A REPORT ON

ANDHRA PRADESH
A LUCRATIVE BUSINESS DESTINATION

BY

BHANU TEJASWINI .K 09031E1B10

ARUN KUMAR .N 09031E1B08

PRATHYUSHA .Y 09031E1B31

DIVYA .K 09031E1B14

PADMAVATHI .L.S 09031E1B28

OF

MBA- INTERNATIONAL BUSINESS

UNDER THE ESTEEMED GUIDANCE OF

DR. E. MURALI DARSHAN

SCHOOL OF MANAGEMENT STUDIES

JAWAHARLAL TECHNOLOGICAL UNIVERSITY, HYDERABAD

AP, INDIA.

YEAR: 2010
 ANDHRA PRADESH

A LUCRATIVE BUSINESS DESTINATION

2
CONTENTS
Sl.No Chapter Page no
1 STRATEGIC GEOGRAPHIC LOCATION ADVANTAGE 4
2 ANDHRA PRADESH ADVANTAGE 6
a. WHY ANDHRA PRADESH IS ON THE GLOBAL RADAR?
b. LARGE BASE FOR AGRO AND FOOD PROCESSING
c. ANDHRA PRADESH IS A MINERAL HOUSE OF THE
COUNTRY
d. BULK DRUG CAPITAL OF INDIA
e. FAST GROWING IT/ITES ECONOMY
f. HUGE GAS FINDINGS IN KRISHNA-GODAVARI BASIN
g. WORLD CLASS INFRASTRUCTURE
h. PORT
i. ROAD
j. RAILWAY
k. EDUCATION
l. TOURISM
m. INDUSTRY
n. RESEARCH & DEVELOPMENT
o. SPECIALIZED INDUSTRIAL PARKS

3 ANDHRA PRADESH – MACRO AGGREGATES 13

4 RESOURCES 17
a. FOOD AND AGRICULTURE
b. MEAT, POULTRY & EGG
c. FISHERIES
d. FORESTRY
e. WATER
f. MINERAL STRENGTHS
5 GROWTH SECTORS 27
a. FOOD AND AGRO PROCESSING
b. PHARMA AND BULK DRUGS
c. MARINE INDUSTRY
d. HANDICRAFTS
e. IT
6 BIBLIOGRAPHY 115

3
STRATEGIC GEOGRAPHIC LOCATION ADVANTAGE
Andhra Pradesh is strategically located in India. It has easy access to all parts of the country.
Country’s capital, New Delhi is less than two hours fly from Hyderabad. Populous and Business
states like Uttar Pradesh, Gujarat, Maharashtra, West Bengal, Tamilnadu and Karnataka are at
just 1 to 1½ hours flying distance. Strategic location of the state is very advantageous for the
business to have the best domestic market in country, easy to reach all corners of the country.

Andhra Pradesh is known as Gate of South-East Asia. Easy access to the most
economically developed countries like Japan, Philippines, Singapore, Malaysia, Hong Kong,
Thailand, New Zealand, and Australia. Andhra Pradesh is richly endowed with natural resources
and competitive advantages with geographical area of 274.40 lakh hectares being the fourth
largest state accounting for 8.37% in India with population of 81.60 million being the fifth most
populous state accounting for 7.4% in the country. The state lies between 12041’ and 220
longitude and 770 and 84040’ latitude and is bounded by Madhya Pradesh, Orissa and
Chhattisgarh in the north and caressed by Bay of Bengal in east.

The state also shares its boundaries with Tamilnadu and Karnataka in the south and with
Maharashtra in the west. Hyderabad, the State capital is centrally located and exudes a huge
potential to be transformed into a transit hub of South Asia. It has in the recent years become
prominent as preferred destination for leading software services companies.

Visakhapatnam port in AP is the largest cargo handling port in the country which
provides a major share of cargo to south east Asian countries and Australia. The State have easy
access of less than 4 hours fly to Global Oil capitals of Gulf countries and another 4-5 hours fly
to European majors. Strategic geographic location of the State is very advantageous for the trade
promotion and creates sustained global potential market.

 India's fourth largest state by area

 Fifth largest by population.
 Its capital and largest city is Hyderabad.
 Has the second longest coastline (972 km) among all the States in India.
 Lies between 12°41' and 22°N latitude and 77° and 84°40'E longitude
 Bordered by Maharashtra, Chhattisgarh and Orissa in the north, the Bay of
Bengal in the East, Tamil Nadu to the south and Karnataka to the west.
 Andhra Pradesh is historically called the "Rice Bowl of India". More than 77%
of its crop is rice; Andhra Pradesh produced 17,796,000 tonnes of rice in 2006.
 Two major rivers, the Godavari and the Krishna run across the state. The small
enclave (12 sq mi (30 km²)) of the Yanam district of Puducherry (Pondicherry)
state lies in the Godavari Delta in north-east of the state.
 In Country-India
 Districts-23
 Established-November 1, 1956
 Capital-Hyderabad
 Largest city-Hyderabad
4
 Governor- E.S.L.Narsimhan
 Chief minister- K.Rosaiah
 Legislature(seats) bicameral(294)
 Population 81.60 million(5th)
 Density-277/ km2 (717 /sq mi)
 Official languages-telugu
 Time zone-IST(UTC+5:30)
 Area-275,045 km2 (106,195 sq mi)
 Website- www.ap.gov.in
 State language-telugu
 State symbol-poorna kumbham
 State song- maa telugu thalliki(sankarambadi sundarachari)
 State animal-black buck
 State bird-Indian roller
 State tree-neem
 State sport-kabadi
 State dance-kuchipudi
 State flower-water lily

5
 ANDHRA PRADESH
ADVANTAGE-

ANDHRA PRADESH, THE BUSINESS STATE

IS MOST PREFERRED INVESTMENT
DESTINATION IN THE COUNTRY

6
WHY ANDHRA PRADESH IS ON THE GLOBAL RADAR?
Andhra Pradesh is a fifth populous state in India with a population of 7,62,10,007, which is
7.43% of the country’s population. It is fourth largest state with an area of 2,75,045 Sk. Kms
constituting 8.37% of the country’s area. Andhra Pradesh is strategically located in the Country
having an easy access to all parts of the country and Gateway to South East Asia & Australia.
The State is blessed with seven agro climatic conditions and variety of soils poised to large
agriculture production. The state has 23 districts with Hyderabad city as the Capital, 7 Municipal
Corporations, 79 Revenue Divisions, 1126 Mandals and 21,908 Gram Panchayats.

The total Gross State Domestic Product (GSDP) is Rs 2,258 billion. Andhra Pradesh one among
the five large and progressive economy states and its fast growing economy is first in the
country. The percapita income of the State increased from Rs 17932 in 2001-02 to Rs 25,526 in
2005-06.

LARGE BASE FOR AGRO AND FOOD PROCESSING

Andhra Pradesh is primarily an agro based state and employs 65% of the state’s population. It
has about 115.32 lakh operational land holdings out of which 94.41 lakh are marginal farmers
and 25.18lakh are Small farmers. The contribution of primary sector is 27%.

 Andhra Pradesh ranks 2nd in producing Value Added food products and
beverages with country 10% share.
 Per worker output in the food-processing sector in Andhra Pradesh is very high.
 The state has highest egg and broiler production in the country.
 Largest sheep production.
 Pioneer in Oil palm cultivation.
 Highest in production of Mango, Chillies and turmeric.
 Highest in brackish water shrimp and fresh water prawn production.
 Highest productivity in coarse cereals, Jowar, Maize and Bengal gram.
 Second highest fresh water fish production.
 Second Largest producer of Horticulture products.
 Second longest coastline, Andhra Pradesh becomes the pioneer in the marine
exports in the country.
 The State is the first maritime.

The state has about Rs 5,000 crores investment in the food processing sector contributing
20% of the total existing investments in the state. The annual production in this sector is about
Rs.9260 crores contributing 20% of the total industrial production in the state. .Agriculture will
experience a quantum leap in growth, achieving an average annual growth rate of 6 per cent in
real terms over the next 20 years.

7
ANDHRA PRADESH IS A MINERAL HOUSE OF THE COUNTRY
 World’s largest single deposit of Barytes in Kadapa
 1st in granite reserves in the country
 1st in production and promoting various colours of lime stone slabs for flooring.
 2nd largest store house of mineral resources in India
 2nd in value of mineral production - 910% of country’s mineral revenue.
 2nd largest Bauxite deposits in the country
 2nd in occurrence of uranium deposits in the country
 2nd longest coastline of 974 kms – rich beach sand resources
 2nd largest producer of cement – 59 plants with 23 million tones p.a.

Andhra Pradesh is very strong in the mineral sector resulting in creating strong base for
Thermal Power plants, Steel plants, Aluminum plants, ceramic industries, Cement plants, Granite
industries etc.

BULK DRUG CAPITAL OF INDIA

Due to the presence of world class Research & Development Institutions in the state and
availability of large pool of skilled manpower at competitive prices Hyderabad became the Bulk
Drug Capital of India with a contribution of more than 1/3 rd of the country’s Bulk Drugs
production.

FAST GROWING IT/ITES ECONOMY

Strong business presence of Global Software giants like Microsoft, Oracle, IBM, GE Capital,
Satyam, Wipro, Infotech, Infosys, Metamor, Motorola, Ericsson, Keane, Portal Player, ICICI,
Vanenburg, Computer Associates etc. Andhra Pradesh has become a leading state in promotion
of Software industry in the country. It is registered that the country’s highest growth rate of 65%
in Software exports. The state was committed in creating IT infrastructure, HRD and investment
climate.

Andhra Pradesh is a leading producer of Cotton with average production 2.6 million bales
annually. 2nd rank in production of Paper and Machinery Equipment, 3rd rank in production of
chemicals, 4th rank in production of Wood, Rubber and Plastic products in the country.

Andhra Pradesh is the 3rd largest power utility in the country. APGENCO’s Hydel
Installed Capacity is highest in India. The power installed capacity is 11,134 MW.

During the last 3 years the capacity addition of 2080 MW is highest in the Country. The
state achieved highest Plant Load Factor of 89.7% in the country. Andhra Pradesh is consistently
strong in the power sector in India due to advantageous mix of Thermal, Hydro and Gas power

8
general. Availability of huge resources of Natural Gas, Coal and perennial rivers with good
monsoons are the major advantages for the power generation in the State.

HUGE GAS FINDINGS IN KRISHNA-GODAVARI BASIN

Reliance Industries Limited (RIL) struck 9 trillion cubic feet (tcft) of gas reserves in Krishna
Godavari basin which was found the biggest gas find in the country constituting 50% in the
country. RIL is proposed to produce 40 MMSCMD gas for the next 20 years.

WORLD CLASS INFRASTRUCTURE

Hyderabad International Airport is the first green field Airport in the country. It is being
designed to handle 12 million passengers per annum with 4.2 Kms run way, the longest in the
country. The project is in the area of 5,400 acres of land in Shamshabad, which about 20 Kms
from the existing Hyderabad Airport with the project cost of Rs 2283 crores and scheduled to
completed by 2008.

PORT
Visakhapatnam Port is a prestigious major port in the country for its largest cargo handling of
more than 60 million tons per annum. Kakinada deep sea water Port in East Godavari District is
a state port which is presently reducing the cargo load of Visakhapatnam. The port can handle 10
million tonnes of cargo. The upcoming Gangavaram port which is 15 kms from Visakhapatnam
port to handle 35 MTPA will be the deepest port in the country scheduled its operations in 2008.
Krishnapatnam port in Nellore District is a Rs 1,432 crore project has commenced its operations
in 2008 committed to export 14 million tons per annum. All minor ports of Andhra Pradesh
handle 15 million tonnes of cargo which is 2nd highest cargo handling state in India. The state has
planned to develop ports in the State to handle 173 million tons of cargo in the next 15 years.

ROAD
The State has an excellent road network with backbone of 4-lane roads. All industrially
developed areas are well connected with National Highways / State Highways. Andhra Pradesh
has 1,78,747 Kms Roads out of which the length of National Highways is 4,014 Kms and State
Highways is 8,763 Kms. Road network of Andhra Pradesh is very large and connects all small
villages in the State. Golden corridor project of Government of India covered 1014 Kms of NH
- 5 in the State

RAILWAY
Secunderabad is the Head Quarters for the South Central Railway network and covers a railway
network of 4752 Kms in the State and surroundings. Numbers of Super fast Trains are operated

9
to all major metro cities in the country. 3754 Kms of Broad Guage, 508 Kms of Meter Guage
and total 748 Railway Stations are covered in the state railway network.

EDUCATION
AP is home to many specialized and internationally renowned academic institutions like Indian
School of Business (set up in collaboration with Kellog Institute, USA), producing World-Class
management graduates. The Administrative Staff College of India has been India’s oldest
advanced management training institute for senior managers in reputed companies and senior
bureaucrats in the Government. The other prestigious institutions are National Institute of
Fashion Technology, National School of Law, and International Institute of Information
Technology.

TOURISM
Andhra Pradesh is the best tourist place. There are number of tourist places in the state covering
historical structures, Heritage & Culture, Arts & Crafts, Cuisine, Fairs and Festivals which
include

 Hyderabad - Charminar, Golconda, Salarjung Museum, Ramoji film City, Hitec City, and
NTR Gardens etc.
 Visakhapatnam -Rishi Konda, Bhimunipatnam, Kailasagiri, Arakuvalley, Borra Caves,
Simhachalam
 Chittoor - Tirumala Tirupati Devasthanam, Chandragiri Fort, Srikalahasthi, Horsley Hills
 Ananthapur - Sri Satya Saibaba Institutes, Lepakshi
 Guntur and Krishna Districts -Nagarjunasagar Dam, Nagarjuna Konda,Ethipothala
Waterfalls, Amaravathi,Krishna Barriage
 Warangal – Kakatiya Fort, Thousand Pillar Temple, Ramappa Temple
 Kurnool – Belum Caves, Srisailam

Due to the continuous efforts of the Government in promoting the tourism sector in the state,
domestic tourist arrivals have significantly increased from 63.3 million in 2002 to 84.9 million in
2004, similarly, the International Tourist arrivals also increased from 2.10 lakhs in2002 to 5.01
lakhs in 2004.

INDUSTRY
AP is home to many large Public and Private Sector companies manufacturing diverse products
like ship building, fertilizers, Hi-precision machine tools, drugs and pharmaceuticals, cement,
paper, large power generating equipment, electronic hardware, long range missiles, castings &
forgings, defense electronics etc.

10
RESEARCH & DEVELOPMENT
AP is home to a large number of internationally renowned civil and defense research
establishments, which include Defense Metallurgical Research Laboratory, Defense Electronics
Research Laboratory, Defense Research and Development Laboratory, Indian Instt. of Chemical
Technology, Centre for Cellular and Molecular Biology, Central Institute of Plastic Engineering
Technology, National Remote Sensing Agency, National Geo-physical Research Institute, Centre
for DNA Fingerprint, Central Institute of Tool Design, ICRISAT, National Institute of Nutrition,
Nuclear Fuel Complex. AP is perhaps the only state in the country in post independence India to
have consciously developed local technocrat entrepreneurial base and with this support only that
large Public Sector Units like BHEL, HMT, HAL, MIDHANI, BDL, BEL, HCL, Praga Tools,
VSP, BHPV, IPCL etc. could build up their ancillary (vendor) network.

SPECIALIZED INDUSTRIAL PARKS

Government of Andhra Pradesh has promoted specialized industrial parks on sector basis. ICICI
Knowledge Park, Apparel Park, Hardware Park, Hitec Cityin two Phases, Jawaharlal Nehru
Pharma Park, Biotech Park, Export Promotion Industrial Park, Exclusive industrial estate for the
AP Women Entrepreneurs, Auto Park, IT Parks, Food Processing Park and Leather Park. In
addition to the above, Government of AP is promoting Special Economic Zone in
Visakhapatnam and Kakinada, Mega Industrial Chemical Estate in Visakhapatnam, IT Parks in
Hyderabad, Visakhapatnam, Warangal and Vijayawada, Gems & Jewellery Park in Hyderabad,
Leather Parks and Apparel Parks across the state. Andhra Pradesh is a home for 3680 large and
Medium Enterprises with an investment of Rs 53,339 crores and1,47,217 Small Enterprises with
an investment of Rs 5,098 crores. The exports from the state are growing at a rate of 20%
annually.

INVESTOR FRIENDLY INDUSTRIAL INVESTMENT PROMOTION

POLICY
In order to promote investments in the state, Government of Andhra Pradesh has announced
vibrant industrial and investment promotion policy 2005-2010 covering various fiscal and non-
fiscal incentives including

 Providing infrastructure at the doorstep of the industry

 Reimbursement of power @ Rs 0.75 per unit for eligible industries and Rs 1.00 per unit
for eligible food processing industries
 Reimbursement of 25% of the VAT paid by the industry for a period of 5 years
 100% stamp duty exemption for the registration of land & building / leased property for
industrial use
 Tailor made benefits for the mega projects with investment above Rs 100 crores
depending on the nature of project and creation of employment.

11
With all the efforts and initiatives of the Government and based on the availability of the
resources, large industrial base and infrastructure in the State could attract investments proposals
of Rs 1,96,364 crores since August 1991 and ranks 3rd in the country.

Government of Andhra Pradesh was very keen and committed in creation of world-class
infrastructure, framing investor friendly policies, simplifying the laws, rules, procedures and
documentation for making Andhra Pradesh the foremost-industrialized state in the country.
Andhra Pradesh becomes the best state for the investments. Government of Andhra Pradesh
appeal to all the investors to investment in the state as the banking system in the state/country is
flush with funds and no dearth of funding for a right project. Capital markets are booming and
the rupee has been appreciating against dollar. It is the right time for the investor to invest in AP.

12
 ANDHRA PRADESH –
MACRO AGGREGATES

ANDHRA PRADESH WILL BE A $300

BILLION ECONOMY BY THE YEAR-END
2010

13
 GSDP at current prices of 1993 - 94
250000

200000

150000

100000

50000

0
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

Secondary Primary Territory GSDP

Fast growing per capita income

30000

25000

20000

15000

10000

5000

0
2001-02 2002-03 2003-04 2004-05 2005-08

Growth of per capita income enhanced the purchasing

14
 Fast growing manufacturing sector
30000
25000
20000
15000
10000
5000
0
2001-02 2002-03 2003-04 2004-05 2005-06

Strong Manufacturing
Sectors
 Pharmaceuticals & Bulk Drugs
 Food & Agro Processing Industries
 Biotechnology
 Iron & Steel, Paper, Cement, Sugar, Cotton
Spinning, Textile, Granite, Fertilizers & Chemicals,
Hitech manufacturing, Engineering, Electrical &
Ceramics
 IT / Hardware

Population
100
80
60
40
20
0
1971 1981 1991 2001 2005

Large population is a best size of potential market

15
16
ANDHRA PRADESH RESOURCES
Andhra Pradesh is the leading
producer of Agriculture /
Horticulture crops

17
RESOURCES
Andhra Pradesh is endowed with bountiful natural resources with good soil and a diversified
cropping pattern. The State is rightly called “A RIVER STATE’ as it is blessed with major river
system like Godavari, Krishna, Pennar, Vamsadhara and 36 others. The major irrigation systems
are fed by these rivers.

Andhra Pradesh is primarily an agro based state and employs 65 % of the state’s population.
It has about 115.32 lakh operational land holdings out of which 94.41 lakh are marginal farmers
and 25.18lakh are Small farmers. The average size of land holding is 1.25 hect. Around 15
percent (average contribution) of AP’s GDP comes from agriculture. The state enjoys a position
of prominence in respect of crop production.

The State’s water share of dependable flow at 75% is estimated at 2,746 TMC. This beaks up
into 1480 TMC from the Godavari River system, 811 TMC from the Krishna, 98 TMC from
Pennar and the rest from other rivers. Entire dependable water from Krishna River is harnessed
through construction of several reservoirs and barrages. Yield from Godavari River being
utilized to 720 TMC and surplus flow aggregating to an average of 3000 TMC are flowing into
the sea. Total utilization of river yields is works out to 1700 TMC only and thus there is vast
scope of tapping water resources for creating irrigation potential.

Andhra Pradesh ranks first in productivity of crops like coarse cereals, Jowar, Maize and
Bengal gram.
Andhra Pradesh ranks 2nd in producing Value Added food products and beverages with
country 10% share. Per worker output in the food-processing sector in Andhra Pradesh
is very high
The state is very strong in the crops like Cotton, Rice, Groundnut, Pulses and Bajra.

Andhra Pradesh has the diverse agro climatic conditions in different parts of the state are
conducive to growing all kinds of tropical and sub-tropical fruits and vegetables. Andhra Pradesh
is one of the more progressive states with farmers adapting quickly to modern and innovative
practices to improve productivity. The state ranks 3rd in production and productivity of paddy.
Economy of the AP continues to be predominantly agrarian. The dependence of rural labor force
on agriculture and allied activities is quite evident and is likely to continue on the same in the
near future. Apart from direct impact of agricultural growth on generation of rural employment
and incomes its significant secondary linkages with the development of rural non-farm sectors
are more crucial. Trade in agricultural outputs and inputs and services required by it and
processing of its products open up additional and more significant avenues for labor absorption.
Andhra Pradesh being an important producer of Groundnut, Cotton, Chillies, Sugarcane etc., and
quite a number of Horticultural crops, such secondary linkages of agriculture assume added
importance to its rural economy, more so now in the context of new Agricultural Policy
18
initiatives taken up by the Government. New investments in the sector focus on producing fruit
concentrates and pulp, Vegetable purees, pastes and powers, frozen fruits and vegetables,
dehydrated products, oleoresins and cold chains. Palm cultivation and oil processing plants are
already coming up capitalizing on the warm, humid conditions in the villages close to the coast.
Owing to a good seasonal rainfall received copiously across all districts, agricultural operation
could take place in a record area. The area sown under Food grains have increased to 70.20 lakh
hectares with production of 151.51 lakh tones. Andhra Pradesh ranks first in the productivity of
crops like coarse cereals, Jowar, Maize and Bengal gram. The gross area irrigated in the Stated
increased to 50 lakh hectares, the major share of irrigated area under wells accounts 51.40%
followed by canals34.7% and by tanks by 10.3%. Andhra Pradesh ranks 1st in area, production
and productivity of oil palm development. An area of 4.10 lakh hectares has been identified as
potential for oil palm cultivation in 11 districts in the state.

The State is pioneer in Oil palm cultivation – 4.1 lakh hectares

The State is 1st in sheep production
The State ranks 1st in area and production in Mango, Oil palm, Chillies and
turmeric
The State ranks 1st in egg (1,505 crores p.a) and broiler production

The state is implementing various schemes with main thrust on fruits & plantation crops,
hybrid vegetable and seed distribution, floriculture under controlled conditions, spices &
condiments, medicinal & aromatic plants, mushroom cultivation, precision farming, tissue
culture, leaf analysis etc. The activities include area expansion, training on latest technologies,
pre and post harvest trainings, Special emphasis on oil palm development. Cashew is being
encourages with high yielding grafts and strains /selections. Cashew is a dollar-earning crop,
hence the cultivation promoted in an area of 706 hectares.

Andhra Pradesh holds 1st rank in Chillies and Turmeric in area, production and productivity.
Considerable increase in productivity of spices has been reported in research stations. The need
of the hours is effective transfer of technology to progressive farmers.

Floriculture sector has been identified as most focused segment of Horticulture. It is proposed to
set up 8 units of green / policy houses of 560 sq. meters for production high value flowers like
carnations, gerbera, anthurium etc. under controlled conditions with an object to explore the
export potential. It was also proposed to set up 1269 units for production of chrysanthemum,
jasmine, rose and marigold in bulk and as loose flowers.

 The State ranks 1st in production

 2nd in area and production in of brackish water shrimp and Citrus and Coriander
fresh water prawn
 2nd in productivity and 19
 2nd in production of fresh water production of cotton fish
 1st in paper production with 5.2
 2nd longest coastline of 974 kms lakh tones per annum
 Andhra Pradesh is the Horticulture bowl of India with enterprising farming community,
varied agro climatic zones, variety of soils coupled with endemic irrigation sources; the State is a
front running producer of variety of fruits, vegetables. Horticulture crop is the besting means for
crop diversification and improving productivity and returns, nutritional security, employment
opportunities raw material for agro processing industries. The state could be the most preferred
destination to register healthy growth in food processing industry driven mainly by export
demand in the next 10 years. The area under horticulture is 16 lakh hectares with an annual
production of 130 lakh tonnes and 1200 million coconuts. AP hold 2 nd in citrus and coriander,
3rd in cashew, 4th in flowers and 5th in grapes, banana, ginger and guava.

AGRICULTURE TECHNOLOGY MISSION

In order to bring Agriculture and allied activities under one umbrella, Government have set up
Agriculture Technology Mission under the Chairmanship of Chief Minister.

AGRI EXPORT ZONES

Governments of India and Govt. of AP have jointly set up 4 Agri Export Zones in the state to
boost exports and encourage in private investment.

Zone Crop

Chittoor Mango pulp and vegetables

Vijayawada Mango

RR, Medak and Mehboobnagar Mango and grapes

Mehboobnagar, Rangareddy, Medak, Gherkins

Warangal, Anantapur and Nalgonda

MEAT, POULTRY & EGG

20
Animal Husbandry is one of the rapid expanding sectors playing a significant role in the rural
economy by providing gainful employment to a large number of small / marginal farmers and
agricultural laborers and raising their economic status. Livestock sector contributes 7.27% to
GSDP. Andhra Pradesh has the distinction of much diversified livestock resources in seven agro
climatic zones with different production systems. Live stock farming is one of the most
sustainable and dependable livelihoods as an alternative to their dependable resources in rural
areas. Over the past 50 years, the state has undergone a metamorphic change and emerged as a
pioneer in the livestock and poultry production. Poultry farming in AP is most dynamic and
fastest growing.
The annual milk production is 72.57 lakh metric tons and state stand 4th position in the
country.. The state is known as egg basket of the India with an annual production of 1,505 crore
eggs. It stands 1st position. It also stands 1st position in sheep population and 5.31 lakh families
are being benefited from the sheep sector. Government has helped in channelizing all efforts and
resources for a common goal to reach self-sustainable.AP has achieved significant growth in the
areas of livestock breeding, health care, fodder management, small ruminant development,
poultry production and human resources development.

4th in area and production in flowers

4th in productivity of pulses and groundnuts
4th in the milk production ( 72.57 lakh MT)
5th in area and production in grapes, banana, ginger and guava
5th in production of marine fish and shrimp

FISHERIES
Andhra Pradesh ranks 1st in India in production of brackish water shrimp and fresh water prawn,
2nd in production of fresh water fish and 5th in production of marine fish and shrimp. Nearly 10
lakh tonnes of fish / prawn per annum is produced. The state is contributing about Rs 2,500
crores by way of marine export which is nearly 40% of the marine export from India. The
fisheries sector is providing direct and indirect employment to over 14 lakh people, especially in
the rural areas.

FORESTRY
Forest development activities commenced on a really big scale in Andhra Pradesh. Forestry
programmes involve the raising of economic plantations and quick growing species, large areas
of mixed deciduous forests of poor quality were cleared and planted with Teak, Eucalyptus and
Bamboo and more recently high yielding varieties of Cashew are being planted on a large scale.

21
 Species Area planted hectares

Teak 1,09,610
Eucalyptus 77,204
Cashrina 29,413
Cashew 21,745
Red sander 2,791
Sandal wood 2,872
Coffee 142
Bamboo 44,109
Misc. 3,01,069
Avenue plantation 11,732

WATER
India’s first Industrial Water Supply Scheme was implemented in Visakhaptnam. Government of
Andhra Pradesh, sensing the critical need of a reliable source of water supply to cater to the
upcoming projects, commissioned the APIIC to augment and implement the Visakhapatnam
Industrial Water Supply Project (VIWSP) on a commercial format. The US $ 144 million
VIWSP facilitates bulk supply of 385 million liters per day of water from river Godavari to be
conveyed through a 56 km long pipeline and 153 km long Yeleru left main canal.

The State has earmarked allocation of 5 TMC water each from the Yeluru reservoir and
Godavari river water for industrial use. Yeleru Left Bank Canal presently supplies water to
Visakhapatnam Steel Plant, NTPC. A special purpose vehicle, the Visakhapatnam Industrial
Water Supply Company (VISCO) has been formed to design, construct, operate and maintain the
project facilities on a BOOT basis. L&T and ECC Group of Chennai have completed the 56 km
pipeline to pump 5 TMC of water from river Godavari into Yelueru main Canal.

Government of AP issued orders that 10% of water should be reserved for the industrial use
in all irrigation projects in the State.

22
Technical education is one the priority sector of the Government as it aimed to generate quality
technical manpower with profound knowledge and skill to ensure building culture and ultimately
to ensure efficiency and productivity. Skilled manpower is expected to be globally competitive.
Keeping the growing industry, Government has set up adequate no. of technical institutions and
related courses.

23
MINERAL STRENGTHS-

1st in granite reserves in the country

1st in production and promoting various colors of lime stone slabs for flooring
2nd largest store house of mineral resources in India
2nd in value of mineral production - 9-10% of country’s mineralrevenue.
2nd largest Bauxite deposits in the country
2nd in occurrence of uranium deposits in the country
2nd longest coastline of 974 kms – rich beach sand resources
2nd largest producer of cement – 59 plants with 23 million tones p.a.
World’s largest single deposit of Barites in Kadapa

24
COAL

Andhra Pradesh is the only producer of Coal in the entire South India. It produces around 35 MT
annually. The estimated reserves are around 16,694 MT. Major coal bearing areas fall in
Adilabad, Karimnagar, Khammam and Warangal districts.

LIME STONE

The state contains 34% of the country’s limestone reserves with estimated reserves of 35,220
MT and produces about 25,000 MT. Extensively occur in Nalgonda, Kadapa, Kurnool,
Anantapur, Mahabubnagar, Rangareddy, Adilabad, Karimnagar, Krishna and Guntur Districts.
At present there 14 major and 29 mini cement plants producing about 18 MT which forms largest
cement producing states in the country. AP promoting various colors of limestone slabs for
flooring and there are more than 2,000 limestone slab cutting and polishing units.

URANIUM

Occurs in Nalgonda, Mahabubnagar, Kadapa, Kurnool and Guntur District. AP has a very good
scope for producing Uranium for establishment of Atomic Power plant.

NEW URANIUM MINING PROJECTS

The proposed new uranium project by Uranium Corporation of India Limited (UCIL) proposes
to set up the processing plants for new mines in the state of Andhra Pradesh. Project details
Region Andhra Pradesh Location Nalgonda Investment Rs1,030 crores Total area 879 hectares
The proposed plant can extract 30,000 tonnes ore per day for 30 years.

BAUXITE

Huge reserves of around 613 MT of metal grade bauxite deposit were proven in Visakhpatnam
and East Godavari District. There is a scope for establishing 2-3 Alumina and Aluminum
projects in the State.

MARBLE

In Khammam, Guntur, Kadapa, Anantapur & Kurnool districts.

CERAMICS

Largest sources various clays, Feldspar, Quartz, Silica sand, Rare Earths like Titanites,
Zirconites in Rangareddy, Mahabubnagar, Nellore, Kadapa, Kurnool, Medak, Anantapur,
Nalgonda, Vizianagar, Visakhapatnam and Guntur districts.

25
DIAMONDS

In about 50,000 sq. km with incidence of 3-4 carats / 100 tones in Anantapur, Kurnool,
Nalgonda, Mahabubnagar, Krishna and Khammam districts.

GOLD

In Chittoor, Anantapur,Kadapa, Kurnool, Mahabubnagar – incidents of 3-5 gms / tonne

26
ANDHRA PRADESH
GROWTH SECTORS

FOOD AND AGRO PROCESSING

PHARMA AND BULK DRUGS

MARINE SECTOR

HANDICRAFTS

IT SECTOR

27
FOOD & AGRO PROCESSING
GLOBAL SNAPSHOT

Global food product industry generated total revenues of USD 2675.7 billion in 2006

 The global food product industry grew by 3.1% in 2006 to reach a value of USD 2675.7
billion and a growth of 17.2% is projected in 2011 achieving a value of USD 3,137.2
billion
 Revenues from sale of food products dominate the industry generating 63.60% of the
global market value
 Europe is the highest contributing region in the global industry value with a share of
38.20% followed by Asia-Pacific region
 Major players in the industry include Altria group, PepsiCo, The Coca-Cola Company,
British American Tobacco, Cadbury among others
 Global food, beverage and tobacco industry will continue to grow, with major
contribution from developing countries such as India and China

Global food processing industry snapshot

Market segmentation as per geography

Geography % share
Asia – Pacific 31.20%
Europe 38.20%
US 20.10%
Rest of the world 10.50%

Market segmentation of global food

products
packaged food and agriculture products
meats
31.7; 32%

68.3; 68%

INDIAN SCENARIO

28
  The agricultural food industry of India contributes nearly 35% of country’s GDP and
employs around 65% of the population
 India is the world’s second largest producer of food next to China
 India is:
o World’s largest producer of cereals and milk
o Largest producer of Cotton
o Largest producer of fish
o Largest producer of Psylium husk
o 2nd largest producer of rice, wheat, sugar, fruits and vegetables
 The food grain output grew by 4.6 percent with total production of 227.32 MT in 2007-
08
 The food processing industry in India ranks fifth in size, growing at 7% annually
 India consumes about USD 200 billion worth of food products, 53% of which is
processed food

India agriculture facts

Crop Production (2006-07) Growth over 2005-06

Mn tonnes

Food Grains 216.13 4%

Oilseeds 148.18 5%

Cotton 227.00 23%

Sugarcane 345.31 23%

India food processing industry

Food processing Fruits & Grain

USD 69.4 billion vegetables processing

Primary Fish processing Meat and

processing USD
poultry
47.2 billion

India is among the

Value added world’s
Milk major producer
processing of food, producing over 600 million tons of
Beverages
processing USD
food products every year. India ranks first in the world in production of cereals, livestock
22.2 billion
population and milk. It is the second largest fruit and vegetable producer and is among the top

29
five producers of Rice, Wheat, Groundnuts, Tea, Coffee, Tobacco, Spices, Sugar, and Oilseeds.
Food processing industry includes fruit and vegetable processing, fish processing, milk
processing, meat and poultry processing, packaged/convenience foods, alcoholic beverages and
soft drinks and grain processing. Milk processed foods like chocolates and ice creams were much
in demand in India. Agri products like coconut has multiple values in the market from coconut
water to oil, fiber and leaves are economically valuable. The agricultural sector’s performance
has direct impact on the processing industry and its exports. The raw agricultural and
horticultural yield into human consumption is called processed foods such as fruit jam, jelly,
milk products. The performance of the Agri-processed foods industry essentially depends upon
the general performance of the economy and the performance of agriculture and industry sectors
in particular. The processed foods are slowly capturing the rural market also. In urban areas the
processed foods become one of essential items due to change of life style and long working
hours, many urban families are depending upon these processed ready to eat foods. The market is
growing considerably due to rapid urbanization. It is expected to continue to some more years.
The government support for processed food industry by reduction of excise duty from 16% to8%
on ready to eat packaged foods and instant food mixes. Import duty reduction from 15% to 5%
on processed food packaging machines. Special window in NABARD for refinancing
infrastructure and market development of processed foods industry, proposed 100% excise duty
exemption for condensed milk, ice cream, preparations of meat, fish & poultry, pectin, pasta and
yeast industry.

ANDHRA PRADESH SCENARIO

Around 19 percent (average contribution) of AP’s GDP comes from agriculture and it provides
employment to around 65 per cent of the state’s population. The state enjoys apposition of
preeminence in respect of crop production. Andhra Pradesh is endowed with bountiful natural
resources with good soil and a diversified cropping pattern. The edge comes from major
irrigation systems fed by rivers like Godavari, Krishna, Thungabhadra, Penna, Nagavali,
Vamsadhara etc. Agriculture in the State has made rapid strides taking the annual food grains
production from 56.20 lakh tons in 1955-56 to 160.28 lakh tons in 2000-01. The new emphasis
on agriculture will be on identifying and developing sectors with high potential for growth;
building strong agro based industries, developing agriculture in rain-fed areas; and spurring
growth through policy reforms. The major growth engine in agriculture, rice, is a large
contributor to Andhra Pradesh’s economy (Contributing a quarter of agricultural GSDP) that
even small improvements in the sector will create a large impact. Since rice growing is the
primary occupation of a large proportion of the state’s agricultural labor, its further development
will increase rural incomes and reduce poverty. To achieve this vision, the State of Andhra
Pradesh will aggressively pursue strong agricultural growth, including employment generation,
and target levels of investment needed.

30
 Andhra Pradesh is the second largest producer of horticulture products in India and it is
expected that the production will reach 22.90 million tonnes by the year 2020. The State’s 970
kilometer coastline, 8,577 kilometer river length and 102 reservoirs spread over an area of 2.34
lakh hectare have been the principal sources of its marine foods, fresh water foods, including fish
and prawn. Andhra Pradesh is the largest egg producer in India. As per the Agro Climatic Zones
the following Major Crops are grown in Andhra Pradesh.

S.No Resources Districts

1 Mango, Coconut, Cashew, Oil Krishna, East Godavari&

31
 Palm, Bhendi, Chillies, West Godavari
Mushrooms, etc.

2 Mango, Banana, Cashew, Srikakulam, Vizianagaram &

Coconut, Oil Palm, Tapioca, Vizag
Sweet Potato etc.

3 Mango, Oranges, Acid Lime, Chittoor, Prakasam&

Banana Oil Palm, Coconut, Anantapur
Potato, Flowers, Coriander,
Tamarind, etc.

4 Mango, Oranges, Guava, Nizamabad, Karimnagar &

papaya, Flowers, Chillies, Adilabad
Turmeric, Coriander, etc.

5 Grapes, Guava, papaya, Medak, Rangareddy&

Oranges, Acid Lime, Tomato, Mahabubnagar
Flowers, Chillies etc.

6 Mango, Oranges, Banana, Kadapa, Kurnool & Anantapur

Guava, Pomegranate, Bhendi,
Tomato, Onion, Flowers,
Chillies, Turmeric.

7 Pine Apple, Black Pepper, Hill High Altitude Tribal Areas

Banana, Guava, Mango, Cole
Crops, Tomato, Aromatic
Plants.

GROWTH
The state has about Rs 5,000 crores investment in the food processing sector contributing 20% of
the total existing investments in the state. The annual production in this sector is about Rs.9260
crores contributing 20% of the total industrial production in the state. .Agriculture will
experience a quantum leap in growth, achieving an average annual growth rate of 6 per cent in
real terms over the next 20 years.

STRENGTHS FOR PROMOTION OF FOOD AND AGRO PROCESSING

INDUSTRY
Andhra Pradesh ranks first in productivity of crops like coarse cereals, Jowar, Maize and Bengal
gram.

32
  Andhra Pradesh ranks 2nd in producing Value Added food products and beverages with
country 10% share. Per worker output in the food -processing sector in Andhra Pradesh is
very high.
 The State is pioneer in Oil palm cultivation – 4.1 lakh hectares
 The State is 1st in sheep production
 The State ranks 1st in area and production in Mango, Oil palm, Chillies and turmeric
 The State ranks 1st in egg (1,505 crores p.a) and broiler production
 The State ranks 1st in production of brackish water shrimp and fresh water prawn
 2nd in production of fresh water fish
 2nd longest coastline of 974 kms
 2nd in area and production in Citrus and
 The state is very strong in the corps like Rice, Groundnut, Pulses and Bajra.

The industries in food products contribute 19.36 per cent to total industrial production in the
state. The major segments in the Food & Agro Processing sector are - Rice Mills, Sugar, Dal
Mills, Diary units, Milk Products & Confectioneries, Palm Oil and other Oil Mills, Biscuits,
Mushrooms, Cold Storages.

The state has about Rs 5,000 crores investment in the food processing sector contributing
20% of the total existing investments in the state. The annual production in this sector is about
Rs.9260 crores contributing 20% of the total industrial production in the state.

INVESTMENT
Achieving the growth envisaged for the agricultural sector will require significant investment.
The State will need promote investment around Rs.70,000 crore until 2010, while the total
investment until 2020 will be roughly Rs.1,60,000 crore.

Policy Support - The Government provides reimbursement of power costs @ Rs.1 per unit up to
2010.

AGRO PROCESSING - AGRO PROCESSING HAS AVENUES IN:

Rice : Value addition in rice based products like rice flakes, puffed rice, rice noodles, rice cakes,
fermented products, bakery products etc. · Rice beverages, rice barren oil. · IICT has developed
technologies for value-added products. · FAO declared 2003 as “International year of Rice”
recognizing the importance of rice in the food basket.

Maize: The requirement of maize by the major consuming agency i.e. poultry is around 15 lakh
MT and is to be exported outside the state. · To avoid exploitation by traders, processing of
maize can be promoted in starch making, maize granules etc. on the lines of Karnataka which has
a separate body called “CORNFED”. · Ethanol made from maize is being blended with petrol
and provides scope for utilizing the marketable surplus in the state.

33
Jowar: Similarly from Jowar, alcohol can be extracted and made use of efficiently.

INDIAN EXPORTS IN AGRI PRODUCTS

Pulses (Dals), Lentils, Peas, Beans, Flours
Moong Dal Yellow Yellow split Lentils
Chora Dal Black Eye Bens
Chick Peas-Kabuli White Sorghum
White Peas Bajra (Millet)
Prepacked Dals Peanut
Prepacked Gramflour Sesame seed
Moong Split Moong Whole
Urid Dal White Urid Dal Split
Urid Whole Moth Dal
Chana Dal Best Bold Chana Dal Grinding Quality
Gram FlourSuperfine Red Split Lentils
Masoor Whole Polished Toor Dal Oily Madhi
Toor Dal Plain Val Dal Jumbo
Dry Green Chana Kala Mosambi Chana
Indian Black Chana Moth Whole
Red Mung(Cow Beans) Red Kidney Beans
Kala Vatana Peas Green Peas
White Peas Chick Peas Kabuli
White Beans Prepacked Dals -- Airavat Brand

Ground & Whole Spices

Turmeric Powder Cumin Powder
Coriander Powder Madras Curry Powder
Chilly Powder Black Pepper Powder
Mango Powder Garam Masala
Pizza Chilly Powder Dhanajeera Powder
Cumin Seeds (Jeera) Fennel Seed Green
Fenugreek Seeds (Methi) Ajwain Seeds
Corriander Seeds Dry Ginger Whole
Black Pepper Whole Black Cardamom
Tamarind Cinnamon Stick
Anardana Whole Charoli
Aserio Seeds Bay Leaves
Red Chilly Whole Singora Flour
Yellow Mustard Seed Chilly Whole
Kolinjan Roots Peanut Oil

34
Gum Arabica Mustard Seed
Mustard Oil Sesame Oil
Hulled melon Seed (Ek Magaz) Phylliam Husk (Isabgol)
Rajgira Powder Pure Ghee
White Khatta Whole Cloves
Dry Amla Coconut Slices / Half Cut
Mustard Powder Dry Vegetables
Fenugreek Powder  

Poha / Mamra / Roasted Gram / Indian Jaggery / Rice

Poha Thin (Nylon Poha) Roasted Gram With Skin
Poha Thick (Medium) Roasted Gram Whole
Mamra (Puffed Rice) Mahabaleshwar Roasted Gram
Jaggerry (Goor) Prepacked Rice - Airavat Brand
Basmati Rice Surti Kolam Rice
Par Boiled Rice Sugar Crystals
Sago Seed Sooji
Jaggery Cubes Corn Flakes

Biscuits, Nourishing Foods and Food Supplements

- Biscuits - All types
- Food supplements - All types

Papads & Papadoms

Papad Madras Papadoms
Saboodana Papads/Wafers Potato Wafers
Khicha Papad -Green Chilly Khicha Papad - Garlic / Plain
Alu Wafer Alu Papad Masala / White
Rice Papad Dhamta Papad Sago Jalebi Color Papad
Color Frymes (just fry and eat - tasty and crunchy)- FAR FAR

Blended Spices (Masala)/ Powders

Biryani Pulao Masala Garam Masala
Tea Masala Chat Masala
Chana Masala Madras Sambhar Powder
Madras Rasam Powder Anardana Powder
Pav Bhaji Masala Sambar Powder
Chat Masala Rasam Powder
Rajwadi Garam Masala Undhiu Masala
Tomato Rasam Punjabi Chhole Masala

35
Ginger Powder Panipuri Masala
Jaljira / Jiralu Powder Rice Puliyodharaimix
Curd Chillies Idli Milagai Podi
Vadams Vathal Kujambu Paste

Tea, Tea Bags & Cofee

- All kind Assam Leaf Tea
- Tea Bags
- Instant Tea Pouches
- Prepacked Tea & Cofee

Canned Vegetables, Mango Pulp, Mango Chutney, Pickles

Okra In Brine Karela In Brine
Punjabi Tinda In Brine Suran In Brine
Drumstick In Brine Papadi Lilva In Brine
Tuver In Brine Patra Curried
Undhiu Curried Alphanso Mango Pulp
Kesar Mango Pulp Sweet Mango Chutney
Mango Pickle Garlic Pickle
Mix Pickle Lime Pickle
All kind Pickles Amla Pickle
Chilly Pickle Tomato Sauce
Soup Pouches Gujrati Pickle
Punjabi Pickle Pickle in Drums
Rasgulla in Tin Gulabjamun in Tin

Packed Instant Foods Wafers, Namkeen & Farsan & Fried Dals
Masala Noodles Chaat Noodles
Imli Sauce Soup Pouches
Hot Sweet Sauce Chilly Garlic Sauce
Vermicelli & Sevai Tomato Sauce
Panipuri Rounds Bhel Mix

Instant Foods & Other Food Preparation

Idli Mix Dosa Mix
Gulabjamun Mix Pakora Mix
Vada Mix Khaman Dhokla Mix
Sambhar Mix Rava Idli Mix
Rava Dosa Mix Jilebi Mix
Ice Cream Mix Custard Powder

36
 Icing Sugar Baking Powder
Basundi Mix Instant China Grass
Kulfi Mix Jelly Crystals
Badam Beverage Falooda Mix
Citric Acid Thandai Masala Mix

Wafers & Namkeen & Farsan & Fried Dals & Snacks -Foil Packed
Special Potato Wafers Masala Potato Wafers
Plain Sev Yellow Banana Wafers
Makai Chivda Special Kachori
Methi Gathia Mini Bhakarwadi
Mix Farsan Chana Dal Fried
Moong Dal Fried Kabuli Chana Fried
Bhujia / Sev Panipuri Gol gappa

Beetalnut & Mukhwas(Mouth Freshner)

Manglori Fadcha(Half Cut) Supari Pouches
Manglori Chhil(Slices) Green /Red - Mukhwas (Mouth Freshner)
Handmade Tukda White(Pieces) Salli Supari
Whole Round Beetalnut Scented Supari/Mysore Supari Tukda
Calcutta Mukhwas Chamcham Mukhwas
Poona Mukhwas Manpasand Mukhwas
Salli Mukhwas Lukhnow Mukhwas
Variali Churi Mukhwas Gujrati Mukhwas
Disco Mukhwas Rainbow Til
Sweet Candy Orange Candy

Agarbatti (Incense Sticks) /Pooja / Lagna Samgri

Pooja Samgri Lagna Samgri
3 in 1 Agarbatti 4 in 1 Agarbatti
Jasmine Agarbatti Kevda Agarbatti
Mogra Agarbatti Rose Agarbatti
Sandal Agarbatti Levender Agarbatti
Special Agarbatti Camphor

EXPORTS OF THE STATE

Andhra Pradesh has emerged as one of the progressive and dynamic states in the country because
of its policies towards development of a sound infrastructure under stable political environment

37
and visionary leadership.AP share in all India exports is estimated relatively moderate level of 5
%.

 Agro based industries

 Engineering sectors (including softwares)
 Drugs/pharma and chemical industries together accounting for 3/4th of total exports.
 Agriculture and agro products, processed foods
 Engineering items including software
 Leather ,animal and marine products
 Chemicals , pharmaceuticals and allied products
 Mineral and mineral products
 Handlooms ,textiles, including cotton yarn
 Handicrafts
 Rice -------> Bangladesh,S.Korea,USA, Dubai,Srilanka
 Unmanufactured tobacco -------> Russia,Belgium,Italy
 Cashew -------> UK,Dubai
 Molasses -------> Russia
 Sunflower extraction -------> Germany,Switzerland
 Soya bean extraction -------> Singapore,Malaysia,china
 Mango pulp -------> S Arabia,Kuwait,Qatar,UAE
 Castor oil -------> Kuwait,Thailand
 Wheat------->UK,Iran
 Pickles -------> US, S Arabia,UAE,Kuwait
 Chillies -------> UK, Netherlands, USA, Sri Lanka, Bangladesh, the Middle East and the
Far East, Nepal, Mexico, Canada, Saudi Arabia, Singapore, Malaysia and Germany.

AGRI EXPORT ZONE

Rice: There is scope for establishing an Agri Export Zone (AEZ) for Rice in East Godavari and
West Godavari. · Price-wise AP can compete with several other countries. · Higher Nutrient
content of certain varieties like brown rice, purple and black varieties are preferred in many
developed countries and can also be promoted in developing countries. · The main focus for
Andhra Pradesh is on Non- Basmati rice varieties, which include Sona Masuri, Samba Masuri,
HR-47, IR-64, Krishnaveni and Kavya.

Objective

In a fast changing International Trade Environment, with a view to providing remunerative

return to the farmers’ community in a sustained manner, efforts will be made to provide

38
improved access to the produce / products of the agriculture and allied sectors in the
International markets by setting up Agri Export Zones. The AEZ is expected to give a focus and
direction for exports of key agricultural produce with potential from the country. It involves a
detailed action plan for the development of a specified geographic area /s for effecting
systematically greater exports of a specific produce.

Agri Export zones will be concerned with A to Z of Agri – exports. The emphasis is on
partnership on various agencies / systems and convergence of interventions of various agencies
like APEDA, Ministry of Food Processing Industries (MFPI), and National Horticulture Board
(NHB) etc. The focus will be on increasing exports of identified commodities.

The Concept of AEZ’s which aims to give fillip to agriculture exports, comprises the
following

 Identifying a potential zone based on agro-climatic requirements for a particular crop.

 Integrating various assistance programmes of Central and State Government agencies and
providing fiscal incentives to exporters.
 Implementing the same through involvement of private and public partnership and
integrating all the activities till the produce reaches the market.

Measures envisaged for promoting exports from such Zone

1) Financial Assistance

Both central as well as state government and their agencies are providing a variety of financial
assistance to various agri export related activities. These extend from providing financial
assistance for training and extension, R&D, quality Up gradation, infrastructure, marketing etc.
Thus whereas Central Government agencies like APEDA, NHB, Deptt of Food Processing
Industries, Ministry of Agriculture provides assistance, a number of state governments have
extended similar facilities. All these facilities have to be dovetailed and extended to promote agri
exports from the proposed zones in a coordinated manner.

2) Fiscal Incentives

The benefits under Export Promotion of Capital Goods Scheme, which were hitherto available to
direct exporters, have now been extended to service exporters in the Agri Export Zones.Thus
even service provided to ultimate exporters will be eligible for import of capital goods at a
concessional duty for setting up common facilities. They shall fulfil their export obligation
through receipt of foreign exchange from ultimate exporters who will make payments from their
EEFC account.

Exporters of value added agri products will be eligible for sourcing duty free fuel for generation
of power, provided cost component of power in the ultimate product is 10% or more and the
input out norms are fixed by the advance licensing committee of the DGFT.

39
Agri Export Zone – Hyderabad

 It was set up to promote high quality Grapes & Mangoes.

 Districts covered are RangaReddy, Mahaboobnagar & Medak.
 The area around Hyderabad, the capital of Andhra Pradesh, has historically been the most
suitable for the production of Grapes and Mangoes.
 The continuous belt across Ranga Reddy, Mahaboobnagar and Medak districts also have
vast tracts of land suitable for cultivation of Mango and Grapes.
 Thomson seedless is popular among Grapes & Banginappli among Mango are being
encouraged.

Most progressive farmers with their farms EurepGap Certified.

Summary Details

 A number of activities have been suggested under the AEZ to facilitate exports, which
include interventions at Farm level like appropriate agronomical practices, IPM & INM
programmes, Demonstrations & Trainings, Drip, Post Harvest practices like usage of
Plastic Crates, Precooling centers, Cold Storages, Pack houses and Marketing areas
leading to an Integrated approach for export development.
 Creation of and up gradation of post harvest infrastructure required for Exports.
 Total project outlay is Rs 5721 lakhs over a 5-year period, with financial support from
Government Agencies estimated at Rs 1542.5 lakhs and investment from Private
entrepreneurs at Rs 4178.5 Lakhs.
 Expected to result in exports of 5500 MT of Grapes & 6000 MT over the next 5 years
valued at Rs 2900 lakhs.

Progress so far:

 State has announced the creation of an AEZ (Agri Export Zone) for Grapes & Mangoes
covering the districts of RangaReddy, Mahaboobnagar & Medak.
 Department of Horticulture has been named as the nodal agency and an MOU in this
regard was signed on 29th July 2002.
 Trainings of farmers have been conducted on various aspects like Pruning, INM, IPM etc
post harvest aspects have been encouraged in a big way.
 For the year 2003-04, around 2500-3000 farmers planned to be trained.
 An exclusive Soil Testing Laboratory has been set up for the benefit of Farmers from
AEZ.
 Exposure Visits have been organized for the farmers to IIP, Pack Houses.
 Above 30,000 plastic crates have been supplied so far.
 Shade net is being encouraged among Grape Growers for better quality produce.
 2400 Ha of Grapes & Mango have been brought under area expansion.
 Buyer / Seller meets are organized for promotion of Mango Exports from the AEZ.

Exclusive Monitoring team for control of Pesticides.

40
Agri Export Zone – Vijayawada

 It was set up to promote Banginapalli Mangoes from Krishna district.

 Banginapalli variety of Mango, rated one of the best in the world in unique to Andhra
Pradesh and in particular to Krishna District.
 Krishna district has been traditionally a Mango growing belt with an area over 60,000 Ha.
 Major variety being Banginapalli, other varieties includes Collector, Chinna Rasam.
 Vijayawada is very well connected by road and rail to Hyderabad, Mumbai and Chennai
where international airports are present.

Brief Details

 A number of activities have been suggested under the AEZ to facilitate exports, which
include interventions at Farm level like appropriate agronomical practices, IPM & INM
programmes, Demonstrations & Trainings, Drip, Post Harvest practices like usage of
Plastic Crates, Precooling centers, Cold Storages, Pack houses and Marketing areas
leading to an Integrated approach for export development.
 Creation of and up gradation of post harvest infrastructure required for Exports.
 Exclusive market yard for Mangoes at Gollapudi market yard.

Total project outlay is Rs 1790 lakhs over a 5-year period, with financial support from
Government Agencies estimated at Rs 801lakhs and investment from Private entrepreneurs at Rs
989 Lakhs.

 Expected to result in exports of 4000MT of Mangoes valued at Rs.1867 Lakhs.

Progress so far

 State has announced the creation of an AEZ (Agri Export Zone) for Mango covering
Krishna district.
 Department of Horticulture has been named as the nodal agency and an MOU in this
regard was signed on 27th Sept 2002.
 Trainings of farmers have been conducted on various aspects like Pruning, INM, IPM etc
post harvest aspects have been encouraged in a big way.
 For the year 2003-04, around 2500-3000 farmers planned to be trained.
 An exclusive Soil Testing Laboratory has been set up for the benefit of Farmers from
AEZ.
 Exposure Visits have been organized for the farmers to IIP, Pack Houses.
 Above 20,000 plastic crates have been supplied so far.

Around 17 Pack Houses have been constructed in Nunna market for packing grading, washing
etc with the assistance of NHB.

Agri Export Zone - Gherkins

41
  It was set up to promote export of Gherkins from Andhra Pradesh.
 Districts covered are RangaReddy, Mahaboobnagar, Medak, Warangal, Karimnagar,
Nalgonda & Anantapur.
 Most suitable Soil & Climatic Conditions for cultivation of Gherkins.
 Complete cultivated under Contract Farming. Companies enter into arrangement with
farmers providing them with Seeds, Pesticides, Fertilizers and technical assistance with
assured buyback arrangement
 Availability of abundant and skilled labour, which is a prerequisite for Gherkin
cultivation.
 Farmers from the AEZ have gained expertise of growing this crop several times and have
acquired skills to produce exportable Gherkins to meet discerning taste of International
Consumers.
 A DPR (Detailed Project Report) prepared by Department of Horticulture in association
with M/s. Global Green co has been approved.

Brief Details:

 A number of activities have been suggested under the AEZ to facilitate exports, which
include interventions at Farm level like appropriate agronomical practices, IPM, Drip,
Crop Extension Literature, Post Harvest practices like usage of Plastic Crates, Produce
Exchange Centers, Packaging Development, Cold Storages, Pack houses and Marketing
areas leading to an Integrated approach for export development.
 Creation of and up gradation of post harvest infrastructure required for Exports.
 Total project outlay is Rs 2005 lakhs over a 5-year period, with financial support from
Government Agencies estimated at Rs 373.5lakhs and investment from Private
entrepreneurs at Rs 1631.5 Lakhs.
 Expected to result in exports of 88000MT of Mangoes valued at Rs.414Crores..

Progress so far:

 State has announced the creation of an AEZ (Agri Export Zone) for Gherkins covering
RangaReddy, Mahaboobnagar, Medak, Warangal, Karimnagar, Nalgonda & Anantapur.
 Department of Horticulture has been named as the nodal agency and an MOU in this
regard was signed on 5th May 2003.
 Department of Horticulture has brought out literature on package of practices for
Gherkins. 10,000 Copies have been printed which are being distributed to the farmers.
 Drip irrigation is being encouraged in a big way.
 Financial assistance has been provided to the Metal Detector as requested by the
Company.
 ISO, HACCP & Kosher certificates have been awarded for the units in Andhra Pradesh.

42
SWOT ANALYSIS
STRENGTHS OF ANDHRA PRADESH AGRICULTURE IN THE CONTEXT OF
EXPORT POTENTIALITIES

 Stands among the top five Indian states in terms of cultivated land.
 Large population mostly living in rural areas and deriving their livelihood from
agriculture and allied activities.
 Enterprising, receptive and hard working farmers.
 Diverse soil types which facilitate cultivation of large number of crops round the year.
 Strategically located in the South-central part of India with easy access to all parts of the
country.
 Climate is fairly congenial for a variety of agriculture and allied activities.
 Second largest coast line in the country providing several gateways for international
trade.
 Rich natural resources
 Rich livestock
 Good scope for marine cultivation
 Leads all other states in production of poultry.
 Rich bio-diversity with respect to agriculture and horticultural crops.
 Sincere support from the State Agricultural University (Acharya N. G. Ranga
Agricultural University), presence of several ICAR institutes and an International
Institute, ICRISAT in the areas of education, extension, research and training for the
welfare of farming community.

WEAKNESSES OF ANDHRA PRADESH AGRICULTURE IN THE CONTEXT OF

EXPORT POTENTIALITIES

 Long coast line often subjected to cyclones and storms.

 Comparatively high percentage of illiteracy of 66% compared to 48% of the country.
 About 60% of the Gross Cropped Area is under rainfed farming.
 Limited irrigation infrastructure.
 Low investment capacity of the farmers.
 Lack of adequate technical manpower and infrastructure to study the implications of
WTA on the agricultural exports.
 Low marketable surplus due to high domestic consumption.
 No effective steps have been taken for consolidation of land holdings.
 Rural roads are unmotorable due to poor maintenance.
 Inadequate and erratic power supply to agricultural sector and also high cost of power.
 Lack of proper marketing infrastructure like cold storage facilities, processing facilities,
grading facilities, market information network, advertisement etc.

OPPORTUNITIES OF ANDHRA PRADESH AGRICULTURE IN THE CONTEXT OF

EXPORT POTENTIALITIES

43
  The existing diversified agro-climatic conditions, soils and cropping pattern offers great
opportunities for producing diverse crops both for the international as well as domestic
market.
 Conducive environment for direct foreign investment in the state to build requisite
infrastructure.
 Sine the state occupies a pride place among several states in the country in different
crops, there exists a greater opportunity to enhance their exports by creating requisite
marketing infrastructure.
 The spread of Information Technology sector in the state offers great opportunities to
export the commodities (importersÕ need-based) by studying the price trends in the
international markets.
 The establishment of bio-technology industries in the state provides a greater scope for
releasing pest and disease resistant varieties and promoting quality of production through
cost effectiveness.
 Greater scope for private enterprises participation (ex. contract farming) for enhancing
quality of production and exports.
 Herbs and medicinal plants are found in abundance in different parts of the state. The
ÔAyurvedaÕ system of medicine is still very popular outside, because of the realisation
of drawbacks of synthetic chemicals and drugs. This offers an opportunity to the state to
explore marketing of such herbs and medicinal preparations overseas.
 Location of several ICAR institutions, an International institution (ICRISAT) and other
institutions facilitate exchange of expertise and materials to study the implications of
WTA relevant to the state.
 Large extension network system facilitate the farmers to shift their cropping pattern
towards more profitable crops.

THREATS TO ANDHRA PRADESH AGRICULTURE IN THE CONTEXT OF EXPORT

POTENTIALITIES

 Erratic distribution of rainfall may adversely affect the production.

 Droughts, floods and cyclones of high frequency and intensity.
 Limited scope for expansion of area under agriculture.
 Threats of extremism, absentee landlordism leads to ineffective utilization of land and
other resources.
 Superstitious beliefs of the farmers

44
CONCLUSIONS & SUGGESTIONS

From the above analysis, it is clear that the farmers should be motivated to take up the
agricultural and allied activities as a profit making business and to concentrate more on
profitability rather than on productivity of crops. This implies that the farmers should produce
and market their produce through cost effective technologies. To achieve this, the following
suggestions should deserve special attention.

Trained and skilled manpower should be provided in the fields of agricultural research,
extension and marketing.
The roles and responsibilities of the existing State Agricultural University, State
Department of Agriculture and Marketing Department should be properly restructured.
Networking of different scientific organizations located in the state should be improved
so as to expand application of modern technology in the fields of production and
marketing Since the state is having an easy access to all parts of the country and having
2nd largest coast line in the country, there is a greater opportunity to promote exports by
developing both air-cargo and ship-cargo facilities with requisite infrastructure.
The State Agricultural University and State Department of Agriculture should conduct an
extensive research for generating cost effective technologies for agricultural production.
The WTO Cell established in the state should conduct studies periodically regarding the
implications of WTA on the state agriculture and allied sectors, suggest steps to
safeguard the interests of the sector, should aim at exploiting the opportunities offered by
this Agreement, conduct marketable surplus studies and export competitiveness of
different agricultural commodities in the international market.
There is a greater need to introduce sophisticated technologies in place of existing and
outdated technologies to boost both quantum and quality of production, thereby, higher
profits from the international market.
There is a greater need to educate the farmers to adopt IPM and INM practices with more
emphasis on adopting biological control and biofertilizers so as to reduce the cost and
improve the quality of production.
Agricultural research, extension and education system should be totally re-oriented by the
State Agricultural University to meet the new requirements in the light of WTA. There is
a greater need to start a fresh course in the area of International Agricultural Trade with a
major focus on the Implications of WTA on Indian Agriculture to educate the farm
graduates or post-graduates. The research agenda should focus on improving the
profitability rather than productivity.
Bio-technology should be given special attention regarding development of high yielding
varieties with drought tolerance, pest and disease resistance and with higher quality.
There is a greater need to invest substantially for infrastructure development such as cold
storages, grading facilities, processing facilities, market information network etc., which
will have a positive impact on export marketing.
The Government should encourage private sector agencies to take up contract farming in
the state so as to diversify agricultural production, disseminating scientific technology,
supply of quality inputs, proper technical guidance etc for boosting the agricultural
production and exports.

45
Export Promotion Organizations should be established in the state and they should be
entrusted the responsibilities of collecting marketing information on international trade,
production, prices, quality standards, seasonality, marketable surplus etc., for analyzing
and disseminating information among the producers and exporters. The export
competitiveness of agricultural commodities should also be studied from time to time so
as to encourage their exports which are having more comparative advantage in the
international market. It also facilitates full exploitation of market access opportunities
provided by the WTA. The expenditure incurred on export promotion activities does not
go against the spirit of WTA, because they come under the Green Box provisions.
A long term policy is essential to promote the agricultural exports on a sustainable basis.
This policy should aim at proper selection of commodities for exports based on the need
of other countries rather than on surplus oriented commodities. Besides implementing the
above suggestions in a systematic manner, adequate attention should be paid to overcome
the possible threats and mitigating the weaknesses for a proper and planned development
of export oriented agriculture in the state. This should be carried out both from the short-
term and long-term perspective so as to carve out the states due share in the world trade.
New investments in the sector focus on producing fruit concentrates and pulp, vegetable
purees, pastes and powers, frozen fruits and vegetables, dehydrated products, oleoresins
and cold chains. Palm cultivation and oil processing plants are already coming up
capitalizing on the warm, humid conditions in the villages close to the coast.
The state has to implement various schemes with main thrust on fruits & plantation crops,
hybrid vegetables and seed distribution,forticulture under controlled conditions, spices
and condiments, medical and aromatic plants, mushroom cultivation, precision farming,
tissue culture, leaf analysis etc. the activities must include latest technologies, pre and
post harvest technologies.
Special emphasis must be made on oil palm development. Farmers are increasingly
shifting to oil palm cultivation in Khammam, especially in Aswaraopet and Dammapet
mandals of the district. The crop has found greater acceptability since the oil palm
processing unit with five ton- capacity came into operation in the town. The seedlings are
imported from Costa Rica.
Some 31 mandals have been identified in Khammam as suitable for oil palm
cultivation. The oil palm development programme was however taken up only in 19
mandals initially along with three mandals in East Godavari and two in West Godavari.
The farmers who raised the crop in the initial years were successful in proving it as
highly remunerative. The saplings planted in 2003-2004 and 2004-2005 have come up
for fruiting.
Some of the farmers have claimed to achieve better average than their counter
parts in Malaysia as the yield per acre ranged from 13 tons to 16.5 tons. It is not a labor
intensive crop. A farmer, Gottipolla Prabahkar Rao who raised oil palm in an area of 50
acres involving his brothers and relatives, said the average annual returns would not be
less than Rs. 45,000 per acre against an investment of Rs 12,000 to 14,000. “Our
earnings are no less than that of software engineers”, he said.
If the increase in demand for the edible oils in the international market is of any
indication, the oil palm plantation would give more or less the same as an assured income
for the next three decades, he added. The farmers have their voice in pricing the oil palm.

46
About 90 per cent of the palm oil produced is used for food purposes and the remaining
for non-food purposes. Even the oil palm sludge has a price. It is being used as aqua feed.
Cashew is a dollar earning crop. Hence the cultivation must be improved. Cashew
plantations are more in AP but cashew industries are less and due to financial problems
by heavy taxation, cashew factory owners are paying less prices to cashew farmers. If
taxation is reduced, cashew farmers can definitely get adequate price for their crop.
AP ranks 1st in chillies and turmeric in area, production and productivity. Considerable
increase in productivity of spices has been reported in research stations. The need is
effective transfer of technology to progressive farmers. India faces competition mainly
from China and Pakistan who offer chillies at low prices in international markets. Imports
as whole chillies have fallen in the world market as exports of chilli powder and oleoresin
have grown. Demand is growing for value added products using chillies such as chilli
paste, curry powders and other sauces for the convenience food industry. Andhra Pradesh
alone commands around 53.27% of the chilli production in India. The major chilly
growing districts of Andhra Pradesh are Guntur, Warangal, Khammam, Krishna and
Prakasam. Chilli has well established spot markets. Guntur, Warangal, Khammam in
Andhra Pradesh; Raichur, Bellary in Karnataka are the major spot markets at the
production centers. Guntur is Asia’s largest market for chillies. The marketing season
begins in the first week of March and peaks during the month of April, and closes by the
middle of May. Around 35-40% of the crop that arrives here is estimated to be stored in
the cold storages present at Guntur and surrounding areas. Normally, about 80 lakh to one
crore bags of chillies (each bags carries approximately 35 to 50 kgs) is traded during the
season in Guntur market alone. The market players estimate that trade worth nearly Rs
500 crores takes place in Guntur during season. Besides the highly popular Guntur
Sannam (S-4) variety, other hybrid varieties like Wonder Hot, Ankur, Namdhari, and
Indam 5 are traded in this particular market. It is estimated that there are a 100 odd
exporters in this market. It is estimated that around 25-30% of the chilly crop is used for
powder preparation, with the branded chilly powder manufacturers accounting for around
5% of the total volume.
In the year 2007, 148500 tons of chilli was exported for the value 807.5 crores.
The market players estimate that trade worth nearly Rs 500 crores takes place in
Guntur during season. During the peak arrival period around 0.8 - 1 lakh bags of
35-50 kg is traded here daily.
Nowadays India is facing a very tough competition in the international export
market as price of the Indian chilli powder is considered too high and other
competing countries are providing chilli at very competitive rates to the major
importing countries. The exports can be further improved, provided India is able
to meet the strict quality demands of the international market. Steps have to be
taken by the government to encourage exporters in order to maintain India’s
dominance in the world market.

There are no proper cultivation and marketing techniques of turmeric in the state though
it ranks first in the country and the country ranks first in the world.
Lack of minimum support price (MSP), high cost of labor and non availability of
good farm mechanization tools continue to add to the woes of the farmers
cultivating turmeric in Nizamabad district in Andhra Pradesh. The impact is so

47
much that over the past three years, there has been a considerable decline in the
total area under cultivation of turmeric and the overall production in the district.
Nizamabad is the largest turmeric producing district in the state and it accounts
for nearly 40% of the overall production of turmeric in the country. The overall
area under turmeric cultivation has been declining every year right from 2005-06.
It dropped from 11,959 hectare in 2005-06 to 9,829 hectare in 2006-07 and to
7,377 hectare in 2007-08. Similarly, there has been a drop in the overall
production from the district from 53,815 tons in 2005-06 to 49,145 tons in 2006-
07 and to 29,508 tons in 2007-08. According to officials, the farmers have been
asking for MSP for quite some time but it is yet to be brought in. When farmers in
the neighboring turmeric growing states such as Maharashtra get about Rs 4,000
per quintal, farmers here get only Rs 3,300 per quintal. Another drawback for the
farmers is that there is no testing facility to quantify the ‘Curcumin’ content in
turmeric. ‘Curcumin’ is one of the primary ingredients in turmeric that gives the
bright yellow color to it. And, normally turmeric with high `Curcumin' content
fetches good price. The cost of labor has gone up substantially. As against Rs 60-
70 per day, laborers are now demanding over Rs 100 per day. The working hours
have also come down from 6-8 hours per day to 3-4 hours per day. Also, the
increasing cost of cultivation including labor and other inputs and lesser
realization from the market, has forced many farmers to switch over to other crops
like paddy, soya bean and sunflower.
At present there is no risk management tool available for the traders, farmers,
industry, exporters to hedge their risk out of price uncertainty. As India is having
major share in the international turmeric export market thus it is equally exposed
to global uncertainly that affects trade time to time and thus on price.
In such a scenario offering future trading would provide an opportunity to the
hedge risk for market participants against volatile price movements. Turmeric
price is quite volatile and showing marked fluctuations in daily price. Due to high
volatility it reinforces the need of future trading to allow traders to hedge their
risk. Other factors that indicate success of future trading is well developed spot
market and large number of participants such as traders, farmers, exporters,
industrial consumer etc that provide depth and width to the market.

48
PHARMACEUTICALS AND BULK DRUGS
INDIAN SCENARIO:

Indian pharma industry (IPI) is one of the largest and most advanced among the developing
countries. It has over the years made significant progress in infrastructure development,
technological capability and hence produced a wide range of products. The industry now
produces bulk drugs under all major therapeutic groups. It has a sizable technically skilled
manpower with prowess in process development and downstream processing. It has a capital
investment of about Rs. 2150 crores (CII 2002). It produced bulk drugs of value of Rs. 3777
crores and formulations worth Rs. 15860 crores in 1999-00. It is estimated that the figures for the
above could rise up to Rs. 4344 and 17843 crores respectively (IDMA 2001). The balance of
trade in the pharma sector, which was 16.05 in 1960-61 and 650.6 in 1990-91, has grown into an
imposing 5129.0 (IDMA 2001). It is evident from the above statement that the rate of growth of
value of exports is more than imports (Rs. 6631.0 crores of exports against Rs. 1502.0 crores of
imports). There is an increasing interest and investments in R&D: Rs. 260 crores in 1998-99.
Bulk drugs have grown at a rate of approximately 15%, formulations by 20% in the nineties. It
provides employment for over 28,00,0000 persons both directly and indirectly (employment in
ancillary industries and distribution trade) (OPPI) (Patel 2000). The industry is highly
fragmented. It has about 250 large units and around 2500 small units in operation. At present
70% of requirement of the country in bulk drugs and all the demands for formulations are met by
the domestic industry.

Times are getting tougher for pharmaceutical companies. New registration procedures
and the restructuring of health care systems around the globe are causing fierce price
competition. Many companies are being forced to radically rethink their business models.

The Indian pharmaceutical sector is emerging as one of the major contributors to Indian
exports with export earnings rising from a negligible amount in early 1990s to Rs.29,139.57
crores (US$7.24bn) by 2007-08. The exports of Drugs, pharmaceuticals & fine chemicals of
India have grown at a compounded annual growth rate (CAGR) of 17.8% during the five-year
period 2003-04 to 2007-08. The Indian domestic pharmaceutical market size is estimated at
US$10.76bn in the year 2008 and is expected to grow at a high CAGR of 9.9% percent till 2010
and thereafter at a CAGR of 9.5% till 2015.

The pharmaceutical sector is emerging as one of the major contributors to Indian exports
with export earnings rising from a negligible amount in early 1990s to Rs.29,139.57 crores by
2007-08. The exports of Drugs, pharmaceuticals & fine chemicals of India were growing at a
compounded annual growth rate (CAGR) of 17.8% during the five year period 2003-04 to 2007-
08. The total size of the industry is estimated at US$18bn at the end of the year 2007. The Indian
domestic pharmaceutical market size is estimated at US$10.76bn in the year 2008 and is
expected to grow at a high CAGR of 9.9% percent till 2010 and thereafter at a CAGR of 9.5%
till 2015.

49
 Currently, the Indian pharmaceutical industry is one of the world’s largest and most
developed, ranking 4th in volume terms and 13th in value terms. The country accounted for 8
percent of global production and 2 percent of world markets in pharmaceuticals. Most of the
domestic pharmaceutical drug requirements are met by the domestic industry. In the segment of
Active Pharmaceutical Ingredients (APIs) India ranks third in the world producing about 500
different APIs.

INDIAN PHARMA POLICY

 To ensure availability of good quality medicines at reasonable prices

 To improve accessibility of essential medicines to the poorer sections
 Higher investments to increase production of good quality medicines
 To promote greater research and development in the pharmaceuticals sector by providing
suitable incentives in this regard
 Pharma companies to become internationally competitive by implementing cGMP,
GLP ,GCP & other international guidelines
 To facilitate higher growth in exports of APIs and formulations by reducing the barriers
to international trade
 India as the preferred global destination for Pharma industry
 To facilitate implementation of the Health Policy of the country

50
 India's Trade in Pharmaceutical Products (2003-04 to 2007-08) (figs in US$ mn. & %)
Commodity Name Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 CAGR
(2003-04 to
2007-08)
Exports of Drugs, 3,312.99 3,972.81 4,994.52 5,939.75 7,241.44 22.2
pharmaceuticals & fine
chemicals
Imports of Medicinal & 644.17 705.08 1,027.75 1,292.32 1,660.01 22.9
pharmaceutical products
Exports Growth Rate 24.76 19.92 25.72 18.93 21.91

Imports Growth Rate 8.59 9.46 45.76 25.74 28.45

The composition of Indian pharmaceutical exports during the years 2003-04 to 2006-07: India’s Exports of Bulk Drugs,
Formulations, Ayurvedic, Unani, Homeo & Herbal Products (figs. In Rs. Crores)
Commodity Name Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08
Exports of Formulations 5,952.93 7,481.45 9,066.94 10,829.55 14,382.55 16,647.36
Exports of Basic Drugs, Fine 2,493.36 7,207.79 8,091.69 10,740.51 11,868.29 13,299.33
Chemicals & Intermediates
Exports of Herbals 390.79 318.44 293.63 307.48 377.02 470.73
Medicants & Medicaments 743.88 192.75 399.82 233.07 259.54 321.44
of Ayurvedic System
Medicants & Medicaments 8.19 10.30 2.11 1.87 2.74 3.05
of Homeopathic System
Medicants & Medicaments 0.00 2.08 1.89 1.13 0.70 1.13
of Unani System
Medicants & Medicaments 0.00 0.42 0.47 0.30 0.02 0.42
of Siddha System
Source: DGCI&S

As of 2007-08 the large markets for Indian pharmaceutical exports & suppliers of pharmaceutical products to:Top
Importing Countries of Drugs, Pharmaceuticals & Fine Chemicals (2007-08) (figs. in Rs. Crores)
Rank Importing Country Rs. Crores % Share in India's Exports
1 USA 5,534.68 19.1
2 Germany 1,357.72 4.7
3 Russia 1,199.02 4.1
4 UK 1,077.72 3.7

51
 5 China 818.46 2.8
6 Brazil 752.62 2.6
7 Canada 738.03 2.5
8 South Africa 650.35 2.2
9 Nigeria 644.08 2.2
10 Netherlands 504.17 1.7
11 Spain 485.88 1.7
12 Turkey 485.47 1.7
13 Ukraine 475.88 1.6
14 Viet Nam 466.07 1.6
15 Israel 430.83 1.5
16 Italy 428.16 1.5
17 Mexico 426.28 1.5
18 UAE 412.13 1.4
19 Singapore 401.23 1.4
20 Iran 366.21 1.3

As of 2007-08 the source countries for Indian pharmaceutical imports of India :Top Exporting Countries of
Medicinal & Pharmaceutical Products to India
(figs. in Rs. Crores & %)
Rank Exporting Country Rs. Crores % Share in India's Exports
1 China 2,760.90 40.7
2 Switzerland 912.13 13.4
3 USA 658.14 9.7
4 Germany 391.66 5.8
5 Denmark 287.03 4.2
6 Italy 208.25 3.1
7 France 194.82 2.9
8 UK 160.79 2.4
9 Belgium 124.59 1.8
10 Spain 117.44 1.7
11 India 102.37 1.5
12 Ireland 93.36 1.4
13 Japan 83.09 1.2
14 Korea Republic (South) 72.11 1.1
15 Netherlands 68.18 1.0
16 Austria 47.80 0.7
17 Indonesia 43.47 0.6
18 Poland 34.20 0.5
19 Mexico 31.03 0.5
20 Thailand 26.41 0.4
Source: DGCI&S

52
 Apart from these, some of the fast emerging markets (2005-06) are presented in table 18: Table
18: Countries of High Import Growth Rates in Pharmaceutical Products from India (2005-
06) (figs. In Rs.Crores)
Country Export Value Growth%
South Africa 442.18 104.0
Israel 310.33 84.2
Turkey 426.22 78.5
Kenya 227.74 78.3
Singapore 378.50 58.5
UK 820.63 40.0
China 762.55 40.0
Russia 1,051.12 35.8
Italy 411.98 35.4
Vietnam 400.69 31.3
Source: WTO

ANDHRA PRADESH SCENARIO

Andhra Pradesh has a dominant position in this sector with a market size of $ 1.6 bn presently
growing upto $ 8 bn to 10 bn by 2010, and is well known internationally for its skill in chemical
synthesis and process engineering and its speed to market. The State intends capitalizing on these
strengths, acting quickly in the window of opportunity provided by global regulatory change to
build a strong and globally competitive pharmaceutical industry.

 1/3rd of the national Bulk Drugs production from A.P

 Hyderabad predominantly Bulk Drugs manufacturing hub
 Hyderabad is a centre for institutes of excellence, chemical synthesis and for invention of
new molecules
 Hyderabad is connected to major international destinations by air
 Visakhapatnam a strategic location is just 600 kms away from capital city Hyderabad
 Visakhapatnam is well connected by air, road, rail and seaways – Visakhapatnam port,
Gangavaram port
 The State produces a majority of 500 basic drugs produced in India
 The half-year net sales of the pharmaceutical industry the State is Rs 4700 crores
 The half-year net profits of the Pharma industry in the State is Rs 503.26 crores with a
growth of 11.69%
 Pharma production in the State will reach US$ 8 billion by the end of 2010

SKILLED HUMAN RESOURCES

The State offers excellent opportunities for the growth of the pharmaceutical industry in the
country due to availability of trained and skilled manpower research and development facilities,
including the Indian Institute of Chemical Technology (IICT), Centre for Cellular and Molecular
Biology (CCMB), National Institute of Nutrition (NIN), Centre for DNA Fingerprinting and
Diagnostics (CDFD), Indian Immunological Ltd (IIL), S.P. Biotech Park, ICICI Knowledge

53
Park, and many universities. In addition to this, to develop human resources required for the
innovation led growth, Indian Institute of Life Sciences (IILS) was set up in Hyderabad in
collaboration the industry, the Government and research institute to provide the following:
 Post-Graduate and Ph.D Programmes in Pharmaceutical Sciences and Drug Discovery.
 Train the students and researchers to cater to the needs of the industry.
 Do collaborative research in association with international research institutes.
 Collaborate with the Indian industry.

JAWAHARLAL NEHRU PHARMA CITY AT PARWADA, VISAKHAPATNAM

Realizing the potential scope and imminent challenges in Pharma sector post 2005, the
Government of Andhra Pradesh has developed Jawaharlal Nehru Pharma City at Parwada near
Visakhapatnam in 2200 acres of land with world class infrastructure to support efficient and
environment-friendly Pharma manufacturing. The Pharma City is being developed on a
commercial format with private sector participation. M/s Ramky Pharma City (India Ltd) with
the equity participation of Ramky and APIIC with 89%, 11% equity respectively. A Special
Purpose Company in the name & style of Ramky Pharma City (India) Limited incorporated has
entered into concession agreement with the Government of Andhra Pradesh to build, operate and
maintain the Pharma city infrastructure and amenities. Environmental clearance was accorded by
the Ministry of Environment and Forest, GOI in March,2005 Construction of CETP and marine
outfall facility for letting out the effluents into sea and Hazardous Waste Management are certain
important infrastructure components. The other facilities in the Pharma City are Storm water

54
Discharge, Effluent Conveyance, Sewage Conveyance, Hazardous Waste discharge, Parwada
Balancing Reservoir (Yeleru Canal), Underground & Overhead Reservoir.

450 acres were offered allotments to 41 Major and Medium Companies through BDMA.
100 acres was allotted to 3 Major and Medium Companies of non-BDMA

SWOT ANALYSIS OF THE PHARMACEUTICAL INDUSTRY

Preceding sections make an effort to place Indian Pharmaceutical industry in the global
perspective, followed by an examination of the trends in growth of industry both in terms of the
emerging markets and products; and also the trends in global competition. It may be useful now
to present a SWOT analysis of Indian Pharmaceutical Industry4:

STRENGTHS

1. India is regarded as having an edge over China in terms of qualified, English-speaking

manpower and fair protection of intellectual property rights supported by well-developed
judicial system. (Appendix IV gives more information on IPR status in India).

2. India has skilled scientists/technicians/management personnel at affordable cost leading to

low cost of innovation/ manufacturing/capex costs/ expenditure to run cGMP compliance
facilities and high quality documentation and process understanding.

3. The country has well developed chemistry, R & D and manufacturing infrastructure with
proven track record in advanced chemistry capabilities, design of high tech
manufacturing facilities and regulatory compliance.

4. The healthy domestic market with rising per capita expenditure is another significant
strength enabling achievement of economies of scale. The country also has a strong
marketing & distribution network.

5. India is considered a desirable destination for off shoring of data management functions
for clinical trials and also due to its rich biodiversity and strength in Chemistry which are
essential for drug discovery.

6. The country has significant ability to circumvent API Patents. India has filed a number of
non-infringing process patents. The country has a recent success track record in
circumventing formulation patents. Proven Legal skills to evaluate IP and commercial
strategies are available at least in select top companies. The present domestic regulatory
environment though in need of further improvement has been conducive to the growth of
an emerging pharmaceutical industry.

WEAKNESSES

1. Low investments in innovative R&D continue to be a major weakness of Indian

pharmaceutical industry.

55
2. Diffused nature of the Indian pharmaceutical industry means that only about 20 to 30
companies are large enough to bear the transactions costs associated with sustained
exports to and compliance with entry regulations of the developed markets.

3. Majority of companies lack the ability to compete with MNCs for New Drug Discovery,
Research and commercialization of molecules on a worldwide basis due to lack of
resources.

4. Strong linkages between industry and academia which are essential for growth of the
industry is lacking in India.

5. Comparatively small domestic market size due to low medical and healthcare expenditure
in the country.

6. The country has at times shown inadequate regulatory framework or compliance and
enforcement regime, reflected in occurrences such a production of spurious or low
quality drugs.

7. Competency in API/Formulation, intellectual property creation, facility design and

maintenance, global regulatory affairs, legal intricacies, and managing international work
force is limited to a few players among the big players.

8. Rapidly increasing costs of skilled manpower such as scientists/ regulatory compliance

personnel / pharmaceutical lawyers/ international business development personnel is
pushing up the cost of innovation. Ability to evaluate contracts/alliances etc., is available
only in top companies. Significant lacuna in this area exists and companies are falling
into traps created by the competitors. Institutionalization of learning in the following
areas is restricted
 Regulatory affairs knowledge for different countries and continents
 Process and product patents procedures knowledge for different countries and continents.

9. Sales and marketing knowledge is inadequate due to lack of understanding of international

Pharmaceutical marketing/pricing practices and market environment in various countries.

10. Inadequate manufacturing practices in comparison to those accepted in developed world

such as change of API source, change of manufacturing locations, equipment, etc.,
without proven stability/ bioequivalence may be creating inadequate technical work force
for exports. The national drug regulatory system though evolved substantially, has been
in the need of strengthening its manpower and systems requirements.

11. Inadequate emphasis on Biosciences in education system leading to slower development

in areas related to Biology giving away advantage to China.

56
OPPORTUNITIES

1. India is faced with significant export opportunities, such as,

i. US$40 billion worth of drugs in the U.S.A and US$25 billion worth of drugs in
Europe are expected to go off patent soon. Assocham estimates that Indian
manufacturers may capture 30 percent of that market. This translates to an
opportunity of US$19.5bn which is significant considering the country’s current
exports of approx. US$7.25bn. However the figures need to be appropriately
deflated since Indian opportunity will lie in generics equivalent of branded or
patented drugs, which would be cheaper.
ii. Generic launches by Indian manufacturers have increased in the United States from
93 in 2003 to 250 by 2008.
iii. Compulsory licensing provisions negotiated in the Doha Round, allows for
countries to import cheaper generic versions of patented drugs in the interests of
public health. Thailand and South Africa have already started such initiatives from
which Indian firms have benefited.

2. Due to the cost advantage in contract manufacturing & Research multi-national companies
find it compelling to shift their production bases to countries offering such cost
advantage. Typical of the industry which requires approval of manufacturing facilities by
various drug regulatory agencies of the world involving a very high cost, once such
business finds base in India it would continue with it for at least one & half to two
decades.
3. Licensing deals with MNCs for NCEs (New Chemical Entities) and NDDS (New Drug
Delivery Systems) offer new opportunities for Indian manufacturers.

4. Marketing alliances for MNC products in domestic and international market is another
emerging opportunity.

5. Contract manufacturing arrangements with MNCs is estimated at 10% of patented markets

estimated at US$450bn which is approx. US$45bn.

6. India has a very high potential for developing as a centre for international clinical trials
due to its rich diversity.
7. India can become a niche player in global pharmaceutical R&D and possibilities exist for
expansion of biotechnology generics (also known as bio-similars) and biopharmaceuticals.

8. There is a possibility of greater returns from an Indian entry into mature and more
remunerative markets like Brazil, Japan, CIS, Russia, etc.

9. The Work Programme for the European Medicines Agency 2007 identifies greater co-
operation with India - especially in the field of traditional and herbal medicines and
remedies. Emerging preference for traditional medicines and herbs in the developed
markets including lifestyle products and food supplements also presents an opportunity
for the country in traditional medicinal systems & Herbal based products.

57
 10. A rise in life expectancy generally, and increase in the population of the old, particularly
in the developed world is causing higher expenditure from respective national health
budgets compelling them to move to cheaper APIs and formulations which are India’s
forte.

11. Unleashing of a plethora of preferential trading arrangements, both bilateral and regional,
offers opportunities for India to negotiate preferential access to partner markets for Indian
pharmaceuticals in the long term and in a sustainable manner.

THREATS

1. Product patent regime poses serious challenge to domestic industry unless it invests in
research and development.

2. R&D efforts of Indian pharmaceutical companies are hampered by lack of enabling

regulatory requirement.

3. Drug Price Control Order puts unrealistic ceilings on product prices and profitability.

4. Export effort is hampered by procedural hurdles in India as well as non-tariff barriers

imposed abroad. For example:
i. Indian manufacturers are prevented from bidding for government contracts as US
permits bidders only from countries that are signatories to WTO Agreement on
Government Procurement.
ii. Indian manufacturers have to submit separate state level applications for marketing
drugs in the United States as there is no nation-wide system of application even
where FDA approval has been received.

5. Lowering of tariff protection has increased competition in domestic markets resulting in

erosion of profitability.

6. Mergers and acquisitions by foreign companies’ particularly multinational corporations of

a few Indian generic leaders may completely change the direction of India’s pharmaceutical
movement neutralizing its thrust on generics and cost competitiveness.

7. The generics market in developed countries may be affected by a number of factors:

i. The release of authorized generics by major drug manufacturers.
ii. New midsized players, establishing themselves in the generics market.
iii. Increased competition due to newer Chinese and East European manufacturers.
(E.g. there has been massive state level investment by China in the biotechnology
sector – though at present India still has the edge due to IP laws.)
iv. TA’s entered into by the United States of America with third countries (e.g. the
Morocco-U.S.A FTA) may be harmful to Indian pharmaceutical exports because of
provisions for increases in patent terms, etc. The United States enters into a number
of FTA’s with different countries and while the exact text of these agreements differ
from country to country, each of these agreements contains provisions which can be

58
 damaging to Indian exporters of pharmaceuticals partly also because of their
provisions on patents. These FTA’s contain a large number of provisions which
increase patent terms for pharmaceuticals by allowing for patentability of new uses
of discovered inventions and by increasing patent terms by taking into account the
time taken to process claims (ever greening). These provisions go beyond TRIPS
and hence it may not be possible to challenge these under the WTO Dispute
Resolution process. However, the compatibility of these provisions with Article
XXIV of the GATT needs to be examined.

8. Specific non-tariff and para-tariff barriers being increasingly adopted by other countries
such as long transaction time taken for registration of drugs, insistence on completing
long process for registration when the drug may actually have gone through the most
rigorous process of registration such as the USFDA; insistence on allowing imports of
only those drugs which are registered in some developed countries, etc.

59
MARINE SECTOR

INDIAN MARINE INDUSTRY LOGISTICS

The global logistics industry was valued at US$3.5 trillion in 2005, whereas US logistics industry size
was around US$900 billion, 25% of the global logistics industry. Logistics costs in India are estimated to
be around 13% of the GDP, which comes to around US $94 billion in 2005-06. However, India’s
spending on logistics industry is much higher than the developed economies like the US (9.5%) and
Japan(10.5%). Marine transport sector contributes over 0.2% to the country’s GDP at constant prices
(1999-2000 prices). Transport sector’s contribution to the GDP has been increasing because of the
growing economic activities in the country. Shipping industry plays a significant role in the Indian
economy. India has 12 major and 187 minor/intermediate ports along its coastline of around 7,517km.
Ports serve as the gateways to the international trade in India. Major ports in India together have handled
463.84m tonnes of cargo in 2006-07, a growth of 9.51% against the same period of the previous year. The
petroleum-oil-lubricants (POL) accounted for 33.38% of the total traffic at major ports during April-
March 2007, while iron ore constituted 17.37%, coal 2.98%, container traffic 15.84%, fertilizer 3.04%,
and others 17.49%.According to the Planning Commission, India’s shipping fleet strength will be
increased up to15m GRT by the end of 2011-12, with an estimated investment of US$17.7 billion. The
port throughput will increase up to 1,008m tonnes, growing at a CAGR of 10.96% from 2007-08 to
2011-12. The following table gives the detailed data about the major ports of India for the
financial year 2005-06 and percentage growth over 2004-05

Cargo  % Vessel  % Container  %

Handled Increase Traffic Increase Traffic Increase
Name   (06-07) (over (05-06)  (over (05-06) (over 04-
'000 05-06)     04-05)   '000 05)  
tonnes   TEUs  

Kolkata 55,050 3.59% 2,853 07.50% 313 09.06%

(Kolkata Dock
System &
Haldia Dock
Complex)

Paradip 38,517 16.33% 1,330 10.01% 3 50.00%

Visakhapatnam 56,386 1.05% 2,109 14.43% 47 04.44%

Chennai 53,798 13.05% 1,857 11.26% 735 19.12%

Tuticorin 18,001 05.03% 1,576 06.56% 321 04.56%

Cochin 15,314 10.28% 1,225 09.38% 203 09.73%

60
 New Mangalore 32,042 -06.99% 1,087 01.87% 10 11.11%
Port

Mormugao 34,241 08.06% 642 -03.31% 9 -10.00%

Mumbai 52,364 18.50% 2,153 14.34% 159 -27.40%

J.N.P.T. 44,818 18.45% 2,395 03.06% 2,267 -04.39%

Ennore 10,714 16.86% 173 01.17%

Kandla 52,982 15.41% 2,124 09.48% 148 -18.23%

All Indian Ports 463,843 9.51% 19,796 08.64% 4,744 12.07%

MARINE TRANSPORT IN INDIA

Shipping industry plays a significant role in the Indian economy as 95% of India’s international
trade by volume and 70% by value are seaborne. The fleet strength by the end of December 2007
was 850 vessels with 9.03 million Gross Registered Tonnage (GRT), of which overseas shipping
accounted for 90.11% of the total capacity in terms of Gross Tonnage. According to the Planning
Commission, Indian Shipping Industry’s gross tonnage capacity will be increased up to 15
million GT (As per 3rd target) by the end of Eleventh Five Year Plan (2012) with an estimated
investment of Rs. 800 billion.

EXPORT OF MARINE PRODUCTS FROM INDIA 2008-09

EXPORT TREND 

Since the fall in the export earnings during 2003-04, the dollar earnings have increased steadily till 2008-
09

EXPORT TREND OF MARINE PRODUCTS

 Q: Quantity in MT, V: Value Rs. Crore, $: US Dollar in Million

  Year   Export Variation    (%) U.V.

2002-03 Q 467297 +42827 +10.09  

  V 6881.31 +924.26 +15.52 147.26

  $ 1424.90 +171.55 +13.69 3.05

2003-04 Q 412017 -55280 -11.83  

61
   V 6091.95 -789.36 -11.47 147.86

  $ 1330.76 -94.14 -6.61 3.23

2004-05 Q 461329 49312 11.97  

  V 6646.69 554.74 9.11 144.08

  $ 1478.48 147.71 11.10 3.20

2005-06 Q 512164 50835 11.02  

  V 7245.30 598.61 9.05 141.46

  $ 1644.21 165.74 11.21 3.21

2006-07 Q 612641 100478 19.62  

  V 8363.53 1118.23 15.43 136.52

  $ 1852.93 208.72 12.69 3.02

2007-08 Q 541701 -70941 -11.58  

  V 7620.92 -742.61 -8.88  

  $ 1899.09 46.16 2.49 3.51

2008-09 Q 602835 61134.51 11.29  

  V   8,607.94 987.02 12.95  
  $   1,908.63 9.54 0.50 3.17

Frozen shrimp continued to be the single largest item of export in terms of value accounting for
about 44% in the total export earnings. In terms of quantity, fish accounted for the major share at
40% (shrimp 21%) as could be observed from the table below.                             

MAJOR EXPORT ITEMS

Q: Quantity in Tons, V: Value in Rs. Crores,$: USD Million
ITEM Share %   2008-09 2007-08 Growth(%)

FROZEN SHRIMP 21 Q 126042 136223 -7.47

  43.91 V: 3779.88 3941.62 -4.10
  43.97 $: 839.30 980.62 -14.41
    UV$: 6.66 7.20 -7.50
FROZEN FISH 40 Q: 238543 220200 8.33

62
   20.01 V: 1722.29 1303.41 32.14
  19.66 $: 375.23 326.29 15.00
    UV$: 1.57 1.48 6.16
FR CUTTLE FISH 8 Q: 50698 45955 10.32
  8.84 V: 760.59 744.13 2.21
  8.81 $: 168.17 185.66 -9.42
    UV$: 3.32 4.04 -17.89
FR SQUID 9 Q: 57125 34172 67.17
  7.35 V: 632.35 408.42 54.83
  7.49 $: 142.87 101.29 41.05
    UV$: 2.50 2.96 -15.63
DRIED ITEM 5 Q: 31688 22414 41.38
  4.89 V: 420.75 258.88 62.53
  4.85 $: 92.51 64.72 42.94
    UV$: 2.92 2.89 1.10
LIVE ITEMS 1 Q: 3434 2498 37.47
  1.15 V: 99.00 69.07 43.33
  1.14 $: 21.82 17.21 26.84
    UV$: 6.36 6.89 -7.73
CHILLED ITEMS 4 Q: 21453 6541 227.98
  2.53 V: 217.34 118.11 84.02
  2.54 $: 48.39 29.62 63.35
    UV$: 2.26 4.53 -50.19
OTHERS 12 Q: 73851 73698 0.21
  11.34 V: 975.75 777.29 25.53
  11.54 $: 220.33 193.68 13.76
    UV$: 2.98 2.63 13.53
TOTAL 100 Q: 602835 541701 11.29
  100 V: 8607.94 7620.92 12.95
  100 $: 1908.63 1899.09 0.50
    UV$: 3.17 3.51 -9.69

 European Union (EU) continued as the largest market during the year with a percentage share of 32.6%
in $ realization followed by China 14.8%, Japan 14.6% , USA 11.9%, South East Asia 10%, Middle East
5.5% and Other Countries 10.6%. 

MAJOR EXPORT MARKETS

Q: Quantity in Tons,    V: Value in Rs. Crores,   $: USD Million
Country Share %   2008-09 2007-08 (%)

JAPAN 10 Q: 57271 67373 -14.99

  14.34 V: 1234.01 1227.59 0.52
  14.60 $: 278.61 305.49 -8.80

63
 USA 6 Q: 36877 36612 0.72
  11.87 V: 1021.55 1016.94 0.45
  11.91 $: 227.29 253.05 -10.18
EUROPEAN UNION 25 Q: 151590 149381 1.48
  32.53 V: 2799.96 2664.24 5.09
  32.63 $: 622.87 663.17 -6.08
CHINA 24 Q: 147312 139792 5.38
  15.06 V: 1296.39 1009.59 28.41
  14.77 $: 281.90 252.90 11.47
SOUTH EAST ASIA 15 Q: 88953 63818 39.38
  10.14 V: 873.09 573.97 52.12
  10.01 $: 191.08 143.50 33.16
MIDDLE EAST 5 Q: 27177 25752 5.53
  5.53 V: 475.72 393.96 20.75
  5.51 $: 105.20 98.05 7.29
OTHERS 16 Q: 93654 58972 58.81
  10.54 V: 907.21 734.62 23.50
  10.57 $: 201.68 182.93 10.25
Total 100 Q: 602835 541701 11.29
  100 V: 8607.94 7620.92 12.95
  100 $: 1908.63 1899.09 0.50

PORT WISE EXPORTS

Exports were affected from 19 land/air ports. The major ports to handle the export cargo during the year
in the order of US $ earnings were Kochi (17.6%), JNP (17.3%), Pipavav (16.1%), Chennai (12.6), Vizag
(10.5%), Calcutta (8.4%), Tuticorin (8%), Mangalore (2.8%), etc.                                    

PORTWISE EXPORTS
Q: Quantity in Tons,     V: Value in Rs. Crores,    $: USD Million

Ports   Share % 2008-09 2007-08 Growth(%)

KOCHI                                             Q: 16.35 98537 98520 0.02

  V: 17.48 1,504.98 1,383.74 8.76

  $: 17.57 335.35 344.45 -2.64

J N P                                             Q: 21.04 126853 104670 21.19

  V: 17.28 1,487.28 1,120.86 32.69

  $: 17.26 329.52 279.25 18.00

PIPAVAV                                           Q: 27.18 163866 149734 9.44

  V: 16.36 1,408.35 1,075.31 30.97

  $: 16.12 307.69 268.79 14.47

64
CHENNAI                                           Q: 6.48 39043 42947 -9.09

  V: 12.53 1,078.44 1,158.50 -6.91

  $: 12.62 240.80 287.87 -16.35

VIZAG                                             Q: 5.35 32277 35535 -9.17

  V: 10.43 897.93 1,018.60 -11.85

  $: 10.47 199.85 253.66 -21.21

CALCUTTA                                           Q: 5.58 33625 27666 21.54

  V: 8.37 720.36 689.70 4.45

  $: 8.38 159.96 172.06 -7.03

TUTICORIN                                         Q: 4.87 29354 29697 -1.15

  V: 8.06 693.76 654.64 5.98

  $: 8.05 153.59 162.97 -5.75

MANGALORE/ICD                                    Q: 5.49 33083 26155 26.49

 
  V: 2.77 238.44 162.61 46.64

  $: 2.77 52.81 40.65 29.89

GOA                                               Q: 3.51 21146 19297 9.58

  V: 2.15 185.16 111.22 66.48

  $: 2.20 42.04 27.80 51.24

MUMBAI                                            Q: 0.38 2319 2383 -2.70

  V: 2.05 176.56 116.12 52.05

  $: 2.02 38.60 29.14 32.46

AHMEDABAD                                         Q:

FOREIGN TRADE POLICY 2004-2009

1. ITEMS PERMITTED 
 No Quantitative   restrictions  on export.
 Licence under Foreign Trade Policy not required for import of 125
species/groups of fish, crustaceans, molluscs and other aquatic invertebrates
covered under FREE policy in Chapter 3 of ITC (HS) classification of Export
&Import items under the EXIM policy.
 Import of five groups of live fish permitted under  Restricted Policy (EXIM Code
0301) 
 Import of Whale Shark (Rhincodon types) and parts and products of the species is
restricted. 

65
 2.  PROMOTIONAL MEASURES  

 Central assistance to States for development of critical infrastructure for export

such as roads, inland container depots, container freight stations, Export
Promotion Industrial Parks and for equity participation in infrastructure projects. 
 Encouragements to State Governments for setting up Export Zones. 
 Declaration of Towns of Export Excellence to encourage setting up of critical
infrastructure for export production, encourage common service providers and
facilitate availability of better technological services and integrate benefits under
the other schemes of EXIM Policy for the units in such towns. 
 (iv)  Market Access Initiative Schemes for encouraging increased marketing
efforts by exporters/Brand promotion 
 Schemes to promote the Concept of Total Quality Management. 

3.  IMPORT FOR EXPORT PRODUCTION   

 Advance authorization for duty free import of  inputs for export production. 
 Duty free import authorisation (DFIA) Scheme: Scheme DFIA is issued to allow
duty free import of inputs, fuel, oil, energy sources, catalyst which are required
for production of export product. DGFT, by means of Public Notice, may exclude
any product(s) from purview of DFIA. This scheme is in force from 1st May,
2006.
 However, these Authorizations shall be issued only for products for which
Standard Input and Output Norms (SION) have been notified.  Pre-export
Authorization shall be issued with actual user condition and shall be exempted
from payment of basic custom duty, additional customs duty, education cess, anti-
dumping duty and safeguard duty, if any.  A minimum 20% value addition shall
be required for issuance of such authorization.  
 Manufacturer exporters, merchant exporters tied to supporting manufacturers and
service providers eligible for import of capital goods at 5% Customs duty linked
to fulfilment of export obligation in 8 to12 years under EPCG Scheme. 

4.  EOU/EPZ/SEZ  

 Scheme of 100% EOU/Export Processing Zone/Special Economic Zone for

export production continues. 
 No trading units permitted under the scheme.
 SEZ to be set up for marine products in AP The Marine Products Export
Development Agency (MPEDA), which works under the Union Ministry of
Commerce, will set up the country’s first special economic zone (SEZ) for
marine products in Andhra Pradesh. Likely to be set up at Kara Agraharam near
Machilipatnam, the 260-acre SEZ would house 30-40 units from the private
sector, specialising in the processing of various marine products

5. PACKAGE FOR MARINE SECTOR

66
  Duty free import of specified specialized inputs/chemicals and flavoring oils as
per a defined list shall be allowed to the extent of 1% of FOB value of preceding
financial years export.  Use of these special ingredients for seafood processing
will enable us to achieve a higher value addition and enter new export markets.
 To encourage the existing mechanized vessels and deep sea trawlers to adopt
modern technology for scientific  exploitation of our marine resources in an eco-
friendly manner and boost marine sector exports, it is proposed to allow import of
monofilament long line system for tuna fishing at a concessional rate of duty.
 The present system of disposal of waste of perishable  commodities like seafood
after inspection by a customs official is very cumbersome and leads to
development of unhygienic conditions.  To overcome this, a self removal
procedure for clearance of waste shall be applicable, subject to prescribed wastage
norms.   

FOCUS MARKET SCHEME (FMS)

            Objective is to offset high freight cost and other externalities to selected international
markets with a view to enhance India’s export competitiveness in these countries.
Entitlement Exporters of all products through EDI enabled ports to notify countries (as in
Appendix 37C of HBP v1) shall be entitled for Duty Credit scrip equivalent to 2.5% of
FOB value of exports for each licensing year commencing from 1st April, 2006. 
However additional Markets notified in Appendix 37C of HBP v1 shall be entitled for
Duty Credit scrip on exports w.e.f 1.4.2007.

Sr.No Focus Market Code Country Code Country

Countries in Latin American Block

1 L 001 015 ARGENTINA

2 L 002 039 BOLIVIA

3 L 003 073 CHILE

4 L 004 109 ECUADOR

5 L 005 317 PARAGUAY

6 L 006 319 PERU

7 L 007 427 URUGUAY

8 L 008 433 VENEZUELA

Countries in African Block

9 A 001 011 ANGOLA

67
10 A 002 035 BENIN

11 A 003 041 BOTSWANA

12 A 004 050 BURKINA FASO

13 A 005 053 BURUNDI

14 A 006 057 CAMEROON

15 A 007 061 CANARY IS

16 A 008 063 CAPE VERDE IS

17 A 009 067 CAFRI REP

18 A 010 069 CHAD

19 A 011 085 COMOROS

20 A 012 087 CONGO P REP

21 A 013 115 ETHIOPIA

22 A 014 116 ERITREA

23 A 015 117 EQUTL GUINEA

24 A 016 135 FR S ANT TR

25 A 017 141 GABON

26 A 018 143 GAMBIA

27 A 019 167 GUINEA

28 A 020 169 GUINEA BISSAU

29 A 021 199 COTE D'IVOIRE

30 A 022 227 LESOTHO

31 A 023 229 LIBERLIA

32 A 024 231 LIBYA

33 A 025 241 MADAGASSCAR

34 A 026 243 MA;AWO

35 A 027 249 MALI

68
36 A 028 255 MAURITANIA

37 A 029 257 MAURITIUS

38 A 030 265 MOROCCO

39 A 031 267 MOZAMBIQUE

40 A 032 269 NAMIBIA

41 A 033 289 NIGER

42 A 034 339 REUNION

43 A 035 345 RAWANDA

44 A 036 347 SAHARWI A.DM RP

45 A 037 349 SAO TOME

46 A 038 353 SENEGAL

47 A 039 355 SEYCHELLES

48 A 040 357 SIERRA LEONE

49 A 041 363 SOMALIA

50 A 042 371 ST HELENA

51 A 043 385 SWAZILAND

52 A 044 399 TOGO

53 A 045 407 TUNISIA

54 A 046 417 UGANDA

55 A 047 459 CONGO D.REP

56 A 048 461 ZAMBIA

57 A 049 463 ZIMBABWE

FOCUS PRODUCT SCHEME (FPS)

69
Objective is to incentives export of such products, which have high employment intensity in
rural and semi urban areas, so as to offset infrastructure inefficiencies and other associated costs
involved in marketing of these products.
Entitlement  Exports of notified products (as in Appendix 37D of HBP v1) through EDI enabled
ports to all countries shall be entitled for Duty Credit scrip equivalent to 1.25% of FOB value of
exports for each licensing year commencing from 1st April, 2006.

VALUE ADDED FISH PRODUCTS

Sl.No Item ITC(HS) Description

1 46   Shrimp – breaded, battered, marinated and other such
prepared products

2 47   Shrimp pickle

3 48   Shrimp Curry

4 49   AFD Shrimp, AFD Powder

5 50   Shrimp IQF Raw

6 51   Shrimp IQF blanched/cooked

7 52   Shrimp in Tray/pouch packs

8 53   Squid – breaded, battered, marinated and other such

prepared products

9 54   AFD Squid

10 55   Squid IQF raw

11 56   Squid IQF blanched/cooked

12 57   Squid in Tray/pouch packs

13 58   Cuttlefish AFD

14 59   Cuttlefish IQF Raw

15 60   Cuttlefish IQF blanched/cooked

16 61   Cuttlefish in tray/pouch packs

17 62   Cuttlefish breaded, battered, marinated and other such

prepared products

70
 18 63   Fish fillets / loins / steaks etc in tray / vacuum pouches

19 64   Braded fish fingers / fish fillets, precooked loins and

other such prepared products

20 65   Fish pickle

21 66   Fish curry

22 67   Lobster cooked / half cut IQF/packed in tray / pouches

23 68   Stuffed crab

24 69   Breaded crab cakes/ Crab cake

25 70   Pasteurized crab meat

26 71   Raw crab meat/soft shell crab

27 72   Mussel/clam meat pickle

28 73   Surimi analogues

29 74   Canned Tuna

Implications of the WTO on Indian Marine Industry, Issues and

Policy Perspectives
Marine Trade and the Developing Economies
Marine products, on account of their health attributes and high unit value, are claimed to be one
of the fastest moving commodities in world markets. In the context of WTO-GATS, the nature of
linkage between trade performance and environmental measures has become a major concern for
the developing countries and export of marine products are considered to be the most
environmentally sensitive products in the international market. Within the WTO, fish is treated
as an industrial product within a potentially free global Market to be addressed within the
NAMA negotiations, having been excluded from Agriculture negotiations. During the Uruguay
round, fisheries were left out of the Agreement On Agriculture (AoA) at the insistence of some
EU countries that benefited from the EU Fisheries subsidy regime. As a result, fisheries-related
issues are covered by various other agreements. Most notably, fisheries subsidies fall under the
discipline of the Agreement on Subsidies and Countervailing Measures (ASCM). The Doha and
the HK round proceedings include a number of issues of particular importance to international
trade in fish and fishery products, i.e. fisheries subsidies, market access, environmental labelling,
the relationship between WTO trade rules and environmental agreements. The main areas up for
negotiation were tariff and non-tariff barrier reductions under the negotiating group on NAMA
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and specific mention of a reduction of fisheries subsidies under the WTO negotiating ‘Group on
Rules’. Apart from the above many other WTO-GATS related issues have repercussions on the
marine exports from the Asian countries, namely the outcomes from the Dispute Settlement
Mechanism (DSM); the current process of clarification on the impact of ecolabels on trade; the
relation between trade rules and Multilateral Environmental Agreements (MEAs); Technical
Assistance and Capacity Building (TA & CB); and the provisions for Special and Differential
Treatment (SDT).

Global Trends in Fishery Exports & Imports (US $ Billions)

Region 1976 2001

Exports Imports Exports Imports

World 7.98 8.84 56.10 60.26

Developing Economies 2.94 1.19 28.03 10.66

LIFDC 0.96 0.44 10.82 3.16

Developing / World (%) 37 13 50 18

LIFDC / World (%) 12 5 19 5

(LIFDC) Low-Income Food Deficit Countries

Globally, fish has become a highly traded commodity, with 38 % (live weight equivalent) of
total fisheries product being traded internationally in foreign markets, Vannuccini (2004). In
terms of overall merchandise production and trade, the global share of developing countries was
37.5 % in 2001 but their share in global fish exports was over 50 The livelihoods of
approximately 150 Million people depend on fisheries, aquaculture and associated activities and
over 20 % of the world’s 38 million fulltime fishers earn less than US$ 1 per day, World Bank
(2006). According to Delgado (2003), global capture production of food fish has rapidly
increased from 44.5 mln Tonnes in 1973 to 64.5 mln Tonnes in 1997. The vast majority of this
production (over 90 % in 1997) has come from marine fisheries. During this period, the
production of developed countries as a whole declined by about 3.6 mln Tonnes, whilst
production in the developing world increased at an average annual rate of 3.4 %. The above
evidence mirrors an overall shift in production towards developing countries away from
developed countries. Part of this shift is probably the consequence of the establishment of 200
mile Exclusive Economic Zones (EEZs) that allow coastal nations to claim exclusive fishing
rights. At the same time, capture fisheries is an industry in crisis as the natural resource limits of
the oceans, coastal regions, and many inland water bodies have been reached, World Bank
(2004). According to FAO estimates, 25 % of the world’s major fisheries are over fished, and 40
% are fully fished, resulting in declining fish stocks and ecological change, World Bank.

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As per the FAO statistics, developing countries like China, Thailand, Vietnam, Chile, Taiwan,
Indonesia, India, Peru and South Korea are the main exporters in terms of value of
Fisheries products during the 2000-2005 periods. At the same time, with 34 % of the export
Value (i.e. this may include intra EU trade), the EU is globally the most important exporter
With Norway, USA, and Canada being other major players amongst developed countries, Lem
(2004). Denmark, Spain, Netherlands, United Kingdom, Germany and France are the principal
EU exporters. The export value of internationally traded fish and fisheries products
was US$ 58 Billion (bln.) in 2002, exceeding the combined value of net exports of rice, coffee,
sugar, and tea, World Bank website January 2006). Developed countries absorb 80 % of the
value of world imports, with Japan, USA, and the EU being the principal destinations. Whilst
LIFDC’s account for 20 % of fishery exports in value terms in 2002, the share of all developing
countries combined in fishery exports was 49 % by value and 55 % by quantity. The net receipts
of foreign exchange (i.e. export Minus import values) for fishery commodities by developing
countries increased from US$4.0 billion in 1982 to US$17.4 billion in 2002, Vannuccini (2004).

Indian Marine Trade & Services

In India, till late seventies, the export of marine products mainly consisted of dried
Items like dried fish, dried shrimp, shark fins and fish maws etc. However, later there was a
Decline in the export of dried marine products, and subsequently the exports of processed
Items continued to make steady progress in marine trade. The markets for Indian marine
Foods were initially confined to Singapore, Sri Lanka and Myanmar to a great extent. When
Frozen and canned items figured increasingly in the export basket, USA, France, Canada,
Japan and Australia became the important markets for Indian marine products. During
1980’s canned items slowly disappeared and frozen items became the prominent ones in
India’s seafood trade. India has the seventh largest capture fishery, and is second in importance
in terms of aquaculture production. It is also a significant exporter, although per capita
consumption of fish is low (5 kg per capita). The export of marine products grew to be one of the
important item of India’s exports from a 40.4 US$ in 1970-71 to US$ 1320.5 mln. In 2003-04
accounting for approximately 2.08 % of the total export from India. In 2003-2004 it has a share
of 17.83 % in total agricultural exports, Reserve Bank of India (2004).
Indian seafood exports are less than the global average, with about 12 % of its total fish
production (wet weight equivalent) entering world trade. As a share of the marine fish
production it is about 25 % of the total marine fish production. India has a coastal population
Of 370 mln. People or 36 % of the country's total population, DOD (2002) and about 6.7 mln.
People depend on fisheries for a livelihood, Government of India (2001). This includes
Roughly 725, 000 full-time, and an equal number of part-time, fishermen engaged in fishing
Operations and over one mln. People engaged in pre and post-harvest activities. While 48 %
Of full-time fishermen are on the East Coast of India, 35 % are on the West Coast, and the
Remaining 17 % are spread over other states and union territories. There are also about
300,000 people employed directly in the shrimp aquaculture sector and about 700,000 people
In ancillary units, AAI (2002).

Evolution of Fish and Fishery Product Exports from India, 1960–2002

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India is currently the fourth largest fish producer in the world after China, Peru and
Japan. Marine products form a bulk of the exports of agricultural products. More than 3 % of
India’s exports are marine products. Although tariff levels have been reduced recently (from
an average of 60% to 35%), these remain high even by the standards of other major Asian
Economies. From 1951 to 2003 India's fish production increased eight-fold from 7.52 lakhs
Tonnes in 1950-51 to 6.2 lakhs tonnes in 2002-2003, accounting for over 5 % (approx.) of the
world’s total fish production, Directorate of Economics & Statistics (2004). In the realms of food
production, the rate of growth of Indian fish production is second only to that of wheat. Over 70
% of total fish production of India is sold fresh in the domestic market, about 11 % are dried or
salted, and about 6 % are converted to fishmeal, Government of India (2001). The impact of the
Uruguay Round Agreement on the Application of Sanitary and
Phytosanitary (SPS) agreement and the agreement on Technical Barriers to Trade (TBT)
Adopted by WTO Members in 1995 is clearly depicted through the above figure.

Implications of WTO-GATS on India Marine Industry

The exports of inland and marine capture fishery products are of integral importance
to government revenues and income and employment generation in India. Indian fisherman
and fishery exporters face complex negotiations at the WTO-GATS level on tariffs and
Fishery subsidies and bilateral and regional negotiations with the EU in the formulation of
Economic Partnership Agreements (EPAs) and Fisheries Partnership Agreements (FPAs). In
Addition, they need to comply with increased food safety standards. The impact of GATS
and the implications on Indian marine trade & services are assessed in context of Tariff
Measures, Non-tariff measures, Subsidies and Eco-labelling.

 Market Access – Tariff Measures

Tariffs on fish and fishery products are generally quite higher in developing countries
posing problems to the development of international trade. After the completion of the
Uruguay round, the average weighted import tariffs on fish products were reduced to 4.5% in
Developed countries, Lem (2004). Although this may seem quite low, the average hides a
number of very high tariffs for selected species and products (tariff peaks), as well as cases
of tariff escalation where processed or value added fish products are subject to higher duty
than unprocessed fish. Tariffs on primary fish commodities have declined significantly in

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developed countries and have decreased even in the developing countries of Asia, where
they were previously much higher than in developed countries.

Reductions in Average Tariffs for Fisheries Imports in Select Asian Countries

Share of c.i.f value (percent)

Country Tariff before WTO Tariff after WTO

China 1991 47 2001 11-23

Thailand 1995 60 1999 5-30

Philippines 1994 10-60 2000 2-15

India 1993-94 60 2002- 35

2003

Bangladesh 1991-92 59 2000- 28

2001

While average tariff levels have declined (See Table 2), it should be noted both that
Most fish trade is in processed products of some sort, and that developed countries generally
maintain higher tariff rates on processed fish commodities than on chilled fresh fish, a case
of “tariff escalation” shown in Table 3. Yet even the tariff rates for processed products are
fairly low (compared with meat out of quota, for example), and it is not plausible that tariffs
are or will be a major constraint on the growth of fish exports from developing countries.
Import duties in developed country markets continue therefore to present a barrier to
processing and economic development in the fishery industries in many developing
Countries, and also to developed countries outside the large trade areas, for example Non-EU
Members .Tariff cuts on fish products would mean a reward to those who engage in
economically ‘efficient’ mass exploitation and hasten the depletion of the ocean’s resources.
Sustainable local suppliers would be forced out of their domestic market and the rape of the
fisheries would intensify. Developed countries often have zero or relatively low levels of tariffs
on fish, but there are cases of escalation with some peaks. EU rates are higher than in many
developed countries i.e. on average are around 10%, but zero rates apply for ACP (African
Caribbean and Pacific) and LDC states. As such the issue of concern to developing country
exporters depends on their current exemption status and hence potential change in
competitiveness arising from further liberalization (e.g. the extension of tariff exemptions to
Non-ACP and LDC states which may radically alter competition in the supply of EU
Markets.

Tariff Escalation for Some Developed-Country Fisheries Imports

Share of border c.i.f. value (percent)
Product European Union Japan

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 Conventional GSP MFN GSP

Skipjack

Fresh 22 0 3.5 3.5

Canned 24 0 9.6 6.4

Mackerel

Fresh 20 0 0 0

Processed 25 0 9.6 7.2

Scallops

Fresh 8 2.8 10 7.2

Processed 20 7 9.6 7.2

Crabs/Lobsters

Fresh 10 8.2 7 7

Processed 20 7 6.7 6.7

The U.S. Seafood Regulation in December 1995 has mandated every processor and importer to
comply with HACCP from December 1997. To ensure compliance with its food safety
regulations, the U.S. Food and Drug Administration (FDA) require importers to meet one of two
conditions. First, importers may obtain seafood from countries with voluntary agreements with
the FDA. These agreements may document that the countries’ seafood safety systems are
equivalent to or in compliance with those of the U.S. Second, if these agreements do not exist,
importers must have records demonstrating that foreign firms’ products entering the U.S. have
been processed in accordance with U.S. HACCP requirements. Such records may include a copy
of the foreign firms’ HACCP plan. EU requirements in this regard are more comprehensive than
U.S. requirements. Implication of Tariff barriers for India: EU is India’s largest trading partner.
According to the Indian Export Import Policy 2002-2007, all marine products with a few
exceptions under the Wildlife Protection Act 1972, can be exported free subject to pre-shipment
quality inspection. 90% of Indian seafood exports comprise frozen fish, shrimp and cephalopod.
The average tariff rate in Japan, the biggest Indian seafood market, is 4.1 %. US, the second
biggest market for Indian seafood, has just a nominal 1 % tariff duty. EU, the third biggest
importer, has an average tariff duty of 10.2 %, followed by China, the fourth biggest, which has a
bound tariff rate of 18 %. The EU, Japan and the US extend preferential tariff treatment under
Generalized System of Preferences (GSP) to Indian products including seafood. In general, tariff
measures are not seen as a trade barrier by the Indian seafood industry to the US and Japanese
markets. However, it is seen as a barrier to access some of the markets in developing countries,
including China, as well as the EU market. India is still in List 1 of Annex 1 of the EC Decision

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97/276/EC, amended by 99/136/EC, whereby all organizations exporting seafood to the EU
require export-worthy certification of their processing facilities by an EU-nominated inspection
agency. In the case of India, that agency is the Indian Export Inspection Council (EIC).

 Market Access – Nontariff Measures

Non tariff measures include the SPS regulations and the growth in quality control regimes
promoted particularly by the developed importing countries. The Uruguay Round Agreement on
the Application of Sanitary and Phytosanitary (SPS) agreement and the agreement on Technical
Barriers to Trade (TBT) adopted by WTO Members in 1995 have given a new direction to the
international sea-food trade and services. These agreements are intended to ensure that
requirements such as quality, labelling and methods of analysis applied to internationally traded
goods are not misleading to the consumer or discriminate in favour of domestic producers or
goods of different origin, Bostock . A key aspect has been the development of HACCP, which
can impose significant costs from the viewpoint of the developing country supplier. SPS
measures are unlikely to be relaxed and hence issues arise primarily in the form of mitigation and
enhancement options. TBTs arise especially in the context of specification and labelling. Whilst
the latter may assist in promoting (more) sustainable fishing practice they also again impose
costs on producers. Areas such as eco-labelling are voluntary and there is scope for negotiation
for those developing country suppliers wishing to participate. The SPS Agreement was set up to
avoid sanitary standards being used as an unjustified barrier to trade by importing countries.
There are several key principles including the sovereign right of a country to put protective
measures in place, but these measures should not be more restrictive than necessary to achieve
the appropriate level of protection. The Agreement stresses that SPS measures should be
scientifically based as well as the importance of risk assessment in determining the appropriate
levels of SPS measures. Of crucial importance are transparency in the development and
implementation of measures and the adoption of international standards. The SPS Agreement
gives status and legal force to the standards set by the Codex Alimentarius Commission. The
Codex Alimentarius (food code) was created in 1963 by FAO and WHO to develop food
standards and guidelines and has become a global reference point for consumers, food producers
and processors, national food control agencies and the international food trade. The SPS
Agreement applies only to measures covering food safety, animal and plant life and human
health. Other technical measures outside this area come within the scope of the TBT Agreement.
The SPS and TBT Agreements are thus complementary and mutually reinforcing. The TBT
Agreement tries to balance the trade facilitating aspects of standards against their trade distorting
potential by obligating countries to ensure that technical regulations and standards, including
packaging , marking and labelling requirements and procedures for assessment of conformity
with technical regulations and standards, do not create unnecessary obstacles to international
trade or discriminate in favour of domestic producers or goods of different origins. It does this
by:
 Encouraging “standard equivalence” between countries;
 promoting the use of international standards; and
 mandating that countries notify each other of changes in their standards via
Enquiry points.

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The EU has been at the forefront in developing food safety standards and has had a profound
influence on the development of the seafood export industry in developing economies. EU
standards are enforced and regulated at the country level and thus a restriction of exports to the
EU under the regulations affects all members of the export community. EU legislation for all
food products has recently been brought under one directive and the scope has been extended to
all aspects of the supply chain from "farm to fork". This legislation supersedes the individual
commodity based directives. All the steps in the chain from primary producers (fishermen and
aquaculture units) need to take on board, in a more structured manner, the principles of HACCP
systems and other quality assurance needs thus broadening the scope of the competent authority
in regulating the industry. The need to ensure that quality assurance measures are instituted prior
to arrival at the processing factory gate poses a major challenge to export industries, particularly
for the small-scale and Non-industrialized sectors of the industry. Of even greater concern is the
fact that in order for the ‘farm fork’ principle to be seen to be working a system of traceability of
products throughout the chain will need to be instituted, Bostock. Imports into the USA are
regulated under the Federal Regulations, often referred to as 21 CFR 123. These regulations
apply to domestically produced products and imports. They require that processors of fish and
fishery products operate preventive control systems that incorporate the seven principles of
HACCP. While new regulations with regard to quality control, such as HACCP, have been
adopted by all major importing countries and made compulsory for their fish processing
industries, one notable exception is Japan. While some firms in Japan have neither HACCP nor
external suppliers. Standards for imports of fish and fishery products into Japan are governed by
the legislation set out in the Food Sanitation Law and the Quarantine, Bostock .
Implications of Non-tariff barriers for India: According to the Seafood Exporters Association of
India (SEAI), since February 2002, there were several cases of rejection of Indian shrimp
imports in the EU market on account of detecting traces of prohibited carcinogenic Antibiotics
like nitrofuran and chloramphenicol as well as other bacterial inhibitors like Amino-glycosides
and macrolides. Following the EU requirements, on 17 August 2001 India issued a notification
specifying the limits for various antibiotics, pesticide and heavy metal residues in seafood
products, ITN (2002). International Organization of Standardization
(ISO) 9000 is recognized under the Export-Import Policy of Government of India. Firms,
including seafood firms, enjoy certain privileges if they are ISO 9000 firms. Under the 1997-
2002 Export-Import Policy, Government of India, exporters with ISO 9000 were given
Special Import License (SIL) up to 5 % of f.o.b. value. Certification against ISO 9000 is
beginning to emerge as a major industry in India. There are many auditors with experience in
assessment of quality management against ISO 9000, and the certifiers in India with the highest
credibility in the international market are those under multinational companies.

 Fishery Subsidies

There is considerable debate as to what fisheries subsidies actually are and what they include
which complicates any discussion of their implications for markets, resources and livelihoods.
World Bank (2004) defines fishery subsidies as “government actions or inactions that are
specific to the fisheries industry and that modify – by increasing or decreasing – the potential
profits by the industry in the short, medium or long-term”. The WTO’s definition of subsidies in

78
the Agreement on SCM include: Specific financial transfers from state to the industry; The state
foregoing normally collectable revenue (e.g. tax free fuel); Provision of services or investments
to industry; State purchases of industry outputs other than on commercial terms and also includes
all form of state income or price support. Subsidies can also be categorized in relation to the
rights of members to make complaint and take action (countervailing measures) and can be
Prohibited: export enhancing subsidies or subsidies giving preference to domestic producers or
grants tied to the use of domestically produced goods; and Actionable: a subsidy that may be
challenged on the basis of causing ‘adverse effects’ to the interests of other WTO members.
Subsidies may occur in a wide range of fishery components especially on the catch side and
indirectly via research and development or support to poor fishing communities. Key issues
include perceived distortions that arise especially from EU subsidies (also Japan) with action by
other developed (and some developing) country exporters seeking their reduction. There is also a
widespread perception and/or concern amongst developing countries that subsidies facilitate the
continued operation of excess capacity in long distance fishing fleets with adverse consequences
for sustainability. These aspects have led to debates in a number of international forums.
Ongoing scope for negotiation and change may have important implications for the management
of common pool resources in the form of fish stocks. The Declaration of the fourth WTO
Ministerial Conference (Doha, 2001) stipulates that “In the context of these negotiations,
participants shall also aim to clarify and improve WTO disciplines on fisheries subsidies, taking
into account the importance of this sector to developing countries”. As a result, several proposals
from WTO members aiming to reduce fisheries subsidies were tabled, mostly attempting to
reduce or eliminate those subsidies that increase fishing capacity, Lem (2004).Most of the
literature on subsidies in fisheries focuses on marine capture fisheries rather than aquaculture.
Study like that of the OECD (2003) presents a simple qualitative economic model which
considers the effects of giving Government Financial Transfers (GFT) to fisheries and suggests
that in the main where there is catch control or preferably effective fisheries management;
government financial transfers have no effect on the total catch or the price of fish. A key theme
of a study by MRAG (2000) is the interaction between context and subsidy. The study argues
that bilateral access agreements are the kind of subsidy that have most impact on developing
country coastal and island states. The study summarizes both the negative and positive impacts
from the access agreements organized under three headings: biomass and stocks; economic and
social. These impacts are very context specific and vary considerably in magnitude and are
difficult to isolate from other factors affecting the sector. The role played by good fisheries
management systems was highlighted in the case studies.
The bulk of subsidies are aimed at offshore fisheries which are largely commercial requiring
mechanized oceangoing vessels rather than coastal or inshore fisheries that are largely artisanal
in nature. Some of these subsidies have implications for developing country fisheries and
livelihoods of poor people. Transparency regarding subsidies is an issue: few members of the
WTO have complied with their obligation to report subsidies. The political sensitivity of the
subsidies issue is highlighted by the use of euphemisms for subsidy: e.g. ‘government financial
transfers’ and ‘economic incentives’. There are also large inconsistencies in the data that is
publicly available. There has been more attention in the literature on the trade effects of subsidies
than their effects on sustainability. Most discussions of subsidies largely focus on the fisheries
sectors in developed or middle-income countries. This is due both to their scale and the ease of
access to data. Moreover, MRA stresses, subsidies on deep water fleets from developed
countries “are likely to have a much greater impact”.

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Subsidies are also seen as a driving force in creating the overcapacity in the fishing industry
which leads to over-fishing. According to World Bank estimates (as quoted in Milazzo, 1998)
annual subsidies to the fisheries sector are of the order of US$14 billion to US$20 billion, whilst
WWF (2005) estimates that fisheries subsidies amount to at least US$15 billion per annum.
OECD (2005) states that “governments pay out some US$ 6 billion a year to support the fisheries
sector in OECD countries” in order to help manage fish stocks, to modernize fishing fleets, and
to assist communities and regions that can no longer make a living out of fishing to develop
other economic activities. UNEP (2004) describes the dual impacts of fisheries subsidies on trade
and the environment, whilst WWF (2005) states that “once a hidden problem, inappropriate
subsidies are now widely recognized as contributing to the profound crisis of over fishing that
threatens fish stocks and human welfare around the world”. According to the World Bank
(2004), formal access of foreign vessels to fishing grounds within the EEZ of fish-rich countries
is usually regulated under fishing agreements and many fishing agreements are heavily
subsidized by industrial countries (e.g. the EU pays 83% of the license fee, the vessels
themselves only 17%). The type of subsidy most frequently found in developing countries is in
form of bilateral or multilateral development projects. However, there are some fishing subsidies
in developing countries, for example: port facilities owned and managed by the public sector;
subsidized lending and credit provision – in some cases in order to adopt new technology; sales
tax exemptions for inputs used by the fishing industry; subsidized fishing inputs in the form of
import tax exemptions. Implication of Subsidies for India: Within the framework of the SCM
Agreement, only export subsidies are to be treated as prohibited ones. Even if we treat the entire
annual budget of Marine Products Export Development Authority (MPEDA) as a prohibited
subsidy, which may not be the case if we do a careful analysis of all their schemes, it amounts to
less than half % of the annual seafood export value. Even though fisheries subsidies are small,
from an overcapacity and over-fishing point of view, their role is to be better recognized in India.
Fuel subsidies in terms of tax revenue foregone are extended in several Indian States to the
fishing industry and it has become an important consideration for trawler operators to decide
whether or not to undertake a particular fishing trip. Also, the criteria for subsidy schemes are
often based on political, not legitimate social, considerations. In India, there are instances of
misuse of subsidy schemes by fishermen themselves. The vessel owner would sell his fuel quota
illegally in the open market and he would buy fuel for his fishing operation from the open
market. The net benefit in such a transaction is in favour of the owner since the fuel quota is in
his name, whereas the operational costs of fishing are collectively shared between the owner and
crew. The owner thus privatizes his benefits by exclusively enjoying the proceeds of the sale of
his fuel quota in the open market, and socializes his costs since running costs of a fishing
operation, including costs of fuel, are shared among the owner/s and workers and treated as
common expense. In this case, the owner of the fishing vessel is only partially bearing the burden
of costs of fishing operation. Under the SCM Agreement perhaps the most important aspect to
consider in relation to fisheries subsidies in the Indian context, arguably in developing countries
in general is the revenue foregone rather than government financial transfer. Irrespective of the
nature of the fisheries, whether or not targeting high-value-low-volume, or low-value-high
volume fisheries, there are no fee either to enter the fishery or to access fisheries resources, both
for the rich and poor fishers. A mechanism to generate revenue by taxing fish exports, or high
value shrimp fisheries and aquaculture, should be considered. At least one or two % of the
landed value of fisheries, based on ownership pattern of fishing assets, should be appropriated
through user fees.

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In the light of recent changes in legal regimes for foreign investment in India, it is possible for
excess fishing capacity in other countries to end up in the Indian EEZ. Vessel buyback schemes
with the intent of reducing domestic fishing capacity (e.g. South Korea and Taiwan) could result
in such fishing capacity ending up in Indian waters if subsidies are provided to vessel owners of
distant water fishing nations to transfer their excess fishing capacity to Indian companies. They
could effectively end up competing for the same fisheries resources with the domestic sector,
mainly comprising fishing vessels below 20 m length. This can deny a level playing field to
Indian fishing vessels and it could also give riseto fishing conflicts in the EEZ. There should also
be protective measures within national legislation to prevent subsidized distant water fishing
vessels from gaining unfair access to the national resources.

 Eco-labelling

A number of fisheries related eco-labels already exist (e.g. Marine Stewardship Council (MSC),
Responsible Fisheries Society of the United States, Global Aquaculture Alliance) for labelling
species that are judged to be sustainably fished. The objective of such ecolabeling programmes is
to create market based incentives for better management of fisheries by creating consumer
demand for seafood products from well managed Stocks or from sustainable aquaculture, Lem
(ibid). The DDA also addressed labelling requirements for environmental purposes (i.e. eco-
labels), in order to clarify the impact of eco-labelling on trade and examine whether WTO rules
stand in the way of eco-labelling policies. While certification and labelling schemes may in some
cases offer the opportunity of higher prices and access to niche markets, there are concerns (but
little evidence) over the possible negative impacts on developing country producers (MacFadyen,
2004; Bostock et al, 2004). Although eco-labeled products are not yet prominent in any market,
concerns are based around a number of issues, such as: Legitimacy and credibility; a mismatch
between certification requirements and the reality of tropical small-scale fisheries and potential
distortions to existing practices and livelihoods, Gardiner and Viswanathan, (2004). Implications
of Eco-labelling for India: There are several concerns about ecolabeling in developing countries
and specifically India. Firstly, there is fear of losing access to marketif eco-labeled fish and fish
products gain greater preference in import markets. Secondly, there is worry about the
affordability of costs associated with adjusting fisheries to comply with ecolabeling standards,
and about costs of certification and chain of custody and whether or not the market, if they go for
certification, can adequately compensate their higher costs.
Thirdly, there is apprehension that fishers in the small-scale artisanal sector would lose their
autonomy if they have to comply with standards that are developed and applied by external
agencies to their fish exports without taking into account the specific aspects of their fisheries.
Fourthly, there are doubts about the practicability of eco-labelling in multi-species, multi-gear
fisheries since the unit of certification is the fishery in its entirety. Apart from the above, several
concerns about the implications of voluntary ecolabeling for the artisanal and small-scale
fisheries in developing countries have been expressed, particularly in the context of the
ecolabeling programme in fisheries, viz., the MSC, which was established in 1997, ICSF (1998).
In the history of MSC from 1997 to 2002, for example, there are no fisheries from developing
countries that have been certified, although there are potential candidates for MSC certification
from developing countries including a couple of village-specific crab, mackerel and sardine
fisheries from Tuticorin in Tamilnadu.

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 Summary and Policy Implications

Over the last couple of decades the policy space available for the developing countries has
shrunk dramatically. And if the developed countries have their way in the current NAMA
negotiations, it will shrink over the next decade making economic development in the developing
world all but impossible. The impact of the Doha and HK round related to fisheries is not
confined to NAMA. Fish related products and fishery services are one of the ‘sectoral initiatives’
that would see the early elimination of tariffs. Perversely, tariff cuts on fish products would
reward those who engage in economically ‘efficient mass exploitation and hasten the depletion
of the ocean’s resources. How best the benefits of tariff reductions compare with the costs of
non-tariff measures should be looked into in the context of small producers and exporters of
seafood. Sustainable local suppliers would be forced out of their domestic market and the rape of
the fisheries would intensify. India should also cross-link adoption of effective fisheries
management and habitat protection measures in their national waters to greater access to the
export market for durable goods such as textiles and garments in the US and EU markets, as
suggested by Abrego. Eliminating bad subsidies and targeting good subsidies for fisheries
management and human development should be adopted at a regional level to prevent good
policy regime of one country from being undermined by the bad policy regime of another. Given
the pattern of fish production and consumption in India, market access is an important
consideration for Indian fishers and seafood exporters. Fishers certainly benefit from the export
market because export varieties of fish generally command a higher price in India. Among the
ETBs faced by seafood and shrimps from India pertain to the level of pesticides and antibiotics.
Various antibiotics and chemicals like oxolinic acid and oxytetracyclines without any specified
limit are totally banned. Consignments containing DDT, Aldrin and Heptachlor are bound to be
rejected. The EU directive has also imposed process standards requiring hygiene during
handling, processing and storage of marine products. US ban on Indian shrimp products was a
unilateral restriction on environmental reasons. In 1996, US banned shrimps from entry unless
harvested by aquaculture caught with turtle excluding devices, or by manual instead of
mechanical means or in cold water.

 Policy Implications

 The livelihood of vast masses of poor people is threatened by the ongoing

negotiations in NAMA, most importantly of those involved in fishing. Any
drastic changes in tariff or other rules of market access will have direct
consequences for them. TheGovernment must therefore give special
consideration to this fact and any deliberation on NAMA must entail special
discussions on the impact on employment and livelihood in such sectors.
Unfortunately the Indian government has virtually accepted the contents of the
earlier discredited as the basis for NAMA negotiations. The majority of WTO
members in Cancun had rejected that historically, all late industrializes including
the USA developed their industry behind high protection. The key issue
concerning NAMA is that while developing countries protect their markets
through higher tariffs, the main mode of protection for the developed countries is
through non-tariff measures, particularly through the use of technical barriers.
Such barriers in the developed countries are not being discussed simultaneously

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 or with the same priority. Therefore a further reduction in tariffs as is being
negotiated in NAMA will not lead to any greater market access for the
developing countries including India but will certainly ensure greater market
access for the developed countries. Any further steep reductions in tariffs on
industrial products will accentuate the process of de-industrialization of fishing
sector, which has already commenced with tough import competition being faced
by many sectors in small and medium industries. Indian Government's mandate
at such future negotiations must be comprehensively debated and decided by an
explicit consensus to be evolved in the Parliament.

 The major fishing companies in developed countries use massive factory ships to
process their catch. Thus small countries, whose waters are the source of the fish
gain do not benefit through jobs and development of local industry. The
companies have been pressing their government to cure commitments on
‘services related to fisheries’ in the GATS negotiations that will entrench their
control over processing of the resource and of its global marketing and prohibit
the source countries from reasserting control over the benefits from the resource.
Small-scale fishers in India point out that their problems arise from the open
access regime for foreign trawlers, not from subsidies. From their perspective,
blanket rules that prohibit subsidies would restrict the right of governments to
support small fishers and protect the food security of coastal communities.

 In lieu of meeting the costs of fisheries management, seafood exporters should

demand a reduction in tariffs on Indian seafood imports in EU and Japanese
markets, where the average tariffs are 10.2 % and 4.1 % respectively. EU and
Japan are already in the process of rewarding better fisheries management
regimes in their seafood import markets. A one percent tax on exports can fetch
US$12 mln. per year at current levels of export revenue earnings, which could
provide sufficient financial resources to introduce fisheries management
measures. A verifiable environment management system, under the ISO 14000,
can be adopted in marine fisheries and shrimp aquaculture to demonstrate
effective fisheries and aquaculture management measures to the import markets.
As long as fishmeal continues to be the main feed, and brood stock comes from
the wild and post larvae are collected from the coastal waters, shrimp aquaculture
should be treated as a subset of marine fisheries.

 Some of the HACCP measures are difficult for small-scale beach-based fishers to
meet and hence they will not be in a position to access the international market.
Similarly, unless the State invests on behalf of the industry in expensive quality
control measures, high compliance costs with seafood safety standards could
push out small processors and exporters from business. How best the benefits of
tariff reductions compare with the costs of non-tariff measures should be looked
into in the context of small producers and exporters of seafood. Being a highly
sensitive item from the health and environment point of view, compliance costs
of the seafood industry are bound to be quite high in relation to other durable
exports from developing countries. US lost the case at WTO when India and

83
 other affected countries challenged the ban. However, the ban since 1996
adversely affects the Indian shrimp exports.

 Although there have been significant impacts on the fishing industry as a result of
turtle protection measures there does not seem to be any significant impact on the
exports of India as a result of MEAs. It is quite likely that, in future, MEAs might
play a major role in the seafood exports of India if MEA obligations are to be met
to maintain market access. In fact, fish trade is fast emerging as an area with
potential conflicts between MEA obligations and trade rules.

 In developing countries, the fisheries administration is fragmented, with

responsibility divided among such an array of actors (In India, around 11
ministries across the central and state governments) that any sectoral coherence
in policy is very difficult to secure. Similarly, there is usually no clear policy to
address the problem of over-capacity. For instance, the State of Goa has 1128
registered trawlers and this is far above the saturation point compared to the fact
that the Food and Agricultural Organization of the United Nations following a
study recommends 30 trawlers per 10 kilometres of coastline. Given that Goa has
105 kilometres of coastline the number of trawlers should have been around 315
but it has instead 1128 of them, Rodrigues (2005). A comprehensive central
policy in this regards need to be immediately evolved.

 India should start in earnest putting in place a fisheries management plan.

Subsidies to the industry to adopt and implement such a plan should be defended
as nonactionable subsidies. The EC position on non-actionable subsidies is also
of relevance to developing countries like India since several of the proposed
subsidies in this category can also be defended within the framework of special
and differential treatment of developing countries.

 Under Article 4 of Agreement on Sanitary and Phytosanitary Measures, members

are in the process of bilateral determination of the equivalence of SPS regulations
and regulatory processes between importing and exporting nations. (While the
international standards of US, EU and Japan are more an extension of their
domestic standards, such standards in India are exclusively applied to its export
market. India, for example, does not have any quality standard for seafood for its
own domestic consumers and needs to establish the equivalent.

KEY FINDINGS AND HIGHLIGHTS

India has one of the largest merchant shipping fleet among the developing countries and
is ranked 20th in the world. The fleet strength by the end of December, 2007 was 850
vessels with 9.03 million gross Registered Tonnage(GRT)
The coastline of India is punctuated with 12 major ports: Kolkata, Chennai, Cochin,
Ennore, Jawaharlal Nehru Port Trust (JNPT), Kandla, Mormugao, Mumbai, New

84
 Mangalore, Paradip, Tuticorin and Vishakhapatnam. - All major ports together have
handled total 519.16 million tonnes of cargo in 2007-08, registering growth of 11.94% as
compared to 463.77 million tonnes during 2006-07.
The Shipping Corporation of India Limited (SCI) is the largest shipping company in
India with a significant presence on the global maritime map. It is the country’s premier
shipping line owning 79 vessels, with 2.73 million GRT and 4.76 million DWT as on
December 31, 2007 and has a share of about 30.2% of the total Indian tonnage.
India’s total cargo traffic by all ports is expected to grow at a CAGR of 10.96% during
2007-08 to 2011-12, out of which non-major ports would grow at a CAGR of 12.58%
and major ports would grow at a CAGR of 10.32%.

HANDICRAFTS
STATUS OF HANDICRAFTS INDUSTRY IN INDIA

85
The roots of Indian art and crafts are entrenched very deep and they are capable of influencing
the generations passing by. The present status of craft in India owes much to the rich craft
traditions of the past. Most of the crafts from the past continue to flourish due to their utilitarian
nature, their availability to the common people, and popularity in domestic and foreign markets.
India is one of the important suppliers of handicrafts to the world market.  The Indian
Handicrafts Industry is highly labor intensive cottage based industry and decentralized, being
spread all over the country in rural and urban areas.  Numerous artisans are engaged in crafts
work on part-time basis.  The industry provides employment to over six million artisans
(including those in carpet trade), which include a large number of women and people belonging
to the weaker sections of the society.In addition to the high potential for employment, the sector
is economically important from the point of low capital investment, high ratio of value addition,
and high potential for export and foreign exchange earnings for the country. Although exports of
handicrafts appear to be sizeable, India’s share in world imports is miniscule.  It is a sector that is
still not completely explored from the point of view of hidden potential areas.  India, a country
with 26 states and 18 languages and more than 1500 dialects offers an enormous range of
handicrafts from each of the states.There is a great demand for rich brocades and zari work. The
repertoire of saris ranges from Banarsi Amru, Tanchoi from Surat, Paithani, Patola, and
Kancheevaram to the cotton saris from the tribal regions of Bihar and Madhya Pradesh etc, to
enchant the modern Indian woman. There is a profusion of materials available to the consumers
these days. One can get a variety of garments made of different silks and mixed fabrics.
Richly embroidered garments, woven shawls and household items are in vogue these
days. Mainly craftsmen from Kashmir, Punjab, Gujarat, Rajasthan, Madhya Pradesh, North
Eastern states etc create these products. There is a flourishing market for pherans and tablecloths
from Kashmir. Woolen shawls from Himachal and North Eastern states too are popular.
Products like bed sheets, table mats, napkins, household furnishings etc made out using the
various styles of textile printing ranging from tie and dye, block printing, hand printing etc are in
great demand now a days.
India has an obsession with gems and jewelry since ancient times when India was
referred to as the 'golden bird'. This obsession is strong till date and India has become the largest
importer of gold in the world. A variety of local jewelry traditions (of different states) are present
in India with the modern day gem and diamond cutting and polishing industry. The present day
jewelry tradition of India is a fine example of assimilation between traditional and modern
designs and techniques.
The increasing demand for Indian jewelry and gems has made this craft tradition into a
full-fledged large scale organized industry, which is growing by the day. Gems and semi
precious stones are not only used in making jewelry, but for medicinal purposes. People wear
them under the prescription of astrologers, as it is strongly believed in India that Gems and semi
precious stones, affect ones future and destiny.
Carpet weaving industry is the largest export oriented craft industry from India. Not only
there is a great demand for costly silk carpets from Kashmir, which has become the status
symbol in traditional Indian homes, but there is also demand for woolen and non-woolen carpets.
A variety of floorings and traditional durries are flooding the markets these days and decorating
the floors of Indian homes.
There is a huge domestic market for a hoard of utilitarian craft items such as bedcovers,
sheets, cushions, curtains, tablemats, bags, metal furniture, mats, boxes, cabinets, wood furniture,
toys, utensils, garden pots, terracotta items, brass and silverware, leather products, papier-mâché

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products, cane, jute and coir items, carpets, rugs, durries etc. Most of the units producing
utilitarian craft items have attained the status of small-scale industry.
The demand for decorative items such as traditional wall hangings, silver cutlery, brass
pots, embellished wooden sculptures, marble and wood inlay work, silk carpets, wrought iron
furniture and decorative pieces, traditional paintings, enameled furniture, stone and wood
carvings, metal, wood and stone sculptures etc is also on the rise in India and abroad.
The popularity of these handicraft products is increasing in the domestic markets due to the
increasing demand for traditional goods.
Although each crafts pockets has its particular problems, a few selected craft pockets are
identified based on their past performance for immediate remedial attention to stimulate a
quantum in exports of handicrafts in the coming years. 

Moradabad(UP) : For Artmetalwares and imitation jewellery

Saharanpur (UP) : For Wooden handicrafts& Wrought iron handicrafts
Jodhpur (Raj.) : For Wooden, Wrought Iron and Sea Shell handicrafts
Narsapur (A.P.) : For Lace and Lace goods

TRADE POLICY

Handicraft items fall under the ITC (HS) code 97. Paintings, drawings and paintings, domestic
articles of wood etc. which come under 9701, original engravings falling under 9702, original
sculptures categorized under 9703 and items under the code 9704 are freely importable. Imports
of items in 9705 are restricted

MAJOR PRODUCT CENTERS FOR SELECTED HANDICRAFTS OF

INDIA

Artmetalware: Moradabad, Sambhal, Aligarh, Jodhpur, Jaipur, Delhi, Rewari, Thanjavur,

Madras, Mandap, Bidar, Kerala & Jagadhari, Jaisalmer

Wooden Art wares: Saharanpur, Nagina, Hoshiarpor, Srinagar, Amritsar, Jaipur, Jodhpur,
Jagdalpur, Bangalore, Mysore, Chennapatna, Madras, Kerala & Behrampur (WB)

Hand printed Textiles & Scarves: Amroha, Jodhpur, Jaipur, Farrukhabad, Sagru & Sanganer

Embroidered goods: Kutch (Gujarat), Jaisalmer, Baroda, Lucknow, Jodhpur, Agra, Amritsar,
Kullu, Dharmshala / Chamba & Srinagar

Marble & Soft Stone Crafts: Agra, Madras, Baster, Jodhpur 

Paper Machine Crafts: Kashmir, Jaipur

Terracotta: Agra, Madras, Baster, Jodhpur

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Zari & Zari Goods: Rajasthan, Madras, Baster

Imitation Jewellery: Delhi, Moradabad, Sambhal, Jaipur, Kohima (Tribal)

Artistic Leather Goods: lndore, Kolhapur, Shanti Niketan (WB)

INDIAN HANDICRAFTS EXPORT

Indian Handicrafts Export is one of the most important sources of revenue in the country.
India is known to be the largest exporter of handicraft items among all other developing
countries.
The handicraft industry of India has ensured opportunities to more than six million craftsmen
including females who can utilize their talents to earn a proper livelihood. Indian handicraft
industry comprises of both men and women workers, which has led to a flourishing economy in
these weaker sections of the country. The revenue generated from the exporting of handicraft
items in India during 1998-99 was USD 1.2 billion. The export production of Indian handicrafts
industry is highly significant due to:

 Low capital investment

 High ratio of value addition
 Potentially active for export and foreign exchange income

India has a very less amount of shares in the global market, as the handicrafts sector has not yet
been sincerely explored so as to bring out the hidden potentiality within the artisans. The major
states in India that are involved in exportation of handicraft items include Uttar Pradesh, Andhra
Pradesh, North Western state of Rajasthan, and the coastal state of Gujarat. The two broad
sections in Indian handicraft items are:

 Consumer goods for daily use

 Decorative items manufactured by the skilled craftsmen

The Indian handicrafts industry exports the following products by and large:

 Cloth Paintings
 Design & Development
 Floor Paintings
 Handmade Paper
 Kashmiri Paintings
 Pottery

The various handicraft items that are exported worldwide include the following:

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  Textile based handicrafts- the hand printed textile designs include block and screen
painting, kalamkari, batik, and bandhanis. These materials are widely used in bed-covers,
bed-sheets, upholstery, dress materials, and tapestry.
 Clay, Metal and Jewelry- the chief metals used for handicraft items include brass, copper,
bronze, and bell metal. These are used for manufacturing various wares, which are carved
out in multifarious designs both traditional and contemporary.
 Woodwork- Toys, furniture, decorative items, and other articles are carved out of wood
in multi-faceted designs and are also available in a wide range. Lacquered woodwork is
quite eminent in Indian handicrafts industry.
 Stone Craft- Various handicraft items in India are manufactured in stones. Marble,
alabaster, and soapstone are used as the primary materials for these products. These stone
crafts are then adorned with semiprecious stones.
 Glass and Ceramic- the artistic crafts of glass and ceramic are found in varied range of
designs, which are a perfect blend of the Western style and Indian aesthetics. These
products are available in various shapes and colors.

Indian Handicrafts Export is performing best in the following segments:

 Jodhpur (Raj)- Wooden, Wrought Iron and Sea Shell handicrafts

 Moradabad (UP)- Art metal wares and imitation jewelry
 Narsapur (A.P)- Lace and Lace goods
 Saharanpur (UP)- For Wooden handicrafts and Wrought iron handicrafts

The major clients of Indian Handicrafts Export are as follows:

 Shawls and Art wares have got their markets in Saudi Arabia, U.S.A. Japan and U.K
 Hand printed textiles and scarves have occupied a market in U.S.A., U.K., Germany and
Canada
 Art Metal wares have their markets in U.S.A., Germany, U.K. and Italy
 Imitation Jewelries are highly consumable in U.S.A., U.K., Saudi Arabia and Germany
 Wood Wares are widely popular in U.S.A., U.K., Germany and France
 Zari and Zari goods have found markets in U.K. U.S.A., Japan and Saudi Arabia
 Embroidered and Crocheted Goods have occupied a huge market in U.S.A., Saudi
Arabia, U.K., and Germany
 Miscellaneous handicrafts have markets in U.S.A., Germany, U.K. and France

India's Exports of Handicrafts by Major Items

(excl. carpets)

SI.No Product 2000-2001 2001-2002 2002-2003

1 Artware of Aluminum 44.996 26.0128 47.8835
Artware of Copper,Brass,Bronze & Silver
2 300.3095 237.3776 336.0513
Alloys
3 Bidriware 1.2727 1.3457 1.4109
4 Carpets, numdhas, etc. as artware 6.3683 2.2596 2.5354

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5 Carpets,Rugs,Tapestries etc 3.821 1.6044 2.2075
Carving Sets As Artware(other than
6 0.4451 0.3027 0.2472
Precious)
7 Doll and Toys As Artware 0.1686 0.2448 0.4734
8 Embroidery As Artware 5.9859 2.6728 4.4501
9 Handicrafts 669.185 547.6794 782.1414
10 Hornware As Artware 2.0662 2.312 2.7836
11 Inlaid With Ivory, Metal etc. 0.0784 0.1688 0.5127
12 Ivory Manufactures As Artware 0.0843 0.1896 0.1027
13 Lacquered Wooden Ware 0.4766 0.235 0.102
14 Leather Goods As Artware 4.5827 5.0877 5.8211
15 Namdas 2.5473 0.6552 0.3279
16 Nirmal Ware 0.018 0.0409 0.0057
17 Other Decorative Articles of Jute 2.0417 1.6034 0.9948
18 Other handicraft goods, as artware. 512.469 414.1183 616.4212
19 Other As Artware 146.5394 132.8542 211.7264
20 Others 80.4916 84.0688 123.7453
21 Paper Mache Articles As Artware 1.472 1.2376 1.5253
22 Pottery Artware 1.2541 1.4937 1.5174
23 Scrvs & Similar Articles of Silk 0.3671 0.1198 0.2232
24 Scrvs & Similar Articles of Wool 0.216 0.7047 0.6348
25 Shawls of Silk 0.7632 0.4697 0.6752
26 Shawls of Wool 2.1297 2.338 1.3832
Shawls, scarves and similar articles of
27 3.4761 3.6322 2.9164
silk and wool as artware
Stone Work(Albstr,Marble,etc)As
28 33.0523 23.7409 19.2579
Artware
29 Wall Hangings/Wall Plaquers of Jute 1.2327 1.343 1.4277
30 Wood work as artware 110.9678 102.7041 139.893
Wood Work of Rose Wood (incl.
31 16.5707 10.7919 8.1272
Carving)
Wood Work of Sandal Wood (incl.
32 1.8719 0.517 1.7497
Carving)
Wood Work of Sheesham Wood(incl.
33 8.6789 6.1278 5.2243
Carving)
Wood Work of Walnut Wood (incl.
34 2.7996 0.7948 0.4317
Carving)
35 Zari goods as artware 2.8515 1.2242 1.1175
36 Zari Goods, Imitation 2.5084 1.0165 1.0358
37 Zari Goods, Real 0.3431 0.2077 0.0817
Currency: US $ Million Source: DGCIS

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 India is exporting around 40 items of handicrafts, whose percentage of exports is
increasing year by year respectively.

INDIA'S COUNTRY WISE EXPORTS

SI.No Product 2000-2001 2001-2002 2002-2003

1 Albania 0.0476 0.0003 0.0264
2 Algeria 0.3481 0.1428 0.2653
3 Angola 0.0213 0.0057 0.0706
4 Argentina 1.1218 0.7347 0.1741
5 Armenia     0.0272
6 Australia 11.2893 10.5568 11.9549
7 Austria 1.4684 1.2671 1.2159
8 Azerbaijan 0.1867 0.2683 0.0099
9 Bahrain     1.0058
10 Bangladesh 0.3012 0.3239 0.3249
11 Belarus 0.0001   0.007
12 Belgium 9.0019 9.5755 14.5125
13 Benin 0.0187   0.0237
14 Bhutan 0.0088 0.0459 0.0002
15 Bolivia 0.0108 0.0146 0.1179
16 Bosnia & Herzegovina   0.0005 0.0005
17 Botswana 0.0214 0.0455 0.0213
18 Brazil 0.9471 0.8573 0.9793
19 Bulgaria 0.0425 0.075 0.0661
20 Burkina Faso   0.0145 0.0464
21 Burundi 0.0173 0.0003 0.0297
22 Cambodia 0.001 0.0353 0.0017
23 Cameroon 0.0192 0.0105 0.0263
24 Canada 15.2344 12.8124 17.6554
25 Chad 0.0279 0  
26 Chile 2.4082 1.5293 1.0879
27 China 1.8449 1.5577 3.2492
28 Colombia 0.3479 0.402 0.3603
29 Congo Rep 0.1444 0.1116 0.123
30 Costa Rica 0.1117 0.1886 0.1437
31 Croatia 0.0436 0.0839 0.0373
32 Cuba 0.018 0.0128 0.0034
33 Czech Rep. 0.7584 0.441 4.3204
34 Denmark 10.011 5.5817 11.5208
35 Dominican Rep. 0.1216 0.1038 0.0465
36 Ecuador 0.0686 0.2886 0.1421

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37 Egypt 0.1932 0.7184 0.3929
38 El Salvador 0.0074 0.0016 0.0188
39 Estonia 0.0103 0.033 0.0059
40 Ethiopia     0.3913
41 Finland 1.4499 0.9708 1.9661
42 France 31.013 29.4103 37.5341
43 Gabon   0.0094 0.1746
44 Guatemala 0.0132 0.0048 0.0247
45 Georgia 0.0493 0.0223 0.0191
46 Germany 37.554 30.4357 47.2585
47 Ghana 0.0545 0.1126 0.238
48 Greece 4.4266 4.6484 8.0068
49 Guinea-Bassau   0.064 0.0021
50 Haiti 0.0014 0.0009 0.0221
51 Honduras 0.0006   0.07
52 Hong Kong 4.1806 2.3241 2.5027
53 Hungary 0.4203 0.3918 0.567
54 India      
55 Indonesia 0.4126 0.6598 0.7394
56 Iran 0.3776 0.4719 0.8357
57 Iraq 0.2522 0.0809 0.004
58 Ireland 1.8416 1.2183 1.8926
59 Israel 6.5798 5.2333 4.5088
60 Italy 27.9376 19.89 24.0536
61 Ivory Coast 0.0313 0.036 0.0061
62 Jamaica 0.0275 0.0267 0.0031
63 Japan 11.3249 11.2172 12.2407
64 Jordan 0.4 0.3818 0.6395
65 Kazakhstan 0.4205 0.1003 0.1189
66 Kenya 0.4118 0.5344 1.2716
67 Kingdom of Saudi Arabia 4.8315 5.8023 8.4346
68 Kuwait 1.4898 1.3933 1.9546
69 Kyrgyz Rep. 0.4702 0.3573 0.3536
70 Lao P D R   0.0082  
71 Latvia 0.0256 0.0771 0.0441
72 Lebanon 0.5694 0.6612 0.7514
73 Lesotho   0.0055  
74 Libya 0.0015 0.0427 0.0486
75 Lithuania 0.071 0.0726 0.0946
76 Luxembourg 0.0448 0.0664  
77 Madagascar 0.0095 0.0278 0.0888
78 Malawi 0.0382 0.073 0.0698

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79 Malaysia 2.4922 2.5981 3.1185
80 Maldives 0.0425 0.4731 0.1165
81 Mali 0.0023 0.0191 0.0131
82 Mauritius     1.1113
83 Mexico 1.5031 1.2157 1.2173
84 Moldova     0.0028
85 Morocco      
86 Mozambique 0.0472 0.0015 0.0717
87 Namibia 0.0006 0.0001 0.0023
88 Nepal 0.3068 0.205 0.2612
89 Netherlands 29.243 25.8394 37.3164
90 New Zealand 2.176 2.6102 1.5328
91 Nicaragua 0.0182 0.0078 0.0021
92 Nigeria 0.6969 0.7392 0.6716
93 Norway 3.7595 2.258 3.75
94 Oman 2.1622 2.2903 2.4774
95 Pakistan 0.0502 0.1954 0.0611
96 Panama 0.0792 0.3229 0.3918
97 Papua New Guinea 0.0012 0.016 0.0173
98 Paraguay 0.0053 0.1113 0.0193
99 Peru 0.1906 0.1309 0.1515
100 Philippines 0.6124 0.5646 0.3496
101 Poland 1.5123 0.988 1.2334
102 Portugal 2.3708 2.1359 4.0005
103 Puerto Rico 0.0387 0.0132 0.0668
104 Republic of Korea 1.2363 1.2664 1.2472
105 Romania 0.2481 0.1558 0.2227
106 Russia 2.8932 1.8073 2.2682
107 Rwanda     0.0208
108 Senegal 0.0334 0.0481 0.03
109 Singapore 3.4346 3.9252 4.7473
110 Slovak Republic 245.9932 248.842  
111 Slovenia 0.0748 0.1858 0.2401
112 South Africa 3.9682 3.4547 5.2272
113 Spain 21.8287 19.0162 30.4608
114 Srilanka 1.5123 1.4411 1.14
115 Sudan 0.1709 0.1952 0.2306
116 Sweden 6.1843 4.5337 6.9689
117 Switzerland 2.7547 2.6746 4.0621
118 Syria Arab Rep. 0.1095 0.4074 0.2766
119 Taiwan 1.2094 1.2375 0.9616
120 Tajikistan 0.0171 0.0265 0.0448

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121 Tanzania 0.3656 0.3126 0.3519
122 Thailand 0.6845 1.3595 1.614
123 Togo 0.0398 0.0097 0.0035
124 Trinidad & Tobago 0.1807 0.2402 0.2843
125 Tunisia 0.4545 0.3048 0.2043
126 Turkey 0.5891 0.7913 1.4939
127 Turkmenistan 0.0322 0.0932 0.1353
128 UK 61.6174 56.1987 79.1673
129 Uganda 0.0946 0.1195 0.2608
130 Ukraine 0.3216 0.1803 0.0954
131 United Arab Emirates 14.6376 12.205 20.9196
132 Uruguay 0.2161 0.1417 0.0253
133 USA 294.8517 219.176 324.6047
134 Uzbekistan 0.3619 0.1939 0.1218
135 Venezuela 1.1523 0.7436 0.8946
136 Vietnam 0.278 0.2724 0.1392
137 Yemen Arab Rep. 0.3741 0.5225 0.5567
138 Yugoslavia   0.1048 0.1146
139 Zambia 0.0957 0.0992 0.0579
140 Zimbabwe 0.0447 0.0794 0.0787
Currency: US $ Million Source: DGCIS

Indian Handicrafts industry has great growth perspective as it can export to

all the countries of the globe as the today’s scenario of business is global.

INDIA'S CUMULATIVE EXPORT

April'2002 -
SI.No Product
August'2002
1 Art ware of Aluminum 16.9873  
Art ware of Copper, Brass, Bronze &
2 142.0969  
Silver Alloys
3 Bidriware 0.5978  
4 Carpets, numdhas, etc. as art ware 1.0207  
5 Carpets, Rugs, Tapestries etc 0.8303  
Carving Sets As Art ware(other than
6 0.144  
Precious)
7 Doll and Toys, As Art ware 0.0842  
8 Embroidery, As Art ware 1.728  
9 Handicrafts 320.5616  
10 Horn ware As Art ware 1.3027  
11 Inlaid With Ivory, Metal, etc. 0.0463  

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12 Ivory Manufactures, As Art ware 0.061  
13 Lacquered Wooden Ware 0.0558  
14 Leather Goods, As Art ware 2.3498  
15 Namdas 0.1904  
16 Nirmal Ware 0.0057  
17 Other Decorative Articles of Jute 0.541  
18 Other handicraft goods, as art ware. 253.8943  
19 Other, As Art ware 86.0599  
20 Others 49.0565  
21 Paper Mache Articles, As Art ware 0.6338  
22 Pottery Art ware 0.7593  
23 Scrvs & Similar Articles of Silk 0.0371  
24 Scrvs & Similar Articles of Wool 0.1196  
25 Shawls of Silk 0.295  
26 Shawls of Wool 0.5702  
Shawls, scarves and similar articles of
27 1.0219  
silk and wool as art ware
Stone Work(Albstr,Marble,etc)As Art
28 7.7324  
ware
29 Wall Hangings/Wall Plaquers of Jute 0.5484  
30 Wood work as art ware 56.2957  
Wood Work of Rose Wood (incl.
31 3.8305  
Carving)
Wood Work of Sandal Wood (incl.
32 0.949  
Carving)
Wood Work of Sheesham Wood(incl.
33 2.0248  
Carving)
Wood Work of Walnut Wood (incl.
34 0.3329  
Carving)
35 Zari goods as art ware 0.5966  
36 Zari Goods, Imitation 0.573  
37 Zari Goods, Real 0.0236  
Currency: US $ Million Source: DGCIS

These statistics show the percentage of each handicraft item exported to the international markets
and gives us a clear idea of how the business is and what further can be done.

COUNTRY-WISE EXPORTS OF HANDICRAFTS

The major buyers for handicrafts (other than carpets) are as under: 

Art Metal wares : U.S.A., Germany, U.K. & Italy

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Wood Wares : U.S.A., U.K., Germany & France
Hand Printed & Textiles & Scarves : U.S.A., U.K. , Germany & Canada
Embroidered & Crocheted Goods : U.S.A., Saudi Arabia, U.K., Germany
Shawls as Art wares : Saudi Arabia, U.S.A. Japan & U.K
Zari & Zari goods : U.K. U.S.A., Japan & Saudi Arabia
Imitation Jewellery : U.S.A., U.K., Saudi Arabia & Germany
Miscellaneous Handicrafts : U.S.A., Germany, U.K. & France

HANDICRAFTS INDUSTRY IN ANDHRAPRADESH

Handicrafts have always been a remarkable feature of Indian art and crafts. Andhra Pradesh is
yet another great site offering ample astounding handicrafts. The artisans still make these
extraordinary handicrafts with dexterity. Whether it is needle craft or bronze castings, metal craft
or stone craft, Andhra Pradesh has a wide array of handicrafts that can become a part of your
lifestyle. The eminence of these handicrafts lies in their traditional method of creation. These
handicrafts are loved and adored not only by Indians, but people from all parts of the world.
Many inhabitants of the state still rely on the handicraft industry. Scroll down to get more
information about the famous handicrafts of Andhra Pradesh. Banjara Needle Crafts:

Banjara Needle Crafts

The embroidery and mirror work, created by the 'Banjaras' (Gypsies) on fabrics, have become
the part of each person's wardrobe in India. These people employ their dexterity in needle craft
and create incredible designs on clothes. This work of art is known for its intricate and colorful
designs.

Budithi Brassware
In Srikakulam district, Budithi is a small village that is known for its astonishing brassware. The
items carved out of alloys range from traditional to modern ones. The exclusive art articulates in
the form of traditional utensils and contemporary pots. Brass is commonly used to make the
objects. These objects are adorned with geometric patterns and floral designs.

Durgi Stone Craft

Durgi is a small town, located at a distance of 10 km from Macherla. The traditional skill of
making sculptures is still practiced and taught at the School of Sculpture and Stone Carving
situated here. From generation to generation, these skills have been passed and the ancient
methods are still observed to create the masterpieces of art.

Veena Manufacturing
'Veena' is the one amongst the oldest musical instruments of India. No composition of Carnatic
music is complete without the cadence of this instrument. Bobbili town is much acclaimed for

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manufacturing Veena. The instruments made here are known for their fullness of tone.
Moreover, they are available in different designs and patterns.

Bidri Craft
Bidri craft is another craft that serves as the pride of Andhra Pradesh. This unique art of silver
inlay on metal has always been enthralling people with its lure. The historical events reveal that
this craft was brought by Iran migrants to India. The artisans practiced this art and brought it on
the world wide panorama. In the present day, Bidri craft has been customized to produce
cufflinks, name plates and many more things.

Dokra Metal Crafts

Dokra Metal craft is quite prevalent in the tribal regions of Andhra Pradesh. In Adilabad district,
the places like Chittalbori and Ushegaon are the main promoters of this art. The notable fact
about Dokra craft is that each piece is different from the other. All the objects are created niftily
by hand, boasting of individualistic touch. Dokra craft produces objects like figurines, horses,
drummers, atypical spoons and tribal Gods.

Nirmal Arts
Nirmal town of Adilabad district is known for its wide range of handicrafts. The skilled
craftsmen make the objects appear authentic with their brilliant use of colors and traditional
techniques of creating objects. The colors are extracted from the natural dyes. The popular
'Moghul' miniatures are made on 'Ponniki', which is a soft white wood. It is further strengthened
with coatings of tamarind seed paste, fine muslin and pipe clay.

Bronze Castings
Andhra Pradesh has been known world-wide for its amazing Bronze castings. These castings
require special skills to create incredible idols. The craftsmen are required to study details of the
'Shilpashastra'. The aesthetics of the idols are made by their physical measurements, proportions,
description of the deity, characteristics and symbolism. While exercising solid casting of icons,
the mould is prepared by several coatings of different clay on a finished wax model. This process
provides the fine curves to the cast-image.

Kondapalli Toys
Kondapalli toys are famous for being eco-friendly and different from others. Made out of
softwood, known as 'Tella Poniki', the toys of Kondapalli utilize sawdust, tamarind seed powder,
enamel gums and watercolors in their creation. As and when a toy is carved out from wood, it is
further shaped with a paste made of tamarind, wood and sawdust. After the whole process,
'Sudda' (white lime) is applied on the toy and then, it is left for a day or two to dry. Subsequently,
the artists paint the toys in different colors, indicating the character of the image.

Lacquer Ware
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In Andhra Pradesh, Etikoppaka is famous for its amazing lacquer ware. This craft involves
application of lacquer on wood. Lacquering could be done either by hand or machine. The hand-
lathe is preferred to shape delicate items. The lac is applied when the objects get arid. In this
process, the lacstick is hard-pressed against the woodenware meant to be lacquered. Since the
object keeps on revolving, the friction generates heat, which softens the lac and facilitates the
color to get stick. With the help of brush, designs are painted on the figures, objects and toys.
The lac bangle is the most popular lacquer ware that also comes embellished with stones, beads,
glass and mirrors.

EXPORT PROSPECTS
The rising import demand of handicrafts at an annual rate of 15 percent, indicate that the world
market for handicrafts in the near future would be sizeable. Certain factors like strong preference
for genuine handmade artistic products (handicrafts), lack of interest in similar machine made
substitutes and demand for ethnic handicrafts, further substantiate the grounds for increase in
world demand.

India, though being one of the major producers and suppliers of handicrafts to the world
market, holds a miniscule share of 3 percent of the world imports. Despite the existence of a
fairly large production base and a large number of craftsmen, India has not been able to take due
advantage of the growing overseas markets for handicrafts.

Some of the reasons attributed to the lower share are:

 The Production and supply of handicrafts have continued to be inadequate and erratic.
 The quality and finish are not up to the mark.
 The price standard is not maintained.
 The product development and improvement is not well conceived and adopted.
 Major Distribution Channels which are used by other countries such as:
 Wholesalers
 Importers/distributors
 Commission agents/sales representative
 Department stores
 Mail-order
 Internet sales

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  Tele-shopping should be introduced into the industry to enhance the growth and sales of
the industry at the domestic as well as international markets.

Similar is the case of Andhra Pradesh which has a large production base of
handicrafts supported by an equally large number of artisans. However, some of the items like
crochet lace goods, art metal wares (especially Bidri wares) and wood wares, because of their
unique artistic and aesthetic values have found favour in the overseas markets, but the share of
the State in all-India exports of handicrafts was reckoned at less than one per cent during 2002-
03.
Considering the adequate production potential, the prospectus for export of handicrafts
from the state appears to be bright provided corrective measures as suggested above are taken by
various agencies at central, state and industry levels.

SWOT ANALYSIS OF THE INDIAN HANDICRAFTS INDUSTRY

 STRENGTHS 

 Abundant and cheap labour hence can compete on price

 Low capital investment and high ratio of value addition
 Aesthetic and functional qualities
 Wrapped in mist of antiquity
 Handmade and hence has few competitors
 Variety of products which are unique
 Exporters willing to handle small orders
 Increasing emphasis on product development and design up gradation

 WEAKNESSES 

 Inconsistent quality
 Inadequate market study and marketing strategy
 Lack of adequate infrastructure and communication facilities
 Capacity to handle limited orders
 Untimely delivery schedule
 Unawareness of international standards by many players in the market

OPPORTUNITIES 

 Rising appreciation for handicrafts by consumers in the developed countries

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  Widespread novelty seeking
 Large discretionary income at disposal of consumer from developed countries
 Growth in search made by retail chains in major importing countries for suitable products
and reliable suppliers.  Opportunities for agencies to promote marketing activities
 Use of e-commerce in direct marketing

THREATS 

 Better quality products produced by competitors from Europe, South Africa, South Asia, etc.
 Better terms of trade by competing countries
 Consistent quality and increasing focus on R&D by competing countries
 Better packaging
 Stricter international standards

IT SECTOR

THE GLOBAL SCENARIO OF IT INDUSTRY:

Denmark and Sweden once again lead the rankings of The Global Information Technology Report
2008-2009, released for the eighth consecutive year by the World Economic Forum. The United
States follows suit, up one position from last year, thus confirming it’s pre-eminence in networked
readiness in the current times of economic slowdown. Singapore (4), Switzerland (5) and the other
Nordic countries together with the Netherlands and Canada complete the top 10.The Report
underlines that good education fundamentals and high levels of technological readiness and
innovation are essential engines of growth needed to overcome the current economic crisis. Under
the theme “Mobility in a Networked World”, this year’s Report places a particular focus on the
relationship and interrelations between mobility and ICT.
With record coverage of 134 economies worldwide, the Report remains the world’s most
comprehensive and authoritative international assessment of the impact of ICT on the development
process and the competitiveness of nations.
The Report is produced by the World Economic Forum in cooperation with INSEAD, the
leading international business school, and is sponsored by Cisco Systems.

RANKINGS IN FULL

Ran Country Scor

k Denmark e
1 Sweden 5.85
2 USA 5.84

100
 Singapore
3 5.68
Switzerland
4 5.67
5 5.58
Finland
6 5.53
Iceland
7 5.50
Norway
8 5.49
Netherland
9 5.48
s
10 5.41
Canada

IN 2008 IN ASIA-PACIFIC

Internet penetration ranges from below 1% in economies like Timor-Leste, Myanmar, Bangladesh,
Cambodia, Lao P.D.R. and Nepal, to above 65% in Japan, Republic of Korea, Australia and New
Zealand.

During 2006, India was the top country to add an average of 6.3 million new mobile subscribers
every month. However China represents almost 43% of the entire Asia-Pacific mobile market in
terms of subscriber numbers. The domestic penetration in China still hovers at around 35%. 

India has overtaken China in terms of mobile growth rates. India has growth rates of 91% per
annum since 2001. With just total mobile penetration rates of over 14%, potential for growth is
enormous. 

INFORMATION TECHNOLOGY IN INDIA

The Indian Information Technology industry accounts for a 7% of the country's GDP and export
earnings as of 2008, while providing employment to a significant number of its tertiary sector
workforce. In March 2009, annual revenues from outsourcing operations in India amounted to
US$60 billion and this is expected to increase to US$225 billion by 2020. The most prominent IT
hubs are IT capital Bangalore and presently growing Chennai. The other emerging destinations are
Hyderabad, Pune, Delhi, Coimbatore and Kolkata. Technically proficient immigrants from India
sought jobs in the western world from the 1950s onwards as India's education system produced
more engineers than its industry could absorb. However, there are severe skills shortage among
engineers, especially who lack in soft skill and technical skill, as a result engineering graduates
remain unemployed after being pass out from college or university. India's growing stature in the
information age enabled it to form close ties with both the United States of America and the
European Union.
Out of 400,000 engineers produced per year in the country, 100,000 possessed both
technical competency and English language skills, although 10% of India's population can speak in
English out of 100. India developed a number of outsourcing companies specializing in customer
support via Internet or telephone connections. By 2009, India also has a total of 37,160,000
telephone lines in use, a total of 506,040,000 mobile phone connections, a total of 81,000,000
Internet users—comprising 7.0% of the country's population, and 7,570,000 people in the country

101
have access to broadband Internet— making it the 12th largest country in the world in terms of
broadband Internet users. Total fixed-line and wireless subscribers reached 543.20 million as of
November, 2009.

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103
INDIA'S IT INDUSTRY (USD BN) [SOURCE:NASSCOM]

Particulars FY 2004 FY 2005 FY 2006 FY 2007E

IT Services 10.4 13.5 17.8 23.7

- Exports 7.3 10.0 13.13 18.1

- Domestic 3.1 3.5 4.5 5.6

ITES-BPO 3.4 5.2 7.2 9.5

- Exports 3.1 4.6 6.3 8.3

- Domestic 0.3 0.6 0.9 1.2

Engineering services, R&D and Software products 2.9 3.9 5.3 6.5

- Exports 2.5 3.1 4.0 4.9

- Domestic 0.4 0.7 1.3 1.6

Hardware 5.0 5.9 7.0 8.2

Total IT industry 21.6 28.4 37.4 47.8

- Exports 13.4 18.2 24.1 31.9

- Domestic 8.3 10.2 13.2 15.9

TOP SIX IT HUBS IN INDIA

Ranking City/Region Description

104
 Popularly known as the capital of the Silicon
1 Bangalore Valley of India is currently leading in
Information Technology Industries in India.
Chennai is the second most preferred
2 Chennai
destination in India for IT.
The National Capital Region of India
comprising Delhi, Gurgaon, Faridabad, Noida,
3 NCR Greater Noida and Ghaziabad are having
ambitious projects and are trying to do every
possible thing for this purpose.
Hyderabad which has good infrastructure and
4 Hyderabad good government support is also a good
technology base in India.
Kolkata which is slowly becoming a major IT
5 Kolkata hub in near future. Some of the well known
technological corporations are situated.
The booming city is the home to a good
6 Pune
number of Software companies.
With the arrival of the TIDEL Park II and the
SIDCO IT Park, Coimbatore known for its
7 Coimbatore
attractive climate and skilled manpower is
expected to outsource Bangalore and Chennai.

Engineering Services include Industrial Design, Mechanical Design, Electronic System Design
(including Chip/Board and Embedded Software Design), Design Validation Testing ,
Industrialization and Prototyping. IT Enabled Services are services that use telecom networks or
the Internet. For example, Remote Maintenance, Back Office Operations, Data Processing, Call
Centers, Business Process Outsourcing, etc. E Business (electronic business) is carrying out
business on the Internet; it includes buying and selling, serving customers and collaborating with
business partners.

MAJOR TRENDS

TRENDS IN HIRING

105
The bar chart shows that the recruitment of engineers and IT professionals in the industry is
growing at the Compound Annual Rate of 14.5% approximately.

In the FY06, the direct employment in the IT-ITES sector was 1.3 million people and the indirect
employment was 3 million approximately.
 Trends in Salary Hikes

Along with abundant growth opportunities, IT sector is one of the highest paying sectors. The
average increase in salary in IT sector across the levels was around 16% and the average increase
in the ITeS BPO sector across the levels was in between 16%-18% Requisites for balanced salaries
-
 End to poaching
 Review of compensation according to the skills
 Developing talent in-house
 Entry of talented freshers in the industry

IT: SUCCESS FACTORS

 Increasing number of skilled professionals in IT.

 The demographic factor. Approximately 60% of the population of India lies in the age group of
15-65. More than half of the population of India is below the age of 25. So in the future, the
number of working people is going to be more than the number of dependants.
 The vast academic infrastructure of India. In the year 2006, Total Enrollment in colleges was
9.3 million and India produced 441,000 Technical graduates.
 India has the second largest English-speaking workforce in the world.

ROLE OF THE SOFTWARE INDUSTRY IN INDIA

106
Software Industry in India is a crucial part of the economy in the 21st century. Since the boom of
the software industry towards the end of the 20th century saw a growth of job openings in various
IT and IT enabled companies in India. Additionally India also looked forward to a chunk of
outsourcing job being delegated to its newly established companies. Software exports to different
countries were looked upon with great prospects because of the presence of some of the best people
in the Indian software development.

GRAPHS SHOWS THE IT EXPORTS STATUS:

GROWTH OF SOFTWARE EXPORTS:

107
IT SECTOR IN ANDHRA PREDESH:

BACKGROUND OF THE HYDERABAD IT COMPANIES

The role played by the Hyderabad IT companies in the growth of the software industry in India
has been an important one. Since 1990, Hyderabad has seen a steady growth of IT companies
establishing their offices and headquarters in the city. The growth of the software industry has even
led to the establishment of an IT Park called HITEC City. In this IT Park there are many renowned
national as well as multinational companies that have established base in India through Hyderabad.

TYPES OF IT COMPANIES IN HYDERABAD

The software companies of Hyderabad are related to the following

 IT companies - These companies are mainly involved in the development of various

software programs for various industrial sectors. Companies in this category are both Indian
as well as multinational conglomerates who have established base in India. They cater to
the demands of both the domestic as well as international market. Thus this segment of the
Hyderabad IT companies plays a major role in earning export revenues for the government.

108
  ITES companies - ITES is better known as IT enabled services. They are also popularly
known as the BPO companies (Business Process Outsourcing). These companies mainly
deal in operations of the parent company dealing with a particular product or service. This
segment of the software industry forms a big part of the Hyderabad IT companies. Both
Indian and international companies are a part of this group of IT companies.

 Computer Hardware companies - There are several reputed brands of computer hardware
companies that are a part of the Hyderabad IT companies. Some of the companies are
international brands that have established base in the conducive environs of Hyderabad IT
industry in a bid to expand their sales network in India.

ROLE OF THE GOVERNMENT

The role of the State government in the growth and development of the software industry in
Hyderabad has been a crucial one. Companies received due invitation from the government to
come to Hyderabad and set up base for their operations in India. Land allocations were done in
specific areas for the companies and this was furthermore followed by the establishment of an IT
Park called HITEC City in Hyderabad that allowed companies to build up their companies with
state of the art structures and modern amenities.

MAJOR IT COMPANIES IN HYDERABAD

The following are some of the renowned names of Hyderabad IT companies that has established
base in the city.

 Google Inc - A leading name in Internet search engines, Google's functional areas apart
from search engine operations include online mapping services, free web mail services,
advertising and social networking among others.

 IBM - IBM (International Business Machines) IBM is a multinational company based out
of U.S.A and deals in areas of IT consultations, software development and hardware.

 Infosys Technologies Limited - One of the leading Indian owned multinational company,
Infosys is based out of Bangalore in Karnataka. It is a major player in IT consulting and
service provider.

 Hewlett-Packard Company - One of the largest IT companies in the world, HP deals in

computer hardware as well as storage and networking software development.

 Microsoft Corporation - A leader in the realm of software development, Microsoft

Corporation functions as a developer of software program packages for almost all industrial
sectors.

 Tata Consultancy Services Limited (TCS) - TCS is an IT venture of the Tata group of
Companies in India. Its headquarters are in Mumbai. Mainly dealing in providing

109
 information technology services TCS has also diversified in the area of outsourcing services
over the years.

 Amazon.com, Inc. - This Company is based in Seattle, U.S.A. It deals mainly with online
commerce and retailing. The products range books, clothing, furniture, food, toys to even
DVDs and video games.

IT INDUSTRY IN HYDERABAD

Hyderabad is rightly known as the high-tech city. IT in Hyderabad is renowned world over.
Hyderabad is the hub of information technology in our country. Hyderabad city is today known not
only for its IT and IT Enabled Services, but also Pharmaceuticals and Entertainment industries.
Many call centers, Business Process Outsourcing (BPO) firms, dealing with IT and other
technological services were set up in the 1990s making it the hub of BPO firms. Ramoji Film City,
the largest film studio in the world is located on the outskirts of the hi-tech city. The progress of a
township with state-of-the-art services called HITEC City encouraged several IT and ITES
companies to setup operations in the city. A rapid growth of technology in this area has led civic
boosters to call the city "Cyberabad". Hyderabad has also been referred to as the second Silicon
Valley of India after Bangalore. There have been widespread investments in digital infrastructure
within the city, which includes several multinational corporations having established centres in the
city. The major areas where such campuses have been setup include Madhapur and Gachibowli.
Hyderabad also has the merit of being The Software Training Capital. The city offers innumerable
number of software courses that are taken up by thousands from all over the world. Hyderabad is
on the brink to become a global city as it has been selected as the location for India's first Fab City,
a silicon chip developing facility, being setup with an investment of $3 billion by the AMD-
SemIndia syndicate.

FUTURE OF THE HYDERABAD IT COMPANIES

Despite the boom of the Hyderabad IT companies along with those in other parts of the country the
economic recession had resulted in rough times for this industry. The slowdown in the US as well
as the European economies had affected the progress of many Indian companies.

Faced with the threat of a closure some of the companies tried option of cost cutting as a result of
which many lost their jobs. All further recruitments to these companies were also stopped.

However things are brightening up with the recession being officially declared as over. Companies
are again recruiting along with adequate retention.

110
It may therefore be safely concluded that the Hyderabad IT companies are headed for a positive
and futuristic growth owing to favorable times and favorable environment that the city has
successfully provided the companies from around the world.

The Indian IT industry and electronics is the fastest growing sector of Indian industry. It has
recorded a production of Rs. 68,850 crore during the year 2000-01, and is likely to achieve a
production of Rs. 368,220 crore during the year 2008-09. Thus the industry has grown by a factor
over by five times during the last eight years. The software industry which was worth Rs. 37,750
crore in 2000-01 is likely to achieve a production of Rs. 273,530 crore during the year 2008-09.
Software exports have become an important part of India’s exports, and India’s international
image. Indian Software exports have risen from Rs. 28,350 crore in 2000-01 towards estimated
figure of Rs. 216,300 crore in 2008-09. This success in software has been built on the foundations
of public investments in human capital, outward orientation in policies, and a highly competitive
private sector industry. The Economic Planning Group maintains a database of production and
exports data relating to Electronics and IT-ITeS industry. This data is collected from different
manufacturing and service industry and industry associations. The data is released on as annual
basis through the Annual Report of DIT.

IT MAGNATES ON HYDERABAD

 Shakti Sagar, President and CEO, Hyderabad Software Exporters Association & ADP
Wilco.
 Ashok Soota, Chairman and Managing Director, MindTree Consulting.
 Arun K Maheswari, President and CEO, Computer Sciences Corporation India.
 Rajat Gupta, Managing Director, McKinsey & Co.

IT: Success Factors:

 Increasing number of skilled professionals in IT.

 The demographic factor. Approximately 60% of the population of India lies in the age group of
15-65. More than half of the population of India is below the age of 25. So in the future, the
number of working people is going to be more than the number of dependants.
 The vast academic infrastructure of India. In the year 2006, Total Enrollment in colleges was
9.3 million and India produced 441,000 Technical graduates.
 India has the second largest English-speaking workforce in the world.

MAJOR STEPS TAKEN FOR PROMTION OF IT INDUSTRY

Domain of the IT Industry

111
A wide variety of services come under the domain of the information technology industry. Some of
these services are as follows:

 Systems architecture
 Database design and development
 Networking
 Application development
 Testing
 Documentation
 Maintenance and hosting
 Operational support
 Security services

The information technology (IT) industry has become of the most robust industries in the world.
IT, more than any other industry or economic facet, has an increased productivity, particularly in
the developed world, and therefore is a key driver of global economic growth. Economies of scale
and insatiable demand from both consumers and enterprises characterize this rapidly growing
sector.

The Information Technology Association of America (ITAA) explains 'information technology' as

encompassing all possible aspects of information systems based on computers.

Both software development and the hardware involved in the IT industry include everything from
computer systems, to the design, implementation, study and development of IT and management
systems.

Owing to its easy accessibility and the wide range of IT products available, the demand for IT
services has increased substantially over the years. The IT sector has emerged as a major global
source of both growth and employment.

Features of the IT Industry at a Glance

 Economies of scale for the information technology industry are high. The marginal cost of
each unit of additional software or hardware is insignificant compared to the value addition
that results from it.
 What contribution can information technology (IT) make to India’s overall economic
development? This paper provides an analytical framework centred around the concepts of
comparative advantage, complementarities, and innovation. There is strong evidence that
India has a strong and sustainable comparative advantage in software development and IT-
enabled services. Complementarities in particular some form of domestic hardware industry
as well as growing demand for software within the domestic market are also important to
sustain the growth of the IT sector, as well as to broaden its developmental impact. The
paper also reviews innovative experiments of IT use to improve interactions between

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 citizens and governments, farmers and corporations, and students and teachers in rural
areas. The paper concludes with a brief discussion of opportunities for future growth in IT-
enabled services, constraints to such dynamics, and possible policy responses.

IT PROMOTION

Andhra Pradesh – the most preferred destination for IT industry

The State of Andhra Pradesh has been at the forefront of India’s IT growth. The NASSCOM
-KPMG report of 2004 projects India’s software exports in IT&ITES/BPO sector at $49 Billion
(Rs.2,30,300 crores) by 2009 with direct employment opportunity for 20 lakh graduates. Andhra
Pradesh aims to achieve Rs.69,000 crores in software export turnover and seeks to create
employment for 3 lakh employees directly. It is estimated by NASSCOM that every direct job
creates four indirect jobs hence it is expected to create indirect employment for 12 lakhs in the
State by 2009.

McKinsey Report projects India’s electronics manufacturing opportunities to be $47 billion

(Rs.2,20,900 crores) industry by 2009. Andhra Pradesh wishes to attain a leading position by
building a $12 billion (Rs.56,400 crores) IT hardware and Electronics manufacturing industry.

In December 2004, Gartner in its report “IT Outsourcing to India – Analysis of Cities” has
mentioned that Hyderabad would be the IT Hotspot by 2010 and has rated it high on account of
Infrastructure and Human Resources. Andhra Pradesh provides the right climate for the growth of
IT business and is now the most preferred destination in the country. Hyderabad is home for many
major MNC IT giants and fortune 500 companies. 

ICT Policy 2005-2010 :

The Government have formulated a new ICT Policy 2005-2010 to make Andhra Pradesh the most
attractive and preferred destination of the IT Companies in the world.

Promotion of Tier—II locations:

The following incentives are offered for setting up IT Units in identified Tier II locations:  

 A subsidy of Rs.50 lakhs to the first five anchor IT / ITES companies employing more than
250 employees in IT or 500 employees in ITES in any Tier-II location.
 Rs.15 Lakhs as recruitment assistance for employing minimum 100 employees in IT & 200
employees in ITES within two years of commencement of commercial operations in the
Tier-II city.

SWOT ANALYSIS OF IT INDUSTRY:

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Strengths Weaknesses

 Highly skilled human resource •  Absence of practical knowledge

 Low wage structure
 Quality of work •  Dearth of suitable candidates
 Initiatives taken by the
Government (setting up Hi-Tech •  Less Research and Development
Parks and implementation of e-
governance projects) •  Contribution of IT sector to India 's
 Many global players have set-up GDP is still rather small.
operations in India like Microsoft,
Oracle, Adobe, etc. •  Employee salaries in IT sector are
 Following Quality Standards such increasing tremendously. Low wages
as ISO 9000, SEI CMM etc. benefit will soon come to an end.
 English-speaking professionals
 
 Cost competitiveness
 Quality telecommunications
infrastructure
 Indian time zone (24 x 7 services
to the global customers). Time
difference between India and
America is approximately 12
hours, which is beneficial for
outsourcing of work.

 
Opportunities Threats

 High quality IT education market  Lack of data security systems

 Increasing number of working  Countries like China and
age people Philippines with qualified
 India 's well developed soft workforce making efforts to
infrastructure overcome the English language
 Upcoming International Players barrier
in the market  IT development concentrated in a
few cities only
 
 

BIBLIOGRAPHY

 Strategy Papers of Government of Andhra Pradesh.

 Decisions To-Day (Andhra Pradesh), Issue No: 7, Vol.1, 30th Jan 2002 Reportable Decisions

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 of A.P. High Court on all Subjects.
 Agricultural and Processed Food Products Export Development Authority, ‘Export
Statistics for Agro and Food Products in India, 2005-06’.
 Centre for Monitoring Indian Economy, ‘India’s Agriculture Sector’.
 Chatterjee, Somnath and Mohan, Rakesh, Office of the Economic Adviser, Ministry of
Industry, Government of India, ‘Studies in Industrial Development: India’s Garment
Exports, February 1993’.
 Confederation of Indian Industry and McKinsey & Company, ‘FAIDA:Modernising the
Indian Food Chain’. Confederation of Indian Industry, ‘New Heights in Agriculture’,
Report of the Task Force.

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