Projects started working in the field of alternative production & marketing in
seventies to generate regular work and fair income to its member producers
groups, artisan’s societies and extended families of craftsmen in Delhi area.
In early nineties Tara Projects Registered Trust was formed to provide support
services to the production & marketing of handicrafts on fair trade lines and to
look after the community developmental needs of grassroots crafts-people to
help them gain awareness, rights and human dignity in an area of approx 200
kms in and around Delhi in north India.
This work is now done by Tara Projects Association registered under the
Societies Registration Act of 186O.The production & marketing wing Tara
Projects is responsible for production, marketing, information-sharing, capacity
building program & design assistance. The project seeks to combat exploitation
& poverty through fair trade, rallies, education and proper development of craftscommunities.
4 http://www.taraprojects.com
y.1)
148, Sukhdev Vihar, Mathura Road
New Delhi-110 025 (INDIA)
Telephones: 2683 9721,2691 8037, 2691 8040
International Fax: +91 11 2683 8885
E-mail: tara projects@mantraonline.com
tara.delhi@qems.vsnl.net.in
USHAEXIM
Usha was launched as Private Limited Company, Usha Exim (P) Ltd., in mid
Nineties to bring Quality-Fair Products and Novel Handicrafts to the World
markets. The aim of quality and fairness is being achieved through its efficient
work to provide good business deals in the best interests of the Craftsmen and
Buyers. The success deals in the best interests of the Craftsmen and Buyers.
The success of the Company is constantly monitored with the indicators of the
satisfaction of all the stakeholders. The maximum importance is given to the
esteemed buyers and consumers taking this as a tradition and advancement of
the business operations together.
Usha
with
the
aim
of
experience
oriented
maturity
Usha started with its quality production of Soapstone Handicrafts in the clean &
green production facility of Agra Baazar. The essence of Quality and Fairness
soon substantiated into a successful export business. Gradually, other Craftiness
were added and Usha transformed into 'Center of Indian Traditional & Novel
Handicrafts Under One Roof ' in Soapstone, Iron, Wood, Home Furnishings,
Jewellery and Rajasthani Colonial - Traditional Crafts and Accessories.
Address:
USHAEXIM
244, Okhla Industdrial Estate, Phase III, Mathura Road, New Delhi, 110 020
Main Contact: MANMOHAN SHASTRI (GOOD-DO)
Technical Contact: MOHAN SHARMA
Phone: +91+11+2632 6028, 2691 8033, 2631 8492
Fax: +91+11+2631 8493
Email: ushaexim@vsnl.net, ushaexim@spectranet.com
International Foundation for Fair-trade And Development (IFFAD)
International Foundation for Fair-trade And Development (IFFAD) is a non-profit
organization, established in July 2000 and registered under Section 25 of the
Companies Act of 1956 (INDIA). Its Head quarter is in Chennai (India).
Organisations
involved
in
alternative
trading,
Income
Generation
activities, Development activities and Self Help Groups (SHGs) are intended to
be members of IFFAD. Membership is sought through share holding only.
Membership will be on an International level, which means both NGOs / Groups
in India as well as ATOs / Buyers outside India can become members. In
.21
addition to promoters, representatives of producer groups and ATOs (buyers)
can become Board of Directors of IFFAD. IFFAD as locus organization will strive
to promote the prosperity of its members through market facilitation and
developmental activities.
IFFAD believes in Co-operation, Collaboration, Co-creation of products / services
and Openness in trading and developmental relationships for becoming
prosperous. IFFAD aspires to become a value added linking entity between
buyers and producers of the world. IFFAD perceives that the producers, buyers
and IFFAD will be partners by contributing their respective resources and
competencies for maximizing each other&25;s welfare and minimizing resource
dissipation. IFFAD envisions a co-operative and collaborative trading and
developmental system with utmost faith in participative approach
Producer centered mission
• To help the producer groups in getting regular orders and in receiving fair
price for their goods.
•
To help the producer groups to become self reliant, socially & economically.
• To help the producer groups in developing innovative /market based products
to become self reliant, socially & economically.
*
ATO / Buyer centered missions
i
• To reinforce the ATOs (buyers) efforts in marketing the products of the
producer groups through supply chain management and effective logistics.
1
To extend all possible help in promoting the products of producer members.
£
•
$
Portfolio centered missions
t
• To share the cumulative and collective experiential knowledge gained in fair
trade, with buyers, producer groups and other non-trading organisations.
t
• To develop a resource point for collecting and disseminating valuable
information related to fairtrade and development.
I
• To undertake need-based research and training projects
occupational development and personal growth of producer groups.
related
to
i
4
•
To carry out all the activities with reliability and quality.
IFFAD is a non-profit organization working for the benefit of the disabled
producers, rural producers and traditional artisans of INDIA. Proving marketing,
supply chain management and quality improvement services are the main
business of IFFAD.
i
I
Address:
W-124, 3rd Avenue, Anna Nagar, Chennai, TN, 600040, India
Main Contact: Dr. V Purushothaman
Technical Contact: Sasikanth R Prabhu
Phone: 91-44-6280575
Fax:91-44-6204949
Email: iffad@vsnl.com
ALL India Movement For Seva5:
As part of its commitment to cultural validation in rural and tribal areas, AIM for
Seva has initiated a project to promote the traditional art forms of India. Since
many of these art forms are being eroded due to increased mechanization and
low wages, our commitment is to ensure that the artisans upholding these
traditions are supported and that the youth are encouraged to carry on the work
of their ancestors.
Rural and tribal artisan communities face increasing difficulties in continuing their
traditions. As most artisans are also engaged in agricultural work, they rely
heavily upon revenue from the production of handicrafts during the off-season,
and especially during times of drought. Women do the majority of both
agricultural labor and handicraft production in the rural areas. The daily wages for
women artisans are very low, and the money earned from the sale of their
handicrafts stays with the middlemen who employ them.
A key component of the AIM Handicrafts Project is sustainability, which is
assured through the following objectives:
*
•
AIM purchases handicrafts directly from the artisans so that there is no
middleman involved. This means that the artisan gets a much higher price for
their products and can thus reduce the hours worked per day. Commensurate
income also encourages the youth to carry on the traditions.
•
AIM networks the existing networks of artisan cooperatives, non
governmental and governmental agencies working in the field of handicrafts. As
there are already numerous good programs for supporting rural artisans, AIM
coordinates these organizations and facilitates stronger links between them for
optimum utilization of resources.
•
With the assistance of premiere design institutions of India, AIM
coordinates design enhancement and product upgradation trainings for the
5 http://www.aimforseva.org/india.htni
artisan communities to ensure wider marketability of their handicrafts. The key
components of these training programs are:
1.
Provision of high quality, natural raw materials
2.
Upgrading the product standards for marketability and durability of the
product
3.
Provision of quality equipment to the artisans for optimum production.
•
AIM provides marketing of the handicrafts on both national and
international levels through exhibitions, corporate sales, website, and wider
distribution to retail outlets.
•
Proceeds generated from the sale of these handicrafts are reinvested in
the project for purchasing more handicrafts and establishing other related
programs in areas of environmental preservation, women's empowerment, and
vocational training.
•
AIM produces educational and promotional materials, (including videos,
posters, brochures, greeting cards, and calendars), which highlight the
importance of supporting the indigenous cultural traditions of India and
ecologically sustainable methods of handicraft production. These educational
materials are displayed at all AIM Handicraft exhibitions so that the distributors
and consumers of the handicrafts are well informed of the rich traditions they are
helping to support.
•
By establishing self-help groups for women artisans and linking them with
the micro-credit programs of AIM for Seva, we assist the women in assuming
leadership roles within their communities in order to have greater control over
their environmental conditions. To this end, the self-help groups also involve
reforestation programs so that the women are directly involved as the caretakers
of their natural surroundings and their means of fuel and fodder. This also
impacts the availability of water resources, as reforestation reduces soil erosion
and helps to replenish groundwater supplies.
•
The training programs of AIM help to resuscitate and strengthen traditional
methods of using natural dyes and fibers in the manufacturing of handicrafts.
This not only maintains healthy environmental conditions, but also provides a
livelihood for villagers who can be trained to grow and collect plant materials
used for natural dyes.
Additional jobs will be created for finishing, labeling, and packaging of the
handicrafts.
Fact sheet 1
Handicrafts
The handicrafts sector has a special significance in the country’s
economy in terms of employment generation as well as earning of
foreign exchange through exports. It is estimated that during the 9th
Plan period, employment in the handicrafts sector increased from
52.92 lakh in 1997-98 to 58.41 lakh by the end of the Plan. The office
of the Development Commissioner for Handicrafts has been
implementing several schemes for the development of this sector. The
schemes aim at design and technical upgradation, export promotion,
marketing support and services, research and development and
training and extension.
An important initiative taken by the Government has been the launch of
a new scheme: Baba Saheb Ambedkar Hastshilp Vikas Yojana (AHVY)
during the year 2001-02. This scheme aims at promoting Indian
handicrafts by developing artisans’ clusters into professionally
managed and self-reliant community enterprises on the principles of
effective member participation and mutual co-operation. The package
of support under AHVY has social, technological, marketing, welfare
and financial components. During 2001-02, 222 project proposals were
sanctioned under the scheme involving an expenditure to the tune of
Rs. 355.62 lakh. For the year 2002-03, the outlay for this scheme was
Rs. 880 lakh.
Export earnings from handicrafts including hand-knotted carpets were
to the tune of Rs. 5835 crore during the first year of the 9th Plan. It
increased to Rs. 9205.63 crore during the terminal year of the Plan.
The export target for the year 2002-03 was Rs. 10,470 crore. Exports
to the extent of Rs. 7511.42 crore had been achieved by December
2002 itself.
Sericulture
India continues to be the second largest producer of silk in the world. It
produces all the four varieties of silk, namely, mulberry, eri, tasar and
muga. Sericulture is an important, labour-intensive and agro-based
cottage industry providing gainful occupation to more than 5 million
people. Silk production increased from 7600 metric tonnes (MT) in
1985 to 17347 MT in the year 2001-02, and the estimated production
during 2002-03 is 18700 MT. Silk items being exported comprise
natural silk yarn, fabrics, made-ups, ready-made garments, silk carpets
and silk wastes. The earnings from exports of these items amounted to
Rs. 2235.38 crore during 2001-02
Woollen Textile Industry
The woollen industry in the country is comparatively small in size and
widely dispersed. Most of the units are located in Punjab, Haryana and
Rajasthan. Some of the larger units are located in Maharashtra,
Punjab, Uttar Pradesh, Gujarat and West Bengal. There are 718
registered woollen units in the country. The number of persons
employed in this industry is approximately 12 lakh.
The production of indigenous wool in the country is estimated to have
risen from 47.91 million kg in 1999-2000 to 52.11 million kg in 2001-02.
Since indigenous production of fine quality wool required by the
organised mills and the decentralised hosiery sector is very limited,
India depends largely on import, mainly from Australia. New Zealand
wool, which is rich in lustre, is imported primarily for the carpet sector.
The total imports of wool during 2000-01 and 2001-02 were to the tune
of 53.75 million kg and 72.49 million kg respectively. (PIB Features)
Fact sheet 2
EXPORT PROMOTION MEASURE TAKEN BY EPCH /CEPC
DURING 2002- 03 (Till December 2002) Export Promotion Council
for Handicrafts
• Organized 1st Indian Furniture,Floorings & Accessories Show
for Handicrafts at Pragati Maidan, New Delhi during 8-11 April
2002.
• Participated in Hong Kong House ware week, Hong Kong during
16-19 April, 02.
• Participated in Hong Kong Gift & Premium week, Hong Kong
during 23-26 April, 02.
• Participated in Osaka International Trade Fair, Japan during 2-6
May, 02.
• Participated in International Spring Fair, Dubai, UAE during 5-10
May, 02.
• Participated in Gift fair International, Melbourne, Australia during
7-9 May, 02.
• Participated in International House ware Show, Japan during 1921 June, 02.
• Participated in International Autumn Fair,.Birmingham (U.K.)
during 1-4 September, 02.
• Participated in MACEF-Autumn-02, Milan (Italy) during 6-9
September, 02.
• Participated in Ambient Arabia, 2002, Dubai, UAE during 23-26
September, 02.
• Organized Indian Handicrafts & Gift Fair (Autumn )-02 at Pragati
Maidan, New Delhi during 13-16 October, 02.
• Participated in FAME, Manila, Philippines during 21-24 October
02.
• Participated in 10th Asian Gift & Premium Products Show, Hong
Kong during 18-21 October, 02.
• Participated in China, International Handicrafts Exposition,
China during 22- 26 October, 02
•
! •
Activities undertaken by EPCH
Indian Handicraft & Gifts Fair-Autumn 2002 from 13-16 October,
2002 along with 920 participated displayed of all Handicrafts
Products. Approx. 3000 buyers have been registered during the
2\
fair. Handicrafts exporters have been booked order of
handicrafts products is approx. Rs.850 crore.
• Asian Gifts Premium & Household Product Show-Hongkong
from 18-21 October, 2002. The Council has arranged
participation of 21 Indian exporters in the show and displayed all
Handicrafts Products.
• Fame Manila-Manila (Philippines) from 21-24 October, 2002.
The Council’s participation as a promotional booth of
forthcoming Indian Handicrafts & Gifts Fair-Spring 2003.
• China International Handicrafts Exposition -China from 22-25
October, 2002. The Council has arranged participation of 4
Indian exporters in the show and displayed handicrafts products.
• EPCH organized the First Folk Craft Festival of India at Caracas
(Venezuela) from 24th October-3rd November 2002 along with
16 participants and displayed their products. The festival
received overwhelming response.
• Workshop on UL certification & ISO 9000 & 14000 was held at
EPCH House on 14th December, 2002. 26 member exporters
attended the workshop.
• Workshop on Newer Export Promotion Measures held on 24th
December, 2002 at Jodhpur.
CARPET EXPORT PROMOTION COUNCIL
□ Organized a seminar on Export Promotion from J&K at Srinagar on
27.6.2002.
□ Displayed improvised tools & equipments developed by IIT, New Delhi
under UNDP carpet project in Srinagar.
□ Organized a seminar on Status of Woollen Carpet Industry and its future at
Jaipur on 17.8.2002 which was inaugurated Hon’ble Minster of Textiles.
□ A four-member market study team was deputed to South Africa to study
-the market in July 2002.
Activities undertaken by CEPC
□ India Carpet Fair from 13-16 October, 2002 at New Delhi. 60 participants
displayed their merchandise. 350 overseas buyers visited apart from
buying agents. Business likely to generate around Rs. 100 crore.
□ A Buyer Seller Meet in France from 23 to 24 October, 2002. 8 participants
displayed their merchandise.
□ A Buyer Seller Meet in London (UK) from 27-28 October, 2002. 13
participants displayed their merchandise.
□ A workshop in collaboration with EPCH, India Merchandise Mart and
EUPEA was organized at Varansi on 28th December, 2002
□ A workshop in collaboration with EPCH, India Merchandise Mart, AICMA
and
□ AICTFC was organized at Bhadohi on 29th December, 2002.
□ CEPC participated in First Folk Craft Festival of India at Caracas
(Venezuela) from 24th October-3rd November, 2002.
□ 13 carpets developed under UNDP carpet project were displayed. Apart
from this, demonstration of carpet weaving was also arranged.
18
UNDP PROJECTS
a. Carpet project
□ The project aims to promote employment an income generation in handknotted carpet industry with special focus on value addition, design
development and improvement in technology and post weaving processes
including use of vegetable dyes in carpet manufacturing to augment the
exports. The total outlay of the project is Rs. 990.86 lakh in which the GOI
contribution is Rs. 485.00 lakh. The project commenced in December
1999 and would conclude in March 2003. The progress achieved in the
project being implemented through different agencies is as under:□ IIT-Delhi has developed improved looms, hand tools, moisture measuring
device, washing, squeezing and drying chambers for use in the carpet
industry. These tools and equipments were displayed in demonstration
cum awareness training programme at Bhadohi, Jaipure, Mirzapur,
Gopiganj and Srinagar during 2001 and 2002. Suggestions and feed back
received during this programmes from weavers, manufacturers and
exporters were incorporated and modifications were carried out.
□ The Looms and tools have since been validated and are under production
for distribution to the weavers through Carpet Export Promotion
Council.The remaining equipments were put for final validation at Bhadohi
etc. but, they still need some improvements as per feed back received
from the industries and I IT has accordingly been advised to carry out
further improvement to make the acceptable to the actual users in an
industry. It is expected that final version will come during November 02.
□ Wool Research Association, Mumbai was working on standardization of
extraction procedure of dyes from locally available natural colour yielding
raw materials. WRA so far, conducted three workshops on use of natural
dyes, one at Jaipur, two at Bhadohi and 206 persons were trained.
Developed 100 fast shades for carpet with natural dyes.
□ The work of design development was carried out through NIFT, Delhi in
two phases. During 2000-01 under phase- I, 167 designs were developed
for European/US Market, similarly during 2001-02, under Phase-ll, 200
carpet designs have been developed for US Market and displayed in
Atlanta/Muba- Basel Fair during January-02. Under Phase-Ill, 17
Designers have been engaged, who are developing 170 ethnic new
designs for carpet, which will be displayed in Atlanta Fair, Januarv-03 and
Carpet Fair, Feb-03.
□ IICT has completed procurement and commissioning of CAT system (4
work stations with software) and colour matching equipment. The staff has
been given training on two occasions and final training is to commence
soon. IICT is expected to start short-term training course for designers in
Computer-aided-Designing and organize training of artisans in carpet
weaving by November-02.
□ Carpet Export Promotion Council participates in various marketing under
the project. The following events were organized so far:1. Participated in Atlanta Rug Show, 19-22 July, 02.
2. Participated in Domotex Fair in January- 02 and Atlanta Ruq Show in
US in Jan- 02.
OS^6 Development of new design for Atlanta Rug-Show in US in Jan-
2- IS
A seminar cum interactive workshop on achievements made under the
project including development of design, products and technology was
organized at NIFT, New Delhi, 2002 16-17th December, 2002.
CANE & BAMBOO
Kerala Forest Research Institute has completed the survey for
identification of cane & bamboo species suitable for handicrafts sector
and has set up Gene Pool Bank and Tissue Culture Lab for providing
planting stock to the farmers as well as training them in better farming
techniques. For popularizing the cultivation of Bamboo & Cane KFRI
Kerala has organized 22 training programmes on cultivation
management and uses of Bamboo & Cane, established ten bamboo
and three cane nurseries with the help of progressive NGOs and
farmers and distributed nearly 1,00,000 seedlings planting stock and
trained more than 832 farmers, NGOs and other users group.
□
□
□
□
□
Survey also completed by RFRI Jorhat in 13 districts of Assam and 5
districts of Manipur. 11 bamboos and 7 cane species collected during
the survey has been planted in the bambustum and Canctum located at
RFRI Jorhat. So far 8000 bamboo seedlings and 5000 cane seedlings
have been raised at Jorhat and Imphal Nursery out of which 4500
bamboos and 2000 canes have beendistributed to farmers and
entrepreneurs during the training programmes. So far 7 Kisan nurseries
have been started. 674 farmers /entrepreneurs /NGOs on cane &
bamboo nursery raising and plantation management technique have
been trained in 15 training programmes. Two demonstration plots are
being established at Jorhat and Dimapur districts.
Two cane demonstration plots have been established at Chessa and at
Sogalee by SFRI.
SFRI has conducted 4 training programmes at Itanagar Naharlagun,
Banderdeva and Roing on Bamboo and cane propagation and farming.
IIT, Mumbai has developed a set of various hand operated improved tools,
splitting machines, finishing and dyeing techniques etc, which has been
demonstrated to the users group in a workshop at Guwahati. The artisans
have validated these equipment and tools. 50 sets of improve by tool kits
have been fabricated & distributed for training and use of the artisans’
community. The trained instructors are imparting training to the artisans in
the identified clusters and more than 600 artisans have been trained,
repeated training has also been commenced from May 02. 400 sets of tool
kits have been fabricated and are being distributed among artisans on the
subsidized rates.
Mobilization of Self Help Groups and Thrift & Credit activity in all 21
clusters begun. Necessary inputs/for development of the clusters is being
provided in phased manner.
11 designers under the project (10 in North East & 1 in Kerala) have
produced about 197 new designs prototypes in 1st phase, which was
displayed in IHGF held at Pragati Maidan during 15-18 Oct., 2001. It has
attracted most of the buyers and generated a large number of business
inquiry. These are being made to translate them into the foreign export •
order. These designs have also displayed at Dilli Haat from 19-12-01 to
-2.zo:
21-12-01 for getting feed back of buyer and designers etc. About 222 new
design prototypes have also been developed by these designers in the 2nd
Phase of design development activity
□ 8 Common Facility Centers one in each state (7 in Northeast and one in
Kerala) equipped with electrically/mechanically operated machines to
provide facility for processing of raw material to the artisans/manufactures
has been.sanctioned and out 08 CFCs 4 are being started functionally at
Barpeta (Assam) Dimapur (Nagaland) Ziro (Arunachal Pradesh) and
Gurchuk (Assam). This will not only remove drudgery but will save a lot of
time of the artisans, which is otherwise wasted in non-craft activity like
manual processing of raw material etc. This will result in improving
productivity and quality. Some Indian fabricators have been identified who
have developed electrically operated machines. IIT Guwahati has
validated these machines.
□ In addition to above, 21 Micro Common Facility Centers are being set up 1
in each cluster where 2 sets of working tools and hand operated
processing machines is being provided. These will be used as a CFC by
the artisans and help them in augmenting their production. Out of 21, 3
MCFC has already been set up by IIT-Mumbai at Diezhephe (Nagaland),
Nalchar (Tripura) and Barpeta (Assam), IIT Mumbai conducted following
workshops: □ A design and training workshop has been held at Diezhephe from 17th to
23rd June 2002.
□ A 2 day workshop on tools on 18&19 Sept 2002 at BCDI, Agartala
□ 3-Day workshop on Tool & Design at Nalchar, Tripura on 20.9.2002 to
22.9.2002.
The remaining would be functioned by November 02.
□ Participated in Birmingham Fair (UK) during 3rd to 7th February and Muba
Bazzel Fair at Switzerland during 22nd February to 3rd March 2002 where
displayed the new designs developed by these designers and basketry
items from NEHHDC and other furniture items developed by other
-designers.
□ Participated in Birmingham Autumn Fare 02 & EPCH Autumn Fare
October 2.
A seminar cum interactive workshop on achievements made under the project
including development of design, products and technology was arranged at
India Habitat Centre, New Delhi on 6- 7th November 2002.
1
\Z2.\
Fact Sheet 3
Initiative to improve the Handloom & Handicraft Products of the Northeast: New
Thrust To Economic & Social Development - A Cll Study
In a new venture with NEDFi, Cll completed a study on Handloom and
Handicraft sectors in NorthEast, to understand the potential of this sector in
harnessing social and economic growth in the NorthEast region.
Some of the major findings from the study are as follows:
The producers: Artisans
•
The literacy rate among the artisans is higher than the average rate
recorded for the North Eastern region.
•
Sex ratio (number of women per thousand men) is higher among the
artisans compared to that for the North Eastern region as a whole.
•
Land endowment of the artisans is much lower than the corresponding
state averages
•
Every 14th person in the North Eastern region is dependent on
handloom and handicraft products for livelihood.
•
On an average 80% of the income of those engaged in handloom and
handicraft sector comes from this sector.
•
However, handloom and handicraft sector provides more than 90% of
livelihood to around 61% of the artisanal households in North East.
•
The average artisanal unit derives 60%vof its labour demand from
within the household.
•
The share of raw materials in the value of the product is around 30%,
ranging from a high of 42% to a low of 5% depending on the category
of products.
•
the extent of value addition as a percentage of prices earned by the
artisans is around 32%.
•
The difference between the average price earned by the artisan and
that at which the products are sold in the local market is more than
31%.
•
Daily value addition per unit of an average product is Rs. 62.47.
22.
The Consumers: A Glimpse
•
Around 93% said that they like handloom & handicraft products from
North East.
•
60% of them found the products from NorthEast very useful.
•
Around 65% do not feel the products to be too costly to afford.
•
More then 70% of them feel that the products need redesigning to meet
the requirements of the consumers.
•
More then 76% feel that the channels of marketing these products are
insufficient.
•
Around 84% want the marketing channels to be managed by
professionals.
•
Around 66% desire the marketing channels to be run by the private
sector.
•
They underscored the need to aggressively advertise the products.
•
They are in favour of promoting professional Handloom and handicraft
marketing centres all around the country.
•
83% of the respondents consider that the corporate sector can play a
major role in marketing the products.
•
The study underscored the need to develop an institutional set up that
may facilitate the implementation of the desired changes. Any
production system is constituted of a good number of apparently
independent but inter-linked sub-systems. They are:
Input procurement sub-system
Input processing sub-system
Technology sub-system
Output sub-system
Output processing sub-system and
Marketing sub-system.
Thus it is evident that establishing a strong marketing channel is contingent
upon not only strengthening each of the sub-systems but also developing an
effective feedback mechanism across these sub-systems.
To conclude, the study argues that the Handloom & Handicraft sector in the
NorthEast has a strong potential to stand on its own and act as an engine of
growth for the entire region. The artisans are endowed with considerable
amount Of human capital. However, they are constrained by the insignificant
size of the market for their product. This does not mean that a bigger market
is non-existent. The marketing channel between the producer and the ultimate
consumer is nearly non-existent. Consequently, the capacity of the artisans to
imbibe new technologies for treatment of raw materials, produce new
products and produce them in good quantities is far below the level of
sustenance. Hence the partial dependence on Handloom & Handicraft sector
for livelihood among many of them. A proper coordination among all the sub
systems carried out in a professional way will lead this sector to sustainability.
In an ideal situation the market would have played the role of coordination.
However, handloom products and handicrafts are traditionally produced for
self-consumption or at the most for others belonging to the communities.
Proper markets for them are yet to be developed. The present situation is
clearly an example of the problem of 'non-existence of market’ and the
subsequent problem of 'rent seeking' by some vested interests. As is the
characteristics of the non-existence of a proper market, no precise information
database exists that may be used to identify the present status of the sub
systems and their dependence on one another. Generating such a database
should be accorded the topmost priority today.
The artisans are endowed with considerable amount of human capital.
However, they are constrained by the insignificant size of the market for their
product. This does not mean that a bigger market is non-existent. The
marketing channel between the producer and the ultimate consumer is nearly
non-existent. Consequently, the capacity of the artisans to imbibe new
technologies for treatment of raw materials, produce new products and
produce them in good quantities is far below the level of sustenance. Hence
the partial dependence on H&H sector for livelihood among many of them. A
proper coordination among all the sub-systems carried out in a professional
way will lead this sector to sustainability. In an ideal situation the market
would have played the role of coordination. However, handloom products and
’2-2-.
i
handicrafts are traditionally produced for self-consumption or at the most for
others belonging to the communities. Proper markets for them are yet to be
developed. The present situation is clearly an example of the problem of'non
existence of market' and the subsequent problem of 'rent seeking' by some
vested interests. As is the characteristics of the non-existence of a proper
market, no precise information database exists that may be used to identify
the present status of the sub-systems and their dependence on one another.
Generating such a database should be accorded the topmost priority today.
Cll can play a vital role in initiating the process of developing a market and its
antecedent infrastructure for the Handloom and Handicrafts of this region. A
Center to take care of both product diversification and marketing may be
developed at a suitable location - Guwahati or Imphal - to facilitate such
process of 'market development'. The proposed Center may supply the
requirements of the industrial houses from out of the produce of the
Handloom & Handicraft sector of the NorthEastern region. NEDFi should also
collaborate in this endeavour with its vast repository of local knowledge
i
2-Z-.
Rural Development Statistics
SECTION - 5 : RURAL INDUSTRIES*
This section summarises the progress made in the Village and the Small Industry
sector. The data on Handloom Sector and production and exports of sericulture and
coir products are also provided.
5.1:
Expenditure and Outlay of different types of industries for 2000-01 to
2001-02 are included in this table.
5.2:
The production in different sectors of Village and Small Scale Industry
for the years 1999-2000 to 2001-02 and the targets for 2001-02 is
dealt with in this table.
5.3:
The employment generated under village and small industry sector
for the years 1999-2000 to 2001-02 is provided in this table.
5.4:
The total value of the exports of the Khadi Cloth, Handlooms,
Sericulture, Handicraft under village and small industry sector for
1999-2000, 2000-01 & 2001-02 is given in this table.
5.5 :
The data on expenditure incurred by different Small Scale and Agro
Rural Industries for the year 1999-2000 are given. The revised
estimates of outlay and the budgeted estimates for 2000-01 and
2001-02 are also indicated.
5.6:
The total production and employment generated during 1998-99 in
different States and UTs under Bio-gas scheme taken up in the Khadi
and Village Industry sector are shown in this table.
5.7:
This table presents data on Handloom and Powerlooms Fabric
Production for selected years during the period 1991-92, 1992-93,
1995-96 & 1996-97.
5.8:
The total value of Textiles exported during 1994-95,1995-96 and
1996-97 is shown in this table.
5.9 (a) The production & Exports of Sericulture during the years 1995-96 to
1999-2000 and also the total quantity of Natural Silk Goods and
&(b):
Mixed/Blended Silk Goods exported along with their corresponding
value are included in these tables.
5.10:
Coir Production , Employment and Exports for the years 1999-2000 to
2001-2002.
5.11:
The quantity of Coir products exported and the export eamings in the
years 1995-96 and 1996-97 are provided.
The area and production of Coconuts in different states for the years
1992-93 and 1993-94 are given in this table.
Rural Industries
vv w vv • o i r u o
5.12:
2-
Rural Development Statistics
5: RURAL INDUSTRIES
5.1: Village & Small Industries - Plan Outlay and Expenditure
S.No.
Industry
_________ (Rs. Crore)
Annual Plan Outlay
19992000
Actual
Exp.
2000-01
B.E
2000-01
R.E
2001-02
1.
Small Scale Industries &
Rural Industries
505.16
920.00
875.00
936.00
2.
Textiles (VSI)
209.05
292.07
269.00
317.00
Total (VSI sector)
714.21
1212.07
1144.00
1253.00
R.E
: Revised Estimates
B. E: Budget Estimates
Source: Planning Commission, Annual Plan 2001-2002.
Rural Industries
Rural Development Statistics
5.2 : VSI: Production during 1999-2000 to 2001-02
S.No.
Sector
Unit
1999-2000
Actuals
2000 -01
Anticipated
Achievement
2001 - 02
Targets
1.
Small Scale
Industries
Rs. Crore
572887.00
650332.00
730400.00
2.
Khadi Cloth
M.Sq. Mts.
83.98
88.00
95.00
3.
Village Industries
Rs. Crore
5613.40
6607.00
7896.00
4.
Coir Fibre
000 tonnes
356.00
380.00
395.00
5.
Handlooms Cloth *
M.Sq/Mts
7352.00
7725.00
8500.00
6.
Powerlooms Cloth *
M.Sq/Mts
23187.00
24330.00
26000.00
7.
Raw Silk
Mt.Tonnes
15214.00
16740.00
17500.00
8.
Handicrafts *
Rs. Crore
40295.00
46355.00
49000.00
* : Estimate
Source: Planning Commission, Annual Plan 2001-02.
Rural Industries
Rural Development Statistics
5.3 : VSI: Employment during 1999-2000 to 2001-2002
Sector
S.No.
1999 - 2000
Actuals
(Lakh Persons)
2000-01
2001 - 02
Anticipated
Target
1.
Small Scale Industries
177.50
185.64
192.00
2.
Khadi and Village
Industries
59.23
62.73
66.00
3.
Coir Industry
5.18
5.30
5.50
4.
Handlooms *
165.00
170.00
175.00
5.
Poweriooms *
71.00
72.00
75.00
6.
Sericulture
63.64
65.22
67.00
7.
Handicrafts *
68.00
70.00
72.00
8.
Wool Development *
(Unorganised Sector)
5.00
5.00
5.00
*
: Estimate
Source: Planning Commission , Annual Plan 2001-02.
Rural Industries
<2.2_3
Rural Development Statistics
5.4 : VSI : Exports during 1999 - 2000 to 2001-02
Sector
S.No.
1999 -2000
Actuals
(Rs. Crore)
2000 -01
2001-02
Anticipated
Target
1.
Small Scale
Industries
53975.00
61175.00
65000.00
2.
Coir Industry
303.05
312.00
320.00
3.
Handlooms
1865.00
2000.00
2150.00
4.
Powerlooms *
9915.00
10200.00
11000.00
5.
Silk
1501.78
1550.00
1650.00
6.
Handicrafts
8059.63
9270.50
10600.00
* : Estimates
Source: Planning Commission, Annual Plan 2001-02.
Rural Industries
Rural Development Statistics
5.5 : Plan Outlays/Expenditure
Small Scale & Agro Rural Industries
S.No
19992000
Actuals
Industiy
(Rs. Crore)
2001 -02
2000-01 (RE)
Outlay
BS
IEBR
Outlay
BS
IEBR
16
Dept, of SSI&ARI
1
SIDO
256.29
279.55
279.55
407.00
391.00
2
PMRY
190.00
201.00
201.00
193.50
193.50
3
NSIC
27.12
154.25
34.25
149.00
29.00
4
KVIC
201.93
293.00
293.00
354.00
354.00
5
COIR
12.43
16.75
16.75
18.00
18.00
6.
OTHER SCHEMES
7.39
131.45
106.45
25
8.00
8.00
TOTAL (SSIA& Rl)
505.16
875.00
730.00
145
936.00
800.00
120
120
136
BS: Budgetary Support
IEBR:
Internal and Extra Budgetary Resources
SIDO : Small Industries Development Organisation
PMRY: Prime Minister’s Rozgar Yojana
NSIC: National Small Industries Corporation Limited
KVIC: Khadi and Village Industries Commission
SSIA & Rl : Small Scale Industries, Agro and Rural Industries
Source: Planning Commission, Annual Plan 2001-02.
Rural Industries
23/
5.6 : KVI:Bio-Gas : Production and Employment 1998-99 (State - wise)
S.No.
State/UT
Production
(Rs. Lakh)
Employment
(Lakh Persons)
1.
2.
3.
4.
5.
Andhra Pradesh
Arunachal Pradesh
Assam
Bihar
Goa
Gujarat
Haryana
Himachal Pradesh
Jammu & Kashmir
Karnataka
Kerala
Madhya Pradesh
Maharashtra
Manipur
Meghalaya
Mizoram
Nagaland
Orissa
Punjab
Rajasthan
Sikkim
Tamil Nadu
Tripura
Uttar Pradesh
West Bengal
1693.36
2.49
1199.90
2587.76
32.23
2228.89
39.67
77.87
41.28
3393.97
928.63
889.70
4924.07
2.69
16.63
0.29
5.91
443.52
179.55
66.52
3.97
1482.56
22.21
2093.65
1822.93
0.04
Total
24180.25
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
0.03
0.07
0.06
0.09
0.02
0.02
0.13
0.01
0.04
0.05
0.05
0.61
KVI : Khadi and Village Industries
Source: KVIC, Annual Report 1998-99.
Rural Industries
2.32:
Rural Development Statistics
5.7: Handlooms and Powerlooms Fabrics-Production
(Million Sq.Mtrs.)
1991-92
1992-93
1995-96
1996-97
I) Cotton
4065
4686
6238.56
6441.30
ii) Blending Mixed
12
8
18.40
51.99
iii) 100% Non-cotton
46
525
945.21
963.39
Total Fabrics
4123
5219
7202.17
7456.68
i) Cotton
6383
7306
7014.19
7237.38
ii) Blending Mixed
1885
1996
3136.59
3947.59
iii) 100% Ncn-cotton
4994
5342
7050.49
8165.89
Total
13262
14644
17201.27
19350.86
S.No.
Sector
A.
Handlooms Sector
B.
Powerloom Sector
Source: Ministry of Textiles, Basic Textile Statistics for 1996-97, August 1997.
Rural Industries
Rural Development Statistics
5.8 : Exports of Textiles
(Value Rs. Crore)
S.No.
Item
1994-95
1995-96
1996-97
1.
Cotton Fabrics & Made-ups
1504.60
1491.14
1758.90
2.
Cotton Yam
2613.42
3362.08
5330.17
3.
Readymade Garments
13921.62
14945.62
16729.24
4.
Wool & Woollens
537.53
660.73
1036.78
5.
Silk
937.31
846.07
880.62
6.
Man-made Textiles
2463.51
3122.66
3216.10
Total
21977.99
24428.30
28951.81
*
: Provisional
Source : Ministry of Textiles, Basic Textile Statistics for 1996-97, August 1997.
Rural Industries
Rural Development Statistics
5.9 : Sericulture : Production and Exports
(A) PRODUCTION
(000 Kgs)
1999-2000 (P)
1998-99
1995-96
1996-97
1997-98
15236
15544
Raw Silk (1+2)
14126
15197
13909
14260
Mulberry Raw Silk
14048
1.
12954
13944
12884
1188
1284
2.
1025
1172
1253
Non-Mulberry Silk
a) Tasar
b) Eri
c) Muga
194
745
86
235
864
73
312
814
62
242
970
72
194
974
85
Silk Yarn
a) Spun Silk Yarn
375
485
358
429
505
219
120
273
160
224
b) Noil Yarn
594
605
631
589
729
Total (a+b)
S.No.
I
3.
Item
P : Provisional
Source: C S O, Statistical Abstract India 2000.
Rural Industries
(B) EXPORTS
S.No.
Item
Unit
1996-97
1997-98
1998-99
19992000
I.
Natural Silk Goods
Qty.Lakh Sq.Mts
480.83
402.23
363.34
405.03
Value in Rs.Crore
876.47
904.42
1103.76
1239.53
Qty.Lakh Sq.Mts
447.90
368.1,2
326.56
359.07
Value in Rs.Crore
834.72
856.36
943.23
1142.88
Qty.Lakh Sq.Mts
10.47
10.20
10.29
11.26
Value in Rs.Crore
17.23
16.22
18.25
22.02
Qty.Lakh Sq.Mts
22.46
23.91
26.49
34.70
Value in Rs.Crore
24.52
31.85
42.28
74.63
Qty. Thousand Kgs.
247.00
1038
1410
2097
Value in Rs. Crore
3.44
20.89
32.36
36.36
6
25
2
1
0.53
0.97
0.16
0.11
a) Mulberry Silk
b) Tasar Silk
c) Mixed/Blended
Silk Goods
II.
III.
Silk Waste
Silk Yarn
Qty. Lakh Kgs.
Value in Rs. Crore
Source: C S O, Statistical Abstract India 2000.
Rural Industries
Rural Development Statistics
5.10: Coir: Production, Employment and Exports
S.No.
Item
Units
1999-2000
Actuals
2000-2001
Anticipated
2001-2002
T argets
1.
Production
Coir Fibre
'000 Tonnes
356.00
380.00
395.00
2.
Employment
Coir Industry
Lakh Persons
5.18
5.30
5.50
3.
Exports
Coir Industry
Rs. Crore
303.05
312.00
320.00
Source :
Planning Commission, Annual Plan 2001 - 2002.
Rural Industries
5.11: Coir Products - Exports -1995-96 & 1996-97
S.No.
(Quantity in Tonnes)
(Value in Rs. Lakh)
1995-96
1996-97
Item
Quantity
Value
Quantity
Value
Coir Fibre
303
27.09
337
49.59
2.
Coir Yarn
14839
3434.48
13645
326.32
3.
Coir Mats
20338
10131.77
20969
11343.72
4.
Coir Mattings
7591
4621.29
6283
3923.37
5.
Coir Rugs and
Carpets
2818
1867.91
2306
1705.15
6.
Coir Rope
121
26.27
78
21.68
7.
Coir Other Sorts
353
176.36
578
256.52
8.
Curled Coir
1156
112.89
715
85.94
9.
Rubberised Coir
Products
174
113.40
212
152.32
10.
Coir Geo-textiles
474
167.80
361
149.46
11.
Coir pith
109
5.39
468
51.69
Total
48276
20684.65
43369
21258.00
Source : Coir Board, Coir News, April 20, 1997.
Rural Industries
Rural Development Statistics
5.12 : Coconut Production in India - States 1992-93 & 1993-94
(Area in Thousand Ha.)
(Production Million nuts)
Production
S.No.
State
1.
Andhra Pradesh
1992-93
71.7
1993-94
79.9
1992-93
1081.8
1993-94
1103.5
2.
Assam
15.6
15.6
103.2
103.2
3.
Goa
24.2
24.2
113.0
113.0
4.
Karnataka
246.0
252.2
1269.7
1340.8
5.
Kerala
877.0
881.6
5125.2
5586.4
6.
Maharashtra
7.9
7.9
131.0
148.5
7.
Orissa
38.4
38.4
219.5
219.5
8.
Tamil Nadu
196.4
270.3
2771.1
3281.9
9.
Tripura
11.3
11.3
4.9
4.9
10.
West Bengal
20.4
21.1
285.1
310.3
11.
Andaman
24.1
24.4
84.4
85.3
12.
Lakshadweep
2.8
2.8
21.0
26.3
13.
Pondicherry
1.9
1.9
31.0
31.4
All - India
1537.7
1631.6
11240.9
12355.0
Area
Sources : 1. Ministry of Agriculture. Directorate of Economics and Statistics.
2. Coconut Board, Annual Report 1994-95.
Rural Industries
Annual Exports of Principal Commodities (Rs. G~o ve)
Sr.
1960- 1970- 1980- 1985- 1990- 1999Items
71
81
86
91
2000
61
No.
252' 1,435
2
25 214
265
1. Coffee
2. Tea
195 148 426
1'785
626 1070
7
18 116
643
Fruits & Vegetables
206
335
91 __ 75- 277
574 2100 18151
A_ Cotton yam & manufactures
770 2566
5. Leather & leather manufacture __ 39 __ 72 337
6891
__ 27 117 303
1175
_6_ Iron ore
579 1049
25 __ 33 141
170
263
1009
2^ Tobacco
__ n 130 727 954 3877 22325
8. Engineering Goods
447
9. Cashew Kernel
30 __ 52 140
225
2461
n.a. ___ 9_ 378 1067 4012 20649
IcT Readymade Garments
6167 37568
n.a. __ 70 894 1881
Hr Han dicrafts
^7 __ 31 213
5125
409
960
12. Fish & Fish preparation
462
5 224
3126
196
13. Rice
14. Chemicals & Allied products
3558
14772
Source: India’s Balance of Payments^ 1948-49 to 1961-62: Reserve Bank of India, Handbook of
Statistics on Indian Economy (2001).
©
Direction of India's Foreign Trade (Ts • CtovtcJ
I
Region /
1980-81_____
____ 2000-2001
I
__ Country
Exports
Imports
Exports
Imports
I-------
OECD
of which
, (a) European
Union (EU)
I___
I___ (i) France
I___ (ii) Belgium
I__ (iii) Germany
I
(iv) U.K.
I
(v) Italy_____
i ibj North
America
(i) Canada
I
(ii) USA
Other OECD
I
(i) Australia
I--(ii) Japan
I--(iii)
I
Switzerland
I---
•
I
1w
3126
46.6 5747
45.8 107238
52.6
92090 39.9
1447
21.6 2639
21.0
47561
23.4
48015
20.8
147
144
385
395
2.2
2.2
5.7
5.9
280
296
694
731
2.2
2.4
5.5
5.8
806
12.0 1851
14.8
4660
6718
8718
10502
5979
45509
2.3
3.3
4.3
5.2
2.9
22.4
2927
13112
8038
14472
3305
15588
1.3
5.7
35
6.3
1.4
6.7
62,
744
745'
92
598
111
0.9
11.1
10.5
1.4
8.9
1.7
332
1519
932
170
749
121
2.6
12.1
7.4
1.4
6.0
1.0
. 2999
42570
14168
1854
8198
2000
1.5
20.9
6.9
0.9
4.0
1.0
1814
13774
28487
4855
8416
14437
0.8
6.0
12.3
2.1
3.6
6.3
745
123
97
165
152
11.1
1.8
1.4
2.5
2.3
3490 27.8
1339 10.7
338 . 2.7
540
4.3
350
2.8
22223
1037
910
3760
11866
1826
10.9
0.5
0.4
1.8
5.8
0.9
12385
965
515
2838
3011
4158
5.4
0.4
0.2
1.2
1.3
1.8
1486
22.1
1296
10.3
6020
2.9
3884
1.7
1226
183, 1014
8.1
4061
2.0
2365
1.0
I---
! n OPEC
I
(i) Iran_____
(ii) Kuwait
(iii) S. Arabia
(iv) UAE
(v) Indonesia
i
i III Eastern
i
Europe
USSR / CIS
4
r
I Developing
Nations
of which
| (i) Asia-
11266
18.9
1971
15.7
59381
29.2
50865
22.0
880
13.1
0.7
1.6
1428
135
428
11.4
1.1
3.4
35
5.1
140
204
n.a.
1.6
45858
2059
4007
12064
8810
8915
4609
22.5
1.0
2.0
5.9
4.3
4.4
2.3
38647
4083
6688
3893
2128
9053
3166
16.7
1.8
2.9
1.7
0.9
3.9
1.4
0.9l
45 |
04]
350]
0.2
South Korea _J4
Ii
Singapore
109
ii,'
Hong Kong
i SAARC
236
(ii) Africa
345
(iii)
Latin n.a.
America
&
Caribbean
1
I
I 1
r
V I oThers"
Total I toV
65]
67111100.0 112549710(10 203571 100.0 230873700.0
OPEC ■ O S
f On
Economic Co-operation and Development
77 ■Opan;sat>°n Petroleum Exporting Countries
5AARC : South Asian Association for Regional Co-operation
Source: RBI, Report on T
Currency and-Finance (1998-99) and Handbook of
tatistics on Indian Economy (2001).
74
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