EXECUTIVE SUMMARY

The export marketing is getting more and more competitive day by day.

This project is a study of “Indian Silk” which is a sensitive item. The export

policies have a direct bearing on the domestic silk industry at large.

India is the 2nd largest producer and exporter of silk in the world after

China. We also have very big domestic silk sarees market, which consumes 90%

of the silk produced in India.

This project gives a brief idea about the export of silk, History of silk,

how the silk get processed, export earnings through silk, different incentives /

assistance given to the Indian silk exporter, different competitors of Indian silk in

the world market and how India is safe in the 21st century.

Keeping the above in view, this project work covers the valuable

information on Export of silk, given in various topics to the best of my

knowledge and belief.

Let see the project in detail and understand the Indian silk market in the

world context.

The developed markets going more towards eco-friendly textiles, natural

fibre like silk can look-up with confidence in the years to come. In order to

make use of these situations, India silk industry has to gear up itself to meet the

future challenges ahead.

INTRODUCTION

Silk is one of the oldest known textile fibers.

SILK in the  Indian subcontinent  is a luxury good. In  India, about 97% of

the raw silk is produced in the five Indian states of   Karnataka,  Andhra Pradesh,

Tamil Nadu, West Bengal  and  Jammu and Kashmir.  The North Bangalore regions

of  Muddenahalli  and  Kanivenarayanapura, the upcoming sites of a $20 million

"Silk City" and  Mysore  contribute to a majority of silk production.  Another

emerging silk producer is  Tamil Nadu  where mulberry cultivation is concentrated

in  Coimbatore,  Erode  and  Dharmapuri  districts.  Hyderabad,  Andhra Pradesh  and

Gobichettipalayam,  Tamil Nadu  were the first locations to have automated silk

reeling units.

HISTORY

According to Chinese tradition, silk was used as long ago as the 27 th

century BC. The silkworm moth was originally a native of China, and for about

30 centuries the gathering and weaving of silk was a secret process, known only

to the Chinese. China successfully guarded the secret until AD 300, when Japan,

and later India, penetrated the secrecy.

The ancient Persian courts used Chinese silks, unraveled and rewoven into

Persian designs. When Darius III, king of Persia, surrendered to Alexander the

Great, he was clothed in such silken splendor that Alexander was completely

overshadowed and demanded as spoils the equivalent of $7 million in silk.

Silk became a valuable commodity in both Greece and Rome, until AD

550 all silk woven in Europe was derived from Asiatic sources. About that time,

however, the Roman emperor Justinian I sent two Nestorian monks to China,

where, at the risk of their lives, they stole mulberry seeds and silkworm eggs,

secreted them in their walking staffs, and brought them to Byzantium.

Thus, the Chinese and Persian silk monopolies ended. With the spread of

Islam, the silkworm came to Sicily and Spain. By the 12 th and 13th centuries Italy

had become the silk center of the West, but by the 17 th century France was

challenging Italy’s leadership. The silk looms established in the Lyons area at that

time are still famous today for the unique beauty of their weaving.

The silkworm, however, did not flourish in the English climate, nor has it

ever flourished in the U.S. The first silk mill in the U.S. was erected in 1810.

With the advent of the power loom, and with the help of the high tariffs

introduced during the American Civil War against imported woven goods, the

American silk-weaving industry entered a period of growth.

Silk Goes To India

The brocade weaving centers of India developed in and around the capitals

of kingdoms or holy cities because of the demand for expensive fabrics by the

royal families and temples. Rich merchants of the trading ports or centers also

contributed to the development of these fabrics. Besides trading in the finished

product, they advanced money to the weavers to buy the costly raw materials that

is silk and zari. The ancient centers were situated mainly in Gujarat,  Malwa  and

South India. In the North,  Delhi,  Lahore,  Agra, Fatehpur Sikri, Veranasi, Mau,

Azamgarh and Murshidabad were the main centers for brocade weaving. Northern

weavers were greatly influenced by the brocade weaving regions of eastern and

southern Persia,  Turkey, Central Asia and Afghanistan.

Gujrati builders and weavers were brought by Akbar to the royal

workshops in AD 1572. Akbar took an active role in overseeing the royal textile

workshops, established at Lahore, Agra and Fatehpur Sikri where skilled weavers

from different backgrounds worked. Expert weavers from those distant lands

worked with the local weavers and imparted their skills to the locals. This

intermingling of creative techniques brought about a great transformation in the

textile weaving industry. The exquisite latifa (beautiful) buti was the outcome of

the fusion of Persian and Indian designs. Brocades produced at the royal

workshops of other well-known  Muslim  centers in Syria,  Egypt, Turkey and Persia

were also exported to India. Under the  Mughals, sericulture and silk-weaving

received special encouragement and silk cloth produced in the Punjab came to be

prized throughout the world. Lahore and Multan developed into major centers of

silk industry. The tradition continues.

ABOUT SILKWORM

SILKWORM, common name for the silk-producing

larvae of any of several species of moths.

Silkworms possess a pair of specially modified

salivary glands called silk glands, or sericteries,

which are used in the production of cocoons. The

silk glands secrete a clear, viscous fluid that is forced through openings, called

spinnerets, on the mouthparts of the larva; the fluid hardens as it comes into

contact with air. The diameter of the spinneret determines the thickness of the

silk thread produced.

The best-known silkworm is the larvae of the common, domesticated

silkworm moth, Bombyx mori, of the family Bombycidae. This moth has been

cultivated for many centuries and is no longer known in the wild state.

The female deposits 300 to 400 bluish eggs at a time; the eggs are

fastened to a flat surface by a gummy substance secreted by the female. The

larvae, which hatch in about ten days, are about 0.6 cm (about 0.25 in) long. The

larvae feed on leaves of white mulberry, Osage orange, or lettuce. Silkworm

caterpillars that are fed mulberry leaves produce the finest quality silk. Mature

larvae are about 7.5 cm (about 3 in) long and yellowish gray or dark gray in

color. About six weeks after hatching, the common silkworm stops eating and

spins its cocoon. The length of the individual fiber composing the cocoon varies

from 300 to 900 m (1000 to 3000 ft). The silkworm pupates for about two

weeks; if allowed to complete its pupation period, it emerges as an adult moth.

Tearing during emergence damages the silken cocoon beyond commercial

use. Therefore, in the commercial production of silk, only enough adult moths are

allowed to emerge to ensure continuation of the species. The rest are killed by

heat. Other moths known as silkworm moths include the giant silkworm moths of

the family Saturniidae, particularly of the genus Antheraea.

SILK- WHY?

Silk is a high value but low volume product accounting for only 0.2 % of

world’s total textile production. Silk production is regarded as an important tool

for economic development of a country as it is a labour intensive and high

income generating industry that churns out value added products of economic

importance. The developing countries rely on it for employment generation,

especially in rural sector and also as a means  to earn the foreign exchange.

SILK- WHERE?

Geographically, Asia is the main producer of silk in the world and

produces over 90 % of the total global output. Though there are over 40 countries

on the world map of silk, bulk of it is produced in China and India, followed by

Japan, Brazil and Korea. China is the leading supplier of silk to the world with

an annual production of 81880 MT (2000). Out of Which the Mulberry raw silk

product is 78080 MT.

India is the second largest producer of silk and also the largest consumer

of silk in the world. It has a strong tradition and culture bound domestic market

of silk. In India, mulberry silk is produced mainly in the states of Karnataka,

Andhra Pradesh, Tamil Nadu, Jammu & Kashmir and West Bengal, while the non-

mulberry silks are produced in Jharkhand, Chattisgarh, Orissa and northeastern

states.

SILK- TYPES

There are four major types of silk of commercial importance, obtained from

different species of silkworms which in turn feed on a number of food plants. These are:

MULBERY

TASAR

MUGA

ERI

Except mulberry, other varieties of silks are generally termed as non-mulberry silks. India

has the unique distinction of producing all these commercial varieties of silk.

MULBERRY: - The bulk of the commercial silk produced in the

world comes from this variety and often silk generally refers to mulberry

silk. Mulberry silk comes from the silkworm, Bombyx mori L that solely

feeds on the leaves of mulberry plant. These silkworms are completely

domesticated and reared indoors. In India, the major mulberry silk producing states are

Karnataka, Andhra Pradesh, West Bengal, Tamil Nadu and Jammu & Kashmir which

together accounts for 92 % of country’s total mulberry raw silk production.

TASAR: - Tasar (Tussah) is copperish colour, coarse silk mainly used for

furnishings and interiors. It is less lustrous than mulberry silk, but has its

own feel and appeal.

In India, tasar silk is mainly produced in the states of Jharkhand,

Chattisgarh and Orissa, besides Maharashtra, West Bengal and Andhra Pradesh. Tasar

culture is the main stay for many a tribal community in India.

ERI: - Eri silk is the product of the domesticated silkworm, Philosamia ricini that feeds

mainly on castor leaves. Ericulture is a household activity practiced mainly for protein

rich pupae, a delicacy for the tribal. Resultantly, the eri cocoons are open-mouthed and

are spun. The silk is used indigenously for preparation of chaddars (wraps) for own use

by these tribals. In India, this culture is practiced mainly in the northeastern states and

Assam. It is also found in Bihar, West Bengal and Orissa

MUGA: - This golden yellow colour silk is prerogative of India and

the pride of Assam state. It is obtained from semi-domesticated multivoltine silkworm.

These silkworms feed on the aromatic leaves of Som and Soalu plants and are reared on

trees similar to that of tasar.

Muga culture is specific to the state of Assam and an integral part of the tradition

and culture of that state. The muga silk, and high value product is used in products like

sarees, mekhalas, and chaddars, etc.

FAMOUS SILK CENTRE IN INDIA

SILK SILK CENTRE

Andhra Pradesh Dharmavaram, Pochampalli, Venkatagiri, Narainpet

Assam Sualkuchi

Bihar Bhagalpur

Gujarat Surat, Cambay

Jammu & Kashmir Srinagar

Karnataka Bangalore, Anekal, Ilkal, Molakalmuru, Melkote, Kollegal

Chattisgarh Champa, Chanderi, Rigger

Maharashtra Paithan

Tamil Nadu Kancheepuram, Arni, Salem, Kumbhakonam, Tanjavur

Uttar Pradesh Varanasi

West Bengal Bishnupur, Murshidabad, Birbhum

EXPORT PROCEDURE AND DOCUMENTATION

1. REGISTRATION STAGE: -

Deciding the nature of the business : - The exporter must have to decide the nature

of the business. His choice will be one of the following:

Sole proprietor business.

Partnership firm.

Joint stock company.

Opening of bank account : - An exporter has to select a bank, which undertakes to

fulfill all banking formalities connected with negotiation of documents and

realization of export proceeds. The bank must be authorized to deal with “Foreign

Exchange”.

Registrated with the Shop and Establishment Act : The exporter has to registrated

under this act and gets the registrated “License Number”.

Obtaining code number from DGFT : - This is another formality, which every

exporter has to complete without which he cannot export any commodity. The

code number is known as “Importer-Exporter Code (IEC) Number”. This code no.

is granted by “DGFT (Director General of Foreign Trade)”.

Registration with the Silk Export Promotion Council : - The exporter is required to

register his firm with the “Indian Silk Export Promotion Council” for securing

various benefits under the Import Export Policy.

Obtaining GIR No./PAN No : - Income from export is exempted from income tax

for which he is required to register his firm with “Income Tax Authority”. For this

purposes he has to first get the GIR No./PAN No.

Obtaining Sales Tax Number : - The exporter has to apply to the sales tax

authority for getting “Sales Tax Registration” number. It is compulsory to get the

benefit of sales tax exemption.

2. PRE-SHIPMENT STAGE: -

Sampling and Correspondence : - Before confirming the order the seller send the

sample of the silk material and correspondence with the prospective buyer on the

“terms and conditions” of the order.

Obtaining the confirmed order : - When the overseas buyer accepts the exporter

offer or the invoice, he sends a confirmed order called “Indent” to the exporter.

The exporter should check foreign exchange regulations of the importer countries.

Obtaining a confirmed Letter of Credit : - Together with the confirmed letter order

the exporter may send a formal letter to the buyer or importer to open a “Letter of

Credit” in his name.

Preshipment finance : - As soon as the exporter gets the letter of credit; he should

approach his bank for securing “Preshipment finance”.

Production/Procurement of Goods : - The exporter has to arrange for production of

goods as soon as he gets the “Preshipment finance” from the banks.

Packing and Marking : - The exporter has to arrange for proper packing and

marking of the goods. It must ensure proper protection of the goods and quality of

the packing material. If necessary, the exporter can take the assistance from the

“Indian Institute of Packing (IIP)”.

Silk-pre-shipment inspection : - Exporters will bring the consignments of silk to

the customs point. For each consignment, an application for pre-shipment

inspection in prescribed forms of “Central Silk Board (CSB)” will be made

accompanied by two copies of export invoices, two packing lists and a sample

swatch of 6" square dimension.

Appointment of C&F agents : - Dispatch of goods from India to foreign countries

is a technical job which the exporter require the service of “C&F” agents. C&F

agent ensures smooth clearance of goods from the customs and collection of

negotiable documents.

3. SHIPMENT STAGE: -

Arrangements of Internal transport from factory warehouse to the port of

shipment: - The exporter has to make necessary arrangements for “transporting of

goods” by rail or roads way from his place to the port of shipment.

Preparation and Processing of Shipping Documents : - when the goods reach the

port of shipment, the exporter has to arrange for preparation of a complete set of

documents. The following documents must be submitted to the “Custom

Appraiser at the Custom House”.

Export of Silk (India)

Commercial Invoice (ANNEXURE -1)

Packing List or Packing Note (ANNEXURE -2)

Warehouse Receipt (ANNEXURE -4)

Mate’s Receipt (ANNEXURE -5)

Letter of Credit

Shipping Bill (ANNEXURE –7)

Marine Insurance Policy.

Proforma Invoice

Central Excise

Custom Procedure take Place – During First CSB Inspection

4. POST-SHIPMENT STAGE: -

Submission of Documents by the Agents to the Exporter : - The C&F agents

submit the necessary documents to the exporter to enable him to present the same

to his bank for the purpose of negotiation.

Shipment Advice to Importer : - After the shipment of goods, the exporter has to

send suitable intimation to the importer for his information it include detail like

date of shipment, name of the vessel, date on which goods will reach the

destination etc.

Presentation of Documents to the Bank for negotiation: - A complete set of

documents is submitted by the exporter to his bank for the purpose of negotiating

the same and obtaining export proceeds for the same. The following documents

are to be submitted and they are: -

Bill of Exchange (ANNEXURE -3)

Commercial Invoice

Bill of Lading (ANNEXURE -6)

Marine Insurance Policy

Certificate of Origin and Consular Invoice

Processing of GR Form : - When the negotiating bank has received payments, it

will record on the duplicate copy of the GR Formand forward it to the RBI. When

they are found to be alright the transactions is treated closed because the required

foreign exchange payment has already been received.

EXPORT INCENTIVES/ASSISTANCE:

Government of India offers various incentives and facilities to Indian

exporters in order to encourage and support the export efforts, as the foreign exchange

earned through exports is vital to the country at a time of its adverse balance of payment

position. There are monetary as well as non-monetary incentives. Exporters are provided

with various export incentives/assistance under different Export Promotion Schemes. The

following of them are listed:

Exemption from Income Tax : -The single biggest incentive that an exporter now

enjoys is the exemption from income tax. Export earnings were not subjected to

income tax under section 80-HHC. But from the year 2000-01, this benefit is

being phased out in 5 years time.

Duty Free REP:(DFRC ): - All silk exporters can avail of the benefits under this

scheme for the grant of Replenishment license for import of raw silk free for

custom duty on post export basis.

Other Assistance: - Exporters are also made available other assistance and

facilities to encourage exports such as excise duty rebate, exemption from sales

tax, Rail/ Ocean/ Air Freight concession. MDA, Pre-shipment and post-shipment

finance from banks at low interest, ECGC etc.

Duty Drawback : - Exporters who are not availing benefits under DEEC or DEPB

scheme can claim Duty Drawback “NEW DRAWBACK RATES FOR SILK

ITEMS”. The Government has notified the new Duty Drawback Rates vide

Notification No. 12/2004 Customs (N.T.) Dated 29th January 2004. The Drawback

Notification comes into effect from 9th February 2004.

Sr.No Sub

Sr.No.

Description of goods Rates of drawbacks Allocation

1. Fabrics made out of natural silk

other than made of Noil Silk

Yarn.

Rs. 86.00 (Rs. eighty six only)

per kg of silk content

All Custom

2. Fabrics made of Noil Silk Yarn Rs. 24.50 (Rs. Twenty four

and fifty paise only) per kg of

silk content.

All Custom

3. Readymade Garments made

wholly or mainly of natural silk

other than made of Noil Silk

Yarn

Rs. 86.00 (Rs. eighty six only)

per kg of silk content.

All Custom

4. Readymade Garments made

wholly or mainly of Noil Silk

Yarn.

Rs. 24.50 (Rs. Twenty four

and fifty paise only) per kg of

silk content.

All Custom

5. High fashioned Readymade

Garments made wholly or

mainly of natural silk other than

made of Noil Silk Yarn

Rs. 86.00 (Rs. eighty six only)

per kg of silk content.

All Custom

6. High fashioned Readymade

Garments made wholly or

mainly of Noil Silk Yarn

Rs. 24.50 (Rs. Twenty four

and fifty paise only) per kg of

silk content.

All Custom

7. Handloom / Power loom

Lungies (including Lungies

commonly known as Sungits)

made of natural silk other than

made of Noil Silk Yarn

Rs. 86.00 (Rs. eighty six only)

per kg of silk content.

All Custom

8. Handloom / Power loom

Lungies (including Lungies

commonly known as Sungits)

made of Noil Silk Yarn

Rs. 24.50 (Rs. Twenty four

and fifty paise only) per kg of

silk content.

All Custom

9. Made-up articles made out of

fabrics made wholly or mainly

of natural silk other than made

of Noil Silk Yarn.

Rs. 24.50 (Rs. Twenty four

and fifty paise only) per kg of

silk content.

All Custom

10. Made-up articles made out of

fabrics made wholly or mainly

of Noil Silk Yarn

Rs. 86.00 (Rs. eighty six only)

per kg of silk content.

All Custom

Duty Entitlement Pass Book (DEPB ): - The objective of the DEPB scheme is to

neutralize the basic custom duty on the import content of the export product by

granting duty credit against export. Duty credit is calculated taking into account the

deemed import content of the export product as per the Standard Input Output Norms

and determine the basic custom duty payable on the import content. Export credit is

fixed as a % of FOB value for exports which are as follow: -

ITEM %

SILK FABRICS 6

SILK MADEUPS 7

SILK GARMENTS 8

OBJECTIVE

The main objective of choosing this subject is to know the contribution of India

in the field of “SILK”.

The following are the objectives for making this project : -

To study the India’s contribution in the field of export.

To know exactly what is the position of Indian silk in the world market.

To know what are the procedure for exporting the product “Silk”.

To know that Is India safe when the world textile trade have been

integrated into WTO rules and regulations since 2005 at the international

level.

To know what type of assistance / incentives get to the Indian exporters.

SCOPE OF STUDY

The Study is part of endeavor to enhance the competitiveness of Indian

exporters. The efforts taken by Central Silk Board on improving the

productivity and quality of Indian silk in order to compete in the

international markets.

Silk exports, the Study delineates, account for 1.2 percent share in total

Indian exports and 4.4 percent share in total textile exports in 2000-01.

Silk exports reached a record level of US $ 530 million in the year 2000-

01.

Over 50 percent of silk exports are in the form of fabrics including dress

materials, while silk garments account for 24 percent and silk made-ups

account for 13 percent. USA is the major importer of silk, followed by the

European Union and Japan.

RESEARCH METHODOLOGY

This report is based on primary as well secondary data, however primary data

collection was given more importance since it is overhearing factor in attitude studies.

One of the most important users of research methodology is that it helps in identifying

the problem, collecting, analyzing the required information data and providing an

alternative solution to the problem .It also helps in collecting the vital information that is

required by the top management to assist them for the better decision making both day to

day decision and critical ones.

Data sources:

Research is totally based on Secondary data. Primary data can be used only for

the reference. Research has been done by Secondary data collection, and primary data

has been collected by interacting with various people. The secondary data has been

collected through various journals and websites.

LIMITATIONS OF THE PROJECT

The ma jo r cons t r a in t f a ced by me i n mak ing t he p ro j ec t was

t ime . The t ime was no t enough t o know in de t a i l abou t t he

f a c to r s , t o ma jo r t he pe r fo rmance o f a l l S i l k I ndus t r i e s and t o

wha t ex t en t e ach f ac to r i s r e spons ib l e fo r t he s ame .

Also i n some ca se s t he compan i e s con t ac t ed , we re no t w i l l i ng t o

p rov ide adequa t e i n fo rma t io n , t h i s cons t r a in t l ed t o i nab i l i t y t o

cove r t he who le da t a . Which cou ld g ive me c l ea r p i c t u r e o f t he

sub j ec t .

Howeve r , i n sp i t e o f a l l t he se l im i t a t i ons and cons t r a in t , a

humble a t t emp t t o p r e sen t u se fu l i n fo rma t ion and fo rma t w i th an

ana ly t i c a l p i c tu r e o f t he s t udy w i th sugges t i ons ha s been made .

CHAPTER 2

CENTRAL SILK BOARD

Established in 1949 as a Commodity Board by Govt. of India, is a premier organization for overall development of sericulture and silk industry.

Headquarters – Bangalore.

VISION

See India emerge as the leader in the world market for silk.

MANDATE

CSB is statutorily committed to: - Promote the development of the silk industry by all appropriate measures, and for

this purpose, in particular.

Undertake, assist and encourage scientific, technological and economic research in the silk sector.

Devise means to improve cultivation of mulberry plantations

Produce and distribute healthy silkworm seed.

Improve the quality and production of raw silk and the marketing of silk

Advice and report to Govt. of India on all matters relating to the development of the raw silk industry, including the import and export of raw silk.

MISSION

Make continuous efforts in Research and Development and Technology Transfer.

To create greater opportunities for gainful employment and improved levels of income in sericulture through spread of scientific sericulture practices.

To improve productivity in all stages of silk production

Strengthen levels of efficiency through a commitment to quality

SERVICES RENDERED BY CSB

EXPORT PROMOTION: -

Disseminate information on exports of Natural Silk Goods and Import of Raw Silk.

Guidance to New Entrepreneur Exporters on procedures and formalities.

Export and Import Policy relating to silk.

Incentives offered by the Govt. of India against exports of silk goods.

Imparting technical knowledge on silk manufacturing.

DEMAND AND SUPPLY OF SILK

Silk from time to time is immemorial is considered to be a symbol of luxury,

elegance and sophistication. Being a natural fibre, with all its natural qualities, silk

always remained in demand. From the royal wear to the present status of common man’s

wear, the transition of silk took over a period of two millennium. Nevertheless, skill still

has a special place in the Textile-kingdom as silk. Natural fibres, which are eco-friendly,

have an increased preference over synthetics the world over especially in the developed

market. Therefore there is an increased preference for textiles made out of natural fibres

like silk in the developed markets. This trend is being noticed even in the developing

markets too. Natural fibres therefore would sustain demand as ideal clothing materials

even in the day to come.

India has an ancient silk culture right from the pre-vedics times. Silk has a sacred

place in the cultural heritage of Indian. It is a tradition that in India no religious rituals

will be complete without the use of silk. It is also a religious tradition for the bride to

wear silk saree in the soledom occasion of their marriage irrespective of their economic

condition. Silk industry in India therefore caters to the vast saree market round the year.

The demand for raw silk by the saree industry is quite large. Thousands of weavers, with

their tiny weaving establishments are located at the major weavings centres like Banaras,

Mubarakpur, Kanjeepuram, Salem, Dharmavarm etc. they need raw silk to run their loom

round the year.

India now produces around 15,000 metric tons of raw silk. According to a rough

estimate, the demand for silk in India by both domestic and export sector is around

24,000 metric tons leaving a gap of around 9000 metric tons.