Blogs – UK India Trade Project https://ukitp.org UK India Trade Project Mon, 26 Jun 2023 14:12:18 +0000 en-US hourly 1 https://wordpress.org/?v=6.1.4 Indian Handmade Carpets in the UK Market: Prospects and Pitfalls https://ukitp.org/indian-handmade-carpets-in-the-uk-market-prospects-and-pitfalls/ https://ukitp.org/indian-handmade-carpets-in-the-uk-market-prospects-and-pitfalls/#respond Thu, 22 Jun 2023 15:12:59 +0000 https://ukitp.org/?p=532 Indian Handmade Carpets in the UK Market: Prospects and Pitfalls Read More »

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The Nehru Centre in London, the cultural hotspot of The High Commission of India in the UK, hosted the ‘Woven Gems by Jocelyn Burton’ exhibition in May 2023. The collection showcased a range of handwoven carpets from India designed by Jocelyn Burton, a London-based jewellery designer, in collaboration with Jaipur Rugs (henceforth JR), a well-established carpet-manufacturing firm based in Rajasthan with over 40,000 artisans working for it.

The silk carpets on display were woven by over thirty carpet-weavers, mainly women from Rajasthan and Uttar Pradesh. The labour-intensive process of making carpets involves the work of many hands – from carding and spinning yarn, dyeing the yarn in an array of colours, weaving/ hand-knotting patterns on looms with meticulous precision, washing the carpets to enhance the underlying strength of the design, and subsequently finishing the process with a method called ‘Gultarash’, a technique that translates as ‘finding the flower’. This final stage involves assiduously trimming parts of the carpet to create a textured effect in order to accentuate the motifs and flower patterns in the design.

Take, for instance, the carpet named ‘Tapestry’ (image below). Drawing inspiration from Jocelyn Burton’s iconic Jerwood Necklace, this hand-knotted 6’6 ft x 10 ft carpet costs over £15,000 including import duty and haulage charges. The hefty price tag has to do with the nature of the fabric (silk) and the number of knots per square inch. The denser the knots, higher the price. The ‘Tapestry’ has 121 knots per square inch, hand-knotted by three female weavers on looms installed in their homes by JR over a period of six months.

This exhibition provided an analytical window into exploring the value chain for Indian handcrafted carpets in the UK market: from the hand-knotting artisans and contractors based in carpet-exporting regions in India to buying gents and customers in the UK.

From the perspective of Indian carpet-manufacturing firms, a number of sticking points emerge as far as trade with the UK is concerned. A high import duty on Indian hand-knotted carpets – a 20% VAT – has inhibited sales in the UK. Buyers who might be interested in purchasing Indian carpets are hard to access. They tend to be architects and/or interior designers based in the UK. They, in turn, recommend Indian carpet-making firms to their own clientele.

Indian carpet-making firms have found it difficult to woo UK-based buyers. Instead, they have turned to recruitment agencies to hire their ‘A&D Manager’ (Architects and Designers) who acts as an anchor point ‘on the ground’, connecting the firm with interior designers in the UK.

But, two problems arise. First, recruitment agencies tend to charge a double commission from both ends – employer and potential employee – often holding back on ‘good applicants’ at the first instance. The potential candidates for the job, based in the UK, tend to ask for a higher pay package compared to their Indian counterparts. Furthermore, some firms require their A&D Manager to undergo training in India in order to accurately represent the brand to foreign buyers. This has proven to be both costly and unproductive. Second, marketing strategies such as ‘cold calling’ designers for an appointment has proven to be ineffective.  More prospective methods include giving promotional ‘goodies’ to potential buyers; ‘constant engagement’ through social media channels (e.g. sharing catalogues on Instagram and LinkedIn); organising all-expense-paid brunches and dinners for interior designers to showcase the firm’s products.

There are additional challenges associated with promotions in the foreign market. Often, Indian firms rely on Public Relations (PR) agencies to make recommendations on social events to promote the brand in the UK market. This too poses challenges. For instance, privately hosted exhibitions do not necessarily generate the kind of ‘buzz’ and foot-fall of designers that a firm might be expecting, as is common in international trade expos such as ‘Salone in Milan’, that brings together designers and exporting businesses from across the world. Privately hosted  exhibitions can incur unanticipated expenses and overhead charges — building and dismantling frames on which expensive carpets are mounted, for instance, often entail hidden costs.

Well-established carpet-manufacturing companies in India that have an annual turnover of over two hundred and fifty crore Indian rupees (24 million pound sterling) are big players in India’s growing economy, both in terms of export and employment, especially for women, based in rural settings.

For Micro, Small and Medium Enterprises (MSMEs) in India’s carpet industry, however, the problems and prospects in exporting to the UK market are far more pronounced. Indian MSMEs have been at the forefront of bolstering India’s economic growth. Can MSME’s engaged in carpet-making in India overcome the export barriers? Does access to credit enable Indian MSMEs to successfully connect to global markets? And what role does social networks play in facilitating trade ties between MSMEs in India and the UK, especially in the context of the carpet industry. These questions are at the heart of ‘The Enablers and Obstacles for UK-India Trade’ project jointly undertaken by academics at King’s College London, Indian Institute of Management Bangalore, and non-academic partner Federation of Indian Chamber of Commerce and Industry (FICCI).

By Dr Humaira Chowdhury, Postdoctoral Research Associate at King’s India Institute, King’s College London.

Source: https://www.jaipurrugs.com/eu/rugs/sps-30-medium-sky-blue-blue-tapestry-rug

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A (small) step along the way to a UK-India trade deal https://ukitp.org/test-blog-post/ https://ukitp.org/test-blog-post/#respond Tue, 25 May 2021 10:12:31 +0000 https://ukitp.org/?p=479 A (small) step along the way to a UK-India trade deal Read More »

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A (small) step along the way to a UK-India trade deal

DATE

25 May 2021

AUTHORS

Dr Sunil Mitra Kumar

THEME

Economy

On 4 May, India and the UK announced a new trade agreement worth £1 bn. The agreement focuses mainly on Indian investments into the UK, the flagship announcement being the Serum Institute’s £240 million investment to augment its presence in the UK including a new sales office.

Other investments cover multiple sectors including infotech. Between them, these are expected to create jobs in the UK — at least 6,500 — besides facilitating UK exports into India including medical products, chemicals and technology.

£1 billion is not insignificant in absolute terms, but it is rather modest as a proportion of either country’s trade.

This echoes the wider backdrop: despite strong historical and present-day links, India’s share in the UK’s trade remains very modest.

The UK’s share in India’s trade is relatively larger, but it is still less than half that of China’s (see graph).

Source: Data on India’s services exports and imports are estimates from the WTO Balanced International Trade in Services (EBOPS); all other data from ITC Trade Map.

Both the UK and EU want to sign free trade agreements with India, but negotiations have been slow.

From India’s point of view one consistent sticking point has been hesitation to ease access for Indian workers to the UK and EU, though with Brexit there might be change on the horizon so far as the UK goes.

With the EU, part the reasons include India’s protectionism, for example in favour of the domestic automobile and alcohol industry.

Nonetheless, this deal and the resumption of EU-India trade talks are the result of strong pulls and pushes on both sides.

Pull factors include India’s trade attractiveness as a large market with significant potential given its large and growing consumer class.

Equally, exports are a priority for India. They have grown consistently from the 1990s onwards and are now worth about 18% of India’s GDP (2019), even though this proportion has decreased somewhat from a high of 25% in 2013.

Push factors include rising concerns about China on both sides. For the EU and UK these include trade dependence, IT security (read Huawei) and human rights violations in Xinjiang. India, too, is concerned about China.

Besides recent tensions along the border shared by the two countries, India has been consistently concerned about competition from Chinese firms.

In 2019 it abstained from the 16-country Regional Comprehensive Economic Partnership (RCEP), which would have otherwise strengthened access to east Asian, Australian and Chinese economies.

The timing of the agreement suggests a desire on both sides for continuity in efforts to negotiate closer relations amidst difficult circumstances brought on by Covid-19.

It’s announcement following a virtual meeting between Prime Ministers Modi and Johnson reflected the reality of the Covid-19 outbreak in India, which led to Boris Johnson cancelling first his visit in January as India’s Republic Day chief guest, and later a second attempt to visit in April.

Equally, the fact that the Serum Institute of India features prominently is no coincidence: the vaccine manufacturer has risen to unforeseen global prominence on the back of demand for the Oxford AstraZeneca vaccine, while maintaining pivotal position in the domestic vaccine supply chain.

The company’s owner has substantial personal investments in London, and India-made vaccines have supported the UK’s vaccination campaign.

From late-April onwards the still-unfolding Covid tragedy in India that has been allowed to take place has seen the UK ship oxygen-manufacturing equipment and other supplies to India after appeals on both sides, again evidencing strong diasporic and cultural links.

Unfortunately, the Covid-19 situation may yet have longer-run economic implications that are hard to predict.

Unlike the first Covid-19 wave, where they were relatively untouched, the second wave has hit India’ middle classes hard.

The same goes for small export-oriented manufacturing firms in India that have suffered both from the collapse in global demand as well as the loss of skilled labour as workers headed back to their villages.

Maintaining growth and a strong consumer class in the short run will depend on substantial, long-lasting and well-targeted government support across economic and social classes of a kind that so far seems unavailable.

Perhaps it therefore makes most sense to view this agreement not so much in terms of content, as much as a signal of the desire and willingness to continue engaging and negotiating.

A substantive trade deal must facilitate bi-directional investment in both countries, job creation on both sides, tariff reductions and market access as needed, and enhanced freedom of movement of the sort that India rightly demands but both countries would stand to benefit from.

On the latter, recent moves to lengthen the duration of post-study UK work visas to the benefit of Indian students, as well as UK universities, perhaps signals a slight thaw in the UK’s stance on migration.

At the same time, India’s protests at the prospect of debates on India’s farm laws in the UK Parliament suggests that strong cultural ties can sometimes have awkward consequences.

Yet the fundamental factors that draw the two economies together remain unchanged and are more permanent than the powers negotiating these deals.

Equally, India and the UK (and the EU) will all continue to watch China’s growth and dominance with a sense of caution.

While a free trade agreement of the kind both sides desire may yet be some distance away, it would seem likely that successive negotiations will continue to bring that ideal closer.

By Sunil Mitra Kumar, Lecturer in Economics at King’s College London.

Read the full blog here:

https://ukandeu.ac.uk/a-small-step-along-the-way-to-an-uk-india-trade-deal/

 

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