Research Project Report on Indian Home Furnishings Exports to USA: Current trends & Future Potential

Submitted By: SiddharthMisra FORE School of Management PGDM (IB) 2011-13

Submitted to: Prof. Upendra Kachru Faculty Guide

FORE SCHOOL OF MANAGEMENT

B-18, QUTAB INSTITUTIONAL AREA NEW DELHI
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CERTIFICATE

This is to certify that Mr. SiddharthMisra, Roll No. 053047has completed his research projectand has submitted this project report entitled IndianExport of Home Furnishings to USA, Current Scenario & Future Potential towards part fulfillment of the requirements for the award of the Post Graduate Diploma in Management (FMG-19/IMG-4) 2010-2012. This Report is the result of his own work and to the best of my knowledge no part of it has earlier comprised any other report, monograph, dissertation or book. This project was carried out under my overall supervision.

Date: Place:

----------------------------------Prof. UpendraKachru

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Contents
ACKNOWLEDGEMENT ............................................................................................................................. 4 EXECUTIVE SUMMARY ............................................................................................................................ 5 OBJECTIVE OF STUDY .............................................................................................................................. 7 Chapter 1 - Introduction ..................................................................................................................... 8 Demand drivers ................................................................................................................................... 9 Chapter 2 Literature Review .......................................................................................................... 10 Chapter 3 - Research Methodology .................................................................................................. 23 3.1 - Universe of the Study............................................................................................................ 23 3.2 - Locale of the Study ............................................................................................................... 23 3.4 - Data Sources ......................................................................................................................... 24 Chapter 4 Analysis and Interpretation ........................................................................................... 25 Visit To EASTERN FASHIONS (INTL) .................................................................................................. 32 Chapter 5 Secondary Data Analysis ............................................................................................... 45 Textile Export Trend: India ............................................................................................................ 45 Export of all commodities Vis-a- Vis Textile (value in US $ million) .............................................. 47 Business Environment of USA ....................................................................................................... 48 Chapter 6 Findings and Conclusion ................................................................................................ 52 Limitations of the project.................................................................................................................. 53 Chapter 7 - Recommendations ......................................................................................................... 54 References ........................................................................................................................................ 56 Annexure A Interview Questionnaire ............................................................................................ 57

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ACKNOWLEDGEMENT
The satiation and euphoria that accompany the successful completion of this project would be incomplete without the mention of the people who made it possible. I take this opportunity to express my sincere gratitude to Prof. Upendra Kachru(Faculty Quantitative Techniques and Operations, FORE School Of Management) who has been a constant support and guided me in the report. I would also like to thank Mrs. Anjali Garg (owner of Eastern Fashions Intl.) for her inspiration, valuable guidance, support, encouraging words, guidance and suggestions during the entire project duration.

Siddharth Misra IMG V Roll No. : 053047

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EXECUTIVE SUMMARY
The changes seen in the recent global market scenario and abolition of trade barriers has created a great number of opportunities for bilateral or multilateral trade amongst the countries. This primarily has helped the Export & Import business all around the world to grow.The area of my research is to make comparative study on export of home furnishing items to USA and to find out the market potential for the Home furnishing items in this country. These home furnishing items are one of the categories of Textile export from India. This is a growing business in the global market beside export of readymade garments which still bags the maximum share in terms of export of textiles from India. As this project concerns the export & import business, so here I have explored the market potential for the Home Furnishing items in United States, which is the worlds largest textile importer. Most of my project is based on the secondary data that was available in form of data with the export companies, Export & Import articles available in various magazines, Websites etc. Primary source of data collection were personal interaction with employees and experts in the same business lines and also few owners of the buying houses in Delhi. The home furnishing products can be broadly categorized into five categories, which include - bedding, window dressings, bathroom textiles, cushions and covers, and table linen. Household penetration levels are high, especially in the largest sectors bedding and window dressings. While replacement due to wear and tear is not inevitably frequent, an increased consumer interest in home interior products has stimulated buying in what is now very much a fashion-led industry. The industry also benefits from the growing number of households, a trend, which is expected to continue at an even faster rate in near future With the change in the current global political scenario, it has become easier to trade with the foreign countries. This gives a big boost to the Export & Import industries all over the world. Textile export industries in India also marks a substantial growth during the past decades. This project is all about the current trends of the Textile industries (Home Furnishing products) in the global market, especially in the USA. As according to change in the global market scenario the consumers perception is also changing, now a days foreign buyers demand for complete package as finished product. Also many of our competing countries have shorter lead time to USA and European Countries which are the major market for Indian exporters. With the coming up of open trade policies between countries, the foreign buyers also have an option of moving their business from country to country, where they find
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products cheaper in price, cheaper export quotas but same quality though.

Cheaper

transportation cost is also considered as major factor of conducting export. Therefore the exporters have to be very careful whilechoosing the country where to export their goods to and conscious and sensitive in determining the prices of products.

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OBJECTIVE OF STUDY

The main Objectives of this research are to: Carry out market analysis of the production and distribution of home textile furnishings in India, geared to the US buyers interested in the Indian market. Identify potential buyers of products/operators in India, interested in US fashion products. Identify the concrete forms of industrial cooperation, both with local firms of equal size (small and micro enterprise) and market bracket (high range) and with suppliers of raw materials (yarn, woven silk, cotton etc.). Examine the various legal and political aspects in commercial matters (procedures for opening a credit line in India, general rules on the custom clearance of goods, custom duties and other payments, rules of certification). Check the main features of competition and the increasing needs of the customers.

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Chapter 1 - Introduction
The textile industry of India is one of the largest segments of the Indian economy and accounts for over one fifth of the countrys industrial production. The winds of change have transformed a traditional art to a modern industry, employing state of the art technology and providing direct employment to millions of people and also being considered as the second largest Industry providing so much of employment. This combination of traditional art and contemporary design has produced a variety of yarn, fabric, home textiles and other textile products sought after the world over. With over 9 million hectares under cotton cultivation and an annual crop of around 3000 million kgs, India is amongst the world's largest reservoirs of this popular fiber. In addition the 80 odd cotton varieties of different descriptions being grown in India, enables the industry's produce almost every conceivable count and construction of fabrics in a width of choice. Theprocess of economic liberalization begun in the last 20 years has seen the industry become globally competitive-not only in terms of price, but also in the quality of the product manufactured. Modernization has not been restricted to the installation of sophisticated processing machinery, wide width looms, etc, but also to the adaptation of quality systems conforming to ISO 9000 standards. The recent jubilation created in the European markets on Eco-friendly textiles has sent the Indian industry into a flurry of activity to adapt itself to market requirements. The Indian Textile Industry is both unique and complex but is a very important sector for the Indian economy. Besides, it has a very important role to play at the countrys macro

economic level. Just to put things in perspective, the sector contributes to almost 14% of the industrial production and about 35% of the gross export earnings. The sectors contribution to the GDP stands at over 6% and 12% of world production of textile fibers and yarn is from India. Due to all of the above, the growth of the industry has a bearing on the development of the economy, especially exports. Indian textiles is an integrated sector, as the industry not only grows its own raw materials (cotton, jute, silk and wool) but also processes the same into high value products like fabrics, garments, items of home furnishings etc. India exports a large portion of its textile produce. Our main competitors in the textile sector include countries like China, Bangladesh, Indonesia, Sri Lanka and Pakistan. Like India, these countries too are cost-effective textile producers due to the advantage of lower labor costs. The major markets for India have been
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the US and the EU. UAE, Japan and Switzerland are also amongst the top non-quota export destinations. Major furnishings product category includes: Furnishing fabrics :upholstery, curtain material, curtains, drapes, doorcurtains and fabric blinds Bedding :mattresses and pillows Bed linen :sheets, pillowcases, blankets and quilts Table linen : towels and washcloths Other household textile items as shopping bags, laundry bags, shoe bags, covers for clothes and/or Furniture, flags, mosquito nets and sunshades.

Demand drivers
The demand drivers of the Furnishing industry are similar to the Furniture industry and are depicted in the following figure.

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Chapter 2 Literature Review

One of the most researched topics in international marketing is the internationalization process and, in particular, exporting (Dhanaraj and Beamish 2003; Leonidou, Katsikeas, and Piercy 1998; Li and Cavusgil 1995; Nakata and Huang 2005). Despite the relatively large number of exporting studies devoted to small and medium-sized enterprises (SMEs; Leonidou, Katsikeas, and Piercy 1998), determining the appropriate level of export activities for small firms exclusively has received little attention. Although the combination of SMEs has been examined in prior researches, its suggested that it is reasonable to question whether differences exist between small firms employing approximately 3550 employees and the typical SME, which can have up to 500 employees. In particular, understanding the key factors that lead to improved export performance is important for small firms whose goal is to internationalize their operations. Brouthers et al, in their paper titled Key Factors for Successful Export Performance for small Firms (Journal of International Marketing, September 2009), show how much internationalization is beneficial for small firms. If a small firm decides to export, how many countries should it target? Although questions such as these have been examined extensively for other types of firms, such as multinational enterprises (MNEs) and small and mediumsized enterprises, there is scant research addressing these same questions for small firms exclusively. Despite their size, many small firms still attempt to expand abroad as a means of exploiting the unique knowledge they possess, potentially reducing costs by developing scale economies and/or leveraging resources, following customers abroad, alleviating competitive pressures at home, and/or acquiring new products or market knowledge. The propensity to expand internationally is counterbalanced by the many risks involved in internationalizing, such as little market power and the lack of financial and managerial capabilities, information about foreign market opportunities, foreign market expertise, and other resources compared with the traditional MNE. Thus, for a smaller firm, given its comparatively limited resources and expertise, internationalization may be much riskier than it is for an MNE. Brouthers, Nakos, Hadjimarcou, and Brouthers employ the internationalization process (IP) theory and the organizational learning (OL) theory to answer the following question: Given the comparative limited resources and greater risks involved for small firms, after a small
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firm decides to export, how international (multinational) should it become? Previous research has shown that learning through stage internationalization is an essential element of successful marketing strategies. Consequently, the authors draw on the IP model and hypothesize that small firms may be better off following the classic IP model, expanding slowly and incrementally and severely restricting the number of foreign markets they enter. Furthermore, focusing on a few export markets enables a small firm to develop expertise in those markets, build a strong distribution network, and manage its export activities effectively, resulting in superior export performance. Organizational learning theory leads to the second hypothesis: Small firms that export a larger portion of their output tend to perform better; they have accumulated knowledge in international markets, and as a result, they have developed a competitive advantage, which in turn leads to better performance. Finally, drawing from both OL theory and the IP model, the study suggests that small firms that (1) export to fewer markets but (2) concentrate their sales activities in export markets have even better performance than firms that pursue either strategy in isolation. Unlike previous research, which has focused on larger, publicly held companies, the authors test the hypotheses on a sample of Greek and Caribbean privately held firms with 100 or fewer employees. The findings show that (1) emphasizing international sales while (2) restricting exports to a few foreign markets results in superior perceived export performance for the sample of small firms from Greece and several Caribbean countries. Notably, post hoc analysis shows that the greater a small firms concentration of export sales in a single foreign market, the greater is its export performance. The research methodology followed for this research includes Primary Research on Greek and Caribbean firms and applied t test to compare the two descriptive variables. The limitations of this research are that scope of the study is limited to Greece and English speaking Caribbean nations only. Also since the study uses cross-sectional sample, it is possible that the behavior of firms changes over time. Two alternative diversification strategiesthe geographic diversification of export sales and key market concentrationare extensively discussed in management, strategy,

entrepreneurship, and economics literature. However, no conclusive evidence currently exists

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as to how either of these strategies affects the performance of international sales. This paper contributes to a better understanding of geographic diversification as a key dimension of the internationalization process for small and medium-sized enterprises (SMEs). In it, we analyze a comprehensive database of Polish exporters over a 3-year period to better understand the geographic diversification patterns of exporters. Based on this analysis, six propositions emerged from the export patterns examined and two viable strategies for exporting SMEs are identified: (1) Concentrating on a single market and (2) A balanced approach aimed at targeting a small number of key markets, combined with a strategy of penetrating other markets. The scope of geographic diversification of the international operations of firms is discussed in management, strategy, entrepreneurship, and economics literature as a key dimension of the internationalization process. It has been argued that by increasing the number of export markets (i.e., adding to the breadth of internationalization), a companys internationalization effort becomes more intense and deepens, a process that is typically measured by foreign sales/total sales ratio (FSTS, Thomas and Eden 2004; Pangarkar 2008). Other dimensions of internationalization intensity include level of international production (Thomas and Eden 2004; Jones and Coviello 2005) and product diversification (Chang 2007). Previously, the research community has focused on the diversification of international activities of large multinational enterprises (MNE; Hitt et al. 1994, 1997); however, FDI operations, being the center of the MNE research, are beyond the scope of our analysis. In this paper, we focus on the diversification of international activities of small and mediumsized companies (SMEs). These SMEs are characterized by: Constraints in international operations due to limited financial, marketing and managerial resources (i.e., a weak infrastructure for conducting international operations); and, A predominant use of exporting (the simplest form of outward internationalization).

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Once a smaller firm engages in exporting, it can either focus on key markets or widely diversify its export sales (Crick et al. 2000; Katsikea et al. 2005), yet no conclusive evidence has been offered concerning how these export expansion strategies affect the growth of international sales. Moreover, little evidence exists concerning existing trends in geographic diversification. This incomplete knowledge base impedes the advancement of research that could lead to meaningful recommendations for managers and policy makers. Therefore, the purpose of our study is to remedy this shortcoming by exploring patterns of geographic diversification of export sales. More specifically, the aims of this study are twofold: 1. Identify the prevalence of the use by Polish domestic SMEs of two basic export expansion strategies identified in the literature, namely concentration and spreading, and 2. Identify alternative ambidexterity strategies that attempt to pursue both concentration and spreading. The apparent trade-off between a wider geographic diversification and a concentration on key destination markets has been the subject of substantial debate, particularly in export management literature. This trade-off is called the concentration versus spreading debate (Crick et al. 2000; Katsikea et al. 2005), and research into it began in the late 1970s and early 1980s (e.g., Piercy 1981). It gained importance in the 1990s in relation to export performance whereupon the main conclusion was that performance results from export strategy, which includes the selection of foreign markets (Leonidou et al. 2010). Although the findings are inconclusive, they stress the rationale behind pursuing one approach versus another and relay that various situational factors play an important role in choice (Piercy 1982). Leonidou et al. (2002) based their meta-analysis on 36 studies specifically addressing market strategy, and found that the concentration strategy, which is dependent on the performance measure used, is positively related to export performance. In addition, a significant positive influence was found while using sales-based indicators. Weak associations were observed for the remaining measures, particularly the export market share. Similarly, market-spreading strategies were shown to be positively related to export performance, with the exception of export sales volume. The association was particularly strong when the share of exports in total sales was used as a performance indicator.

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Researchers have found long-term advantages of this spreading strategy when used to improve the effectiveness of sales management and personal selling activities. Spreading accelerates the process of accumulating diversified knowledge and experience, thus improving the competencies of the staff involved in international operations. They incorporated the dispersion of foreign sales across a number of regions by measuring the degree of internationalization (DOI) and found that higher DOI (combining both export intensity and geographic dispersion) led to better performance of SMEs. Lu and Beamish (2006) investigated the impact of internationalization on a firms growth and financial performance and pointed out that the learning-from-exporting effect is a factor that facilitates building the strong capabilities that enable the implementation of comprehensive strategies (thereby contributing to an accelerated growth). Lages et al. (2006) stated that the learning process accelerates with the number and diversity of foreign markets served, particularly when previous experiences in some of the export markets have been positive. An additional advantage occurs because a broadly diversified market scope stabilizes a companys earnings due to uncorrelated economic cycles in the different countries to which they export. Widespread geographic diversification, however, is not without risksparticularly for SMEs. Researchers have argued that SMEs are not smaller versions of larger companies, but are confronted with constraints in the internationalization process relevant to the pace of geographic diversification. For example, SMEs do not regularly scan the environment for information on a global scale and therefore frequently overlook opportunities in international markets. SMEs also lack managerial resources that need to be assigned to the opening of new markets. Once a smaller firm establishes a presence in overseas markets, a limitation to further expansion stems from a scarcity of managerial capacity and the lack of material infrastructure necessary for effective communication and coordination of a global network. At this stage, a proactive and well-planned geographic expansion strategy is recommended for SMEs. Because SMEs often initiate exports early on without prior planning, these orders have been identified in a number of empirical studies as having a high impact on managements decision to expand internationally. The proactive adaptation and creative replication of operating patterns from early markets to new ones also depends on the fungibility and

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scalability of the resources, which generally reflects the firms preparedness to internationalize In the spreading versus concentrating strategy choice, the negative correlation between the number of markets served and the percentage of markets that are significant seems evident: the larger the proportion of goods that are channeled to a smaller number of key export markets, the less remains for sale to other markets. In reality, exporters may pursue both strategies simultaneously in that exports can be highly concentrated (e.g., 80% of exports go to one destination) and simultaneously serve a large number of markets (the remaining 20% are thinly spread among a large number of distant markets). After compiling the results of studies on international marketing strategies, it was determined that the apparent successes of some new international ventures are derived from the firms effective implementation of both concentration and geographic strategy. Such ventures tend to employ a market-spreading strategy because they actively search (globally) for opportunities, while simultaneously keeping much of the firms resources committed to priority markets. Firms which internationalize rapidly enter a larger number of foreign markets while at the same time relying heavily on key export destinationsmore so than firms that follow less aggressive internationalization strategies. A more refined formulation of the simultaneous use of concentration and spreading strategies is to adopt the concept of ambidexterity originally applied to international operations of large multinational enterprises. Ambidexterity addresses the need to simultaneously pursue exploratory strategies in new markets while continuing to exploit opportunities in established markets. In summary, despite a generally positive reputation of the diversification strategy for SMEs that was influenced largely by a similar debate for large MNEs, this type of strategy involves significant untenable risks, particularly for smaller firms with financial and human resource constraints and limited operational experience In the incremental process model, exporters gradually gain experience while adding new export markets as they move from close proximity markets to ones that are more distant. In this model, the use of a large number of export markets, of which a significant number are distant, reflects a high degree of exporting maturity when the firm is engaged in an internationalization process. Thus, the number of markets and the size of the firm correlate positively with the (experiential) age of the firm. In turn, it was pointed out that not only the number of export markets matters but also whether the company expands its international
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operations within a relatively homogeneous cluster of countries (related geographic diversification) or across heterogeneous geographic regions (unrelated geographic diversification). The importance of geographic diversification has received considerable attention in the extant literature over last two decades and is identified as a crucial characteristic of born global (BG) firms. Oviatt and McDougall (1994) define (p. 49) an international new venture (INV) as a business organization that from inception seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries. Later on, the scope of geographic diversification was viewed as a key differentiating factor between INVs and those labeled as born global or truly born global firms. Luostarinen and Gabrielsson (2004) illustrated that a born global firm must have business activities in at least two geographic regions. Similarly, Kuivalainen et al. (2007) distinguished truly born global firms as those that operate in multiple and distant markets. Following the methodology adopted in the debate on global versus regional characteristics of top MNEs Rugman and Verbeke (2004), puts forward a formalized categorization of BGs and INVs (the latter of which only needs to internationalize within three years from its formation, with export sales directed to at least three overseas markets that represent at least 30% of total sales). To qualify as a BG, the firm must derive at least 10% of its turnover from each of three broadly defined triad markets: North America, Western Europe, and Southeast Asia. Early internationalizing firms do not possess established operating routines geared toward domestic markets and are quicker to absorb knowledge about dealing in foreign markets and subsequently change their processes to accommodate the needs of these markets more efficiently (Autio et al. 2000). This, in turn, facilitates a rapid expansion of international activities. As a result, early internationalization (precocity), combined with the rapidity of the internationalization process (Zucchella et al. 2007), has a positive impact on the level of geographic diversification (McNaughton 2003). Larimos(2006) study of Finnish SMEs challenges the link between the extraordinary performance and the strategy of rapid international diversification. Although the evidence generally confirms a relationship between the two, the findings primarily apply to traditional exporters and less to firms with intensive export operations (labeled by the author as truly
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born internationals). SMEs included in the latter category concentrate their export operations on key destinations and performed better by achieving a higher FSTS ratio. The literature reports different results from the combined effects of differences in language, culture, consumer behavior, and the legal framework of early internationalizing firms. These differences are termed psychic distance or country distance, and they impede the flow of information and cause uncertainty in foreign markets (Jones and Coviello 2005). In view of the financial, marketing, knowledge, and managerial constraints faced by young and small firms, what matters is not just the number of markets served, but also the effect of expanding operations beyond the home region into one or more host regions. Taking into account recent progress in regional integration [e.g., the European Union (EU) or NAFTA], the removal of barriers in the flow of goods, services, and capital has a positive impact on the regional operations of smaller firms. This is because the differences between conducting domestic and regional export sales in terms of operations often become negligibleespecially when sales within the EU single market are no longer considered exports but intracommunity trade. On the other hand, some authors emphasize benefits of operating outside of the home region. A number of factors underlie a direct, positive relationship between extended international diversification and performance (Zahra et al. 2000). Entering new markets enables a company to exploit market opportunities and gain access to an extended business network. The learning-from-exporting argument advanced by Salomon and Shaver (2005) is particularly relevant hereexporters receive valuable marketing and technological knowledge while operating in a diversified international environment. Similarly, Preece et al. (1999) articulate a difference between going international and going global. In contrast to the above, Beleska-Spasova and Glaister (2010) hypothesized that smaller exporters, unlike large MNEs, are less able to absorb the costs associated with international expansion. As a result, those exporters concentrating on the home region often perform better than those trading predominantly in the other triad regions, although this hypothesis is not supported by empirical research. Similarly, mixed results were drawn from a large panel study on German nonexporters (those exporting to the eurozone and those exporting outside the eurozone, Verardi and Wagner 2010). After eliminating sample outliers, the differences in the productivity premia between these categories of firms proved to be insignificant.

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While regional integration facilitated the international operations of smaller firms within regional country groupings, other developments paved the way for their global expansion thereby resulting in substantial progress in lowering or dismantling international trade barriers. The key driver was the information and communication technology (ICT) revolution that resulted in better communication and decreased cost of international operations (Ruzzier et al. 2006). Modern ICT enabled the implementation of new business models and facilitated participation of smaller firms in global production and service networks (i.e., by means of subcontracting, offshoring). With the use of ICT, global niche markets opened up to SMEs and small batch production became economically viable. Finally, the integration of the former communist countries in the market system and the emergence of new players like China, India, or Brazil created new, more diversified environments for conducting business internationally. Hultman, Katsikeas, and Robson investigates how international experience shapes managerial judgment in the formation of effective export promotion strategies. Their study focuses on understanding how managerial decisions concerning export duration, scope, and intensity determine the circumstances under which promotion strategy adaptation or standardization connect to export performance. Drawing from contingency theory and the organizational learning perspective, Hultman, Katsikeas, and Robson develop and test a model of the effects of different forms of international experienceduration, scope, and intensityon the performance outcomes of promotion adaptation. Based on data from 336 Swedish export ventures, the results show that the promotion adaptationperformance link differs depending on the type of experience residing within the exporting firm. Specifically, promotion adaptation relates positively to performance when duration is short and intensity low and vice versa. It appears that inexperienced exporters in terms of duration and intensity can reduce their liability of foreignness and benefit from adapting their promotional strategies in accordance with the procedures prevailing in their new host markets, as opposed to following a standardized approach. By contrast, more experienced exporters seem able to capitalize on their enhanced international knowledge and likely to find standardized promotional strategies more conducive to enhanced performance. Surprisingly, the study results did not indicate that experience in terms of scope interacted with promotion adaptation in the same manner. The authors further investigated this issue and
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found that there is a more complex underlying relationship between promotion adaptation and scope of exporting that includes sociocultural differences between markets. Additional analysis revealed that the relationship of promotion adaptation and scope with performance is conditioned by the learning barrier posed by large sociocultural distances between home and export markets. High promotion adaptation relates positively to export performance when scope is large, but only in cases when sociocultural distance is high rather than low. Hultman, Katsikeas, and Robson conclude that management decisions taken on international promotion strategies have profound implications for the performance of the affected exporters. Adaptation or standardization can be powerful strategies in this era of globalization, but it is important the promotion strategy decisions are aligned with relevant experiential contexts. Moreover, managers are recommended to avoid broad-brush conceptualizations of international experience since the study findings imply that firms have fine-grained experience profiles that may lead to different levels of learning about markets and export performance. Jena (Indian exports in Globalization Times: an analysis of Global-Local dynamics, 2010) refers to why the growing integration of societies, economies and cultures around the world, has become one of the most hotly-debated topics and key area of research among the policy makers, statesmen, corporate, politicians and academia respectively over the past few years. As India opens up her doors to the multinationals during the era of economic reform and liberalized market, putting an end to the license raj, it is not only the economies that often meet in the global market sphere, but also the people and cultures, which bring a new dimension to the multi-cultural setting. What we can see in present day modern world is that there is always a cross-cultural interaction between the local and global and the much discussed global village, is now not just a possibility but a reality despite many contradictions. Talking about Indian Handicrafts, which constitutes a significant segment of the decentralized sector of the economy, its export has reached at a commendable height. Indian folk art and crafts which are the integral parts of the Indian culture and tradition are in high demand among the western consumers. Again, foreign fashion industry borrows a great deal from Indian appliqud motifs Saree designs, an ethnic Indian wear. Needless to say, the borders between the world cultures are now eroding out and becoming irrelevant, therefore prompting to call it as a de - territorialized world.

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But notwithstanding, the real concern for many of us is that, can the local really meet with the global by truly sustaining its localness? The biggest problem in the Indian Handicraft industry is that the village craftsmen remain concerned that with free trade and mass production, hand-made products from other parts of the world will out price the products of their hard labour. So the basic question that arises, is whether globalization a panacea for every human problems that the mother earth is facing now. With a brief theoretical understanding, this paper looks at globalizations increasing impact on Indian handicrafts and crafts persons. It tries to assess how far globalization serves as an opportunity and threat to the artisans. The role of the government in promoting the crafts and protecting the artists is also discussed. The epitome of India lies in its art and craft, which symbolizes the culture, tradition and societal values. Indian artifact industry is one of the oldest & biggest sectors of India. It provides employment to millions of artisans, among whom a large number of women and people belonging to the weaker section of the society are involved, and have accepted it as a profession. India is one of the major supplier of Artifacts to the world Markets. Mohan et al(The Plight of Indian Articraft Sector in an Era of Global Economic Crisis, 2012) attempts to comprehend the essence of the art which hold the Indian artifact in high esteem and demand in the international market. The paper primarily focuses on the immense opportunities that exist for the Indian artifact industry. It also pictures the impact of global recession on the industry and personnel associated with the crafts. The paper tries to contemplate upon the hurdles which the manufacturers and exporters are facing. In addition it would also plunge into the details of skilled labour migration and the plight of Indian Artifact Industry in its present state. The paper is divided into five sections as under: The first section speaks of the Indian Artifact industry and its recognition in the Global market. The plight of the growth in Artifact sector has become a thing of deep concern due to the recessionary trend witnessed in the global economy over the past few years.. The second section deals with the research methods adopted to carry out the study and the various statistical tools used to analyse the data (both Primary and Secondary data). It would also detail the scope of the study undertaken. The next section focuses on the Government allocation of funds for the development and promotion of the handicrafts. The fourth section is set to deal with the Socio-Economic problems being faced by the artisans and the plight of skilled and semiskilled laborers- forcing migration to other sectors to maintain an equitable livelihood option, enforced on them by the economic meltdown witnessed at the global level.
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Concluding observations would form the last section, providing concrete information on the Artifact and Skilled/Semi-skilled Artisans, and, the urgency, the sector demands to protract the traditional value of Indian Society. The Indian handicraft sector has been a concern, since the rate of migration from the traditional arts has been constantly on the rise. The initiatives taken by the Government are found to be bearing fruit with the evidence of increase in employment generation in the sector. The effect of recession seems to have had a toll on the sector but, the insurance scheme launched by the Government to counter the ill effect is found to be materializing by building confidence in the mind of the artisans. The traditional craft of India has been in huge demand in the third world and has been able to withstand the pressure of economic slowdown even during hard times by showing a positive growth. Hence, there is a ray of hope, indicating that further steps would bring more population to take up entrepreneurial ventures in this sector which would lead to the survival of the endangered art of the country. The need of the hour is to invest more in Research and Development, Skill Development and promotional activities. A regulatory authority and a quality control section is an urgent requirement to streamline the Indian Handicraft sector towards further growth and prosperity. One of the major factors that were noticed was with regard to the daily wages:- When approached directly, the wage mentioned was found to be very low i.e. in most cases, less than Rs. 100, but, for the respondents whose names were provided by companies, the wages was on an average Rs. 200.There is a great opportunity to develop the art of rug weaving business, as majority of the population in the age group of 20 to 40 were willing to accept the art, provided, the wage rate was modified to at least Rs. 150. Women were willing to take up rug weaving business, if proper training programmes were imparted and their wage rate were revised to at least Rs. 125.It may be noted that, the wages may not be attractive enough, when compared to MNREGA. The major concern was a better livelihood, since, at a wage rate of Rs.100 or Rs. 120 for 100 days in a year; it is practically not be possible to save any money for the rest of the year in the current inflationary situation. The respondents felt that, a continuous income though nominal, but, on a continuous basis were required for a sustainable livelihood. Though, most of the persons were willing to migrate to other places for better opportunity, but, would prefer to continue rug weaving if the wage structure was revised and regularity of order was ensured.

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The art was transferred from one generation to the next generation through family initiatives and friends. In most of the cases, children had a chance to inherit the rug weaving art, as their parents were not reluctant, provided proper training, competitive wages and consistent orders were ensured. The populations were willing to continue as weavers. They only wished that, a proper value chain be created, since, they felt that, the current intermediaries exploited them. Further, it was also observed that the family members especially women, were supportive in the weaving business, which stands to be a constructive sign. The only thing required, is, to provide a conducive environment for bringing in more people in the ambit of weaving. There was a strong relationship between experience and daily wages, where, experience was being considered as the major determinant of wage. It was also observed that there was a relationship between no. of hours put in weaving and daily wages. The daily wages acted as a determinant for no. of hours to be allocated for weaving while the age group of 21-40 has a higher wage expectation. Also, Gender did not seem to have any relationship with daily wages, but, mean values showing male are paid higher than female. Experience and monthly income were found to be related to each other. It was found that the monthly income was determined based on the number of years of experience in weaving. Wage being a major concern, the population were willing to migrate to other places which provided them better livelihood. It was also found that, most of those who had shunned weaving hinted, financial reasons to be the major culprit for their quitting. The population opined that, they were ready to continue weaving, provided, they received proper support from the family, revision of the existing wage structure and wanted specialised training to be imparted to them. The global economic crisis, though, have been affecting the Indian Handicraft Sector, the impact have been minimal, due to the high quality brought about by the dedication of the artisans involved in the craft. The major culprit have been the poor return for the hard work put up by the labourers, bringing in forced migration in the sector. The recession though, presently showing negligible impact would be having an adverse and long lasting influence if proper motivation is not induced among the artisans who are considered to be endangered and would become extinct.

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Chapter 3 - Research Methodology

The previous chapter gave insights about the various studies that have been carried out which are relevant to the study. This chapter focuses on the research methodology which refers to the tools and methods used for obtaining information for the purpose of subject under study. The methodology followed for the purpose of finding customers response is random sample surveys. To solve any managerial problem that you face in the organization you need relevant information. This relevant information has to meet test of sufficiency and accuracy to be useful to solve the problem in hand. The information which is processed in form of data refers to collection of numbers, letters, or symbols maintained or produced for the management when required.
3.1 - Universe of the Study

Textile industry is one of the most booming industries in the world. Over the years, particularly after the adoption of liberalization policies all over the world, the world textile industry is growing very rapidly. The Asian countries have their respective dominance in the production of textile all over the world. India being one of the fastest growing economies of the world has been considered the potential global textile hub internationally. For this research, the universe of the study considered is the various export houses in India exporting textile (and in particular home furnishing goods) to USA and other countries. 3.2 - Locale of the Study For the purpose of the research, the locale of the study has been narrowed down to the export houses located in Delhi NCR. The export houses contacted for the research are listed below:
Name of Export House Angelina Gif and Premium Co. Acacia Fashions Ltd. Poddar International Sunny Enterprises Eastern Silk Industries Ltd. AN Craft United Alamgeer Exports Neha Exports Ltd Eastern Fashions International

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3.4 - Data Sources Primary data: It represents those items that are collected for the first time and first hand. This data is the raw material which may be combined, or structured in any form. The point to be noted here is that the data is not statistically processed. Various sources include: Inputs from the employees of export houses Owner of the export house Inputs from the people working in export houses of the same nature.

Secondary data: This is also known as published data. Data which is not originally collected but rather obtained from published sources and is normally statistically processed. Majority of my project is based on the secondary data that I got through my visits to the export house. Secondary source of data collection were Data available within the company. Home Decor books and magazines Export & Import books available in the library Websites.

These were some of the sources through which up-to-date and relevant data has been collected. It is also one of the best methods as provides economy in terms of time and money. After the data was collected it was screened and then used as per the requirement of the project giving a great importance to the authenticity of its sources.

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Chapter 4 Analysis and Interpretation

9 export houses (5 small scale, 3 medium scale and 1 large scale) were visited for the purpose of getting the questionnaire filled up and data gathering. Following is the analysis of the responses: 1. Products manufactured and exported

Products manufactured & exported

120% 100% 80% 60% 40% 20% 0% Bed Linen Kitchen Linen Toilet Linen Table Linen Curtains Home Others Furnishing Articles

All the respondents in the sample manufactured and exported curtains as they have the highest demand in the international market. Second highest manufacturers were observed to be of table linens (80%). 70% respondents manufactured bed linen and toilet linen and kitchen linen is manufactured and exported by 60% of the respondents. 40% of the sample exported other products such as mattresses etc. and 30% export home furnishing articles. 2. Percentage change in export

Change in export volume

100% 80% 60% 40% 20% 0% Increase Decrease

10% Decreasr e 10% >30% Increase 20% 30% Increase 20%

10% Increase 10%

20% Increase 40%

The market for export of home furnishings is growing at a steady pace since past few years. This is evident from the above response. Only 10% respondents said that their export volume has decreased in past couple of years whereas 90% claimed of increasein export volumes.
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40% respondents claimed an increase of 30% or more and same number for 20% increase. 10% respondents said their export volume has increased by 10 %. It can be clearly seen that the demand for export of home furnishings in constantly rising. 3. Factors influencing export of home furnishings from India

Factors
Good raw material base Skilled and cheap labour Good Transport facility Availability of water resource Strong finance base Experienced supplier based for

Mean Value
2 1.8 4.5 5.4 2.2 3.1

production services and intermediate goods

Respondents were asked to rank these factors influencing export of home furnishings from India. The lowest rank (1) being the most important factor and the highest rank (6) being the least important factor. Mean scores of the responses were calculated to find out the importance of factors influencing export of home furnishings. It can be seen that the two most important factors in this respect are availability of skilled and cheap labor and good raw material base in the country. Availability of water, though important in steps during manufacturing, was given the least importance by the respondents. 4. Factors creating problems Seven factors were identified and respondents were asked how much problem these factors create in export of home furnishings respondents rated labor shortage, high yarn prices and infrastructure facilities as low problem creating factors. Respondents also said that currency exchange rate fluctuation and production costs also create problems but only till a limited extent and economic slowdown and power cuts created more problems for them. It can be said that factors like recession have a huge impact on exports of home furnishings.
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5. Government Policies A majority of respondents agreed that government schemes and policies have a positive impact and help in facilitating the exports of home furnishings. GOVERNMENT POLICIES Duty Drawback- The Duty Drawback Scheme is administered by the Directorate of Drawback, Ministry of Finance. Under Duty Drawback scheme, an exporter is entitled to claim Indian Customs Duty paid on the imported goods and Central Excise Duty paid on indigenous raw material or components. To facilitate export of home decors government provides a duty drawback on net exports value of 6 8 % subject to changes from time to time Taxation Aspects: Prior to year 2000 export sales of home furnishings in our country were 100% tax free but however in the accounting year 2000 government of India introduced a tax slab for the export income pertaining to the same which was as follows:

YEAR
2000 2001 2002 2003

TAX FREE RATE

80% 60% 40% 20%

TAXABLE RATE
20% 40% 60% 80% 100%

2004 Onwards -

Presently Companies income is 100% taxable at 30% rate with 10% surcharge and 3% education cess on it.

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6. SWOT Analysis

Strengths
The strength of the Indian textile export industry is that availability of the raw material in the home country at a cheaper price and also the cheap manufacturing cost (e.g. cheap labor cost, transportation cost etc.). It is also to be noted that the United States home furnishing market is presently one of the world's most important markets and the prospects for growth are very good indeed. The disposable income of upper age group is at a high level, which spends the most on the home. They buy larger and more expensive houses, carry out restructuring or often buy a second home. The formation of new nuclear families among population's youth, through matrimony and other types of long term relationships, (in spite of the fact that in the last few years young people are staying at home for longer periods of time). Another determining factor is the rate of single people due to separations and divorces among the young which has brought about a greater demand for reduced living spaces. This things really becomes a major strength for the home furnishing market n USA. The main strengths for which exporters choose USA as a major exporting country are

Political and economic stability even though the country suffered from economic downturn conditions which are expected to revive in the future

Shared history and culture Strong underlying relationships between the US and the India. Indian goods have traditionally enjoyed a good reputation for quality in the US US manufacturers often source components overseas. Wider market access through NAFTA.

Weakness
The main weakness of the Indian Textile export industry is that it is limited by the certain export & import quotas. Also non availability of raw materials, powers may affect the Indian Textile export industry. Inflexible Indian Labor laws are the biggest weakness of Indian Textile Export Industry (manufacturing units). Demand of too much of job security is no good for an industry whose performance greatly depends on the performance of its labor force.
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Lack of discipline amongst work force in the Indian Textile factories is the reason for very low productivity and high cost of Indian Textiles. It also reduces the Quality of the products as well.

Another hurdle in the path of growing textile exports from India is Artificial pricing of the Chinese Currency, which is giving undue advantage to the Chinese industry in the Global Market. Hardening of the Indian Rupee against US$ has also seriously affected and eroded the bottom-lines of textile and garment exporting companies.

Another challenge is shorter lead-time; several of our competing countries have substantially shorter transit times to Europe and USA, which are our main markets. Non availability of direct sailing vessels and excessive government holidays (currently about 160 days a year including Saturday and Sunday's) also lead to a lot higher transit times from Indian ports.

Expenditure is very seasonal (dominated by Christmas) in USA.

Opportunities
Home Textile export industry is not a very old and still an emerging business in the global business environment with a high demand during spring and Christmas seasons. Various quotas that have been removed in 2007 have given a very big boost to this Textile Export industry. Also, various schemes taken by Indian government like TUFS (Technology Up gradation Fund Scheme) have promoted the same.India as a developing economy today is well prepared for competing and has already opened the sector for manufacture of garments and made ups for large, modern and contemporary units. Availability of abundant and low prices of cotton and low labor costs provides India with significant competitive advantage in manufacture and export of cotton yarn, textiles and made ups. Trade fairs organized by Various Trade promotion organizations (Govt. approved) also help promoting the Textile products to importers of other countries which is creating a good opportunity for this industry. As USA is capturing the largest segment of import of Textiles in the world, so it creates a great opportunity for the Indian exporters to explore various markets in this country. The factor that determines the purchasing of home furnishing items is the amount of disposable income available in USA. In any case the average amount spent on furniture purchases is tied to income brackets, as income increases so does the purchasing power. The
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increaseddisposable income in USA as compared to any other country of the world creates a big market opportunity for the home furnishing items in here.

Threats
Threats for the Textile Export industry in India is mainly the competitors from Asia which is providing the products at comparatively lower price than India, but the same quality. If we see the Chineses textile industry large number of textile projects are being undertaken in. China is also improving quality of the product. In the year 2004, China imported textile machinery valued at US $ 4.3 billion which is up by 24.26% year on year. Out of this, knitting and weaving machinery alone accounted for US $ 1.75 billion. With such a huge machinery and production China becomes the major competitor for India in Asia region. Global recessions are also a major threat for the Textile Export industry. Recently the Antidumping is also becomes the major threat for the India Textile Industry. 7. Risk Analysis Exporters expose themselves to various legal risks each time they export. These risks can be grouped under five headings: Home country risk - Here the exporter may run afoul of home country laws and regulations directed at exporting. Such laws and regulations may include those relating to export inspection, documentation, finance, charges, shipping, occupation, and the environment. An example would be failure to comply with airline packaging requirements, or misrepresentation of product, or export of a prohibited product or species. Importing country risk - This includes all laws and regulations directed at controlling imports and regulating international trade. Such laws include inspection, safety, documentation, and payment of appropriate duties and charges. An example would be misrepresentation of product. Home Country Third-Party Risk - Here is the risk associate with statutory or common-law claims brought by Australian claimants relating to such issues as injury caused by negligence, misrepresentation, or unconscionability that may adhere to the transaction. An example here would be where an employee was injured by a sharp edge or nail on a packing crate.

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Importing Country Third-Party Risk - As above but relate to actions brought by overseas claimants. An example would be an action brought by a company in Japan against an Australian exporter for use of a Japanese registered trademark or brand name, or an outbreak of illness in Japan due to contamination of Australian products during processing in Australia. International Trade Law Risk - Here are included factors such as appropriate jurisdiction, processes for dispute resolution, and claims for damages imposed on domestic traders by international courts. If a dispute arises that cannot be resolved by personal negotiation between the parties, the resolution of the dispute will be according to the Convention. The Convention will also apply for contracting parties whose countries are not parties to the Convention if they elect to have the Convention apply to their transactions.

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Visit To EASTERN FASHIONS (INTL)

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BACKGROUND
Established in 1978 the company Eastern Fashions (Intl) is an export house of repute, based in Delhi. Started as garment exporters today they are not only exporters but also a manufacturer and area of expertise in Home Furnishings, Textiles, Garments, and Handicrafts. It is managed by a team of highly skilled professionals and designers from one of the best fashion institute of India namely National Institute of Fashion Technology (NIFT) all working together to ensure quality products. It has a wide product range to offer to its clientele which includes: Quilts (Hand Quilts and Machine Quilts), Cushion Covers, Table Covers, Place Mats, Pillow Covers, Bed Covers, Bed Spreads, Curtains, Accessories, Lamp Shades (printed and embroidered) etc. Beside an exotic range of goods it also:

Specializes in various types of quilted and embroidered products made either by hand or by machine. Firm is also capable of developing new styling using different

techniques and concepts. It has its own computer aided sewing, cutting, dyeing, and embroidery machines They provide textiles dyed in vegetable and natural dyes which are non- allergic, nontoxic, and non- hazardous

In terms of infrastructure Eastern Fashions (Intl) is well equipped to handle various types of fabrics for furnishings and accessories with a built up area of 25000 Sq feet in Tughlakabad area of New Delhi. The production capacity of the plant on an average is of 1000-1500 pieces per day. Sophisticated facilities not only include skilled designers, artisans, and craftsmen but also in- house production unit operational by way of fine machinery.

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ORGANIZATIONAL STRUCTURE
Eastern Fashions (Intl) is not only an export house but also a manufacturer of home furnishings and other items like accessories etc which undergo a production process in the following manner:

SAMPLING

CUTTING UNIT

WAREHOUSE

PACKAGING FLOOR

FINISHING FLOOR

PRODUCTION FLOOR

Selection ofFabric:
Producing a quality product begins from the selection of right raw materials and cotton yarns with established spinning mills in India, also so that the product meets its buyers demand criteria. Generally prior approval of the buyer is taken for the nature composition and count of the yarn. Most desired yarn is generally in 30s and 40s count for making fabric. Company selects and forwards the yarn to its approved composite weaving mills that are using world class looms and knitting machines for making the fabric

Dyeing:
Eastern Fashions (Intl) has its own dyeing facility. The company ensures that only natural and Azo free dyes are used. The dyers use open width continuous dyeing with microprocessor controls and automatic systems to produce uniform results and defect free fabrics.

Printing:
The computer aided cotton printing machines have increased the rate of printing with high accuracy. Computers are used for creation of designs, automatic color separation, setting of designs and repeats during the process of printing, matching colors etc. Fully controlled color kitchens and automated color dispensing systems are used to produce defect free prints.
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SamplingUnit:
Within Eastern Fashions (Intl) each sample is allocated a unique computer generated code for flawless recall. The sampling unit forwards sample input details like yarn count,

composition of fabric, target dates etc. Customer suggestions are promptly attended to and the finalized details are reconfirmed to the buyer. The sampling unit recommends various options available to the buyer keeping in view the customers appeal, regional tastes and preferences. Once everything has been finalized by the buyer, the approved samples are retained at the sampling unit for ensuring strict conformity at the time of commercial production.

COLOUR WISE SORTING OFFABRIC

Cutting Floor:
After sampling of the products, they are forwarded to the cutting floor. This process is named as laying up the cut the cutting is done both manually and by the cutter which follows the pattern outlined on the maker using a straight knife machine. After cutting of the fabrics the next step is to bundle the cut pieces of same size together and sending them to storage centre from where they are dispatched to production floor for sewing

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CUTTING FABRIC AS PER MEASUREMENT

Production Floor:
Here the bundled pieces undergo the sewing process. Eastern Fashions (Intl) uses power driven sewing machines like Chain- Stitch machine, Lock- Stitch machine, Over- Lock machine etc. Individuals are assigned jobs according to their ability and efficiency in this department. The whole system is supervised by the line supervisors. The company is also dealing in quilting, an art people are not really aware of is a French technique of putting together pieces of finest fabric to attain styling.

MACHINE STITCHING OF FABRICS

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Finishing Unit:The whole system is monitored by a supervisor. There are people who are
employed at different levels to check the quality of the products coming from sewing unit. Finishing is an important function carried in an organization to insure products are made in the same way as desired by the clients and even if there are any deviations they can be corrected. The finishing operation is carried in the following manner:

INITIAL INSPECTION

ALTERATION

SPOTTING

THREAD CUTTING

FULL IRONING

MEASUREMENT

FINAL CHECKING

ALTERATION

SPOTTING

THREAD CUTTING

PRESSING

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RE-FINAL INSPECTION

FINISHED QUILT ON THE WORK TABLE

WASHING AND DRYING OF FINISHED PRODUCT

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IRONING OF THE FINISHED PRODUCT

PACKAGING OF PRODUCTS

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READYING FOR DISPATCH

Labeling Unit:
Along the production line, approved labels given by the buyers are attached to the product in this department in order to identify the following Manufacturers name Fiber content in order of percentage use Country of origin Usage care instructions Washing or cleaning instructions

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Packaging Unit:
The packaging unit is also supervised by a supervisor. The finally approved products from the finishing department come here for packing. For different requirements different

packaging cartons are there. According to the buyers need and shipping capacity packaging unit gives an order for the cartons. Cartons have a label on them with following things inscribed like Buyers Name Corporations P.O No. Item No. Style Size Cartons Dimensions etc. After the packaging is complete detailed internal inspection is undertaken by the Quality Control Personnel in presence of buyers inspection agent as well and on complete approval these goods are exported.

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COMPANY AND ITS PRODUCT LINE

Eastern Fashions (Intl) caters mainly to European markets with few clients in USA. They are dealing with some of the most prestigious clients establishing long lasting and benefiting relationship with endless possibilities. Few of its esteemed clients are as follows: Pomax, Belgium Botex Design, UK Kaszer International, Belgium Coquecigrues, France Wood & Scherer G.B.R, Germany Elcorte Ingles, Spain Blanc Dlvoire, France Dunjour Al Autre, France Orient Style, France Provence Distribution, USA / France TJ Maxx, USA HOME Goods, USA Taylor Linens, USA N.H Diffusion PomPomMaison, USA. Etc

Company provides its clients with an exclusive range of products in attractive colors and designs by keeping a close eye on the international market trends and concepts so as to be in pace with the global change. Beside this they also pay a great deal of attention to the quality of their products for premium as well as regular customers, thereby ensuring use of best raw material sourced from reliable sources all over the country. Dedicated team of its highly trained designers perfectly understand the clientele needs and bring out exactly what is needed. The product range is wide and impressive retaining their finish for years. The exotic product range comprises of: BED LINENS Quilts Bed Head Covers

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Bed Skirts Duvet Covers Throws Cushion Covers

TABLE LINENS Table Mats / Place Mats Table Covers Table Runners Napkins

KITCHEN LINENS

Aprons Bread Baskets Kitchen Mittens and Gloves Tortilla Warmers

BABY RANGE Baby Quilts Baby Pillow Covers Mattress Covers Sleeping Bags Cot Skirts Bottle Warmers Bibs

ACCESSORIES RANGE Photo Frames Cosmetic Pouches Lamp Shades Jewelry Boxes Scarves Shawls Stoles Tie Backs

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Thus from trendy to ethnic, casual to formals wide product range is available in here, made keeping in mind the upcoming demand. The company constantly strives at providing the best and that too at competitive prices.

MARKETING STRATEGIES
Eastern Fashions (Intl) marked its presence in the market mainly by participating in fares and exhibitions and internet. TheExportPromotion Council of Handicrafts (EPCH) organizes two exhibitions in an year: First being held at end of January or first week of February and Second exhibition is usually scheduled at the end of September or first week of October Company actively

These exhibitions invite foreign buyers from all over the globe. participates in these fares held twice a year.

For its Product Distribution company uses direct channels with no involvement of intermediaries. Eastern Fashions (Intl) provides its products to its buyers at comparative prices which is determined by adding the cost of raw material to the manufacturing and overhead costs of the company and adding a markup of nearly 20 25%.

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Chapter 5 Secondary Data Analysis

Textile Export Trend: India

EXPORTS OF PRINCIPAL TEXTILE COMMODITIES - US DOLLARS (US $ million) Commodity / Year 2005-06 2006-07 2007-08 2008-09 A Textile and textile products 1 Cotton yarn, fabrics, made-up, etc. 2 Natural silk yarn, fabrics, made-up, etc., incl. silk waste 3 Man made yarn, fabrics, made-up, etc. 4 Manmade staple fiber 5 Woolen yarn, fabrics, made-up, etc. 6 Readymade garments 7 Jute & jute manufactures 8 Coir & coir manufactures 9 Carpets (a) Carpet handmade (b) Carpet mill made (c) Silk carpets Handicrafts (excluding handmade carpets) 12791.5 3394.8 379.8 13555.3 3450.1 405.0 16402.1 3944.8 432.6 17373.2 4218.7 441.9

2009-10 19015.1 4511.2 381.9

1761.2

1962.7

1957.8

2204.4

2858.8

60.1 58.3 6231.4 242.4 77.8 585.7 559.5 0.0 26.2 499.7

88.0 69.8 6561.4 276.3 105.6 636.4 608.1 0.0 28.4 377.4

81.8 85.3 8617.7 296.3 133.3 852.6 829.2 0.0 23.3 462.0

196.4 85.2 8892.3 260.4 145.9 928.0 898.7 0.0 29.3 438.0

276.9 93.1 9491.8 322.9 158.9 919.7 905.7 0.0 14.0 460.7

Table 1, Source: Directorate General of Commercial Intelligence and Statistics.

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US $

Graph-1
YEARS

Above chart represents year wise export of various items of home furnishings and handicrafts. Since 2005 export of readymade garments have always been maximum as compared to other textile items like woolen yarns, jute made-up etc followed by cotton yarns, cotton fabrics and made-up. Also that over the years it has shown an increasing trend.

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Export of all commodities Vis-a- Vis Textile (value in US $ million)

Period(April/March)

Export of all commodities

Export of all Textiles

Share of textiles in all export of commodities (%)

2005-2006 2006-2007 2007-2008 2008-2009

63842.6 83535.9 103090.5

126361.5

12791.5 13555.3 16402.1

17373.2

20.04% 16.23% 15.91% 13.75%

2009-2010 159006.7 19015.1 11.96% Table 2, Source: Directorate General of Commercial Intelligence and Statistics.

Thus following table represents the textile export trend which has subsequently shown an increase from year 2003 2004 to 2007-2008 even though the share of textile in total exports have shown a decreasing trend with maximum % in the recent year 2007-08.

Graph-2
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Business Environment of USA

The federal governments oversees the operation of over 175 public-use Foreign Trade Zones (FTZs) and over 180 private special-purpose sub zones throughout the country. These

secured areas, which are the US equivalent of international free-trade zones, currently operates in almost all states. FTZs are used by both exporters and importers to warehouse, package, and manufacture goods. Duties are paid only on those items that enter to the USA domestic market from the zone, often at rates lower than those that would have applied upon initial importation. A 1980 amendment to US customs regulations made Foreign Trade Zones even more attractive to businesses, especially for those interested in importing into United States. When merchandise enters US territory, the customs appraisal excludes the cost of processing (US labor, overhead, facilities) and profit realize when determining the duty value of imported articles. The federal government actively promotes exports of US produced goods The Export-Import Bank of United States (EXIM bank) is a government owned corporation that assists in financing and facilitating US exports by making loans and providing guarantees and insurance for loans from commercial sources. EXIM bank provides short, medium and long-term financing when it is not available from the private sector on competitive terms. Financing is available to buyer, sellers or bank involved in the export activity even if the exporting company has foreign ownership, however, the products or services exported must originate in the United States.

Exporting to USA:
United States is the worlds largest business place, for all kind of businesses due to it being thelargest and most technologically powerful economy in the world, with aGDP of $14.58 trillion (2010). Exporting goods to USA consist of the following essential elements:

A sale of merchandise from the foreign exporter to a US importer. When the merchandise reaches a port of entry, documents must be filed with customs in order to assign a tentative value and tariff classification of the product. Goods aregenerally released upon presentation of these documents, unless Custom selects the shipments for physical examination.

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Customs may choose to examine the merchandise to see whether there are any restrictions on importation (like quotas); to ensure compliance with customs and other agency regulations (like proper marking or other means of identification) and to uncover any prohibited items (like counterfeit goods).

Duties are generally payable within 10 working days after good are released by customs. If the estimated duties paid are determined to be correct, and customs doesnt require any additional information, the entry is liquidated without any change. If the

Customs determinesthat the estimated duties paid were not correct, the entry is liquidated with a bill for increased duties or a refund of overpaid duties. Exporters should also be aware of the United States Antidumping law (Sales at prices lower than for sales in export market) and the countervailing Duty Law (subsidies exports). Exporters should also be aware of various import duties applicable in USA over various goods like: 1. Custom duties - Items brought into USA are subjected to duty in accordance with their classification in the import tariff schedule. Duty rates vary, depending on the

products country of origin, the type of product and other factors. India comes in the independent countries category. 2. Foreign trade - Duties are not paid upon importation when goods are admitted to a Foreign trade Zone. The duties become payable only if and when those goods are withdrawn from the zone for consumption in the USA. When the goods enter US territory, the cost of processing undertaken in the Zone (including USA labor, overhead and facilities) as well as the profit realized is excluded in determining dutiable value. 3. Other taxes - In addition to duties, USA imposes a user fee of 17% ($1.70/$1000 value) on all imported goods. Imports and exports by water are also subject to a 0.125% ($1.25/$1000 value) harbor maintenance fee. Besides these fees and excise taxes on some products such as alcoholic beverage, perfumes, tobacco and petroleum products, no other taxes are due by virtue of exportation to the United States. However, once the product is sold within the country, many local jurisdictions collect inventory or sales taxes, which vary from state to state.

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Documentation Procedure:
To make or file a customs entry the following documents are generally required A bill of lading, airway bill or carriers certificates (naming the consignee for customs purposes) as evidence of the right of the consignee to make entry. A commercial invoice, obtained from the exporter that shows the value and description of the merchandise. Entry manifested or Application and special Permit for Immediate delivery.

Packing list if appropriate, and other documents necessary to determine whether the
merchandise may be admitted. The documentation required up to the stage of customs clearance is known as preshipmentexport documentation. The documentation in relation to negotiation of documents for realization of export proceeds is referred to as post-shipment export documentation. An exporter is required to deal with the various documents both at the pre-shipment and post shipment stage to complete the export transaction. These documents are important as these are used as an evidence of shipment and title of goods for obtaining payments

The shipment is represented by the set of documents once the goods have been cleared by the customs for their transportation to the importer. These document are of vital interest to both the exporter and importer. The importer needs them to claim peaceful and legal possession and delivery of the goods in his country. The exporter needs to hand them over to claim payment for the shipment.

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Indias Trade with US (US$ Million)

2005-06 $ US Exports 7,199.59

2006-07 $US 8,395.61

2007-08 $US 9,305.12

2008-09 $US 8,513.34

2009-10 $US 10,895.76

Imports

3,640.25

3,560.22

3,015.00

3,149.62

4,443.58

Table-9, Source: Directorate General of Commercial Intelligence and Statistics.

From the above table we can see that there has been a steady increase in the exports to US in 2005-2007 and thereafter in 2008-2009 the exports have decreased but again followed a rise in the FY 2009-2010 at a greater rate than before. On the other hand the imports to US has not increased at the same rate in comparison to the exports. Thus India has been one of the major exporters to US leading to self sufficiency of the country.

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Chapter 6 Findings and Conclusion

This business on export of home furnishing items really has great opportunity in USA which can be interpreted with the help of data collected and analyzed about USA textile imports and Indias textile exports. The major competition though to India in this section is given by the other Asian countries where China is on the top due to the Tax exemptions it gets and cheaper power production cost as compared to India. Presently, even after the economic downturn in USA, it still stands as the worlds largest importer of textiles in the world thus increasing potentials of export of Indian home furnishings as our country is one of the largest producer of textiles. Also the sales of the Home furnishing items generally depend upon the disposable income of the consumers, which is very high in USA as compared to the various countries in the world. Up to 2005 the export of home furnishing items was very smooth but by the financial year 2008-2009 export of Bed Linen saw an abruptly increasing trend especially in USA which is again a good indication for the exporters of home furnishing items in India to explore new markets in this country. Government schemes, policies and tax structure also have a positive impact and facilitate the exports of home furnishings. It is believed the quota regime has frozen the market share, providing export opportunities even for high cost producers. Thus, in the free trade regime, the pattern of imports in the quota countries would undergo changes. The issues that would govern the market share in the post quota regime would eventually be productivity, raw material base, quality, cost of inputs, including labour, design skills and operation of economies of scale. It is believed that quotas, by limiting the supply of goods have kept export prices artificially high. Thus, it is estimated that there would be price war in the post quota regime, with competitive price cuts. The price and quantity effects would depend on the efficiency in production process, supply chain management and the price elasticity of demand. Due to the expected fall in prices, developing countries with high production cost have little choice but to compete head-on with the biggest low cost suppliers. In this process, it is presumed that there would be better resource reallocation in these economies.

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It is assumed that quota restrictions would continue beyond 2005 in various forms. It is also widely recognized that removal of quota may not directly provide easy and unrestricted access to developed country markets. There would be non-tariff barriers as well. Standards related to health, safety, environment, quality of work life and child labour would gain further momentum in international trade in textiles and clothing.

Limitations of the project

The training has been completed with ease and no particular limitations or shortcomings. However during the collection of data for the project report there were a few problems which were incurred: Due to privacy issues, the company was not able to deliver all the required information. Since lot of policies and documents are confidential in nature it was a problem to source out information from the officials. As major part of the report was dependant on secondary data, latest and up to date data was not available. Some updated data was available only on paid sites which could not be accessed, and latest figures could not be provided.

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Chapter 7 - Recommendations
From the data that has been analyzed in the project report following are the suggestions that can be drawn out: As the initial months of this current year 2012 show a good response from the buyers for bed Linen items so company should come out with multiple products from this segment. They should promote more about Bed linen products to the Buying agents from USA. Cost competitiveness in Indian furnishings sector has been restrained by limited scale operations, obsolete technology and reservation under SSI policies. While retaining its traditional cost advantages of home grown cotton and low cost labour, India needs to sharpen its competitive edge by lowering the cost of operations through efficient use of production inputs and scale operations. Besides, there are needs for rationalization of charges, levies related to usage of export logistics to remain cost competitive. As fallout to the quota regime, there would be consolidation of production and restriction on supplying countries, which would necessarily mean improved scale operations. Indian players should also integrate to achieve operating leverage and demonstrate high bargaining power. It is reported that Chinese textile firms have already invested heavily to expand and grab huge market share in the quota free world. In India, organized players in this sector would require huge investments to remain competitive in the quota free world. These players need to expand and integrate vertically to achieve scale operations and introduce new technologies. It is estimated that the industry would require Rs. 1.5 trillion (US $ 35 billion) new capital investment in the next ten years (by 2014) to lap the potential export opportunities of US $ 70 billion. It is estimated that USA and EU together would offer a market of US $ 42 billion for Indian textiles and garments in 2014. Technology would play a lead role in the weaving and processing, which would improve quality and productivity levels. Innovations would also be happening in this sector, as many developed countries would come up with new generation machineries that are likely to have low manual interface and power cost. Indian textile industry should also turn into high technology mode to reap the benefits of scale operations and quality. Foreign investments coupled with foreign technology transfer would help the industry to turn into high-tech mode.

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Internationally, trading in textile and garment sector is concentrated in the hands of large retail firms. Majority of them are looking for few vendors with bulk orders and hence opting for vertically integrated companies. Thus, there is need for integrating the operations in India also, from spinning to garment making, to gain their attention. This would also bring down the turnaround time and improve quality. Indian players should also improve upon their soft skills, viz., design capabilities, textile technology, management and negotiating skills. Logistics and supply chain would also play a crucial role as timely delivery would be an important requirement for success in international trade. The logistics and supply chain management of Indian textile firms are relatively weak and needs improvement and efficiency. China has already created a world class export infrastructure. Given the volume of projections for exports by India, it may be necessary to create additional export infrastructure, especially investment for modernization of ports. In addition, India needs to invest for creating brand equity, supply chain management and apparel industry education. To sum up, the ability of Indian home furnishings industry to take advantage of quota phaseout would depend upon their ability to enhance overall competitiveness through exploitation of economies of scale in manufacturing and supply chain. The need of the hour therefore is to evolve a well chalked out strategy, aimed at improvement in the levels of productivity and efficiency, quality control, faster product innovation, quick response to changes in consumer preferences and the ability to move up in the value chain by building brand names and acquiring channels of distribution so as to outweigh the advantages of competitors in the long run. Beside these there are certain general recommendations that I would like to give keeping in mind improvement of the infrastructure: Large bins in the washing department of the companies should be provided to avoid keeping the garments from overflowing from the bins. Proper lighting conditions should be provided within the factory for the workers working in the night shifts. The machines of washing and finishing departments should be properly guarded in order to avoid accidents.

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References
Books: Albaum, G. ,Duerr, E. , Strandskov, J. (2008), International Marketing and Export Management, pp 475 - 501 Davies, G. (1984), Managing Export Distribution. London : William Heinemann, pp 581 582 Home Furnishing Magazines

Websites: https://www.cia.gov/library/publications/the-world-factbook/geos/IN.html https://www.cia.gov/library/publications/the-world-factbook/geos/US.html http://www.rbi.org.in/scripts/PublicationsView.aspx?id=10654 http://www.textilefurnishings.com/exim-policy.html http://www.epch.com/moreDetails.htmhttp://commerce.nic.in/tradestats/indiatrade_press.asp http://smetimes.tradeindia.com/smetimes/news/top-stories/2008/Jun/13/exporters-ofhome-furnishing-feeling-heat-of-rising-inflation.html http://italiaindia.com/images/uploads/pdf/home-textile-furnishing.pdf

Online Journals: Key factors for the Successful Export Performance of Small Firms (2009); Journal of International Marketing, Brouthers LE, Nakos G. The Impact of Geographic Diversification on the Export Performance of Small and Medium sized Enterprises (SMEs) (2012); Journal of International Entrepreneurship, Cieslik J., Kaciak, E., Welsh, D.H.B. Export Promotion strategy and Performance: Role of International Experience (2011); Journal of International marketing, vol 19,No 4, pp 17-39, Hultman Magus Constraints and potential of handicraft industry in underdeveloped region (2011); African journal of Business management vol.5(2),pp 256-260, Redzuan M, Aref F. Indian exports in Globalization Times: an analysis of Global-Local dynamics (2010); Interdiscipilnary Description of Complex Systems 8(2), 119-137, Jena, P.K. Network Without Technologies in Industrial Districts of North East Italy (2001); Cluster Poilicies: Cluster Development, Chiarvesio, N., Micelli S. The Plight of Indian Articraft Sector in an Era of Global Economic Crisis (2012); International Conference on technology and Business management, Mohan Ashutosh.

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Annexure A Interview Questionnaire

Questionnaire
1. Name and Address :_____________________________________________________ 2. Year of Establishment: 3. Nature of ownership: 4. Type of business operation : a) Small scale b) Medium scale c) Large scale

5. Products manufactured and exported : a) Bed linen d)Table linen articles 6. Process involved : a) Dyeing d) Quality checking b) weaving e) packing c) sampling f) others b) Kitchen Linen e) Curtains c) Toilet Linen f) Home furnishing

g) other made ups

7. Tick the countries where you are exporting? USA Spain France Australia Canada Germany Other countries

8. Do you have any changes in percentage of export in past 2 years? a) Yes b) No

If yes what is the change? a) Increase b) Decrease

If Increase what is the percentage of change? a. 10% increase b. 20 % increase c. 30 % increase d. More than 30% increase If Decrease what is the percentage of change? a. More than 30% decrease b. 30 % decrease Page | 57

c. 20 % decrease d. 10% decrease 9. Rank the factors that influenced for home furnishings export from India?(Rank 1 to 6) Good raw material base Skilled and cheap labour Good Transport facility Availability of water resource Strong finance base Experienced supplier based for

production services and intermediate goods Others

10. Are you facing any problem regarding the following factors? Low Currency fluctuation Economic slow down Labour shortage Yarn price high Infrastructure facilities Power cuts Production cost Other Problems To limited extend High

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11. Do government policies, schemes and corporation helps in promoting home furnishings export? a) Yes 12. Rank the followings: a) Strengths Good raw material base Skilled and cheap labours Strong private finance Favorable schemes Export Environment b) No

b) Weakness Unorganized industry Unskilled labours Lower productivity Scarcity of water Power cuts Global competition

c) Opportunities Abundant availability of raw materials Unrecognized markets Growing market demand Skilled labours at low cost Favorable policy initiatives

d) Threats Lack of modernization Pollution problems Lack of scientific management Fast depletion of water source Lack of linkage between SMEs Competition from other countries Changing political environments overseas ****** Thank you ***** Page | 59