“VRIKSH” TIMBER LEGALITY ASSESSMENT

AND VERIFICATION PROGRAM

London, UK 23rd October 2013

EXPORT PROMOTION COUNCIL FOR HANDICRAFTS “EPCH HOUSE” Pocket 6 & 7,

Sector-C, L.S.C. Vasant Kunj,

New Delhi-110070 Tel: 91-11-26135256 Fax:91-11-26135518/19

E-MAIL: epch@vsnl.com website: www.epch.in, www.texmin.nic.in

Export Promotion Council for Handicrafts (EPCH) Set up in 1986 under section 25 of companies act 1956 To develop and promote the exports of handicrafts from India 6903 member exporters as on 31st march, 2013

Exports of handicrafts Handicrafts exports us$ 3304.90 million 2012-13

Wooden handicrafts us$ 505.01 million 2012-13

EMPLOYMENT IN HANDICRAFTS SECTOR

7 million artisans

Destinations 2011-12 (US$ million)

2012-13 (US$ million)

European Union 185.75 277.17

U.S.A 105.55 164.03

Rest of the World 34.10 63.81

Total 325.40 505.01

Exports of Woodwares

Indian Handicrafts - Highlights

Wooden handicrafts provides livelihood to around 1.1 million artisans

The major importers of Indian wooden handicrafts are Australia, Canada, France, Germany, Italy, Japan, The Netherlands, UAE, Switzerland, Saudi Arabia, USA and UK

The demand for wood products is increasing in both domestic and international markets

Major places of India producing wooden handicrafts:

Jaipur, Jodhpur, Saharanpur, Nagina, Rajkot, Barmar, Hoshiarpur, Srinagar, Amritsar, Jagdalpur, Bangalore, Ahmedabad, Kerala, Berhampur, Chennapatna and Mysore

Wooden Industry in India

Types of Wood in India

Sheesham, Acacia, Ebony, Neem, Salwood, Khair, Mango,

Poplar, Kikar, Chirpine, Sandal wood, Rosewood, Sagwan etc

Sl. No. State/District/Cluster Crafts

1 Jammu & Kashmir/

Srinagar

Walnut & Deodar Wood Craft

2 Uttar

Pradesh/Saharanpur

Wood Carving Furniture, Screens

3 Uttar Pradesh/Nagina Wood Carving Boxes

4 Rajasthan/Jodhpur Wooden Handicrafts, Furniture

Antique Finish

5 West Bengal/Calcutta Wooden Furniture & Giftwares

6 Andhra

Pradesh/Kondapalli

Wood (Turning And Lacquer Ware)

7 Karnataka/Chennapatna Wood Inlay Articles

8 Tamil Nadu/Chennai Wooden Handicrafts Antique Finish

9 Kerala/Quilandy Coconut Wood/Coconut Shell Gift

Articles

10 Kerala/Trivandram Rose Wood Carving Gift Wares

11 North East Region Cane & Bamboo- Furniture and other

Home Utility Products

Wooden Handicrafts Producer

Hubs/Exporter Hub

European Union Forest Law Enforcement,

Governance And Trade (FLEGT) Action Plan was

mooted in 2003 to stop illegal logging which is now

formalized as EUTR

Similar Action Plans introduced worldwide -

o Lacey Act of USA

o Australian Legality Act

o Saint Petersburg Declaration for Russia

o Belgium Legality Act

o Similar requirements as put in place by

corporate agencies viz. Walmart, Target etc.

Action Plans Introduced Worldwide

Lack of an acceptable standard system puts a question mark in the international market on the wood origin, authenticity of documentation and validity and veracity of timber legality documents presently in acceptance.

Impact on wood handicraft industry , especially the SMEs

Small artisans may lose their livelihood if clarity not brought about regarding wood legality issues which are beyond their capabilities.

Need for a timber legality assessment scheme to address these concerns of industry, artisans, buyers and international market

Need for quick action before India’s competitive advantage is lost out

Impact of these Action Plans

Discussed the issue with industry representatives, subject matter experts and other stakeholders in detail

Industry put forth problems faced by exporters – sudden drop in export orders, hesitance in fulfilling export commitments, lack of clarity regarding compliance

Industry heads asked EPCH for guidance and help – necessity to meet new timber legality requirements to meet customer obligations

EPCH decided to initiate VRIKSH to promote the responsible and legal use of wood in the handicrafts and home décor industry, keeping in mind the social and environmental obligations as well

To provide a viable solution to help the handicrafts exporters and maintain their source of livelihood, through standard development and verification programme to effectively deal with international timber regulation requirements

VRIKSH – A Tree of Life –

A Livelihood Tree

Complexity of Requirements

Multiple Languages

Multiple Authorities

Lead to the

Necessity of

VRIKSH To bring back

competitive

advantage

Demand side challenges

Due Diligence/Due Care

Establishment of CoC

Due Diligence

Ensures

Legal right to harvest and trade

Compliance with the legislation

Compliance with legislation

Related to Taxes & Royalties

Compliance with requirements of

trade and export procedures

Scope of VRIKSH

Beneficiaries

Forest / Harvest site Manager

Harvester/ logger

Consolidator/

Concentration yard

Primary manufacturer Timber Supply Chain

Secondary manufacturer

Broker/ Importer /Exporter

Retailer

Scope of VRIKSH

Governing Body/ Secretariat

Establishment of Clear and Documented Standard

Operating Procedures.

Registry of ‘Vriksh” verified companies.

Maintenance of Data base

Standards updation and revision protocols

Complaints/ disputes handling and Redressal mechanism

Promotion of scheme and achieving Global acceptance in

markets and international regulatory bodies

Structure and Governance

Standard Development Process

Consult , Revise , Finalize

Field Test to check that the standards actually work in practice

Standard setting group reviewed input and developed the revised draft

Consulted with all the interested parties to get their input on the Draft Standard. Through meetings .Public Postings , stakeholder consultation

Developing first Draft Standard

Identify the elements on which the standard will be based using international criteria and indicators

Defined Rules and Procedures

Standard setting group Established

Part 1: Quality Management Systems

Part 2: Legality Compliance

Part 3: Raw Material Supply And Production

PART 4: Sale of “VRIKSH” Legally Verified Wood

Part 5: Risk Assessment And Mitigation Program

Components of the standard

Certification Process by independent Third Party CB’s

o Application and Proposal

o Pre-assessment /scoping

o Gap identification

o Main assessment

o Reporting

o Certification Decision

o Surveillance assessments

Based on Developed and approved Standards

Certification

Specifically designed to Indian Handicraft Industry

Risk Assessment and Verification Program

Supply Chain Verification

Traceability through Batch Accounting

Covering all aspects of legality

• Government Forests

• Private lands

• Farm Forestry

• Imported Timber

Legality Verification of all sources

Complaint Mechanism

Mutual Recognition of other schemes

World wide presence through web based registry

Unique Features of VRIKSH

Benefits

Benefits

Well Documented Process

Compliance with EUTR/ Lacey Act

One-Stop Solution for all Legal Verification

Benefits

Benefits

Reduction in Risk

Worldwide Market for verified wood

International Recognition

World wide presence through web based registry

(To be Published in the Gazette of India Extraordinary Part-II, Section - 3, Sub-Section (ii))

Government of India

Ministry of Commerce & Industry

Department of Commerce

Udyog Bhawan

Notification No 13 (RE – 2013)/2009-2014

New Delhi, Dated : 14 May, 2013

Subject: Nomination of Export Promotion Council for Handicrafts (EPCH) as nodal agency for certificate on due diligence adopted by the

exporters in procuring wood from legal sources for manufacture of Handicraft articles.

S.O.(E) In exercise of the powers conferred by Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 (No.22 of 1992) read with

Para 2.1 of the Foreign Trade Policy, 2009-2014 (as amended from time to time), the Central Government hereby adds, with immediate effect, a

new Note 3 in Chapter 44 of Schedule 2 of ITC(HS) Classification of Export & Import Items for nominating Export Promotion Council for

Handicrafts (EPCH) as nodal agency for certificate on due diligence adopted by the exporters in procuring wood from legal sources for

manufacture of Handicraft articles.

2. Accordingly, Note 3 of Chapter 44 of Schedule 2 of ITC(HS) Classification of Export & Import Items will read as under:

“Note 3

Export Promotion Council for Handicrafts (EPCH) is authorized to issue certificate, on demand, on the due diligence adopted by the exporters in

procurement of wood from legal sources”.

3. Effect of this notification:

In case of request by the foreign buyer or any other agency on showing due diligence in procurement of wood from legal sources for manufacture

of handicraft articles, Export Promotion Council for Handicrafts (EPCH) will be authorized agency to issue such certificate.

(Anup K. Pujari)

Director General of Foreign Trade

E-mail: dgft[at]nic[dot]in

(Issued from F.No.01/91/180/510/AM12/Export Cell)

Export Promotion Council for Handicrafts has been

nominated as the nodal agency for issuing certificate

on due diligence adopted by the exporters in

procuring wood from legal sources for manufacture of

Handicraft articles’

Thank you

www.epch.in/vriksh

Sacred Tree

Worshipped as God in India

VRIKSH – A Tree of Life –

A Livelihood Tree

• Demand Side

• Supply Side

Responsible Trade

• Lacey Act

• FLEGT (EUTR)

• Saint Petersburg Declaration for Russia

• Australian Legality Act

Obligations fulfilled by putting Regulations

Voluntary requirement from big retailers viz Walmart, Target, B&Q, Home Depot, IKEA etc

What is the requirement ?