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EXECUTIVE SUMMARY
The export marketing is getting more and more competitive day by day.
This project is a study of “Indian Silk” which is a sensitive item. The export
policies have a direct bearing on the domestic silk industry at large.
India is the 2nd largest producer and exporter of silk in the world after
China. We also have very big domestic silk sarees market, which consumes 90%
of the silk produced in India.
This project gives a brief idea about the export of silk, History of silk,
how the silk get processed, export earnings through silk, different incentives /
assistance given to the Indian silk exporter, different competitors of Indian silk in
the world market and how India is safe in the 21st century.
Keeping the above in view, this project work covers the valuable
information on Export of silk, given in various topics to the best of my
knowledge and belief.
Let see the project in detail and understand the Indian silk market in the
world context.
The developed markets going more towards eco-friendly textiles, natural
fibre like silk can look-up with confidence in the years to come. In order to
make use of these situations, India silk industry has to gear up itself to meet the
future challenges ahead.
INTRODUCTION
Silk is one of the oldest known textile fibers.
SILK in the Indian subcontinent is a luxury good. In India, about 97% of
the raw silk is produced in the five Indian states of Karnataka, Andhra Pradesh,
Tamil Nadu, West Bengal and Jammu and Kashmir. The North Bangalore regions
of Muddenahalli and Kanivenarayanapura, the upcoming sites of a $20 million
"Silk City" and Mysore contribute to a majority of silk production. Another
emerging silk producer is Tamil Nadu where mulberry cultivation is concentrated
in Coimbatore, Erode and Dharmapuri districts. Hyderabad, Andhra Pradesh and
Gobichettipalayam, Tamil Nadu were the first locations to have automated silk
reeling units.
HISTORY
According to Chinese tradition, silk was used as long ago as the 27 th
century BC. The silkworm moth was originally a native of China, and for about
30 centuries the gathering and weaving of silk was a secret process, known only
to the Chinese. China successfully guarded the secret until AD 300, when Japan,
and later India, penetrated the secrecy.
The ancient Persian courts used Chinese silks, unraveled and rewoven into
Persian designs. When Darius III, king of Persia, surrendered to Alexander the
Great, he was clothed in such silken splendor that Alexander was completely
overshadowed and demanded as spoils the equivalent of $7 million in silk.
Silk became a valuable commodity in both Greece and Rome, until AD
550 all silk woven in Europe was derived from Asiatic sources. About that time,
however, the Roman emperor Justinian I sent two Nestorian monks to China,
where, at the risk of their lives, they stole mulberry seeds and silkworm eggs,
secreted them in their walking staffs, and brought them to Byzantium.
Thus, the Chinese and Persian silk monopolies ended. With the spread of
Islam, the silkworm came to Sicily and Spain. By the 12 th and 13th centuries Italy
had become the silk center of the West, but by the 17 th century France was
challenging Italy’s leadership. The silk looms established in the Lyons area at that
time are still famous today for the unique beauty of their weaving.
The silkworm, however, did not flourish in the English climate, nor has it
ever flourished in the U.S. The first silk mill in the U.S. was erected in 1810.
With the advent of the power loom, and with the help of the high tariffs
introduced during the American Civil War against imported woven goods, the
American silk-weaving industry entered a period of growth.
Silk Goes To India
The brocade weaving centers of India developed in and around the capitals
of kingdoms or holy cities because of the demand for expensive fabrics by the
royal families and temples. Rich merchants of the trading ports or centers also
contributed to the development of these fabrics. Besides trading in the finished
product, they advanced money to the weavers to buy the costly raw materials that
is silk and zari. The ancient centers were situated mainly in Gujarat, Malwa and
South India. In the North, Delhi, Lahore, Agra, Fatehpur Sikri, Veranasi, Mau,
Azamgarh and Murshidabad were the main centers for brocade weaving. Northern
weavers were greatly influenced by the brocade weaving regions of eastern and
southern Persia, Turkey, Central Asia and Afghanistan.
Gujrati builders and weavers were brought by Akbar to the royal
workshops in AD 1572. Akbar took an active role in overseeing the royal textile
workshops, established at Lahore, Agra and Fatehpur Sikri where skilled weavers
from different backgrounds worked. Expert weavers from those distant lands
worked with the local weavers and imparted their skills to the locals. This
intermingling of creative techniques brought about a great transformation in the
textile weaving industry. The exquisite latifa (beautiful) buti was the outcome of
the fusion of Persian and Indian designs. Brocades produced at the royal
workshops of other well-known Muslim centers in Syria, Egypt, Turkey and Persia
were also exported to India. Under the Mughals, sericulture and silk-weaving
received special encouragement and silk cloth produced in the Punjab came to be
prized throughout the world. Lahore and Multan developed into major centers of
silk industry. The tradition continues.
ABOUT SILKWORM
SILKWORM, common name for the silk-producing
larvae of any of several species of moths.
Silkworms possess a pair of specially modified
salivary glands called silk glands, or sericteries,
which are used in the production of cocoons. The
silk glands secrete a clear, viscous fluid that is forced through openings, called
spinnerets, on the mouthparts of the larva; the fluid hardens as it comes into
contact with air. The diameter of the spinneret determines the thickness of the
silk thread produced.
The best-known silkworm is the larvae of the common, domesticated
silkworm moth, Bombyx mori, of the family Bombycidae. This moth has been
cultivated for many centuries and is no longer known in the wild state.
The female deposits 300 to 400 bluish eggs at a time; the eggs are
fastened to a flat surface by a gummy substance secreted by the female. The
larvae, which hatch in about ten days, are about 0.6 cm (about 0.25 in) long. The
larvae feed on leaves of white mulberry, Osage orange, or lettuce. Silkworm
caterpillars that are fed mulberry leaves produce the finest quality silk. Mature
larvae are about 7.5 cm (about 3 in) long and yellowish gray or dark gray in
color. About six weeks after hatching, the common silkworm stops eating and
spins its cocoon. The length of the individual fiber composing the cocoon varies
from 300 to 900 m (1000 to 3000 ft). The silkworm pupates for about two
weeks; if allowed to complete its pupation period, it emerges as an adult moth.
Tearing during emergence damages the silken cocoon beyond commercial
use. Therefore, in the commercial production of silk, only enough adult moths are
allowed to emerge to ensure continuation of the species. The rest are killed by
heat. Other moths known as silkworm moths include the giant silkworm moths of
the family Saturniidae, particularly of the genus Antheraea.
SILK- WHY?
Silk is a high value but low volume product accounting for only 0.2 % of
world’s total textile production. Silk production is regarded as an important tool
for economic development of a country as it is a labour intensive and high
income generating industry that churns out value added products of economic
importance. The developing countries rely on it for employment generation,
especially in rural sector and also as a means to earn the foreign exchange.
SILK- WHERE?
Geographically, Asia is the main producer of silk in the world and
produces over 90 % of the total global output. Though there are over 40 countries
on the world map of silk, bulk of it is produced in China and India, followed by
Japan, Brazil and Korea. China is the leading supplier of silk to the world with
an annual production of 81880 MT (2000). Out of Which the Mulberry raw silk
product is 78080 MT.
India is the second largest producer of silk and also the largest consumer
of silk in the world. It has a strong tradition and culture bound domestic market
of silk. In India, mulberry silk is produced mainly in the states of Karnataka,
Andhra Pradesh, Tamil Nadu, Jammu & Kashmir and West Bengal, while the non-
mulberry silks are produced in Jharkhand, Chattisgarh, Orissa and northeastern
states.
SILK- TYPES
There are four major types of silk of commercial importance, obtained from
different species of silkworms which in turn feed on a number of food plants. These are:
MULBERY
TASAR
MUGA
ERI
Except mulberry, other varieties of silks are generally termed as non-mulberry silks. India
has the unique distinction of producing all these commercial varieties of silk.
MULBERRY: - The bulk of the commercial silk produced in the
world comes from this variety and often silk generally refers to mulberry
silk. Mulberry silk comes from the silkworm, Bombyx mori L that solely
feeds on the leaves of mulberry plant. These silkworms are completely
domesticated and reared indoors. In India, the major mulberry silk producing states are
Karnataka, Andhra Pradesh, West Bengal, Tamil Nadu and Jammu & Kashmir which
together accounts for 92 % of country’s total mulberry raw silk production.
TASAR: - Tasar (Tussah) is copperish colour, coarse silk mainly used for
furnishings and interiors. It is less lustrous than mulberry silk, but has its
own feel and appeal.
In India, tasar silk is mainly produced in the states of Jharkhand,
Chattisgarh and Orissa, besides Maharashtra, West Bengal and Andhra Pradesh. Tasar
culture is the main stay for many a tribal community in India.
ERI: - Eri silk is the product of the domesticated silkworm, Philosamia ricini that feeds
mainly on castor leaves. Ericulture is a household activity practiced mainly for protein
rich pupae, a delicacy for the tribal. Resultantly, the eri cocoons are open-mouthed and
are spun. The silk is used indigenously for preparation of chaddars (wraps) for own use
by these tribals. In India, this culture is practiced mainly in the northeastern states and
Assam. It is also found in Bihar, West Bengal and Orissa
MUGA: - This golden yellow colour silk is prerogative of India and
the pride of Assam state. It is obtained from semi-domesticated multivoltine silkworm.
These silkworms feed on the aromatic leaves of Som and Soalu plants and are reared on
trees similar to that of tasar.
Muga culture is specific to the state of Assam and an integral part of the tradition
and culture of that state. The muga silk, and high value product is used in products like
sarees, mekhalas, and chaddars, etc.
FAMOUS SILK CENTRE IN INDIA
SILK SILK CENTRE
Andhra Pradesh Dharmavaram, Pochampalli, Venkatagiri, Narainpet
Assam Sualkuchi
Bihar Bhagalpur
Gujarat Surat, Cambay
Jammu & Kashmir Srinagar
Karnataka Bangalore, Anekal, Ilkal, Molakalmuru, Melkote, Kollegal
Chattisgarh Champa, Chanderi, Rigger
Maharashtra Paithan
Tamil Nadu Kancheepuram, Arni, Salem, Kumbhakonam, Tanjavur
Uttar Pradesh Varanasi
West Bengal Bishnupur, Murshidabad, Birbhum
EXPORT PROCEDURE AND DOCUMENTATION
1. REGISTRATION STAGE: -
Deciding the nature of the business : - The exporter must have to decide the nature
of the business. His choice will be one of the following:
Sole proprietor business.
Partnership firm.
Joint stock company.
Opening of bank account : - An exporter has to select a bank, which undertakes to
fulfill all banking formalities connected with negotiation of documents and
realization of export proceeds. The bank must be authorized to deal with “Foreign
Exchange”.
Registrated with the Shop and Establishment Act : The exporter has to registrated
under this act and gets the registrated “License Number”.
Obtaining code number from DGFT : - This is another formality, which every
exporter has to complete without which he cannot export any commodity. The
code number is known as “Importer-Exporter Code (IEC) Number”. This code no.
is granted by “DGFT (Director General of Foreign Trade)”.
Registration with the Silk Export Promotion Council : - The exporter is required to
register his firm with the “Indian Silk Export Promotion Council” for securing
various benefits under the Import Export Policy.
Obtaining GIR No./PAN No : - Income from export is exempted from income tax
for which he is required to register his firm with “Income Tax Authority”. For this
purposes he has to first get the GIR No./PAN No.
Obtaining Sales Tax Number : - The exporter has to apply to the sales tax
authority for getting “Sales Tax Registration” number. It is compulsory to get the
benefit of sales tax exemption.
2. PRE-SHIPMENT STAGE: -
Sampling and Correspondence : - Before confirming the order the seller send the
sample of the silk material and correspondence with the prospective buyer on the
“terms and conditions” of the order.
Obtaining the confirmed order : - When the overseas buyer accepts the exporter
offer or the invoice, he sends a confirmed order called “Indent” to the exporter.
The exporter should check foreign exchange regulations of the importer countries.
Obtaining a confirmed Letter of Credit : - Together with the confirmed letter order
the exporter may send a formal letter to the buyer or importer to open a “Letter of
Credit” in his name.
Preshipment finance : - As soon as the exporter gets the letter of credit; he should
approach his bank for securing “Preshipment finance”.
Production/Procurement of Goods : - The exporter has to arrange for production of
goods as soon as he gets the “Preshipment finance” from the banks.
Packing and Marking : - The exporter has to arrange for proper packing and
marking of the goods. It must ensure proper protection of the goods and quality of
the packing material. If necessary, the exporter can take the assistance from the
“Indian Institute of Packing (IIP)”.
Silk-pre-shipment inspection : - Exporters will bring the consignments of silk to
the customs point. For each consignment, an application for pre-shipment
inspection in prescribed forms of “Central Silk Board (CSB)” will be made
accompanied by two copies of export invoices, two packing lists and a sample
swatch of 6" square dimension.
Appointment of C&F agents : - Dispatch of goods from India to foreign countries
is a technical job which the exporter require the service of “C&F” agents. C&F
agent ensures smooth clearance of goods from the customs and collection of
negotiable documents.
3. SHIPMENT STAGE: -
Arrangements of Internal transport from factory warehouse to the port of
shipment: - The exporter has to make necessary arrangements for “transporting of
goods” by rail or roads way from his place to the port of shipment.
Preparation and Processing of Shipping Documents : - when the goods reach the
port of shipment, the exporter has to arrange for preparation of a complete set of
documents. The following documents must be submitted to the “Custom
Appraiser at the Custom House”.
Export of Silk (India)
Commercial Invoice (ANNEXURE -1)
Packing List or Packing Note (ANNEXURE -2)
Warehouse Receipt (ANNEXURE -4)
Mate’s Receipt (ANNEXURE -5)
Letter of Credit
Shipping Bill (ANNEXURE –7)
Marine Insurance Policy.
Proforma Invoice
Central Excise
Custom Procedure take Place – During First CSB Inspection
4. POST-SHIPMENT STAGE: -
Submission of Documents by the Agents to the Exporter : - The C&F agents
submit the necessary documents to the exporter to enable him to present the same
to his bank for the purpose of negotiation.
Shipment Advice to Importer : - After the shipment of goods, the exporter has to
send suitable intimation to the importer for his information it include detail like
date of shipment, name of the vessel, date on which goods will reach the
destination etc.
Presentation of Documents to the Bank for negotiation: - A complete set of
documents is submitted by the exporter to his bank for the purpose of negotiating
the same and obtaining export proceeds for the same. The following documents
are to be submitted and they are: -
Bill of Exchange (ANNEXURE -3)
Commercial Invoice
Bill of Lading (ANNEXURE -6)
Marine Insurance Policy
Certificate of Origin and Consular Invoice
Processing of GR Form : - When the negotiating bank has received payments, it
will record on the duplicate copy of the GR Formand forward it to the RBI. When
they are found to be alright the transactions is treated closed because the required
foreign exchange payment has already been received.
EXPORT INCENTIVES/ASSISTANCE:
Government of India offers various incentives and facilities to Indian
exporters in order to encourage and support the export efforts, as the foreign exchange
earned through exports is vital to the country at a time of its adverse balance of payment
position. There are monetary as well as non-monetary incentives. Exporters are provided
with various export incentives/assistance under different Export Promotion Schemes. The
following of them are listed:
Exemption from Income Tax : -The single biggest incentive that an exporter now
enjoys is the exemption from income tax. Export earnings were not subjected to
income tax under section 80-HHC. But from the year 2000-01, this benefit is
being phased out in 5 years time.
Duty Free REP:(DFRC ): - All silk exporters can avail of the benefits under this
scheme for the grant of Replenishment license for import of raw silk free for
custom duty on post export basis.
Other Assistance: - Exporters are also made available other assistance and
facilities to encourage exports such as excise duty rebate, exemption from sales
tax, Rail/ Ocean/ Air Freight concession. MDA, Pre-shipment and post-shipment
finance from banks at low interest, ECGC etc.
Duty Drawback : - Exporters who are not availing benefits under DEEC or DEPB
scheme can claim Duty Drawback “NEW DRAWBACK RATES FOR SILK
ITEMS”. The Government has notified the new Duty Drawback Rates vide
Notification No. 12/2004 Customs (N.T.) Dated 29th January 2004. The Drawback
Notification comes into effect from 9th February 2004.
Sr.No Sub
Sr.No.
Description of goods Rates of drawbacks Allocation
1. Fabrics made out of natural silk
other than made of Noil Silk
Yarn.
Rs. 86.00 (Rs. eighty six only)
per kg of silk content
All Custom
2. Fabrics made of Noil Silk Yarn Rs. 24.50 (Rs. Twenty four
and fifty paise only) per kg of
silk content.
All Custom
3. Readymade Garments made
wholly or mainly of natural silk
other than made of Noil Silk
Yarn
Rs. 86.00 (Rs. eighty six only)
per kg of silk content.
All Custom
4. Readymade Garments made
wholly or mainly of Noil Silk
Yarn.
Rs. 24.50 (Rs. Twenty four
and fifty paise only) per kg of
silk content.
All Custom
5. High fashioned Readymade
Garments made wholly or
mainly of natural silk other than
made of Noil Silk Yarn
Rs. 86.00 (Rs. eighty six only)
per kg of silk content.
All Custom
6. High fashioned Readymade
Garments made wholly or
mainly of Noil Silk Yarn
Rs. 24.50 (Rs. Twenty four
and fifty paise only) per kg of
silk content.
All Custom
7. Handloom / Power loom
Lungies (including Lungies
commonly known as Sungits)
made of natural silk other than
made of Noil Silk Yarn
Rs. 86.00 (Rs. eighty six only)
per kg of silk content.
All Custom
8. Handloom / Power loom
Lungies (including Lungies
commonly known as Sungits)
made of Noil Silk Yarn
Rs. 24.50 (Rs. Twenty four
and fifty paise only) per kg of
silk content.
All Custom
9. Made-up articles made out of
fabrics made wholly or mainly
of natural silk other than made
of Noil Silk Yarn.
Rs. 24.50 (Rs. Twenty four
and fifty paise only) per kg of
silk content.
All Custom
10. Made-up articles made out of
fabrics made wholly or mainly
of Noil Silk Yarn
Rs. 86.00 (Rs. eighty six only)
per kg of silk content.
All Custom
Duty Entitlement Pass Book (DEPB ): - The objective of the DEPB scheme is to
neutralize the basic custom duty on the import content of the export product by
granting duty credit against export. Duty credit is calculated taking into account the
deemed import content of the export product as per the Standard Input Output Norms
and determine the basic custom duty payable on the import content. Export credit is
fixed as a % of FOB value for exports which are as follow: -
ITEM %
SILK FABRICS 6
SILK MADEUPS 7
SILK GARMENTS 8
OBJECTIVE
The main objective of choosing this subject is to know the contribution of India
in the field of “SILK”.
The following are the objectives for making this project : -
To study the India’s contribution in the field of export.
To know exactly what is the position of Indian silk in the world market.
To know what are the procedure for exporting the product “Silk”.
To know that Is India safe when the world textile trade have been
integrated into WTO rules and regulations since 2005 at the international
level.
To know what type of assistance / incentives get to the Indian exporters.
SCOPE OF STUDY
The Study is part of endeavor to enhance the competitiveness of Indian
exporters. The efforts taken by Central Silk Board on improving the
productivity and quality of Indian silk in order to compete in the
international markets.
Silk exports, the Study delineates, account for 1.2 percent share in total
Indian exports and 4.4 percent share in total textile exports in 2000-01.
Silk exports reached a record level of US $ 530 million in the year 2000-
01.
Over 50 percent of silk exports are in the form of fabrics including dress
materials, while silk garments account for 24 percent and silk made-ups
account for 13 percent. USA is the major importer of silk, followed by the
European Union and Japan.
RESEARCH METHODOLOGY
This report is based on primary as well secondary data, however primary data
collection was given more importance since it is overhearing factor in attitude studies.
One of the most important users of research methodology is that it helps in identifying
the problem, collecting, analyzing the required information data and providing an
alternative solution to the problem .It also helps in collecting the vital information that is
required by the top management to assist them for the better decision making both day to
day decision and critical ones.
Data sources:
Research is totally based on Secondary data. Primary data can be used only for
the reference. Research has been done by Secondary data collection, and primary data
has been collected by interacting with various people. The secondary data has been
collected through various journals and websites.
LIMITATIONS OF THE PROJECT
The ma jo r cons t r a in t f a ced by me i n mak ing t he p ro j ec t was
t ime . The t ime was no t enough t o know in de t a i l abou t t he
f a c to r s , t o ma jo r t he pe r fo rmance o f a l l S i l k I ndus t r i e s and t o
wha t ex t en t e ach f ac to r i s r e spons ib l e fo r t he s ame .
Also i n some ca se s t he compan i e s con t ac t ed , we re no t w i l l i ng t o
p rov ide adequa t e i n fo rma t io n , t h i s cons t r a in t l ed t o i nab i l i t y t o
cove r t he who le da t a . Which cou ld g ive me c l ea r p i c t u r e o f t he
sub j ec t .
Howeve r , i n sp i t e o f a l l t he se l im i t a t i ons and cons t r a in t , a
humble a t t emp t t o p r e sen t u se fu l i n fo rma t ion and fo rma t w i th an
ana ly t i c a l p i c tu r e o f t he s t udy w i th sugges t i ons ha s been made .
CHAPTER 2
CENTRAL SILK BOARD
Established in 1949 as a Commodity Board by Govt. of India, is a premier organization for overall development of sericulture and silk industry.
Headquarters – Bangalore.
VISION
See India emerge as the leader in the world market for silk.
MANDATE
CSB is statutorily committed to: - Promote the development of the silk industry by all appropriate measures, and for
this purpose, in particular.
Undertake, assist and encourage scientific, technological and economic research in the silk sector.
Devise means to improve cultivation of mulberry plantations
Produce and distribute healthy silkworm seed.
Improve the quality and production of raw silk and the marketing of silk
Advice and report to Govt. of India on all matters relating to the development of the raw silk industry, including the import and export of raw silk.
MISSION
Make continuous efforts in Research and Development and Technology Transfer.
To create greater opportunities for gainful employment and improved levels of income in sericulture through spread of scientific sericulture practices.
To improve productivity in all stages of silk production
Strengthen levels of efficiency through a commitment to quality
SERVICES RENDERED BY CSB
EXPORT PROMOTION: -
Disseminate information on exports of Natural Silk Goods and Import of Raw Silk.
Guidance to New Entrepreneur Exporters on procedures and formalities.
Export and Import Policy relating to silk.
Incentives offered by the Govt. of India against exports of silk goods.
Imparting technical knowledge on silk manufacturing.
DEMAND AND SUPPLY OF SILK
Silk from time to time is immemorial is considered to be a symbol of luxury,
elegance and sophistication. Being a natural fibre, with all its natural qualities, silk
always remained in demand. From the royal wear to the present status of common man’s
wear, the transition of silk took over a period of two millennium. Nevertheless, skill still
has a special place in the Textile-kingdom as silk. Natural fibres, which are eco-friendly,
have an increased preference over synthetics the world over especially in the developed
market. Therefore there is an increased preference for textiles made out of natural fibres
like silk in the developed markets. This trend is being noticed even in the developing
markets too. Natural fibres therefore would sustain demand as ideal clothing materials
even in the day to come.
India has an ancient silk culture right from the pre-vedics times. Silk has a sacred
place in the cultural heritage of Indian. It is a tradition that in India no religious rituals
will be complete without the use of silk. It is also a religious tradition for the bride to
wear silk saree in the soledom occasion of their marriage irrespective of their economic
condition. Silk industry in India therefore caters to the vast saree market round the year.
The demand for raw silk by the saree industry is quite large. Thousands of weavers, with
their tiny weaving establishments are located at the major weavings centres like Banaras,
Mubarakpur, Kanjeepuram, Salem, Dharmavarm etc. they need raw silk to run their loom
round the year.
India now produces around 15,000 metric tons of raw silk. According to a rough
estimate, the demand for silk in India by both domestic and export sector is around
24,000 metric tons leaving a gap of around 9000 metric tons.