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The Indian Clusters:

An Overview of the
Carpet Industry

White Paper Series

on
Carpet Industry

Team D’Essence
Carpet Industry is one of the oldest industries in India. Major Carpet Producing Centers in India
Carpet Weaving was brought to India by Moguls. Some
of the majestic carpets were woven during this Mogul Over the years, various carpet weaving center have
era. Over the period, the weaver has become an artist emerged in India. Each center has its own competitive
imbibing the magical exotic colors to the Indian carpets. advantage. These centers employ millions of people.
Based on individualistic skill of the weaver, there is an Major belts are Bhadohi – Mirzapur and Agra belt in
aesthetic touch of the coloring and beauty in the carpets. Uttar Pradesh, Jaipur-Bikaner belt in Rajasthan, Panipat
Over the period, various clusters have emerged in the belt in Haryana and Kashmir belt.
northern part of India. Initially, carpet weaving was done
only at few centers. Due to several historical reasons Market Size and Segmentation
and availability of resources, carpet manufacturing
The carpets manufactured in India are mainly exported.
spread across the northern India. Major centers have
There is a very small market for carpets in India. This is
been Bhadohi, Agra, Jaipur & Kashmir. During the last
mainly because of the purchasing power of local players.
few decades, hand-tufted carpets have emerged as one
Also, there is no proper channel for marketing these
of the major categories. Due to proximity to Home
products in India leading to lack of awareness in the
furnishing products, Panipat has emerged as another
Indian market. Presently, India exports carpets worth
major center for carpet manufacturing.
over Rs. 2600 crores. The domestic market size is about
Rs. 200 crores. Many Industry players think that Indian
Types of Carpets
market will expand rapidly based on current retail boom
There are various kinds of carpets available in India.
in India.
These are as follows
• Hand-knotted Woolen Carpets
Following table shows comparison of exports from India
• Tufted Woolen Carpets and other countries.
• GABBE Woolen Carpets Country-wise exports
• Handmade Woolen Dhurries 1998 1999 2000 2001
• Pure Silk Carpets World 2028 1926 1977 1760
• Staple or Synthetic Carpets Iran 547 520 647 537
• Chainstich Rugs China 365 346 249 227
India 378 341 351 330
Each kind of carpets has its own tradition, design and Pakistan 126 122 217 211
significance catering to different needs of customers.
Nepal 203 122 140 116
They have developed unique competitiveness in the
Turkey 101 97 98 98
respective categories.
In USD Millions
The Industry has seen a decline during the late 90s. If one dissects the market, some interesting facts come
However, carpet industry has recovered over the last to fore. The export destinations can be categorized on
two years. Many players in Industry doubt whether this the basis of potential. Following chart shows some
recovery will be sustained or not. interesting facts about this.

There are two kinds of designs available in carpets:

traditional & modern. Modern designs are H
popular among youths while traditional designs G i
Latin America/ US
g
are popular among elderly people. The
r h South Africa
o
preference is not solely determined by age. w
Geographical location is also important t Japan, Australia Europe
L
determinant. Traditional designs are popular in h o
w
southern European market while modern design in
northern European countries. There is no such
differentiation in US market. Low High

As said earlier, carpet industry’s major products are

hand-knotted and hand tufted carpets. Hand-tufted Volume
carpet market is growing rapidly. Some of industry
players believe that market is being shifted from hand-
knotted segment to hand-tufted segment. However many
players believe that both products are targeted at Source: Discussion with Industry Experts
different markets. Additionally, hand-tufted carpets have
already entered in to home-furnishing segment. It is clear from the chart that the traditional markets like

Following chart shows the product wise market share in Europe offer small potential for growth though the

Indian exports. volumes are high. The scenario may change in future if
southern European countries start driving the growth.
For most of the players, USA offers a good market
Types of Carpets
based on its size and growth. Also, demand for different
kinds of carpets is not widely varying as in the case of
Hand Knotted
11% 22% woolen other countries. Hence, USA offers an opportunity for
Hand-tufted both, traditional as well as modern designs. Similar case
Woolen
Other handmade is for Hand knotted and hand tufted carpets.
67%
Key Market Players millions of people directly and indirectly. They
Following are the major importers in the industry are highly skilled in this areas
• Costs : India has an advantage in terms of
1. Nourison costs. The labor costs in India are comparatively
2. V. Heinrich low. Also, total cost of producing a carpet is low
3. Theo Keller compared to countries like Turkey, Iran with out
4. Wissenbach compromising on quality fronts heavily.
5. Abeth • Innovations: Innovations is one of the major
6. Roubeni criteria for selling carpets. As carpets are
7. Feizy considered as luxury items and consumer trends
8. Capel re changing continuously, innovation is a key for
9. ABC the success. The countries like China which
10. Obittee produce low cost carpets lack in innovations
11. Kalaty • Flexibility: Indian carpet industry can
12. Noonoo manufacture all kinds of carpets. Other countries
13. Trans-Ocean have specialized in particular carpets. Also, the
14. Beneleve carpets of any size can be manufactured in hand
15. IKEA knotted categories. This is not possible in
16. Kibek machine made carpets. There are several kinds
of manufacturers which can take small orders or
SWOT Analysis of Carpet Industry
big orders. Hence, Indian industry can offer wide
options to a customer for carpet purchases.
Indian Carpet industry is a unique kind of industry. It’s Weaknesses
highly unorganized with lack of proper channels. Still, it • Unorganized: Indian carpet industry is highly
has managed to show impressive performance in the unorganized. Therefore, a lot of activities are
past. What is behind this industry which drives the duplicated. Hence, it increases the cost of
exports? One can not forget that it had significant share production. Also, it increases the time of delivery
in Indian exports till early 1990s. SWOT analysis will of carpets.
bring forth the value drivers and stumbling blocks in this • Marketing Channels: The carpet manufacturers
industry. lack the proper marketing channels. They find it
Strengths very difficult to access the customers is increase
• Artistic skills: Over the period, major carpet the market. Therefore, they are heavily
centers have built huge network of artistic dependent upon the buying agents.
weavers. The industry currently is employing • Infrastructure: The infrastructure is very poor
leading to higher time for production and costs.
 Also, buyers find it difficult to visit places like attracted youth market as well. This segment
Bhadohi for looking designs. Most of the can be further expanded
manufacturers do not have showrooms in the • After dealing with China for some time, many
cities to showcase their creations. There is only players think that India provide better option and
one institute which provides courses related to flexibility. This kind feeling can further be tapped
carpet industry. • Carpets are generally considered to be
• Professional Approach: Majority of players lack expensive. With use of modern technology,
professional approach for doing the business. prices can further be reduced. Also, cutting
They do not respect delivery time and quality middlemen will directly benefit the consumers
issues. Therefore, buyers like to deal only thereby increasing the demand.
through buying agents to control them. • Organized operations can enhance the image of
• Internal Competition: Many players have entered Indian Carpet industry.
the industry increasing the competition. There is • The companies like IKEA, Wal-Mart, etc can
a tremendous competition among players on offer new and larger market to the
price front and are willing to offer very low prices manufacturers provided this market is properly
even though some one has already taken order. tapped.
• Intellectual Property Rights:
Many players in the industry ƒ Artistic Skills ƒ Unorganized
ƒ Lower costs ƒ Narrow Marketing
copy designs from each others. ƒ Innovations Channels
ƒ Poor Infrastructure
Weaknesses
There is a lack of respect for ƒ Flexibility
intellectual property rights. This Strengths ƒ

ƒ
Lack of professional
Approach
Unhealthy Internal
demoralizes players from
Competition
designing innovative products ƒ Intellectual Property
which is an expensive process. Rights

Opportunities ƒ Home Furnishing Market for ƒ Rebound sustainability

• Globally, Home furnishing low end carpets ƒ Unhealthy competition
ƒ Youth Market ƒ Backlash because of
market is moving towards ƒ Differentiation with China issues like child labor,
Caret industry. Hence, this
Opportunities
ƒ Demand growth through cost
cutting
Threats
etc

movement offers a new ƒ Image enhancement through

market for Hand tufted organized operations
ƒ Big retailers like Wal-Mart,
Carpets which are Ikea, etc
comparatively cheaper to ƒ Designing

hand-knotted carpets • Designing skills of India are being acknowledged

• Traditionally, the carpets were purchased by old at global level mainly in garments. Similar skill
people. The evolution of modern design has
 set can be developed in the Carpet Industry and
used as a marketing tool.
• There is an opportunity for providing stocking
and warehousing services to various players.
Threats
• If not handled properly, current rebound in the
industry may not be sustainable.
• Unhealthy competition in the industry kills each
other.
• Indian Carpet industry has not completely got rid
off of issues like Child labor. Hence, risk of
possible backlash on the industry is a going to be
there for considerable time in the future although
some action is being taken on this front.
Present & Future Growth Drivers of the Industry
ƒ Low – End Carpets
Low end carpets like hand-tufted carpets are currently
driving the growth of industry. These carpets have
expanded the market as they are cheaper and affordable
for many consumer segments. These segments are
going to drive future growth for a considerable time.
ƒ Modern Designs
As in the case of low end carpets, modern designs are
expanding the market. Modern design is attracting young
consumers. Also, there are a significant number of
consumers who prefer modern designs compared to
traditional designs. These are prominent in countries like
Germany, Scandinavia, etc.
ƒ New Markets
Traditionally, carpets industry is dominated by buyers
from USA & Germany. However, new markets are
emerging for carpets and they are growing fast. These
are basically developing countries or lesser developed
countries like Spain, etc. Growth in income level is the
major driver for this.
ƒ Big Retailers
Big retailers like Wal-Mart, Ikea can drive the growth in
the carpet industry. These players have huge network
with a large customer base. Low-end carpets can be a
major product that can be targeted by these players.
ƒ Cost Management
In Today’s competitive market, price has become an
important factor. Hence, better price can be offered
through better costs management. Effective costs
management will always be a competitive advantage to
any player. The trend is common in every industry.
Carpet industry is no exception. Better cost management
will reduce the price which can lead to increase in
volume sales.
ƒ Business Process Up gradation
As said earlier, the carpet industry is going through a
major change. Timely delivery, better price and high
quality products can only help carpet manufacturers for
survival. Business Process Up gradation is the tool for
achieving this. All these factors will definitely improve the
present market as well as expand in to new markets.
Otherwise, it’s going to be difficult for the carpet industry
to grow.
Conclusion

It ca be said that the carpet industry is presently going

through a major change. Traditional markets are
saturated while new markets are officering opportunities
for growth. Modern designs and low end carpets like
Hand-tufted carpets are attracting new customer base.
However, the total sales in the carpet industry have been
stagnant in terms of value. Hence, traditional model of
carpet business is no longer relevant. There is no single
kind of customer. Market can easily be segmented now.
Product mapping with the consumer preferences is
necessary for the future growth in the industry. Indian
carpet industry will find it difficult to compete with
Chinese industry in terms of volumes and prices.
Innovative range of products with lower volume is going
to be mantra for success in Indian Carpet industry.
Hence, efficient coordination and management of
activities is a key for success for any Indian carpet
business. This offers an opportunity for consolidation of
activities for reduction in costs, improvements in quality
standards, better product development and timely
delivery of products thereby driving the growth.
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© D’Essence Consulting 2004

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