REPORT ON CARPET

INDUSTRY

SUBMITTED TO:
MS. GARIMA TOMAR
SUBMITTED BY:
G
EETANJALI GUPTA
M
AMTA MALHOTRA
IMBA-IB (2007-11)
 SEC:H
INTRODUCTION TO CARPET INDUSTRY

Carpet Industry is one of the oldest industries in India. Carpet Weaving was brought to India
by Moguls. Some of the majestic carpets were woven during this Mogul era. Over the period,
the weaver has become an artist imbibing the magical exotic colors to the Indian carpets.
Based on individualistic skill of the weaver, there is an aesthetic touch of the coloring and
beauty in the carpets.

India has always had an ancient heritage of carpet weaving, a craft that has assorted skill and
expertise from lands as diverse as Persia, China and Afghanistan. This artistry however is no
longer a trade that is still isolated in the villages or towns. Along time, this craft has evolved
spreading its wings not only at the domestic front but also the international markets. This
section is an interface of a complete know-how regarding the carpet industry right from its
hubs to the measures taken by the government to further extend the export of carpets
globally.

OVERVIEW OF THE CARPET INDUSTRY

Indian carpet industry is primarily export oriented. Though it experienced a major set back
during 1996 -2000 due to the involvement of the child labour, it has overcome the jolt by
implying special measures like "rugmark" and"kaleen"labels that ensure the non involvement
of child labour.

The major carpet producing regions (including all types of floor coverings and durries) are
Agra-Bhadoi belt in Uttar Pradesh, Kashmir, and Bikaner-Udaipur belt in Rajasthan,
Haryana, Punjab and Andhra Pradesh. There are 1215 carpet manufacturing units recorded
and of that 190 are in the organized sector and the rest are in small scale industry sector.

THE MANUFACTURING PROCESS

Preparing the yarn

Synthetic yarns arrive at the carpet manufacturer either in staple fiber form or bulk
continuous filament form. The staple fibers, which average 7 inches (18 cm) long, are loose,
individual strands that arrive in bales. Several bales are blended together into one batch in a
hopper. Then, after lubrication, they are spun into long, loose ropes called slivers by a
carding machine. The slivers are then pulled, straightened, and spun into single yarn that is
wound onto spools. Both the single-ply staple fibers (now spun into filament) and the bulk
continuous filament must now be twisted together to form thicker two ply yarn suitable for
tufting. The yarns are then steamed to bulk them, and then heated to 270-280°F (132-138°C).
This heat setting causes the yarn to maintain its shape by fixing its twist. After cooling, these
yarns are wound onto tubes and transported to the tufting machines.

Dyeing the yarn

Most carpets are dyed after tufting, yet sometimes the yarns are dyed first. The methods
include putting 500-1,000 pounds (227-455 kg) of fiber into pressurized vats through which
treated dyes are circulated, or passing the fiber continuously through the bath, or passing
skeins of yarn through the vat of dye. The yarn can also be put on forms, and the heated dyes
can then be forced under pressure from inside the forms to color the yarn. Another method
passes the yarn through printing rollers, while yet another involves knitting the yarn onto a
form that is then printed with dyes before the yarn is unraveled. All yarn that has been dyed is
then steamed, washed, and dried.

Tufting the carpet

The yarn is put on a creel (a bar with skewers) behind the tufting machine, then fed into a
nylon tube that leads to the tufting needle. The needle pierces the primary backing and pushes
the yarn down into a loop. Photoelectric sensors control how deeply the needles plunge into
the backing, so the height of the loops can be controlled. A looper, or flat hook, seizes and
releases the loop of yarn while the needle pulls back up; the backing is shifted forward and
the needle once more pierces the backing further on. To make cut pile, a looper facing the
opposite direction is fitted with a knife that acts like a pair of scissors, snipping the loop. This
process is carried out by several hundred needles (up to 1,200 across the 12 foot [3.7 ml
width), and several hundred rows of stitches are carried out per minute. One tufting machine
can thus produce several hundred square yards of carpet a day.

Dyeing the tufted carpet

For solid color carpeting, carpet of several standard roll lengths is sewn together to make a
continuous roll, which is then fed into a vat. The vat is filled with water, which is first heated
before dyes and chemicals are mixed in. The mixture is then slowly brought to a boil and
cooked for four hours. Another method of making solid color carpet is to sew several rows
together to make one continuous roll, which is then fed under rods that bleed the color into
the pile. After dyeing, the carpet is then steamed to fix the color, excess color is washed off,
and the carpet is dried and put on a roll.

To make printed carpet of various designs, white carpet passes under screens in which holes
in the desired pattern have been cut. The desired color is squeegeed through the holes in the
screen, and the carpet is advanced 36 inches (91 cm) to a different screen that applies a new
color in a different design through the screen. Up to eight colors can be applied with this
method.6 Another method of dyeing printed carpet is to pass it under embossed cylinders that
have raised portions in a design, which press color into the carpet. Each cylinder provides a
different design for a different color. After dyeing, the printed carpet is steamed, excess dyes
are washed off, and the carpet is then dried and put onto rolls to go to the finishing
department.

Finishing the carpet

The ends of the dyed carpet are first sewn together to form a continuous belt. This belt is then
rolled under a dispenser that spreads a coating of latex onto the bottom of the carpet.At the
same time, a strong secondary backing is also coated with latex. Both of these are then rolled
onto a marriage roller, which forms them into a sandwich and seals them together. The carpet
is then placed in an oven to cure the latex.

The completed carpet is then steamed, brushed, vacuumed, and run through a machine that
clips off any tufts that rise above its uniform surface. The carpet is then rolled into 120 foot
(37 m) lengths that are then packaged in strong plastic and shipped to either the carpet
manufacturer's inventory warehouse or to a retail carpet store.

QUALITY CONTROL

• Every piece of carpet that is tufted is inspected to see if any tufts are missing. One
person with a single needle tufting gun shoots pile yarn wherever holes are found.
Each piece of carpet is then inspected. The manufacturer checks that the piece is of
the proper dimensions and that the tuft height is of the desired length. The static shock
potential is also tested.

• Backing fabrics and carpet padding are tested for strength by being pulled in a vise
until they break. The primary backing's strength is checked both before and after
tufting. The delamination strength of the secondary backing is also tested by
determining at what force the secondary backing can be pulled away from the primary
backing.

• Most states require a flammability test.

• The mass per unit area of pile yarn is a significant test because pile density
determines the feel of the carpet

• To test how the carpet's color stands up to sunlight, a standard light source that
simulates sunlight is directed at a specimen, which is then rated according to the
number of units of exposure required to produce visible loss of color.

CARPET TYPES

Handknotted Woollen Carpets

Hand knotted Woolen Carpets from India speak eloquently of the superb
workmanship of the Indian carpet Weavers. Their design and color schemes have
their own independent logic and their own unique magic.
The art of weaving carpets has percolated through generations and the Indian craftsmen have
been creating the greatest of specimen since the medieval period. The Indian woolen carpets
are inspired by the classical Persian Tradition of motifs to the most modern design. Superior
hand-knotting technique, variety of designs, colours and a good number of knots per square
inch have made them desired objects to impart a vivid appearance to a home besides adding
warmth to it.

The prominent areas which produce woolen carpets are Bhadohi, Mirzapur, Khamaria,
Ghosia, Varanasi and Agra in Uttar Pradesh; Amritsar and Pathankot in Punjab and Jaipur in
Rajasthan.
Tufted Woollen Carpets

The handmade Tufted Woollen Carpets are produced with the help of tufting guns. A good
quality fabric is used for a desired pile density and number of stitches per square inch. The
variety of designs and colours used in these carpets make them a feast to one's eyes.

Panipat is main carpet producing centre of Tufted Woollen Carpets.

GABBE Woollen Carpets

Hand-knotted Gabbe Woollen Carpets portray a unique tradition of Tribal Design.The

continuity of superb artistic tradition of Tribals have made these carpets a product of a living
and thriving art. The raw material composition of these carpets is generally 75% wool and
25% cotton.

Gabbe Woollen Carpets are mainly produced in Bhadohi-Mirzapur region in Uttar Pradesh.
Handmade Woollen Dhurries

Woollen dhurries are one of the least expensive yet very elegant 'Hand-WovenFlat Floor-
Coverings'.Dhurries are just perfect to use anywhere: in a room, in a formal setting, or
casually in a balcony echoing its democratic antecedents. Its variety of colours are fast selling
and have made them one of the popular floor coverings in the world.

Woollen dhurries are mainly produced in Bhadhohi, Mirzapur, Agra, Jaipur, Panipat and
Bangalore.
Pure Silk Carpets

Handknotted pure silk Carpets are renowned for suppleness and softness and fine
workmanship in the world.The material composition is 80% silk yarn and 20% cotton yarn
with knottage 400 knots and above per square inch. Produced in Kashmir, these carpets
display a fine workmanship and intricate designs of a kind.

The designs vary from intricate motifs and patterns inspired from nature to hunting scenes,
bird and animal motifs or thematic designs like historical romances.
Staple/Synthetic Carpets

Staple/Synthetic carpets are synthetic handknotted carpets with a feel of silk. These finely
knotted carpets (256 knots per square inch) imbibe all the aesthetic characteristics of classical
and contemporary designs and colours.

The main carpet producing centre of Staple/Synthetic carpets are Srinagar (Jammu &
Kashmir), Agra and Gwalior.

Chainstitch Rugs
Decorative handmade embroided floor coverings or Chainstitch Rugs are made
of 65% Wool or Silk yarn 35% cotton yarn
. Intricate needlework by creating a variety of traditional and modern designs and colours in
these rugs reflects a fine craftsmanship of the worker.

Chainstitch Rugs are mainly produced in Kashmir.

PRODUCTION CENTRES

• Uttar Pradesh: Varanasi, Bhadohi, Gopiganj, Khamaria, Ghosia, Madhosingh,

Mirzapur, Agra, Shahjahanpur.

• Jammu & Kashmir: Srinagar, Baramulla, Anantnag, Jammu, Leh.

• Rajasthan: Jaipur, Bikaner, Tonk.

 • Punjab: Amritsar.

• Haryana: Panipat.

• Madhya Pradesh: Gwalior.

• Bihar: Obra, Danapur, Madhubani

• Himachal Pradesh: Dharmshala.

• West Bengal: Dargeeling.

• Andhra Pradesh: Elluru and Warangal

• Karnataka: Bangalore.

• Pondicherry: Pondicherry

HIGLIGHTS OF FOREIGN TRADE POLICY 2009-14

• The incentive available under Focus Market Scheme (FMS) has been raised from
2.5% to 3%.

• The incentive available under Focus Product Scheme (FPS) has been raised from
1.25% to 2%.

• A common simplified application form has been introduced for taking benefits under
FPS, FMS, MLFPS and VKGUY.

• To simplify claims under FPS, requirement of ‘Handloom Mark’ for availing benefits
under FPS has been removed.

• Higher allocation for Market Development Assistance (MDA) and Market Access
Initiative (MAI) schemes is being provided.

• Jaipur, Srinagar and Anantnag have been recognised as ‘Towns of Export Excellence’
for handicrafts.

• To accelerate exports and encourage technological upgradation, additional Duty

Credit Scrips shall be given to Status Holders @ 1% of the FOB value of past exports.
The duty credit scrips can be used for procurement of capital goods with Actual User
condition. This facility shall be available upto 31.3.2011.

• Transferability for the Duty Credit scrips being issued to Status Holders under
paragraph 3.8.6 of FTP under VKGUY Scheme has been permitted. This is subject to
the condition that transfer would be only to Status Holders and Scrips would be
utilized for the procurement of Cold Chain equipment(s) only.

• To impart stability to the Policy regime, Duty Entitlement Passbook (DEPB) Scheme
is extended beyond 31-122009 till 31.12.2010.
 • Interest subvention of 2% for pre-shipment credit for 7 specified sectors has been
extended till 31.3.2010 in the Budget 2009-10.

• The adjustment assistance scheme initiated in December, 2008 to provide enhanced

ECGC cover at 95%, to the adversely affected sectors, is continued till March, 2010.

• In cases, where RBI specifically writes off the export proceeds realization, the
incentives under the FTP shall now not be recovered from the exporters subject to
certain conditions.

EXPORT STATISTICS OF LAST SIX YEARS

YEAR VALUE PF EXPORTS

RUPEES CRORES(US$
MILLION)

2003-04 2779.79(614.4)

2004-05 2583.62(591.62)

2005-06 3082.06 (696.53)

2006-07 3674.86 (807.94)

2007-08 3524.73 (875.71)

2008-09 2708.73 (600.06)

AREA WISE ANALYSIS OF EXPORTING DESTINATIONS

 Europe (including Germany & Scandinavian Countries)

• According to the statistics compiled for country wise exports from India in the year
2000-01, the share of exports to Europe is 43.07% (Germany accounts for 24.53%,
Scandinavian 4% and Rest of Europe 14.59%). Germany registered a decline of 8.3%
in value term whereas the decline in Europe was only 2.9%.

• The German Market for Silk Carpets is again dominated by India and China. China is
having 52.3% share in volume and 42% share in value whereas India is having 33.7%
share in volume but only 19% share in value.

• The Bhadohi and Mirzapur are the main supply area of carpets and floor coverings in
wool to Germany and other European countries. Lack of resources to keep stock and
 pressure of banks for payment of interest on export credit is forcing them to sell on
lower unit value realization.

 USA & Canada

• According to the statistics compiled for country wise exports from India in the year
2000-01, the share of our exports to USA & Canada is 45.33% (USA accounts for
43.55% whereas Canada accounts for only 1.78%).

• There is an increase of 19.03% in exports to USA & Canada during the year 2000-01
compared with the figures of 1999- 2000. USA consumes around 28% of the world
import of carpets & floor coverings.

• The major portion of import of carpets and floor coverings into USA is of knotted
carpets accounting for 38% whereas other woven carpets accounts for 29.8% and
tufted accounts for 27%.

 South East Asian Countries (including Japan and Australia)

• The South East Asian Region because of climatic conditions and economy have not
developed for carpets and floor coverings. Although Japan has grown small market
for carpets and floor coverings but Indian exporters have not been able to penetrate
much in this market because of dominance of China and Pakistan. These countries
account for only 4.2 1% of the total exports of carpets and floor coverings from India.
The main competitors in these markets are China and Pakistan.

• The reasons for our exporters not penetrating much in the markets are:

• Distant location and edge of competitors because of proximity in the markets;

• Slow moving of economy in the region;

• Climatic conditions.

 Rest of the World including LAC

• The share of exports of Indian Carpets and Floor coverings to rest of the world
including LAC accounts for only 7.3 9% which clearly shows that these markets
remained un-explored.

• Since Government of India is paying special emphasis for promotion of exports to

LAC and Carpets & Floor coverings from India have huge potential for expansion the
following suggestions are being made:

• To Lower down the Tariff Structure be taken up in Bilateral Trade Agreement;

• Fashion Oriented and less expensive products to be promoted i.e., Woven Durries,
Chain Stitched Rugs, Woven Carpets, Tufted Carpets & Art Silk Carpets.
CARPET EXPORT PROMOTION COUNCIL

Founded in 1982, the CEPC was established by the ministry of textiles of the government of
India to promote the export of hand-knotted rugs and all other types and styles of floor
coverings from India.

The CEPC’s membership comprised of senior trade representatives of and government

officials, who provide invaluable service and expertise to the organization. The CEPC’s main
responsibility is to advise the government on export promotion measures and help exporter
community to bring their problems and needs to the attention of the government. The
organization also provides assistance to Indian exporters by identifying key markets and
trends, offering financial trend, sponsoring, participating in trade fairs and exhibitions, and
conducting promotional activities abroad.

For overseas importers/buyers the CEPC acts as a bridge to help create meaningful
relationships with Indian exporters. The council helps identify suppliers of high repute and
good standing in the industry, provides credit reports on exporters, arranges buyer-seller
meetings, and assists in trade disputes. There are over twenty carpet production regions in
india, each specializing in different type of floor covering. The CEPC is well versed in the
specialists of each production region, and can, therefore be of assistance to both exporters
and overseas importers.

The CEPC also advises the government about the proper strategies for carpet promotion, and
its officials regularly visit the council’s overseas members to explore possibilities for new
markets and joint marketing opportunities.

Focusing on growth and the development, the CEPC has seen sharp increase in export of rugs
worldwide. To eradicate the incidence of child labor from the carpet industry the CEPC has
adopted a label ‘KALEEN’.

THE HALLMARK OF COMMITMENT

The label on carpet ensures that no child labour has been involved in the production of
carpets. The exporters of carpets are required to fulfil certain pre-requisites to obtain that
label. They have to contribute % of FOB of their exports value to the child welfare fund.

Main objective of obtaining this label are:

• Total eradication of child labour.

• Welfare of the weaver community.

• Education of the children with mid-day meal.

 • Medicare of the weaver families.

• Vocational training of the children with assured stipend.

SPECIAL FOCUS INITIATIVES

With a view to doubling our percentage share of global trade within 5 years and
expanding employment opportunities, especially in semi urban and rural areas, certain
special focus initiatives have been identified for agriculture, handlooms, handicraft,
gems & jeweler, leather and Marine sectors Further Sectoral Initiatives in other sectors
will also be announced from time to time.

Handlooms:

1. Specific funds would be earmarked under MAI / MDA Scheme for promoting
handloom exports.

2. Duty free import entitlement of specified trimmings and embellishments shall

be 5% of FOB value of exports during previous financial year.

3. Duty free import entitlement of hand knotted carpet samples shall be 1% of

FOB value of exports during previous financial year.

4. Duty free import of old pieces of hand knotted carpets on consignment basis
for re-export after repair shall be permitted.

5. New towns of export excellence with a

threshold limit of Rs 250 crore shall be notified.

6. Handloom mark enables handloom products to develop a niche market with a

distinct identity.

7. Machinery and equipment for effluent treatment plants shall be exempt from
customs duty

CURRENT NEWS REGARDING CHALLANEGES FACED IN CARPET INDUSTRY

 VAT on carpets a setback to exporters in Kashmir: CCEPC

• Srinagar, Sep 8: Urging Union Textile and Commerce ministry to exempt the carpet
industry from VAT and Sales Tax, Chairman Carpet Export Promotion Council
(CEPC), Ashok Jain Friday said the imposition of tax was a setback for the carpet
exporters in Kashmir.
• The handicraft products were exempted under VAT/ST by union ministry, the
VAT/tax was imposed on carpets, hence creating problems for artisans, dealers and
exporters.

 Carpet export goods need improvement & innovations – Minister

• The minister has suggested exporters to concentrate on quality improvement of

products and to take efforts to bring variety of innovations in product designing to
provide an international standard to the products.

The minister assured the support of Ministry of Commerce and Trade Development
Authority to provide facilities to the carpet exporters and was concerned about the
decline in carpet exports from $146 million to $103 million during the current year.

 INDIAN CARPET INDUSTRY ASKS GOVT TO RESTRICT CHEAP

IMPORTS

• MUMBAI, April 13 Asia Pulse - India's carpet industry has urged the Government to
impose restrictions on the import of cheap synthetic carpet from regions like China
and the Middle East, as it is not only affecting business, but also the environment.

• "We have urged the Government to impose restrictions on imports of synthetic

carpets to India to protect the in-house carpet industry."

• "The centuries-old Indian carpet industry, currently worth Rs 40 billion (US$803

million), is already facing a severe crisis in the wake of the global economic
slowdown.

EXPORT OF CARPETS INCREASES BY 22%

India’s carpet export increases by 22 percent to $3.60 million in June year-on-year owing
to good orders from US and Europe. In June 2009, exports were recorded at $2.94
million.

As per OP Garg, Chairman, Carpet Export Promotion Council (CEPC), apart from the US
and Europe, carpet industry is also receiving good amount of orders from the Middle East
and Latin America.

More so, Garg also stated that, for 2010-11, carpet exports would rise by around 25
percent to $650 million from $525 million recorded in the same period, last year.

The categories that recorded growth were handmade and synthetic carpets, which have
increased by more than 94 percent, followed by handmade woolen carpets, rugs, druggets
and handmade silk carpets.

US and EU together, total for nearly 70 percent of the nation’s exports of carpets.
Apparently, exports of carpets started falling since October 2008 but had somehow
managed to get back on to the track in November 2009, witnessing an increase of 18
percent. This sector provides jobs to 2.5 million people.
During June 2010, India’s exports increase by a good 30.4 percent to $17.75 billion,
whereas, in June 2009, exports had dived by 27.7 percent to $12.81 billion, owing to
world economic downturn

S.W.O.T ANALYSIS OF INDIAN CARPET INDUSTRY

Indian Carpet Industry is a unique industry which is highly unorganized but lacks proper
channels. Somehow, it has managed to perform impressively in the past years. The
industry has made significant contribution in Indian exports till 1990s. What was there
behind the industry that drives the export? SWOT analysis brings forth the value drivers
and tentative blocks this industry has experienced and experiencing even today;

• Strengths- Over the years, carpet industry has flourished in India due to availability of
artistic skills, cheap labour and low cost raw material, innovations in selling carpets
and flexibility in manufacturing all kinds of carpets.

• Weaknesses- The industry's greatest weakness is its highly being unorganized. The
carpet exporters and manufacturers lack marketing channels. Indian suppliers suffer
due to poor infrastructure and internal competition, and lack professional approach
and Intellectual Property Rights.

• Opportunities- Home furnishing market is moving towards Carpet industry, which

results in evolution of new carpet designs. It is used as a marketing tool, and gives
opportunity to provide stocking and warehousing services to various players in the
market.

• Threats- Industry is suffering a lot due to unhealthy competition exiting within it. If
not handled properly, current rebound in the industry may not be sustainable. Social
evil such as Child labor has strong bonding with the industry. Hence, the industry
invites risk of possible backlash on itself.

CONCLUSION

• The Indian Carpet Industry has potential for expansion since adequate skilled
manpower & raw-material is available, requirement for capital is almost negligible,
Indian Products are acceptable all over the World and are at par on quality and
competitive in prices. We have tremendous flexibility and adaptability. We have large
range of products to offer. India can supply carpets & floor coverings strictly in
accordance with the requirement of consumers.

• The only weakness is marketing and fore-sightedness of the exporters besides

resources. Generally the exporters are small in comparison with our competitors thus
having limited resources. Indian exporters have so far been making carpets as per
orders of Buyers and have not paid much attention or priority on keeping inventory
for spot sales. The trend in buying has undergone a radical change switching over to
stock buying rather than placing orders