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 27th 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 12th and 13th centuries Italy had become the silk center of the West, but by the 17th century France was challenging Italys 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 worlds 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 nonmulberry 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 countrys 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

Andhra Pradesh Assam Bihar Gujarat Jammu & Kashmir Karnataka Chattisgarh Maharashtra Tamil Nadu Uttar Pradesh West Bengal

SILK CENTRE
Dharmavaram, Pochampalli, Venkatagiri, Narainpet Sualkuchi Bhagalpur Surat, Cambay Srinagar Bangalore, Anekal, Ilkal, Molakalmuru, Melkote, Kollegal Champa, Chanderi, Rigger Paithan Kancheepuram, Arni, Salem, Kumbhakonam, Tanjavur Varanasi 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) Mates 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.

1.

Description of goods

Rates of drawbacks

Allocation

Fabrics made out of natural silk Rs. 86.00 (Rs. eighty six only) All Custom other than made of Noil Silk per kg of silk content Yarn.

2.

Fabrics made of Noil Silk Yarn

Rs. 24.50 (Rs. Twenty four All Custom and fifty paise only) per kg of silk content.

3.

Readymade

Garments

made Rs. 86.00 (Rs. eighty six only) All Custom

wholly or mainly of natural silk per kg of silk content. other than made of Noil Silk Yarn 4. Readymade Garments made Rs. 24.50 (Rs. Twenty four All Custom

wholly or mainly of Noil Silk and fifty paise only) per kg of Yarn. 5. High fashioned made silk content. Readymade Rs. 86.00 (Rs. eighty six only) All Custom wholly or per kg of silk content.

Garments

mainly of natural silk other than made of Noil Silk Yarn 6. High fashioned made Readymade Rs. 24.50 (Rs. Twenty four All Custom wholly or and fifty paise only) per kg of silk content. loom Rs. 86.00 (Rs. eighty six only) All Custom Lungies per kg of silk content.

Garments

mainly of Noil Silk Yarn 7. Handloom Lungies / Power

(including

commonly known as Sungits) made of natural silk other than

made of Noil Silk Yarn

8.

Handloom Lungies

Power

loom Rs. 24.50 (Rs. Twenty four All Custom Lungies and fifty paise only) per kg of

(including

commonly known as Sungits) silk content. made of Noil Silk Yarn 9. Made-up articles made out of Rs. 24.50 (Rs. Twenty four All Custom fabrics made wholly or mainly and fifty paise only) per kg of of natural silk other than made silk content. of Noil Silk Yarn. 10. Made-up articles made out of Rs. 86.00 (Rs. eighty six only) All Custom fabrics made wholly or mainly per kg of silk content. of Noil Silk Yarn

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 SILK MADEUPS SILK GARMENTS

%
6 7 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 Indias 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 200001.

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 major constraint faced by me in making the project was time. The time was not enough to know in detail about the factors, to major the performance of all Silk Industries and to what extent each factor is responsible for the same. Also in some cases th e companies contacted, were not willing to provide adequate information , this constraint led to inability to cover the whole data. Which could give me clear picture of the subject. However, inspite of all these limitations and constraint, a humble attempt to present useful information and format with an a n a l yt i c a l p i c t u r e o f t h e s t u d y w i t h s u g g e s t i o n s h a s b e e n m a d e .

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 mans 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.