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Export potential of spices from India to UK

CHAPTER 1

COUNTRY PROFILE

1.1 INDIA

• HISTORY
• POLITICAL OVERVIEW
• ECONOMIC OVERVIEW

1.2 UK

• HISTORY
• POLITICAL OVERVIEW
• ECONOMIC OVERVIEW

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Export potential of spices from India to UK

1.1 INDIA
HISTORY
The history of India begins with the Indus Valley Civilization, which flourished in the
north-western part of the Indian subcontinent from 3300 to 1700 BC. This Bronze Age
civilization was followed by the Iron Age Vedic period, which witnessed the rise of
major kingdoms known as the Mahajanapadas. In two of these, in the 6th century BC,
Mahavira and Gautama Buddha were born.

It subsequently became fragmented, with various parts ruled by numerous Middle


kingdoms for the next ten centuries. This period was known as the "Golden Age of
India." During the same time, and for several centuries afterwards, Southern India, under
the rule of the Chalukyas, Cholas, Pallavas and Pandyas, experienced its own golden age,
during which Hinduism and Buddhism spread to much of south-east Asia.

Beginning in the mid-18th century and over the next century, India was gradually
annexed by the British East India Company. Dissatisfaction with Company rule led to the
First War of Indian Independence, after which India was directly administered by the
British Crown and witnessed a period of both rapid development of infrastructure and
economic decline.

During the first half of the 20th century, a nationwide struggle for independence was
launched by the Indian National Congress, and later joined by the Muslim League. The
subcontinent gained independence from Great Britain in 1947, after being partitioned into
the dominions of India and Pakistan. Pakistan's eastern wing became the nation of
Bangladesh in 1971.

Political overview

Location: Southern Asia, bordering the Arabian Sea and the Bay of Bengal,
between Berma and Pakistan.

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Export potential of spices from India to UK

Geographic co-ordinates: 2000N, 7700 E


Map reference: Asia
Coastline: 7000km

Economy overview:

India has been one of the best performers in the world economy in recent years,
but rapidly rising inflation and the complexities of running the world’s biggest
democracy are proving challenging.
India’s economy has been one of the stars of global economics in recent years, growing
9.2% in 2007 and 9.6% in 2006. Growth had been supported by markets reforms, huge
inflows of FDI, rising foreign exchange reserves, both an IT and real estate boom, and a
flourishing capital market.

India’s Economy has grown by more than 9% for three years running, and has seen a
decade of 7%+ growth. This has reduced poverty by 10%, but with 60% of India’s 1.1
billion population living off agriculture and with droughts and floods increasing,
poverty alleviation is still a major challenge

GDP:
Purchasing power parity-- $3.267 trillion (2008 est.) $3.065 trillion (2007)
Real growth rate -- 6.6% (2008 est.)
Per capita: purchasing power parity--- $2,800 (2008 est.)
Composition by sector:
Agriculture: 17.2%
Industry: 29.1%
Services: 53.7% (2008 est.)
Inflation rate: 4.1%

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Export potential of spices from India to UK

Industries: textiles, chemicals, food processing, steel, transportation equipment,


cement, mining, petroleum, machinery, software
Agriculture product: Rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes;
onions, dairy products, sheep, goats, poultry; fish
Exports: $175.7 billion f.o.b. (2008 est.)
Exports commodities: petroleum products, textile goods, gems and jewelry,
engineering goods, chemicals, leather manufactures
Export partner: US 15%, China 8.7%, UAE 8.7%, UK 4.4%
Imports: $287.5 billion f.o.b. (2008 est.)
Import commodities: Crude oil and petroleum products, machinery, gems,
fertilizer, chemicals.
Imports-partner: China 10.6%, US 7.8%, UK 6%, Germany 4.4%, Singapore 4.4%
Exchange rate: 1US$ = RS. 43.319
Fiscal year: 1st april-31st march

1.2 UK
HISTORY
On 1 May 1707, the Kingdom of Great Britain was created by the political union of the
Kingdom of England and the Kingdom of Scotland. This event was the result of the
Treaty of Union that was agreed on 22 July 1706, and then ratified by both the Parliament
of England and Parliament of Scotland each passing an Act of Union in 1707. Almost a
century later, the Kingdom of Ireland, already under English control by 1691, merged
with the Kingdom of Great Britain to form the United Kingdom with the passing of the
Act of Union 1800.
The immediate post-war years saw the establishment of the Welfare State, including
among the world's first and most comprehensive public health services, while the
demands of a recovering economy brought people from all over the Commonwealth to
create a multiethnic Britain. Although the new postwar limits of Britain's political role
were confirmed by the Suez Crisis of 1956, the international spread of the English

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Export potential of spices from India to UK

language meant the continuing influence of its literature and culture, while from the
1960s its popular culture also found influence abroad.

The United Kingdom was one of the 12 founding members of the European Union at its
launch in 1992 with the signing of the Maastricht Treaty. Prior to that, it had been a
member of the EU's forerunner, the European Economic Community (EEC), from 1973.
The attitude of the present Labour government towards further integration with this
organisation is mixed, with the Official Opposition, the Conservative Party, favoring less
powers and competencies being transferred to the EU.

POLITICAL OVERVIEW

Official name: United Kingdom of Great Britain and Northern Ireland

Geography
Area: Total: 244,820 sq km,land: 241,590 sq km,water: 3,230 sq km.

Capital: London

Population: 61,113,205
.
Climate: temperate; moderated by prevailing southwest winds over the North Atlantic
Current; more than one-half of the days are overcast.
Languages: English, Welsh (about 26% of the population of Wales), Scottish form of
Gaelic (about 60,000 in Scotland)

Government Type: Parliamentary Democracy and constitutional monarchy

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Export potential of spices from India to UK

Administrative subdivisions: England: 34 two-tier counties, 32 London boroughs


and 1 City of London or Greater London, 36 metropolitan counties, 46 unitary
authorities.

Economy Overview

GDP: 2008: $2.231 trillion (est.)

Main export: manufactured goods, fuels, chemicals; food, beverages, tobacco

.
Inflation rate: 3.80% p.a
Trade: Exports $468.7 billion f.o.b. (2008 est.)

Major markets: US,Germany,France,Ireland, Netherlands, Belgium, Spain, Italy.

Imports: $645.7 billion f.o.b. (2008 est.)

Main import: manufactured goods, machinery, fuels; foodstuffs.

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Export potential of spices from India to UK

CHAPTER – 2

SPICES

2.1 Introduction of spices


2.2 History of spices
2.3 Major Spices grown in India
2.4 Spices growing states in India
2.5 Indian spices traded in UK market
2.6 Major brand of spice present in both markets
2.7 India’s share in world trade of Spices 2007-08
2.8 Share of spices in both markets
2.9 Indian trade statistic
• Export data of Indian spices in last five year
2.10 Production of spices in India
2.11 Export of spices to UK

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Export potential of spices from India to UK

2.1 Introduction to spices

India is known as the 'The home of spices'. There is no other country in the world that
produces as many kinds of spices as India. The climate of the country is suitable for
almost all spices. In India, spices are the important commercial crop from the point of
view of domestic consumption and export.
Spices constitute an important group of agricultural commodities which are virtually
indispensable in the culinary art. In India, spices are important commercial crops from
the point of view of both domestic consumption and export. Besides, huge quantities of
spices are also being consumed within the country for flavouring foods and are also used

in medicine, pharmaceutical, perfumery, cosmetics and several other industries.

According to the International Organization For Standardization (ISO); The term


'spices and condiments' applies to such natural plant or vegetable products or mixtures
thereof, in whole or ground form, as are used for imparting flavour, aroma and piquancy
to and for seasoning of foods".
There are over 80 spices grown in different parts of the world and around 50 spices are

grown in India. The spices that India can offer in abundant quantities are pepper,
ginger, turmeric, chilli, cardamom, celery, fenugreek, fennel, cumin, dill, coriander,
cinnamon, ajowan (bishop's weed), cassia, clove, nutmeg and mace.
Major spices of export are pepper, cumin, cardamom, ginger, turmeric and chillies. Other
minor spices include ajowan, aniseed, celery seed, caraway, fennel, fenugreek, coriander,
garlic, onion, saffron, vanilla etc. Among the spices exported, pepper has the leading
position in terms of both quantity and value realised. The 'Alleppey Green' Cardamom is
considered the best grade available in the world.

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Export potential of spices from India to UK

Among the spices exported pepper has the leading position in term of both quantity
and value realized. The alleppey green cardamom is considered the best grade available
in the world.

2.2 History of spices

The history of Indian spices dates back to 7000 year in the past. The fame of Indian
spices is older than the recorded history. It is believed that the Parthian wars were being
fought by Rome largely to keep open the trade route to India. It is also said that Indian
spices and her famed products were the main lure for crusades and expeditions to the
east. The people of those times used spices, as we do today, to enhance or vary the
flavor of their foods.

Spices have played a dramatic role in the development of western civilization. Spices
today are plentiful and are used mostly as flavorings. However, in ancient and medieval
times, they were rare and precious products, used for medicine, perfume, incense, and
flavoring.

Spices have been the catalysts of some of the greatest adventures in the human history,
like Christopher Columbus, voyage. Still today, spices empower us as explorers, even if
we never journey beyond the kitchen counter. They energize our daily adventure in
food and remind us of journey to toxic places and favorite meals with loved ones.

Thanks to the vogue of international travel, we can engage in our own spice conquest
now. We can stroll through market stalls around the world spices, perfumes, and exotic
plants and flowers enchant the sense. And when we take these scents and tastes of far-
reaching places back to our home, we are again compelled to discover the allure of the
unknown.

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Export potential of spices from India to UK

2.3 Major Spices grown in India

Asafoeti
A popular spice in foods and medicines
Cardamom
The Queen of all spices
Chilli
Grown throughout the country and is used in almost all dishes.
Cinnamon
It is the dried bark of an evergreen busy tree.
Cumin
It has a particular value in the blending of Indian curry powder.
Fennel
The dried ripe fruit of a perennial aromatic herbaceous plant.
Ginger
A major crop cultivated in India marketed as fresh and dried spice.
Mustard
It is used for its appetising flavour and preservative value
Parsley
One of the best known and used in culinary spices
Pomegranate
It is endowed with excellent medicinal properties.
Turmeric
The spice is quite popular in foreign countries.
Bishops Weed
A native Indian plant is an aromatic spice.
Cassia
The dried husk of a small, bushy evergreen tree
Clove
One of the oldest spices in the world.
Coriander
The fragrant spice has its own medicinal properties.
Fenugreek
The ripe, dried fruit of an annual leguminous herb.
Garlic
It has an attractive flavour and acknowledged medicinal value.

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Export potential of spices from India to UK

Mint
Mint is the erec plant with dark green leaves with pleasant flavour
Onion
One of the oldest spices known to human race.
Pepper
The king of all spices and best known in the world
Rosemary
The spice is quite popular in foreign countries.
Vanilla
Vanilla is a seed pod of a tropical climbing orchid.

2.3 Spices growing states in India

States Spices
Andhra Pradesh Chilli, ginger, turmeric
Arunachal Pradesh Ginger, tejpat, turmeric
Assam Aniseed, turmeric
Bihar Avjoin, garlic, turmeric
Gujarat Chilli, cumin, dilseed, fennel, garlic
Haryana Garlic
Himachal Pradesh Ginger
Jammu & Kashmir Avjoin, saffron, cardamom, chilli, garlic,
clove, ginger, pepper, turmeric, vanilla
Karnataka Cardamom, clove, ginger, pepper, pepper,
cinnamon & cassica, mace
Kerala Turmeric, vanilla
Madhya Pradesh Chilli, garlic, ginger
Maharastra Turmeric, chilli, garlic, pomegrated seed
Meghalaya Ginger, turmeric
Mizoram Ginger
Orissa Chilli, garlic, ginger, turmeric

Punjab Aniseed, celery


Rajasthan Chilli, cumin, coriander, dilseed, garlic,
fennel
Sikkim Cardamom, ginger, tejpat
Tamil Nadu Turmeric, vanilla
Tripura Turmeric, aniseed, celery, chilli, cumin,
fennel, garlic
Uttar Pradesh Turmeric

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Export potential of spices from India to UK

West Bengal Cardamom, chilli, ginger, turmeric

2.5 Indian spices traded in UK market

Capsicum

Name Capsicum

Botanical name Capsicum annum, Capsicum Frutescence

Source of supply Karnataka, Rajasthan

Form of use Fresh vegetable, whole dried spice, ground powder,


oleoresin, tincture.
Application Used in cooking and the flavorings industry
chilli oleoresin are used in burn creams.

Pepper

Name Pepper

Botanical name Piper nigrum, Piper longum

Source of supply Karnataka, J&K

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Export potential of spices from India to UK

Form of use Whole dried corns, ground, essential oil, oleoresin.

Application Black pepper is used in cooking and industrial flavorings,


long pepper in traditional medicine.

Saffron

Name Saffron

Botanical name Crocus Sativa

Source of supply J&K

Form of use Dried stamens, extract.

Application Saffron is a costly flavorings and food colorant and


Is used ayurvedic medicine.

Turmeric

Name Turmeric

Botanical name Curcuma Longa

Source of supply West Bengal, Uttar Pradesh, and Meghalya.

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Export potential of spices from India to UK

Form of use Dried whole rhizome, fingers, oleoresin, spray-dried


extract.

Application A spice used as a domestic and industrial floavourant


and coloring. Cur cumin powder is also used in
ayurvedic Medicine.

Vanilla

Name Vanilla

Botanical name Vanilla Planifolia

Source of supply Tamil Nadu, kerala, J&K

Form of use Cured whole bean, chopped bean, extract, tincture.

Application Domestic and industrial flavorings, particularly in


the dairy and confectionary industry.

2.6 Major brand of spices present in both


Market

 MDH

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Export potential of spices from India to UK

MDH is the number one brand in Indian spices having won a huge number of
international awards worlds over.

The blend of various spices has been a traditional secret transferred from generation to
generation.
It all began way back in the year 1919, with a humble beginning, as a modest Spice
manufacturer and trader. Through these glorious seven and a half decades, MDH has
witnessed a growth which is both phenomenal and remarkable. MDH has not only
pioneered the marketing of powdered spices in handy attractive consumer packs, but has
also established as the leader by his own right and trustworthy processor of Pure & High
quality mixed blended Spices and condiments.

Keeping in pace with the modern times, MDH has been constantly been updating and
modernizing its units, by evolving blended spices and condiments powders for
preparation of popular and exclusive dishes for specific cuisines, which India is famous
for.
MDH stands a class apart, being India's leading manufacturer of blended spices, through
fully automated plants located at New Delhi, Haryana and Rajasthan.

MDH has always believed that quality comes first before anything else.
Because of its commitment to quality, MDH has the distinction of being co-opted as a
member of various committees of the bureau of Indian Standards, which is a nodal

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Export potential of spices from India to UK

agency, responsible for Indian spices and condiments and their blends within and outside
India.

The demand for MDH spices is increasing rapidly in the Exports horizon. Apart form the
millions of Indian families abroad, even foreigners, who are always quality & Health
conscious have reposed their faith in MDH Spices. Thus, the Export performance has
risen tremendously.

 EVEREST

EVEREST MASALA is the leading brand among blended spices in India with an
exciting range of 17 perfect blends including the most popular Garam Masala, Pavbhaji
and Chhole Masala.

As popular Indian cuisine is increasingly becoming the rage of overseas palates,


EVEREST Masala is now available in countries as far flung as the UK, USA, Middle
East, Australia, Canada and South East Asia. EVEREST is also one of the major Indian
spices brand.

Product detail

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Export potential of spices from India to UK

 FLAVOURIT

The FLAVOURIT brands of spices are quality assured by the spice board and
marketed by the STCL will be distributed in the state of Karnataka, kerala, Tamil
Nadu and Maharashtra by nest condiments, which already bagged the deal from
spices board to market the brand in UK, Japan, Australia, and Middle East
countries.

THE demand for `Flavourit' brand of spices launched by the Spices Board in March
last is slowly picking up with the sales crossing Rs 3 lakh as on May 20. Total sales
during the year are expected to cross Rs 10 lakh.

Moisture content would not exceed 38 per cent and vanillin content not less than 1.75
per cent. The idea behind this venture is also aimed at establishing the identity of the
once popular Indian spice grades such as TGEB pepper and Alleppy green extra bold
(AGEB) cardamom.

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Export potential of spices from India to UK

2.7 India’s share in world trade of Spices 2007-08

With the support of the Spices Board, exporters have established adequate infrastructure
for improving quality on a sustained basis. Quality improvement and technological up
gradation are taken up by exporters as an on-going programme. These developments are
in tune with the changing levels of market acceptance. Other areas focused upon by the
Board are export promotion in identified markets, interaction with policy makers in the
importing countries, development of new end uses, farm level training for farmers etc.

Indias's share in world trade of spices 2007-08

2.8 Market share of spices in both the market

Domestic and industrial consumption of spices has steadily increased around the world
during the past few decades due to changing lifestyles affecting traditional eating
patterns, greater consumption of processed and convenience foods, and a return to
healthier eating habits in developed countries. Worldwide, demand for reliable supplies
of quality material from sustainable production system has consequently increased, and is
expected to continue increasing in the foreseeable future.

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Export potential of spices from India to UK

Consumption of spices in UK has increased in line with global trend and this is expected
to continue. UK is a net importer of dried spices, producing fewer than 10% of its
requirements, but the import data collected by UK customs do not differentiate the
product sufficiently, and hence are of no real value to growers. Opportunities therefore
exist to provide material both for import replacement in the domestic market, and export
sales. The majority of spices consumed within UK are produced domestically.

With a relatively clean environment, ready availability of suitable land in a range of


climatic zones, extensive agriculture and technical expertise, and a history of mechanized
production, UK growers can produce spices crops of the highest quality, and conceivably
increase their global market share. Additionally, crops can be produced here in the
northern hemisphere off season, when overseas buyer are seeking product.

The domestic market is still immature and many growers are currently experiencing
difficulties in realizing anticipated returns. Large export markets exist but the volume of
production in UK is relatively small. The individualistic nature of UK growers tending to
compete with one another rather than co-operating to increase the pool of product
available for these export markets, holds the industry back. The challenge for UK
producers are to meet the larger contracts, providing high quality product at reasonable
cost to the buyer, while continuing to maintain themselves in a sustainable production
system.

2.9 Indian Trade Statistic

Value in US$ million

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08*

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Export potential of spices from India to UK

Export to UK 504.1 584.29 720.25 821.23 924.05 402.66


8
Import from UK 1336.7 2649.22 3824.53 4947.21 7002.53 4586.81
9
Total export of India 2,719.43 63,842.55 83,535.94 103,090.54 126,262.6 35,051.36
8
Total import of India 61,412.1 78,149.11 111,517.44 149,165.73 185,604.1 56,535.40
3 0

Exchange rate: (1US$ 48.4935 45.9516 44.9315 44.2735 45.2849 41.2344


= Rs.)

• Export of spices in India in last five years in the world

Year Quantity(tones) Value (crore) Value(US$ million)


2003-04 254383 1911.60 416.56
2004-05 335488 2200.00 490.60
2005-06 320527 2295.25 517.00
2006-07 373750 3575.75 729.95
2007-08* 377000 3785.40 940.47
* Data for the year 2007-08 is from April to Nov.
Source: DGCI&S

2.10 Production of spices in India

2006-07 2007-08(Apr-Jan)
Product Production(tones) Value(crore) Production(tones) Value(crore)
Pepper 24160 250.24 31750 466.38
Coriander 17890 65.35 22750 94.32
Spice oil & 5655 462.17 5760 490.71
oleoresins
Chilli 123330 668.44 169000 906.44
Turmeric 54816.41 172.74 15372 46.30
Mint Product 15020 1016.35 17500 1076.38

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Export potential of spices from India to UK

Source: www.commerce.nic.in

2.11 Export of spices to UK

2006-07 2007-08 (Apr-Jan) *


Product Production(tones) Value(crore) Production(tones) Value(crore)
Vanilla 365.97 29.09 422.01 34.98
Turmeric 567.89 45.96 598.08 48.73
Pepper 239.07 32.67 321.03 41.07
Saffron 87.01 12.34 64.09 8.13
Capsicum 178.98 12.97 188.54 14.32
Coriander 216.00 98.83 225.82 122.32

Garlic 10.35 6.99 2.29 2.70


Mint 14.21 111.91 10.22 76.60
product

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Export potential of spices from India to UK

Cumin 202.78 187.10 151.51 138.67


Fennel 51.67 37.44 66.37 60.90
SOURCE: DGCI&S., CALCUTTA/S.BILL/EXPORTERS RETURNS

CHAPTER 3

SPICE BOARD OF INDIA

3.1 The background of board


3.2 The activities of board
3.3 Association with international agencies
3.4 Major strategies for quality improvement
3.5 Board initiative for export development & promotion of Spices
3.6 Trend in India’s spice export

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Export potential of spices from India to UK

Spice Board of India

3.1 The Background


Within the past one decade the international trade in spices has grown by leaps and
bounds. An estimated 500,000 tones of spices and herbs valued at 1500 million US
dollars are now imported globally every year. An impressive 46% of this supply comes
from India. India's exports of spice extracts have shown spectacular growth attaining over
50 percent of the global market within a short span.

The Indian export of spices has crossed the 850 million US dollar mark during 2007-08
and has reached 876 million US dollar. This remarkable achievement is born of a sea
change in the industry scenario. From traditional commodity exports, Indian Spices have
evolved into a state-of-the-art industry. Absorbing technology, broad basing its products
range, developing value added products, identifying niche markets, forging strategic
alliances clinching global collaborations and joint ventures.

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Export potential of spices from India to UK

The Spices Board India (Ministry of Commerce, Government of India) is the apex body
for the export promotion of Indian Spices. Established in 1987, the Board is the catalyst
of these dramatic transitions. The Board has been with the Indian Spice industry every
step of the way. The Board plays a far reaching and influential role as a developmental,
regulatory and promotional agency for Indian Spices.

3.2 The activities


The Board is a link between the Indian exporters and the importers abroad.
Its broad-based activities include:

• Formulation and implementation of quality improvement systems.


• Research and development programmes.
• Education and training of farmers, processors, packers and exporters on post
harvest handling and registration and licensing of traders and exporters.
• It acts as a data bank and communication channel for importers and exporters and
promotes Indian Spices abroad.

3.3 Board has close association with international agencies like:


1. International Trade Centre (ITC) Geneva.
2. United Nations Development Programmes (UNDP).
3. International Pepper Community (IPC) Jakarta.
4. European Spice Association (ESA).
5. All Nippon Spice Association (ANSA) Japan.
6. Food and Agricultural Organization (FAO).
3.4 Spices Board has adopted two major strategies for quality
improvement.

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Export potential of spices from India to UK

• Introduction of the Indian Spices Logo

• The Spice House Certificate.

3.5 Board’s initiatives for export development & promotion of Spices


Spices exports have registered substantial growth during the last one decade. It has
increased from 109636 tones valued US$ 135 million in 1990-91 to 235611 tones valued
US$ 472 million in 1999-2000. During the year 2007-08, the spices export quantity has
touched an all-time high of 377,000 tones. However, the export value has reached to
927.45 US $ million. The decline was due to low volume of pepper exports coupled with
low unit value realization. Still India commands a formidable position in the World Spice
Trade with 44% share in Volume and 35% in Value.

Award of Spice House Certificate for good manufacturing practices, award of Logo for
quality of the product and accreditation under ISO 9000 for international acceptance are
the three certification systems adopted by the Board. Yet another area of activity centered
upon by the Board is Value Addition. India can now boast as the monopoly supplier of
spice oils and oleoresins the world over. In the case of curry powders, spice powders,
spice mixtures and spices in consumer packs, India is in a formidable position. The
consistent effort of the Board during the last one decade has improved the share of the
value added products in the export basket to 59%.

With the support of the Spices Board, exporters have established adequate infrastructure
for improving quality on a sustained basis. Quality improvement and technological up
gradation are taken up by exporters as an on-going programme. These developments are
in tune with the changing levels of market acceptance. Other areas focused upon by the
Board are export promotion in identified markets, interaction with policy makers in the
importing countries, development of new end uses, farm level training for farmers etc.

EXPORT DEVELOPMENT & PROMOTION OF SPICES –


“Promotion of Indian Spice Brands Abroad”

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Export potential of spices from India to UK

Guidelines / working procedure


To assist exporters in penetrating the developed markets through launching/promoting
own brands or buying out existing brands. The scheme aims to promote Indian Spice
Brands in new, sophisticated and affluent segments in foreign markets, targeted beyond
the ethnic Indian population in European countries. There are two activities assisted
under the scheme viz., [1] Product and Packaging Development and Bar Coding [2]
Brand Promotion.

1. Product and Packaging Development and Bar Coding:


Effective brand promotion programmes for identified products and its packing, which
involves high cost of development, are supported. U nder this activity the assistance will
be given for developing appropriate product, packaging and compliance with other
statutory requirements in force in the target market including traceability details and Bar
Coding. Similarly the Board provides assistance to exporters to develop products to
promote different values/applications of spices. Board will also provide assistance to the
exporters to buy out existing foreign brand to capture that market and expand the range of
Indian products through this brand.
2. Brand Promotion:
Under this component, positioning of specified brands in the identified outlets in selected
cities as well as necessary promotional measures for brand building such as Media
promotion, Promotional trips abroad participation in international fairs etc., are
considered for financial assistance. The Board will undertake the required market studies
and marketing strategy development for promoting branded products and it will be
disseminated to the exporters for market penetration.
Eligibility:
All registered exporters of spices who have registered their brands with the Board,
SHC/Logo holders and holders of organic certification are eligible to avail the benefits
under the scheme. An expert committee constituted by the Spices Board will evaluate the
proposal and approve. The facility will cover spices in all forms exported in institutional

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Export potential of spices from India to UK

packs upto 25 kgs and consumer packs of spices in all form including curry powders and
mixed ground spices upto 5 kgs will be qualified for availing the assistance.
Scale of Assistance:
Interest free loan upto 100% for slotting/listing fee and promotional measures and 50% of
the cost of product development, subject to a maximum of Rs.2.50 crores per brand and
Rs.5.00 crores where brand buyout is involved for (a) Product and Packaging
Development and Bar Coding and (b) Brand Promotion will be considered per exporter
during the XI plan period. For undertaking the brand promotion and other related
campaign the exporter has to meet the entire foreign exchange requirement. This
assistance is restricted to the first three years of promoting the brand.
Mode of Operation:
On the basis of the market study, an appropriate marketing strategy will be evolved and
implemented by the exporter in consultation with the Board. Based on the market study
conducted and indications about sufficient potential, prospective exporter/ exporters
willing to take part in the scheme will be identified. When the loan is approved the Board
will provide the funds to the exporters for meeting their estimated annual expenditure for
brand promotion in accordance with the programmes approved by the Board and in the
manner stipulated. The exporter who has availed the loan should submit half yearly
progress report to the Board. This would be reviewed by a committee constituted by the
Board for the purpose.
The repayment of loan shall be in equal annual installments commencing from the 4TH
year and end in the 8th year from the date of receipt of the fund by the applicant exporter.
Spices Board will periodically review the progress of implementation of the scheme;
expenditure, export growth etc and continuation of the assistance will depend largely
based on:
i) Qualitative analysis of the brand acceptance in the market
ii) Stability and reach of the brand in the market
iii) Growth and competence of the brand
iv) Export growth in real terms.
An exporter can avail the assistance under the scheme for promoting the given brand in a
maximum of 5 countries in the XI plan period. At the end of the third year, a detailed

27
Export potential of spices from India to UK

review will be made by the Board to determine the impact and need for continuation of
assistance, if required, from the fund for a further period
Submission of proposals:
The exporter who desires to avail of the assistance under this component has to submit an
application in the prescribed format along with copies of detailed proposal covering
details of the market promotion to be undertaken with cost break up in each segment
separately.

Conditions:
a) Total approved amount for the programme will be released in three equal installments
at the beginning of each year.
b) Before the release of the loan, the applicant has to provide a bank guarantee in the
prescribed format for an amount equivalent to the loan sanctioned on a stamp paper. This
guarantee is to be renewed well before the date of expiry. The guarantee also needs to be
enhanced as and when further installments of loan are sanctioned/released and an
amended agreement on stamp paper should also be executed to the Board.
c) By the end of every six months the loanee has to give a detailed report of the activities
undertaken along with a progress report and an expenditure statement that the loan has
been fully utilized for the sanctioned purpose should be submitted at the end of the each
year.
d) Supporting documentary evidence for the expenditure incurred/committed has to be
produced.
e) An export obligation of 5 times of the loans availed over a period of 8 years from the
drawl of the 1st installment of loan.
f) In the event of any misuse of funds from the loan amount the exporter has to refund the
entire loan together with existing rate bank interest plus 2 % period interest thereon
immediately to the Board.
g) In the event of default in repayment, the Board reserves the right to invoke the bank
guarantee executed by the loanee and recover the loan amount.
h) The loan shall be paid in Indian currency only.
i) In the case of any dispute, the decision of the committee shall be the final.

28
Export potential of spices from India to UK

3.6Trend in India's spice export

4000

3500

3000

2500

2000

1500

1000

500

0
2003-04 2004-05 2005-06 2006-07 2007-08*
Source: Data collected from economictimes.com
Quantity in '0 MT Value in crore
Source: Data collected from www.economictimes.com

29
Export potential of spices from India to UK

CHAPTER 4

BILATERAL TRADE RELATION WITH UK

4.1 TRADE
4.2 INDIAN IN THE UK
4.3 OPPORTUNITIES
4.4 BILATERAL AGREEMENTS BETWEEN INDIA AND UK
4.5 TRADE AND INVESTMENT WITH UK

30
Export potential of spices from India to UK

4.1 Trade

UK, which remained at second position in India's leading trade partner till 2002, has
become India's fifth leading partner last year. Countries like china, UAE and Belgium
have taken 2nd, 3rd and 4th position resp.
India exports to UK are textiles and readymade garments, gems and jewellery, footwear,
leather and leather goods, engineering goods, metal manufactures, power generating
equipment, software services, pharmaceuticals, chemicals, marine products, rice, tea and
other agricultural products like nuts and preserved fruits and vegetables.

India's imports from the UK include: non-ferrous metals, gold, rough diamonds, power
generating and telecom equipment, transport equipment, industrial machinery and
chemicals. Looking from UK's perspective, India was UK's 15th largest export market,
and the UK's largest exporting market in the developing world (ahead of China). Among
the countries where bulk of UK's import come from, partners, India is the 25th largest
exporter to the UK.

UK's Trade with India (2007)


(In £ million)

Total 2001 2002 2003 2004 2005 2006 2007


(Jan.-

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Export potential of spices from India to UK

Aug.)
Exports 2798 2695 1900
1772 1755 2284 2235
of goods
Imports 2783 3136 2502
1816 1804 2093 2290
of goods
Total 5581 5831 4402
Trade in 3588 3559 4377 4525
Goods

Source: DTI Economics & Statistics Directorate, UK

4.2 India in the UK

Figures for the last FY 2007-08 show: 75 inward investment projects from India. (No. of
projects up by 8%.)

1. 2007-08 saw India retain its position as one of the world’s fastest-growing sources of
investment into the UK, especially in IT and life science.

2. Indians secured 20, 000 jobs in the UK last year, which is the 2nd highest number of
jobs, secured by a foreign employer in the UK. (This includes Tata's £1.15bn acquisition
of Jaguar/Land Rover last year secured 14,000 jobs.)

3. Indian investment in the UK continues to grow across all sectors. M&A is the
preferred method of investment for the majority of inward investors to the UK. We
anticipate that with the cash rich Indian investors wanting to get to the heart of business
quickly, UK will see more M&A's in future years.

32
Export potential of spices from India to UK

4. The UK is the most preferred nation for investments by India Inc. in 2008 so far,
accounting deals worth $6 billion. (till Aug’08).

5. Force India (India’s formula one team) is based in the UK. (*Note: 9 out of the 12
Formula one teams are based in the UK.)

6. London Stock Exchange hosts 52 Indian companies, with a combined *market cap of
£9 billion. Indian firms have raised a total of £3 billion through listings on the exchange.
(*Market cap = aggregate value of a company OR the sum derived from the current stock
price per share)

7. India is the fastest growing source of Inward Investment Projects from Asia into the
UK.

8. Tata’s $ 9 bn acquisition of Corus in 2006-07 has made Tata Steel one of the world's
top five steel makers.

9. The main factors for increasing Indian FDI into the UK are tax and skills base. [The
UK has the lowest main Corporation Tax rate (28%) in the G 7.]

10. Indian companies have also been going offshore to fund their expansions, particularly
with capital which has until recently been cheap. The UK is the destination of choice – as
both the leading global financial services centre and the single most internationally
focused financial marketplace in the world.

*Source: UKTI Inward Investment report 2007-08

More examples /success stories of Indian Cos. in the UK:

Engineering:

• Bangalore-based Dynamatic Technologies is the largest producer of hydraulic gear

33
Export potential of spices from India to UK

pumps in Asia and one of the top five worldwide. In June 2007, it acquired the assets of
the Sauer-Danfoss operation based in Swindon, where the main focus is the manufacture
of gear pumps, valves and integrated hydraulic packages. With a strong emphasis on
R&D, this was seen as an excellent opportunity for the business to grow in the
UK/European market.

• Amtek took over the Triplex-Ketlon Group in 2007-08.

• Bharat Forge acquired a forging plant in Doncaster in 2007-08.

Biotech and pharma:

• Almost all the major India Biotech and Pharma companies such as Orchid, Shasun
Chemicals, Dabur, DRL, Ranbaxy, Nicolas Piramal, Biocon, Aurobindo pharma have set
up base in the UK for activities ranging from manufacturing to marketing.

Financial services:

• Religare Capital Markets' acquired broking firm Hichens Harrison & Co. Plc. for £ 50
million.

• Major Indian banks, including State Bank of India, ICICI Bank, Bank of Baroda and
Punjab National Bank have a presence in London. Among Indian insurance cos., New
India Assurance and the country’s official reinsurer, GIC are present in the UK.

ICT:

• All major Indian IT players - TCS, Infosys, HCL and Wipro have their presence in the
UK.

Legal services:

• India’s largest law firm FoxMandal Little has opened its office in London recently. The
office will practise Indian law only, focusing on attracting EU-based clients seeking to
invest in India.

4.3 Opportunities

Potential for Indo-UK cooperation exists in information technology, biotechnology both


plant and human, drugs and pharmaceuticals, infrastructure development including roads,
ports, airports and railways, power sector, mining, oil and natural including LNG, water
management, soil conservation and waste disposal, food processing and agribusiness,
film and television, processing of gems and jewellery, tourism, and education.

34
Export potential of spices from India to UK

4.4 Bilateral agreements between India and UK

UK is India’s largest trading partner in Europe with 6.4 percent market share. The India-
UK bilateral trade in the first 8 months of 2007 was up 13.2 percent over the comparable
period of 2006. The total bilateral trade in goods has grown from £3.58 billion in 2001 to
£5.83 bn in 2006 with UK being the second largest importer of Indian goods after US.
The total trade in goods and services in last five years (2002-2006) grew 0ver 75 percent
to £ 8.74 bn in 2005 from £ 4.99 bn in 2002. With the presence of more than 350 Indian
companies, India is the eighth largest investor in the UK in terms of number of projects.
Of this, 275 firms are from Information and Communications Technology. UK ranks
third in terms of foreign investments in India after Mauritius and the US.

India has one of the fastest growing economies in the world. The Indian market
provides opportunities for UK companies goods and services. India is the UK's 15th
largest export market. In 2003, UK/India bilateral trade was worth around £5.8
billion. The volume of bilateral trade in goods between India and the UK in 2004 was
£4.5 billion. UK Trade & Investment 2005/6 business plan for India has identified 16
proactive sectors where we believe there are real opportunities for UK companies to
increase their profitability and international competitiveness.
Global partners and the Prime Minister’s Initiatives

Britain and India share a global vision and democratic values. UK and India both play a
proactive role in international affairs. Both have a strong interest in success of
multilateralism. Both play vital roles in the UN, WTO, Commonwealth and range of
other bodies.

Prime Ministers’ Initiative

As the PMs agreed in September 2005, the bilateral relationship has never been better.
Our co–operation is underpinned by then Prime Ministers’ Initiative signed on 20
September 2004, setting out a new strategic partnership between the UK and India.

The Initiative identifies key areas for co-operation:

1. Foreign and Defence Policy including the fight against the proliferation of weapons of
mass destruction.

35
Export potential of spices from India to UK

2. Home Affairs issues, such as combating illegal immigration and building on our
excellent cooperation on counter-terrorism.

3. Economic and trade issues, both developing bilateral trade and working together on
international issues.

4. Science and technology, by tapping the rich vein of innovative talent we both share.

5. Sustainable Development, as we help to solve the world's environmental problems.

6. Expanding on our flourishing educational and cultural links.

4.5 Trade & Investment with UK

Two-way trade of goods and services between India and the UK has doubled since
1993; Over 2447 new Indo-British joint ventures have been approved by the Government
of India since Aug 1991. For the period August 1991 to July 2006, the number of
technical collaborations approved from UK stands at 851, which is 10.89% of the total
technology transfer approvals.

Total two-way trade (goods and services) grew by about 20% in 2005 (to £ 7.9 bn).
UK exports to India grew by 21.3% in 2005 (goods up by 25.3%; services up by 12.3%).

The UK is India’s fifth largest trading partner after the USA (10.63%), China (6.99%),
United Arab Emirates (5.13%) and Germany (3.81%), and accounted for 3.56% of
India’s total foreign trade in goods in FY2005/06.

UK has the third largest share of new investment approved since 1991 till March 2006
(10.04 %), well ahead of Germany (3.78%), Japan (4.67%) and France (2.59%).

UK has the fifth largest share of new investments implemented since 1991 till October
2006 (5.43% cumulative share), behind Mauritius (41.09%) USA (13.94%), Japan (5.6%)
and Netherlands (6.24%). In addition, there is also significantly high reinvestment by
UK companies already established in India, which is not included in the new investment
figures.

36
Export potential of spices from India to UK

Indian investments into the UK increased by a staggering 110% in 2005-06 recording


a total of 76 investment projects from India creating 1449 jobs. IT sector dominated
with 26 projects followed by pharmaceuticals (12 projects). India now ranks third among
foreign investors in the UK globally (with an investment of £ 1.02 bn) and the second
largest from Asia Pacific region behind only the USA and Japan.

The UK imported £3.05bn of goods and services from India. In 2005 the UK imported
£3.9bn of goods and services from India. In the last few years, UK imports from India
have increased substantially.

CHAPTER 5

SWOT ANALYSIS

37
Export potential of spices from India to UK

Strength

1. Favorable climatic condition.

2. Having large area for production.

3. Emerging markets like Europe and other developed countries.

4. Large numbers of exporters are involved in export of spices

Weakness

1. Quality is not as per the international standards

2. Use of more chemical


Example: UK denied importing chilli powder from India few years ago.

3. Lack of skilled entrepreneurs.

38
Export potential of spices from India to UK

Opportunities

1. India can be the largest exporter in the world as this time it captures the major
international Market share.

2. As the increase of its consumption in developed country there can be export at a large
quantity.

Threat

1. Due to not having the standard quality of spices India may lose its grip in International
Market.

2. The major competitors like Sri Lanka, Bangladesh, and Pakistan etc are also growing
at good pace.

3. Other countries having good technical aspect for its production.

39
Export potential of spices from India to UK

CHAPTER 6

COMPARATIVE TRADE ANALYSIS

40
Export potential of spices from India to UK

Comparative trade analysis

The year 2007 saw spices board turning out yet another peak performance when the
spices exports attained all time high export revenue of US$ 940.47 million.
The export value in dollar terms reached US$940 million against the target of 377000
tones the achievement was registered an increase of 28%. Similarly in value terms the
achievement was nine percent more than the target.

Export of spices from India

The export performance during the year was better in respect of pepper, cardamom
(small), cardamom (large), turmeric, garlic, nutmeg and mace, vanilla, curry
powder/paste, mint products, spice oils and oleoresins.

The improvement was spectacular in the case of garlic when the country exported 29250
tonnes of garlic during the year as compared to 2250 tonnes during the previous year.
Though there was decline of 17.9% in quantity of exports, chilli continued to be the
largest exported item during 2006-07 with an export of 113250 tonnes. The average unit
value realization of the spices export as a whole during the year has increased to Rs.
71.61 per kg from Rs. 65.58 per kg in 2005-06.

41
Export potential of spices from India to UK

One of the positive aspects of the exports during the year was increased in export of
cardamom during 2007-08.

CHAPTER 7

FINDINGS

42
Export potential of spices from India to UK

• Currently Indian spices are unlikely to do well in international market, medium


and long term strategies for improving the trade in world.
• UK has potential to grow as a spices market.
• Indian spices are in great demand in UK as well as in world market.
• India is a major player in world spices markets.
• The export value of spices has increased continuously.
• New variety of spices & value added product of spices has been added to export
of these particular commodities.

43
Export potential of spices from India to UK

CHAPTER 8

LIMITATION, SUGGESTIONS AND CONCLUSION

44
Export potential of spices from India to UK

LIMITATIONS

• Study is based on secondary data.


• Spices are growing more and more, it might be necessary to review & reconsider
the report in view of the existing whenever the entrepreneurs refer this report.
• Due to lack of time & resources for the collection of primary data, certain critical
factors may go unnoticed leaving outcome to debate.
• It wouldn’t be possible to discuss uncontrolled variables of the world market,
however it shouldn’t influence study as it is one of the most transparent markets
& with which most of the Indian supplier are familiar to do business with.

SUGGESTIONS

• Determine which spices are most appropriate for production in UK.


• Improve yield and the quality of active constituent
• Provide cost effective production system.
• Achieve high quality UK products with national and international acceptance.
Support research across a wide range of spices for which commercial interest
exists from UK growers or processors.
• Devise and establish improved post harvest handling and drying procedures.

45
Export potential of spices from India to UK

• Develop cost effective quality testing and certification systems for active
constituents in crops and processed products.
• Provide cost effective mechanized implements and physical practices for the
control of weds and other farm-related problems in organic farming system.

CONCLUSION

• Spices, the fastest growing commodity in history.


• UK has never been a major player in spices cultivation and therefore is arguably
behind in the serious cultivation of conventional spices.
• Due to government support production has shown about 48% increase in last three
year.
• Value added product of spices has now great demand in UK as well as in world.

46
Export potential of spices from India to UK

REFERENCE

WEBLIOGRAPHY

www.spicesindia.com
www.dgci&s.com
www.economicstimes.com
www.commerce.nic.in
www.spice-market.com
www.pepperindia.com

BIBLIOGRAPHY
Export management, P.K.KHURANNA
Magazine: spice India

47