Wednesday 15 February 2012

Chikan industry of Lucknow - Pride of India

The chikan work of Lucknow is one of the most popular embroidery works in India.  It has a certain grace and elegance which ensures that it never goes out of style.  It is said to have been originally introduced by Nur Jahan, the beautiful wife of Mughal emperor, Jahangir.  The work became popular in a number of important cities of indo - gangtic plain. 

The designs depend for its effect on the variety of stitches and different grades of threads used to form the patterns which include, the lace like jali, the opaque fillings and the delicacy or boldness of outline and details. Tiny raised flowers done in what seem to be French knots are balanced by the flat stem stitch and large areas of open work to prevent either a crowded or too scattered appearance.  The stitches employed are back-stitch, chain stitch, and hemstitch forming an open work pattern. 

Individual floral motifs may embellish the entire garment or just one corner.  Among the floral motifs embroidered, the jasmine, rose, flowering stems, lotus and the paisley motif are the most popular. Chikan work has a very light, gossamer - like quality.  This makes it very suitable for the seemingly hot climate.

Some of the popular motifs are Kairi; dhaniya patti; phanda; dhum patti; ghas, patti; murri; kangan; joda murri; maharaki; sadi-maharaki; daraz/ katub; pechani; tanire; gitti; phanda; keel; kangira.

A Chikan suit is a regal treasure in any fashion connoisseur's wardrobe.  Really the great thing about this form of embroidery is that it never goes out of fashion and it suits women/ men of all ages.  If you are going to invest in a few pairs of elegant wear, try adding chikan to your wardrobe.  If you wear chikan you really are wearing a piece of history, as it is a form of embroidery that has been art part of India for centuries.

Chikan embroidery in Lucknow is the biggest artisan cluster of India. There are about 5 lakhs artisans of hand embroidery associated with this cluster. Apart from this, the artisans from other fields such as cutting, stitching , Hand Block Textile Printing, jali work and washer men are also a part of this cluster. The total number of artisans associated with Chikan Embroidery , Cluster, other than Chikankari artisans, is about 5000.

There are about 4000 manufacturing units in Lucknow having individual turnover of Rs.10 crore to 10 lacs.  The total turnover of industry is about Rs.1000 crore including export out of India of about Rs.200 crore.

Wednesday 8 February 2012

Access to Finance : Major Concern for MSMEs

The crucial role and place of the MSME sector in the Indian economy is well established now. These enterprises not only provide employment to a large number of unskilled and semi-skilled people but also support bigger industries by supplying raw material, basic goods, finished parts and components, etc.

There are about 2.6 crore enterprises in this sector. The sector accounts for 45 % of the manufactured output and 8%  of the GDP. MSMEs contributed close to 40 % of all exports from the country and employ nearly 6 crore people which is next only to the agricultural sector. MSME is the best vehicle for inclusive growth, to create local demand and consumption.

The Government of India had taken a right step by enacting the MSMED Act, 2006. Advances extended to the MSE sector are treated as priority sector advances and as per the RBI guidelines, banks are required to extend at least 60% of their advances to the MSE sector to Micro Enterprises.

However, the statistics available says different, as according to the Fourth Census of MSME sector (September 2009), only 5.18 percent of the units had availed of finance through institutional sources while 2.05 percent of them had finance from non-institutional sources and the majority of units (92.77 percent) had no finance or depended on self-finance. Considering this extent of financial exclusion in the sector, the problem of unavailability of finance is overshadowing the issue of high cost of credit. The state has a strong base of MSMEs of around 31lacs, but overall position  is  not different as at national level.

While lending to MSMEs, specially to MSEs,  there is too much distrust in their relationship with the banks/Financial Institutions (FIs). There is need to change the role of banks/FIs from money lenders to business partners .They should start providing advisory and planning services actively, and their staff should be  trained to help MSMEs in diverse areas including marketing, technology and market access.

The government should also focus on establishing mechanisms to improve the credit information infrastructure, strengthen creditors' rights, speed up payment by corporate, avail more alternative sources of capital, and ensure timely identification and prevention of sickness in MSMEs .  

Such an approach will help not only the small firms seeking loans, but also the bankers/financial institutions in risk assessment and risk management. However, it is true that there shall be successes and failures, but despite the risk, financing of first time entrepreneurs is must for financial inclusion and growth of all.The state financial corporation’s/state level institutions may play a vital role and they may be given/ may share responsibilities in this regard jointly with banks.   

The interest rate hike cycle has already taken a toll on the economy with high cost of credit intensifying the strains on the industry and needless to mention here, it's the MSEs who have suffered the most. In this scenario, the reduction of CRR by 0.5% by the RBI, after third quarter review of monetary policy-2011-12, is really something that has got the hopes up, as this will enable   the banks to have excess fund of around Rs.32000 crores for lending.

However, only the availability of sufficient funds with banks is not the solution of the finance concern of the MSMEs. Unless the sector is arranged lower cost credit, finance availability only will not ease the sector. As such the government /RBI should now ensure availability of adequate finance for MSMEs and on other hand, move towards in the direction of reducing interest rates for industries, specially, for MSME sector.    

R.B. Verma

Sunday 29 January 2012


Varanasi is situated at the bank of river Ganges, one of the oldest city and is prominent on the tourist map of the world. It is cultural and industrial Centre in U.P. Due to heavy influx of tourist, small industries based on hand skills developed during the course of time. Among others Glass Beads and imitation jewellery made in Varanasi became famous.

The glass beads have a history of around 100 years. Earlier few artisans used to import raw glass and tubes from Firozabad and other places and used to manufacture beads for catering the demand of the tourist visiting Varanasi. With the increased in demand manufacturing activities increased and reached the rural areas of Varanasi. Presently the activities have spread to 40-50 villages in Varanasi and areas around and presently around twenty thousand workers are engaged in these industries. Numbers of micro and artisan based, processing and medium/ small scale unit are working in Varanasi.

Following items manufactured by artisans at Varanasi.

Solid glass beads - these glass beads are largely used in preparation of artistic show pieces and ornaments

Fancy beadsthese are mainly used in India and abroad for embroidery, ornaments and other artistic items.

Hollow beads used for ornaments, wall hanging, curtains and other items.

Glass beads manufactured are generally made by use of colour block glass, glass rod and tubes. The artisan’s units, engaged in production, comprise of hand tools, addas, burner and few other equipments costing 20,000 to 25,000 rupees. The dies which give shape to the beads are generally prepared as per design of the company placing orders for manufacturing of these items. The fuel used is kerosene oil which is generally taken by these artisans from open market. Block glass, rod and glass tubes are main raw material which are purchased form the open market or supplied by the firm placing orders to these artisans, who are the traders and have extended their operation to exports and entered in the field of manufacturing of raw material viz, glass rod, tubes in their own glass factories and have developed arrangements through contractors to ensure distribution of raw material among the artisans and recollections as finial product. 

At present approx. 20,000 artisans are engaged in manufacturing of glass beads and some 35,000 to 45,000 people in other allied activities in Varanasi.  Approximately 8,000 micro units are engaged in production of beads, with 50 small and 6 big units in this area, important among them is M/S Banaras Beads Ltd. The total production volume of the area in terms of rupee is around 105 crores out of which some 70 % is exported to various countries fetching a valuable foreign exchange worth Rs.70 to Rs.72 crores per annum. The perfect and natural mix of urban and rural artisans is the most important factor of this sector. Beside Varanasi Firozabad and Purdilnagar are the other centres where glass bead manufacturing is carried on.

The stress is now for quality up-gradation with improvement in technology, upgraded process and improved raw material. Varanasi is on proposed route of gas pipe line to be laid by ONGC. The availability of gas towards raw material will result in reduction of manufacturing cost.  In spite of threats from china, the industry has witnessed growth rate of 10-12% in the last few years. Large number of artisans and SME has survived in this sector.

S.K. Singh

Udyog Bandhu

Tuesday 17 January 2012

100% Foreign Direct Investment (FDI) in Single Brand Product Retail Trading

Foreign Direct Investment (FDI) means investment by non-resident entity/person resident outside India in the capital of the Indian company. It is the policy of the Government of India (GOI) to attract and promote productive FDI in activities which significantly contribute to industrialization and socio-economic development. FDI supplements domestic capital and technology.  Presently, 51% FDI was permitted in Single Brand Retail which was opened to Foreign Players almost 6 years ago. GOI has allowed 100% FDI in this segment of retailing paving the way for International Players vide notification dated 10-01-2012. The highlights of the notification of GOI is as under :

(1) Foreign Investment in Single Brand product retail trading is aimed at attracting investments in production and marketing, improving the availability of such goods for the consumer, encouraging increased sourcing of goods from India, and enhancing competitiveness of Indian enterprises through access to global designs, technologies and management practices.

(2) FDI in Single Brand product retail trading would be subject to the following conditions:
(a) Products to be sold should be of a 'Single Brand' only.
(b) Products should be sold under the same brand internationally i.e. products should be sold under the same brand in one or more countries other than India.
(c) 'Single Brand' product-retail trading would cover only products which are branded during manufacturing.
(d) The foreign investor should be the owner of the brand.
(e) In respect of proposals involving FDI beyond 51%, mandatory sourcing of at least 30% of the value of products sold would have to be done from Indian 'small industries/ village and cottage industries, artisans and craftsmen'. 'Small industries' would be defined as industries which have a total investment in plant & machinery not exceeding US $ 1.00 million. This valuation refers to the value at the time of installation, without providing for depreciation. Further, if at any point in time, this valuation is exceeded, the industry shall not qualify as a 'small industry' for this purpose. The compliance of this condition will be ensured through self-certification by the company, to be subsequently checked, by statutory auditors, from the duly certified accounts, which the company will be required to maintain.
(3) Application seeking permission of the Government for FDI in retail trade of 'Single Brand' products would be made to the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy & Promotion. The application would specifically indicate the product/ product categories which are proposed to be sold under a 'Single Brand'. Any addition to the product/ product categories to be sold under 'Single Brand' would require a fresh approval of the Government.
(4) Applications would be processed in the Department of Industrial Policy & Promotion, to determine whether the products proposed to be sold satisfy the notified guidelines, before being considered by the FIPB for Government approval. 

Source : Press Note No.1 (2012 Series) of GoI , Ministry of Commerce & Industry,
Department of Industrial Policy & Promotion, (FC-I Section)

Shailendra Kumar Singh
Udyog Bandhu