A REPORT ON ANDHRA PRADESH A LUCRATIVE BUSINESS DESTINATION

BY BHANU TEJASWINI .K ARUN KUMAR .N PRATHYUSHA .Y DIVYA .K PADMAVATHI .L.S OF MBA- INTERNATIONAL BUSINESS 09031E1B10 09031E1B08 09031E1B31 09031E1B14 09031E1B28

UNDER THE ESTEEMED GUIDANCE OF DR. E. MURALI DARSHAN

SCHOOL OF MANAGEMENT STUDIES JAWAHARLAL TECHNOLOGICAL UNIVERSITY, HYDERABAD AP, INDIA. YEAR: 2010

ANDHRA PRADESH

A LUCRATIVE BUSINESS DESTINATION

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CONTENTS
Sl.No 1 2 Chapter Page no STRATEGIC GEOGRAPHIC LOCATION ADVANTAGE 4 ANDHRA PRADESH ADVANTAGE 6 a. WHY ANDHRA PRADESH IS ON THE GLOBAL RADAR? b. LARGE BASE FOR AGRO AND FOOD PROCESSING c. ANDHRA PRADESH IS A MINERAL HOUSE OF THE COUNTRY d. BULK DRUG CAPITAL OF INDIA e. FAST GROWING IT/ITES ECONOMY f. HUGE GAS FINDINGS IN KRISHNA-GODAVARI BASIN g. WORLD CLASS INFRASTRUCTURE h. PORT i. ROAD j. RAILWAY k. EDUCATION l. TOURISM m. INDUSTRY n. RESEARCH & DEVELOPMENT o. SPECIALIZED INDUSTRIAL PARKS ANDHRA PRADESH ± MACRO AGGREGATES RESOURCES a. FOOD AND AGRICULTURE b. MEAT, POULTRY & EGG c. FISHERIES d. FORESTRY e. WATER f. MINERAL STRENGTHS GROWTH SECTORS a. FOOD AND AGRO PROCESSING b. PHARMA AND BULK DRUGS c. MARINE INDUSTRY d. HANDICRAFTS e. IT BIBLIOGRAPHY 13 17

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STRATEGIC GEOGRAPHIC LOCATION ADVANTAGE
Andhra Pradesh is strategically located in India. It has easy access to all parts of the country. Country¶s capital, New Delhi is less than two hours fly from Hyderabad. Populous and Business states like Uttar Pradesh, Gujarat, Maharashtra, West Bengal, Tamilnadu and Karnataka are at just 1 to 1½ hours flying distance. Strategic location of the state is very advantageous for the business to have the best domestic market in country, easy to reach all corners of the country. Andhra Pradesh is known as Gate of South-East Asia. Easy access to the most economically developed countries like Japan, Philippines, Singapore, Malaysia, Hong Kong, Thailand, New Zealand, and Australia. Andhra Pradesh is richly endowed with natural resources and competitive advantages with geographical area of 274.40 lakh hectares being the fourth largest state accounting for 8.37% in India with population of 81.60 million being the fifth most populous state accounting for 7.4% in the country. The state lies between 12041¶ and 220 longitude and 770 and 84040¶ latitude and is bounded by Madhya Pradesh, Orissa and Chhattisgarh in the north and caressed by Bay of Bengal in east. The state also shares its boundaries with Tamilnadu and Karnataka in the south and with Maharashtra in the west. Hyderabad, the State capital is centrally located and exudes a huge potential to be transformed into a transit hub of South Asia. It has in the recent years become prominent as preferred destination for leading software services companies. Visakhapatnam port in AP is the largest cargo handling port in the country which provides a major share of cargo to south east Asian countries and Australia. The State have easy access of less than 4 hours fly to Global Oil capitals of Gulf countries and another 4-5 hours fly to European majors. Strategic geographic location of the State is very advantageous for the trade promotion and creates sustained global potential market.
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India's fourth largest state by area Fifth largest by population. Its capital and largest city is Hyderabad. Has the second longest coastline (972 km) among all the States in India. Lies between 12°41' and 22°N latitude and 77° and 84°40'E longitude Bordered by Maharashtra, Chhattisgarh and Orissa in the north, the Bay of Bengal in the East, Tamil Nadu to the south and Karnataka to the west. Andhra Pradesh is historically called the "Rice Bowl of India". More than 77% of its crop is rice; Andhra Pradesh produced 17,796,000 tonnes of rice in 2006. Two major rivers, the Godavari and the Krishna run across the state. The small enclave (12 sq mi (30 km²)) of the Yanam district of Puducherry (Pondicherry) state lies in the Godavari Delta in north-east of the state. In Country-India Districts-23 Established-November 1, 1956 Capital-Hyderabad Largest city-Hyderabad 4

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Governor- E.S.L.Narsimhan Chief minister- K.Rosaiah Legislature(seats) bicameral(294) Population 81.60 million(5th) Density-277/ km2 (717 /sq mi) Official languages-telugu Time zone-IST(UTC+5:30) Area-275,045 km2 (106,195 sq mi) Website- www.ap.gov.in State language-telugu State symbol-poorna kumbham State song- maa telugu thalliki(sankarambadi sundarachari) State animal-black buck State bird-Indian roller State tree-neem State sport-kabadi State dance-kuchipudi State flower-water lily

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ANDHRA PRADESH ADVANTAGE-

ANDHRA PRADESH, THE BUSINESS STATE IS MOST PREFERRED INVESTMENT DESTINATION IN THE COUNTRY

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WHY ANDHRA PRADESH IS ON THE GLOBAL RADAR?
Andhra Pradesh is a fifth populous state in India with a population of 7,62,10,007, which is 7.43% of the country¶s population. It is fourth largest state with an area of 2,75,045 Sk. Kms constituting 8.37% of the country¶s area. Andhra Pradesh is strategically located in the Country having an easy access to all parts of the country and Gateway to South East Asia & Australia. The State is blessed with seven agro climatic conditions and variety of soils poised to large agriculture production. The state has 23 districts with Hyderabad city as the Capital, 7 Municipal Corporations, 79 Revenue Divisions, 1126 Mandals and 21,908 Gram Panchayats. The total Gross State Domestic Product (GSDP) is Rs 2,258 billion. Andhra Pradesh one among the five large and progressive economy states and its fast growing economy is first in the country. The percapita income of the State increased from Rs 17932 in 2001-02 to Rs 25,526 in 2005-06.

LARGE BASE FOR AGRO AND FOOD PROCESSING
Andhra Pradesh is primarily an agro based state and employs 65% of the state¶s population. It has about 115.32 lakh operational land holdings out of which 94.41 lakh are marginal farmers and 25.18lakh are Small farmers. The contribution of primary sector is 27%.  Andhra Pradesh ranks 2nd in producing Value Added food products and beverages with country 10% share.  Per worker output in the food-processing sector in Andhra Pradesh is very high.  The state has highest egg and broiler production in the country.  Largest sheep production.  Pioneer in Oil palm cultivation.  Highest in production of Mango, Chillies and turmeric.  Highest in brackish water shrimp and fresh water prawn production.  Highest productivity in coarse cereals, Jowar, Maize and Bengal gram.  Second highest fresh water fish production.  Second Largest producer of Horticulture products.  Second longest coastline, Andhra Pradesh becomes the pioneer in the marine exports in the country.  The State is the first maritime. The state has about Rs 5,000 crores investment in the food processing sector contributing 20% of the total existing investments in the state. The annual production in this sector is about Rs.9260 crores contributing 20% of the total industrial production in the state. .Agriculture will experience a quantum leap in growth, achieving an average annual growth rate of 6 per cent in real terms over the next 20 years.

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ANDHRA PRADESH IS A MINERAL HOUSE OF THE COUNTRY 
        World¶s largest single deposit of Barytes in Kadapa 1st in granite reserves in the country 1st in production and promoting various colours of lime stone slabs for flooring. 2nd largest store house of mineral resources in India 2nd in value of mineral production - 910% of country¶s mineral revenue. 2nd largest Bauxite deposits in the country 2nd in occurrence of uranium deposits in the country 2nd longest coastline of 974 kms ± rich beach sand resources 2nd largest producer of cement ± 59 plants with 23 million tones p.a.

Andhra Pradesh is very strong in the mineral sector resulting in creating strong base for Thermal Power plants, Steel plants, Aluminum plants, ceramic industries, Cement plants, Granite industries etc.

BULK DRUG CAPITAL OF INDIA
Due to the presence of world class Research & Development Institutions in the state and availability of large pool of skilled manpower at competitive prices Hyderabad became the Bulk Drug Capital of India with a contribution of more than 1/3 rd of the country¶s Bulk Drugs production.

FAST GROWING IT/ITES ECONOMY
Strong business presence of Global Software giants like Microsoft, Oracle, IBM, GE Capital, Satyam, Wipro, Infotech, Infosys, Metamor, Motorola, Ericsson, Keane, Portal Player, ICICI, Vanenburg, Computer Associates etc. Andhra Pradesh has become a leading state in promotion of Software industry in the country. It is registered that the country¶s highest growth rate of 65% in Software exports. The state was committed in creating IT infrastructure, HRD and investment climate. Andhra Pradesh is a leading producer of Cotton with average production 2.6 million bales annually. 2nd rank in production of Paper and Machinery Equipment, 3rd rank in production of chemicals, 4th rank in production of Wood, Rubber and Plastic products in the country. Andhra Pradesh is the 3rd largest power utility in the country. APGENCO¶s Hydel Installed Capacity is highest in India. The power installed capacity is 11,134 MW. During the last 3 years the capacity addition of 2080 MW is highest in the Country. The state achieved highest Plant Load Factor of 89.7% in the country. Andhra Pradesh is consistently strong in the power sector in India due to advantageous mix of Thermal, Hydro and Gas power

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general. Availability of huge resources of Natural Gas, Coal and perennial rivers with good monsoons are the major advantages for the power generation in the State.

HUGE GAS FINDINGS IN KRISHNA-GODAVARI BASIN
Reliance Industries Limited (RIL) struck 9 trillion cubic feet (tcft) of gas reserves in Krishna Godavari basin which was found the biggest gas find in the country constituting 50% in the country. RIL is proposed to produce 40 MMSCMD gas for the next 20 years.

WORLD CLASS INFRASTRUCTURE
Hyderabad International Airport is the first green field Airport in the country. It is being designed to handle 12 million passengers per annum with 4.2 Kms run way, the longest in the country. The project is in the area of 5,400 acres of land in Shamshabad, which about 20 Kms from the existing Hyderabad Airport with the project cost of Rs 2283 crores and scheduled to completed by 2008.

PORT
Visakhapatnam Port is a prestigious major port in the country for its largest cargo handling of more than 60 million tons per annum. Kakinada deep sea water Port in East Godavari District is a state port which is presently reducing the cargo load of Visakhapatnam. The port can handle 10 million tonnes of cargo. The upcoming Gangavaram port which is 15 kms from Visakhapatnam port to handle 35 MTPA will be the deepest port in the country scheduled its operations in 2008. Krishnapatnam port in Nellore District is a Rs 1,432 crore project has commenced its operations in 2008 committed to export 14 million tons per annum. All minor ports of Andhra Pradesh handle 15 million tonnes of cargo which is 2nd highest cargo handling state in India. The state has planned to develop ports in the State to handle 173 million tons of cargo in the next 15 years.

ROAD
The State has an excellent road network with backbone of 4-lane roads. All industrially developed areas are well connected with National Highways / State Highways. Andhra Pradesh has 1,78,747 Kms Roads out of which the length of National Highways is 4,014 Kms and State Highways is 8,763 Kms. Road network of Andhra Pradesh is very large and connects all small villages in the State. Golden corridor project of Government of India covered 1014 Kms of NH - 5 in the State

RAILWAY
Secunderabad is the Head Quarters for the South Central Railway network and covers a railway network of 4752 Kms in the State and surroundings. Numbers of Super fast Trains are operated

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to all major metro cities in the country. 3754 Kms of Broad Guage, 508 Kms of Meter Guage and total 748 Railway Stations are covered in the state railway network.

EDUCATION
AP is home to many specialized and internationally renowned academic institutions like Indian School of Business (set up in collaboration with Kellog Institute, USA), producing World-Class management graduates. The Administrative Staff College of India has been India¶s oldest advanced management training institute for senior managers in reputed companies and senior bureaucrats in the Government. The other prestigious institutions are National Institute of Fashion Technology, National School of Law, and International Institute of Information Technology.

TOURISM
Andhra Pradesh is the best tourist place. There are number of tourist places in the state covering historical structures, Heritage & Culture, Arts & Crafts, Cuisine, Fairs and Festivals which include  Hyderabad - Charminar, Golconda, Salarjung Museum, Ramoji film City, Hitec City, and NTR Gardens etc.  Visakhapatnam -Rishi Konda, Bhimunipatnam, Kailasagiri, Arakuvalley, Borra Caves, Simhachalam  Chittoor - Tirumala Tirupati Devasthanam, Chandragiri Fort, Srikalahasthi, Horsley Hills  Ananthapur - Sri Satya Saibaba Institutes, Lepakshi  Guntur and Krishna Districts -Nagarjunasagar Dam, Nagarjuna Konda,Ethipothala Waterfalls, Amaravathi,Krishna Barriage  Warangal ± Kakatiya Fort, Thousand Pillar Temple, Ramappa Temple  Kurnool ± Belum Caves, Srisailam Due to the continuous efforts of the Government in promoting the tourism sector in the state, domestic tourist arrivals have significantly increased from 63.3 million in 2002 to 84.9 million in 2004, similarly, the International Tourist arrivals also increased from 2.10 lakhs in2002 to 5.01 lakhs in 2004.

INDUSTRY
AP is home to many large Public and Private Sector companies manufacturing diverse products like ship building, fertilizers, Hi-precision machine tools, drugs and pharmaceuticals, cement, paper, large power generating equipment, electronic hardware, long range missiles, castings & forgings, defense electronics etc.

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RESEARCH & DEVELOPMENT
AP is home to a large number of internationally renowned civil and defense research establishments, which include Defense Metallurgical Research Laboratory, Defense Electronics Research Laboratory, Defense Research and Development Laboratory, Indian Instt. of Chemical Technology, Centre for Cellular and Molecular Biology, Central Institute of Plastic Engineering Technology, National Remote Sensing Agency, National Geo-physical Research Institute, Centre for DNA Fingerprint, Central Institute of Tool Design, ICRISAT, National Institute of Nutrition, Nuclear Fuel Complex. AP is perhaps the only state in the country in post independence India to have consciously developed local technocrat entrepreneurial base and with this support only that large Public Sector Units like BHEL, HMT, HAL, MIDHANI, BDL, BEL, HCL, Praga Tools, VSP, BHPV, IPCL etc. could build up their ancillary (vendor) network.

SPECIALIZED INDUSTRIAL PARKS
Government of Andhra Pradesh has promoted specialized industrial parks on sector basis. ICICI Knowledge Park, Apparel Park, Hardware Park, Hitec Cityin two Phases, Jawaharlal Nehru Pharma Park, Biotech Park, Export Promotion Industrial Park, Exclusive industrial estate for the AP Women Entrepreneurs, Auto Park, IT Parks, Food Processing Park and Leather Park. In addition to the above, Government of AP is promoting Special Economic Zone in Visakhapatnam and Kakinada, Mega Industrial Chemical Estate in Visakhapatnam, IT Parks in Hyderabad, Visakhapatnam, Warangal and Vijayawada, Gems & Jewellery Park in Hyderabad, Leather Parks and Apparel Parks across the state. Andhra Pradesh is a home for 3680 large and Medium Enterprises with an investment of Rs 53,339 crores and1,47,217 Small Enterprises with an investment of Rs 5,098 crores. The exports from the state are growing at a rate of 20% annually.

INVESTOR FRIENDLY INDUSTRIAL INVESTMENT PROMOTION POLICY
In order to promote investments in the state, Government of Andhra Pradesh has announced vibrant industrial and investment promotion policy 2005-2010 covering various fiscal and nonfiscal incentives including y y y y y Providing infrastructure at the doorstep of the industry Reimbursement of power @ Rs 0.75 per unit for eligible industries and Rs 1.00 per unit for eligible food processing industries Reimbursement of 25% of the VAT paid by the industry for a period of 5 years 100% stamp duty exemption for the registration of land & building / leased property for industrial use Tailor made benefits for the mega projects with investment above Rs 100 crores depending on the nature of project and creation of employment.
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With all the efforts and initiatives of the Government and based on the availability of the resources, large industrial base and infrastructure in the State could attract investments proposals of Rs 1,96,364 crores since August 1991 and ranks 3rd in the country. Government of Andhra Pradesh was very keen and committed in creation of world-class infrastructure, framing investor friendly policies, simplifying the laws, rules, procedures and documentation for making Andhra Pradesh the foremost-industrialized state in the country. Andhra Pradesh becomes the best state for the investments. Government of Andhra Pradesh appeal to all the investors to investment in the state as the banking system in the state/country is flush with funds and no dearth of funding for a right project. Capital markets are booming and the rupee has been appreciating against dollar. It is the right time for the investor to invest in AP.

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ANDHRA PRADESH ± MACRO AGGREGATES

ANDHRA PRADESH WILL BE A $300 BILLION ECONOMY BY THE YEAR-END 2010

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GSDP at current prices of 1993 - 94
250000 200000 150000 100000 50000 0 2000-01 2001-02 Secondary 2002-03 Primary 2003-04 Territory 2004-05 GSDP 2005-06

Fast growing per capita income
30000 25000 20000 15000 10000 5000 0 2001-02 2002-03 2003-04 2004-05 2005-08

Growth of per capita income enhanced the purchasing capacity

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Fast growing manufacturing sector
30000 20000 10000 0 2001-02 2002-03 2003-04 2004-05 2005-06

Strong Manufacturing Sectors 
   Pharmaceuticals & Bulk Drugs Food & Agro Processing Industries Biotechnology Iron & Steel, Paper, Cement, Sugar, Cotton Spinning, Textile, Granite, Fertilizers & Chemicals, Hitech manufacturing, Engineering, Electrical & Ceramics  IT / Hardware

Population
100 80 60 40 20 0 1971 1981 1991 2001 2005

Large population is a best size of potential market
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ANDHRA PRADESH RESOURCES

Andhra Pradesh is the leading producer of Agriculture / Horticulture crops

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RESOURCES
Andhra Pradesh is endowed with bountiful natural resources with good soil and a diversified cropping pattern. The State is rightly called ³A RIVER STATE¶ as it is blessed with major river system like Godavari, Krishna, Pennar, Vamsadhara and 36 others. The major irrigation systems are fed by these rivers. Andhra Pradesh is primarily an agro based state and employs 65 % of the state¶s population. It has about 115.32 lakh operational land holdings out of which 94.41 lakh are marginal farmers and 25.18lakh are Small farmers. The average size of land holding is 1.25 hect. Around 15 percent (average contribution) of AP¶s GDP comes from agriculture. The state enjoys a position of prominence in respect of crop production. The State¶s water share of dependable flow at 75% is estimated at 2,746 TMC. This beaks up into 1480 TMC from the Godavari River system, 811 TMC from the Krishna, 98 TMC from Pennar and the rest from other rivers. Entire dependable water from Krishna River is harnessed through construction of several reservoirs and barrages. Yield from Godavari River being utilized to 720 TMC and surplus flow aggregating to an average of 3000 TMC are flowing into the sea. Total utilization of river yields is works out to 1700 TMC only and thus there is vast scope of tapping water resources for creating irrigation potential. Andhra Pradesh ranks first in productivity of crops like coarse cereals, Jowar, Maize and Bengal gram. Andhra Pradesh ranks 2nd in producing Value Added food products and beverages with country 10% share. Per worker output in the food-processing sector in Andhra Pradesh is very high The state is very strong in the crops like Cotton, Rice, Groundnut, Pulses and Bajra. Andhra Pradesh has the diverse agro climatic conditions in different parts of the state are conducive to growing all kinds of tropical and sub-tropical fruits and vegetables. Andhra Pradesh is one of the more progressive states with farmers adapting quickly to modern and innovative practices to improve productivity. The state ranks 3rd in production and productivity of paddy. Economy of the AP continues to be predominantly agrarian. The dependence of rural labor force on agriculture and allied activities is quite evident and is likely to continue on the same in the near future. Apart from direct impact of agricultural growth on generation of rural employment and incomes its significant secondary linkages with the development of rural non-farm sectors are more crucial. Trade in agricultural outputs and inputs and services required by it and processing of its products open up additional and more significant avenues for labor absorption. Andhra Pradesh being an important producer of Groundnut, Cotton, Chillies, Sugarcane etc., and quite a number of Horticultural crops, such secondary linkages of agriculture assume added
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importance to its rural economy, more so now in the context of new Agricultural Policy initiatives taken up by the Government. New investments in the sector focus on producing fruit concentrates and pulp, Vegetable purees, pastes and powers, frozen fruits and vegetables, dehydrated products, oleoresins and cold chains. Palm cultivation and oil processing plants are already coming up capitalizing on the warm, humid conditions in the villages close to the coast. Owing to a good seasonal rainfall received copiously across all districts, agricultural operation could take place in a record area. The area sown under Food grains have increased to 70.20 lakh hectares with production of 151.51 lakh tones. Andhra Pradesh ranks first in the productivity of crops like coarse cereals, Jowar, Maize and Bengal gram. The gross area irrigated in the Stated increased to 50 lakh hectares, the major share of irrigated area under wells accounts 51.40% followed by canals34.7% and by tanks by 10.3%. Andhra Pradesh ranks 1st in area, production and productivity of oil palm development. An area of 4.10 lakh hectares has been identified as potential for oil palm cultivation in 11 districts in the state. The State is pioneer in Oil palm cultivation 4.1 lakh hectares The State is 1st in sheep production The State ranks 1st in area and production in Mango, Oil palm, Chillies and turmeric The State ranks 1st in egg (1,505 crores p.a) and broiler production The state is implementing various schemes with main thrust on fruits & plantation crops, hybrid vegetable and seed distribution, floriculture under controlled conditions, spices & condiments, medicinal & aromatic plants, mushroom cultivation, precision farming, tissue culture, leaf analysis etc. The activities include area expansion, training on latest technologies, pre and post harvest trainings, Special emphasis on oil palm development. Cashew is being encourages with high yielding grafts and strains /selections. Cashew is a dollar-earning crop, hence the cultivation promoted in an area of 706 hectares. Andhra Pradesh holds 1st rank in Chillies and Turmeric in area, production and productivity. Considerable increase in productivity of spices has been reported in research stations. The need of the hours is effective transfer of technology to progressive farmers. Floriculture sector has been identified as most focused segment of Horticulture. It is proposed to set up 8 units of green / policy houses of 560 sq. meters for production high value flowers like carnations, gerbera, anthurium etc. under controlled conditions with an object to explore the export potential. It was also proposed to set up 1269 units for production of chrysanthemum, jasmine, rose and marigold in bulk and as loose flowers.

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The State ranks 1st in production  2nd in area and production in of brackish water shrimp and Citrus and Coriander fresh water prawn  2nd in productivity and  2nd in production of fresh water production of cotton fish  1st in paper production with 5.2  2nd longest coastline of 974 kms lakh tones per annum Andhra Pradesh is the Horticulture bowl of India with enterprising farming community, varied agro climatic zones, variety of soils coupled with endemic irrigation sources; the State is a front running producer of variety of fruits, vegetables. Horticulture crop is the besting means for crop diversification and improving productivity and returns, nutritional security, employment opportunities raw material for agro processing industries. The state could be the most preferred destination to register healthy growth in food processing industry driven mainly by export demand in the next 10 years. The area under horticulture is 16 lakh hectares with an annual production of 130 lakh tonnes and 1200 million coconuts. AP hold 2nd in citrus and coriander, 3rd in cashew, 4th in flowers and 5th in grapes, banana, ginger and guava.

AGRICULTURE TECHNOLOGY MISSION
In order to bring Agriculture and allied activities under one umbrella, Government have set up Agriculture Technology Mission under the Chairmanship of Chief Minister.

AGRI EXPORT ZONES
Governments of India and Govt. of AP have jointly set up 4 Agri Export Zones in the state to boost exports and encourage in private investment. Zone Chittoor Vijayawada RR, Medak and Mehboobnagar Mehboobnagar, Rangareddy, Medak, Warangal, Anantapur and Nalgonda Crop Mango pulp and vegetables Mango Mango and grapes Gherkins

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MEAT, POULTRY & EGG
Animal Husbandry is one of the rapid expanding sectors playing a significant role in the rural economy by providing gainful employment to a large number of small / marginal farmers and agricultural laborers and raising their economic status. Livestock sector contributes 7.27% to GSDP. Andhra Pradesh has the distinction of much diversified livestock resources in seven agro climatic zones with different production systems. Live stock farming is one of the most sustainable and dependable livelihoods as an alternative to their dependable resources in rural areas. Over the past 50 years, the state has undergone a metamorphic change and emerged as a pioneer in the livestock and poultry production. Poultry farming in AP is most dynamic and fastest growing. The annual milk production is 72.57 lakh metric tons and state stand 4th position in the country.. The state is known as egg basket of the India with an annual production of 1,505 crore eggs. It stands 1st position. It also stands 1st position in sheep population and 5.31 lakh families are being benefited from the sheep sector. Government has helped in channelizing all efforts and resources for a common goal to reach self-sustainable.AP has achieved significant growth in the areas of livestock breeding, health care, fodder management, small ruminant development, poultry production and human resources development. 4th in area and production in flowers 4th in productivity of pulses and groundnuts 4th in the milk production ( 72.57 lakh MT) 5th in area and production in grapes, banana, ginger and guava 5th in production of marine fish and shrimp

FISHERIES
Andhra Pradesh ranks 1st in India in production of brackish water shrimp and fresh water prawn, 2nd in production of fresh water fish and 5th in production of marine fish and shrimp. Nearly 10 lakh tonnes of fish / prawn per annum is produced. The state is contributing about Rs 2,500 crores by way of marine export which is nearly 40% of the marine export from India. The fisheries sector is providing direct and indirect employment to over 14 lakh people, especially in the rural areas.

FORESTRY
Forest development activities commenced on a really big scale in Andhra Pradesh. Forestry programmes involve the raising of economic plantations and quick growing species, large areas of mixed deciduous forests of poor quality were cleared and planted with Teak, Eucalyptus and Bamboo and more recently high yielding varieties of Cashew are being planted on a large scale.

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Species Teak Eucalyptus Cashrina Cashew Red sander Sandal wood Coffee Bamboo Misc. Avenue plantation

Area planted hectares 1,09,610 77,204 29,413 21,745 2,791 2,872 142 44,109 3,01,069 11,732

WATER
India¶s first Industrial Water Supply Scheme was implemented in Visakhaptnam. Government of Andhra Pradesh, sensing the critical need of a reliable source of water supply to cater to the upcoming projects, commissioned the APIIC to augment and implement the Visakhapatnam Industrial Water Supply Project (VIWSP) on a commercial format. The US $ 144 million VIWSP facilitates bulk supply of 385 million liters per day of water from river Godavari to be conveyed through a 56 km long pipeline and 153 km long Yeleru left main canal. The State has earmarked allocation of 5 TMC water each from the Yeluru reservoir and Godavari river water for industrial use. Yeleru Left Bank Canal presently supplies water to Visakhapatnam Steel Plant, NTPC. A special purpose vehicle, the Visakhapatnam Industrial Water Supply Company (VISCO) has been formed to design, construct, operate and maintain the project facilities on a BOOT basis. L&T and ECC Group of Chennai have completed the 56 km pipeline to pump 5 TMC of water from river Godavari into Yelueru main Canal. Government of AP issued orders that 10% of water should be reserved for the industrial use in all irrigation projects in the State.
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Technical education is one the priority sector of the Government as it aimed to generate quality technical manpower with profound knowledge and skill to ensure building culture and ultimately to ensure efficiency and productivity. Skilled manpower is expected to be globally competitive. Keeping the growing industry, Government has set up adequate no. of technical institutions and related courses.

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MINERAL STRENGTHS1st in granite reserves in the country 1st in production and promoting various colors of lime stone slabs for flooring 2nd largest store house of mineral resources in India 2nd in value of mineral production - 9-10% of country s mineralrevenue. 2nd largest Bauxite deposits in the country 2nd in occurrence of uranium deposits in the country 2nd longest coastline of 974 kms rich beach sand resources 2nd largest producer of cement 59 plants with 23 million tones p.a. World s largest single deposit of Barites in Kadapa

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COAL Andhra Pradesh is the only producer of Coal in the entire South India. It produces around 35 MT annually. The estimated reserves are around 16,694 MT. Major coal bearing areas fall in Adilabad, Karimnagar, Khammam and Warangal districts. LIME STONE The state contains 34% of the country¶s limestone reserves with estimated reserves of 35,220 MT and produces about 25,000 MT. Extensively occur in Nalgonda, Kadapa, Kurnool, Anantapur, Mahabubnagar, Rangareddy, Adilabad, Karimnagar, Krishna and Guntur Districts. At present there 14 major and 29 mini cement plants producing about 18 MT which forms largest cement producing states in the country. AP promoting various colors of limestone slabs for flooring and there are more than 2,000 limestone slab cutting and polishing units. URANIUM Occurs in Nalgonda, Mahabubnagar, Kadapa, Kurnool and Guntur District. AP has a very good scope for producing Uranium for establishment of Atomic Power plant. NEW URANIUM MINING PROJECTS The proposed new uranium project by Uranium Corporation of India Limited (UCIL) proposes to set up the processing plants for new mines in the state of Andhra Pradesh. Project details Region Andhra Pradesh Location Nalgonda Investment Rs1,030 crores Total area 879 hectares The proposed plant can extract 30,000 tonnes ore per day for 30 years. BAUXITE Huge reserves of around 613 MT of metal grade bauxite deposit were proven in Visakhpatnam and East Godavari District. There is a scope for establishing 2-3 Alumina and Aluminum projects in the State. MARBLE In Khammam, Guntur, Kadapa, Anantapur & Kurnool districts. CERAMICS Largest sources various clays, Feldspar, Quartz, Silica sand, Rare Earths like Titanites, Zirconites in Rangareddy, Mahabubnagar, Nellore, Kadapa, Kurnool, Medak, Anantapur, Nalgonda, Vizianagar, Visakhapatnam and Guntur districts.

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DIAMONDS In about 50,000 sq. km with incidence of 3-4 carats / 100 tones in Anantapur, Kurnool, Nalgonda, Mahabubnagar, Krishna and Khammam districts. GOLD In Chittoor, Anantapur,Kadapa, Kurnool, Mahabubnagar ± incidents of 3-5 gms / tonne

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ANDHRA PRADESH GROWTH SECTORS

FOOD AND AGRO PROCESSING PHARMA AND BULK DRUGS MARINE SECTOR HANDICRAFTS IT SECTOR

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FOOD & AGRO PROCESSING
GLOBAL SNAPSHOT
Global food product industry generated total revenues of USD 2675.7 billion in 2006 

The global food product industry grew by 3.1% in 2006 to reach a value of USD 2675.7 billion and a growth of 17.2% is projected in 2011 achieving a value of USD 3,137.2 billion  Revenues from sale of food products dominate the industry generating 63.60% of the global market value  Europe is the highest contributing region in the global industry value with a share of 38.20% followed by Asia-Pacific region  Major players in the industry include Altria group, PepsiCo, The Coca-Cola Company, British American Tobacco, Cadbury among others  Global food, beverage and tobacco industry will continue to grow, with major contribution from developing countries such as India and China Global food processing industry snapshot Market segmentation as per geography Geography Asia ± Pacific Europe US Rest of the world % share 31.20% 38.20% 20.10% 10.50%

Market segmentation of global food products
31.7; 32% 0; 0% 0; 0% packaged food and meats agriculture products 68.3; 68%

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INDIAN SCENARIO
y y y The agricultural food industry of India contributes nearly 35% of country¶s GDP and employs around 65% of the population India is the world¶s second largest producer of food next to China India is: o World¶s largest producer of cereals and milk o Largest producer of Cotton o Largest producer of fish o Largest producer of Psylium husk o 2nd largest producer of rice, wheat, sugar, fruits and vegetables The food grain output grew by 4.6 percent with total production of 227.32 MT in 200708 The food processing industry in India ranks fifth in size, growing at 7% annually India consumes about USD 200 billion worth of food products, 53% of which is processed food

y y y

India agriculture facts Crop Production (2006-07) Mn tonnes 216.13 148.18 227.00 345.31 Growth over 2005-06 4% 5% 23% 23%

Food Grains Oilseeds Cotton Sugarcane

India food processing industry

Food processing USD 69.4 billion

Fruits & vegetables

Grain processing

Primary processing USD 47.2 billion Value added processing USD 22.2 billion

Fish processing

Meat and poultry processing

Milk processing

Beverages 29

India is among the world¶s major producer of food, producing over 600 million tons of food products every year. India ranks first in the world in production of cereals, livestock population and milk. It is the second largest fruit and vegetable producer and is among the top five producers of Rice, Wheat, Groundnuts, Tea, Coffee, Tobacco, Spices, Sugar, and Oilseeds. Food processing industry includes fruit and vegetable processing, fish processing, milk processing, meat and poultry processing, packaged/convenience foods, alcoholic beverages and soft drinks and grain processing. Milk processed foods like chocolates and ice creams were much in demand in India. Agri products like coconut has multiple values in the market from coconut water to oil, fiber and leaves are economically valuable. The agricultural sector¶s performance has direct impact on the processing industry and its exports. The raw agricultural and horticultural yield into human consumption is called processed foods such as fruit jam, jelly, milk products. The performance of the Agri-processed foods industry essentially depends upon the general performance of the economy and the performance of agriculture and industry sectors in particular. The processed foods are slowly capturing the rural market also. In urban areas the processed foods become one of essential items due to change of life style and long working hours, many urban families are depending upon these processed ready to eat foods. The market is growing considerably due to rapid urbanization. It is expected to continue to some more years. The government support for processed food industry by reduction of excise duty from 16% to8% on ready to eat packaged foods and instant food mixes. Import duty reduction from 15% to 5% on processed food packaging machines. Special window in NABARD for refinancing infrastructure and market development of processed foods industry, proposed 100% excise duty exemption for condensed milk, ice cream, preparations of meat, fish & poultry, pectin, pasta and yeast industry.

ANDHRA PRADESH SCENARIO
Around 19 percent (average contribution) of AP¶s GDP comes from agriculture and it provides employment to around 65 per cent of the state¶s population. The state enjoys apposition of preeminence in respect of crop production. Andhra Pradesh is endowed with bountiful natural resources with good soil and a diversified cropping pattern. The edge comes from major irrigation systems fed by rivers like Godavari, Krishna, Thungabhadra, Penna, Nagavali, Vamsadhara etc. Agriculture in the State has made rapid strides taking the annual food grains production from 56.20 lakh tons in 1955-56 to 160.28 lakh tons in 2000-01. The new emphasis on agriculture will be on identifying and developing sectors with high potential for growth; building strong agro based industries, developing agriculture in rain-fed areas; and spurring growth through policy reforms. The major growth engine in agriculture, rice, is a large contributor to Andhra Pradesh¶s economy (Contributing a quarter of agricultural GSDP) that even small improvements in the sector will create a large impact. Since rice growing is the primary occupation of a large proportion of the state¶s agricultural labor, its further development will increase rural incomes and reduce poverty. To achieve this vision, the State of Andhra

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Pradesh will aggressively pursue strong agricultural growth, including employment generation, and target levels of investment needed. Andhra Pradesh is the second largest producer of horticulture products in India and it is expected that the production will reach 22.90 million tonnes by the year 2020. The State¶s 970 kilometer coastline, 8,577 kilometer river length and 102 reservoirs spread over an area of 2.34 lakh hectare have been the principal sources of its marine foods, fresh water foods, including fish and prawn. Andhra Pradesh is the largest egg producer in India. As per the Agro Climatic Zones the following Major Crops are grown in Andhra Pradesh.

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S.No 1

Resources Mango, Coconut, Cashew, Oil Palm, Bhendi, Chillies, Mushrooms, etc. Mango, Banana, Cashew, Coconut, Oil Palm, Tapioca, Sweet Potato etc. Mango, Oranges, Acid Lime, Banana Oil Palm, Coconut, Potato, Flowers, Coriander, Tamarind, etc. Mango, Oranges, Guava, papaya, Flowers, Chillies, Turmeric, Coriander, etc. Grapes, Guava, papaya, Oranges, Acid Lime, Tomato, Flowers, Chillies etc. Mango, Oranges, Banana, Guava, Pomegranate, Bhendi, Tomato, Onion, Flowers, Chillies, Turmeric.

Districts Krishna, East Godavari& West Godavari

2

Srikakulam, Vizianagaram & Vizag Chittoor, Prakasam& Anantapur

3

4

Nizamabad, Karimnagar & Adilabad Medak, Rangareddy& Mahabubnagar Kadapa, Kurnool & Anantapur

5

6

7

Pine Apple, Black Pepper, Hill High Altitude Tribal Areas Banana, Guava, Mango, Cole Crops, Tomato, Aromatic Plants.

GROWTH
The state has about Rs 5,000 crores investment in the food processing sector contributing 20% of the total existing investments in the state. The annual production in this sector is about Rs.9260 crores contributing 20% of the total industrial production in the state. .Agriculture will experience a quantum leap in growth, achieving an average annual growth rate of 6 per cent in real terms over the next 20 years.

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STRENGTHS FOR PROMOTION OF FOOD AND AGRO PROCESSING INDUSTRY
Andhra Pradesh ranks first in productivity of crops like coarse cereals, Jowar, Maize and Bengal gram.  Andhra Pradesh ranks 2nd in producing Value Added food products and beverages with country 10% share. Per worker output in the food -processing sector in Andhra Pradesh is very high.  The State is pioneer in Oil palm cultivation ± 4.1 lakh hectares  The State is 1st in sheep production  The State ranks 1st in area and production in Mango, Oil palm, Chillies and turmeric  The State ranks 1st in egg (1,505 crores p.a) and broiler production  The State ranks 1st in production of brackish water shrimp and fresh water prawn  2nd in production of fresh water fish  2nd longest coastline of 974 kms  2nd in area and production in Citrus and  The state is very strong in the corps like Rice, Groundnut, Pulses and Bajra. The industries in food products contribute 19.36 per cent to total industrial production in the state. The major segments in the Food & Agro Processing sector are - Rice Mills, Sugar, Dal Mills, Diary units, Milk Products & Confectioneries, Palm Oil and other Oil Mills, Biscuits, Mushrooms, Cold Storages. The state has about Rs 5,000 crores investment in the food processing sector contributing 20% of the total existing investments in the state. The annual production in this sector is about Rs.9260 crores contributing 20% of the total industrial production in the state.

INVESTMENT
Achieving the growth envisaged for the agricultural sector will require significant investment. The State will need promote investment around Rs.70,000 crore until 2010, while the total investment until 2020 will be roughly Rs.1,60,000 crore. Policy Support - The Government provides reimbursement of power costs @ Rs.1 per unit up to 2010.

AGRO PROCESSING - AGRO PROCESSING HAS AVENUES IN:
Rice : Value addition in rice based products like rice flakes, puffed rice, rice noodles, rice cakes, fermented products, bakery products etc. · Rice beverages, rice barren oil. · IICT has developed technologies for value-added products. · FAO declared 2003 as ³International year of Rice´ recognizing the importance of rice in the food basket.
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Maize: The requirement of maize by the major consuming agency i.e. poultry is around 15 lakh MT and is to be exported outside the state. · To avoid exploitation by traders, processing of maize can be promoted in starch making, maize granules etc. on the lines of Karnataka which has a separate body called ³CORNFED´. · Ethanol made from maize is being blended with petrol and provides scope for utilizing the marketable surplus in the state. Jowar: Similarly from Jowar, alcohol can be extracted and made use of efficiently.

INDIAN EXPORTS IN AGRI PRODUCTS
Pulses (Dals), Lentils, Peas, Beans, Flours Moong Dal Yellow Chora Dal Chick Peas-Kabuli White Peas Prepacked Dals Prepacked Gramflour Moong Split Urid Dal White Urid Whole Chana Dal Best Bold Gram FlourSuperfine Masoor Whole Polished Toor Dal Plain Dry Green Chana Indian Black Chana Red Mung(Cow Beans) Kala Vatana Peas White Peas White Beans Yellow split Lentils Black Eye Bens White Sorghum Bajra (Millet) Peanut Sesame seed Moong Whole Urid Dal Split Moth Dal Chana Dal Grinding Quality Red Split Lentils Toor Dal Oily Madhi Val Dal Jumbo Kala Mosambi Chana Moth Whole Red Kidney Beans Green Peas Chick Peas Kabuli Prepacked Dals -- Airavat Brand

Ground & Whole Spices Turmeric Powder Coriander Powder Chilly Powder Mango Powder Pizza Chilly Powder Cumin Seeds (Jeera) Fenugreek Seeds (Methi) Corriander Seeds Black Pepper Whole

Cumin Powder Madras Curry Powder Black Pepper Powder Garam Masala Dhanajeera Powder Fennel Seed Green Ajwain Seeds Dry Ginger Whole Black Cardamom
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Tamarind Anardana Whole Aserio Seeds Red Chilly Whole Yellow Mustard Seed Kolinjan Roots Gum Arabica Mustard Oil Hulled melon Seed (Ek Magaz) Rajgira Powder White Khatta Whole Dry Amla Mustard Powder Fenugreek Powder

Cinnamon Stick Charoli Bay Leaves Singora Flour Chilly Whole Peanut Oil Mustard Seed Sesame Oil Phylliam Husk (Isabgol) Pure Ghee Cloves Coconut Slices / Half Cut Dry Vegetables

Poha / Mamra / Roasted Gram / Indian Jaggery / Rice Roasted Gram With Skin Poha Thin (Nylon Poha) Roasted Gram Whole Poha Thick (Medium) Mahabaleshwar Roasted Gram Mamra (Puffed Rice) Prepacked Rice - Airavat Brand Jaggerry (Goor) Surti Kolam Rice Basmati Rice Sugar Crystals Par Boiled Rice Sooji Sago Seed Corn Flakes Jaggery Cubes Biscuits, Nourishing Foods and Food Supplements - Biscuits - All types - Food supplements - All types Papads & Papadoms Madras Papadoms Papad Potato Wafers Saboodana Papads/Wafers Khicha Papad - Garlic / Plain Khicha Papad -Green Chilly Alu Papad Masala / White Alu Wafer Sago Jalebi Color Papad Rice Papad Dhamta Papad Color Frymes (just fry and eat - tasty and crunchy)- FAR FAR Blended Spices (Masala)/ Powders Biryani Pulao Masala Tea Masala

Garam Masala Chat Masala
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Chana Masala Madras Rasam Powder Pav Bhaji Masala Chat Masala Rajwadi Garam Masala Tomato Rasam Ginger Powder Jaljira / Jiralu Powder Curd Chillies Vadams Tea, Tea Bags & Cofee - All kind Assam Leaf Tea - Tea Bags - Instant Tea Pouches - Prepacked Tea & Cofee

Madras Sambhar Powder Anardana Powder Sambar Powder Rasam Powder Undhiu Masala Punjabi Chhole Masala Panipuri Masala Rice Puliyodharaimix Idli Milagai Podi Vathal Kujambu Paste

Canned Vegetables, Mango Pulp, Mango Chutney, Pickles Karela In Brine Okra In Brine Suran In Brine Punjabi Tinda In Brine Papadi Lilva In Brine Drumstick In Brine Patra Curried Tuver In Brine Alphanso Mango Pulp Undhiu Curried Sweet Mango Chutney Kesar Mango Pulp Garlic Pickle Mango Pickle Lime Pickle Mix Pickle Amla Pickle All kind Pickles Tomato Sauce Chilly Pickle Gujrati Pickle Soup Pouches Pickle in Drums Punjabi Pickle Gulabjamun in Tin Rasgulla in Tin Packed Instant Foods Wafers, Namkeen & Farsan & Fried Dals Chaat Noodles Masala Noodles Soup Pouches Imli Sauce Chilly Garlic Sauce Hot Sweet Sauce Tomato Sauce Vermicelli & Sevai Bhel Mix Panipuri Rounds Instant Foods & Other Food Preparation
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Idli Mix Gulabjamun Mix Vada Mix Sambhar Mix Rava Dosa Mix Ice Cream Mix Icing Sugar Basundi Mix Kulfi Mix Badam Beverage Citric Acid

Dosa Mix Pakora Mix Khaman Dhokla Mix Rava Idli Mix Jilebi Mix Custard Powder Baking Powder Instant China Grass Jelly Crystals Falooda Mix Thandai Masala Mix

Wafers & Namkeen & Farsan & Fried Dals & Snacks -Foil Packed Masala Potato Wafers Special Potato Wafers Yellow Banana Wafers Plain Sev Special Kachori Makai Chivda Mini Bhakarwadi Methi Gathia Chana Dal Fried Mix Farsan Kabuli Chana Fried Moong Dal Fried Panipuri Gol gappa Bhujia / Sev Beetalnut & Mukhwas(Mouth Freshner) Supari Pouches Manglori Fadcha(Half Cut) Green /Red - Mukhwas (Mouth Freshner) Manglori Chhil(Slices) Salli Supari Handmade Tukda White(Pieces) Scented Supari/Mysore Supari Tukda Whole Round Beetalnut Chamcham Mukhwas Calcutta Mukhwas Manpasand Mukhwas Poona Mukhwas Lukhnow Mukhwas Salli Mukhwas Gujrati Mukhwas Variali Churi Mukhwas Rainbow Til Disco Mukhwas Orange Candy Sweet Candy Agarbatti (Incense Sticks) /Pooja / Lagna Samgri Lagna Samgri Pooja Samgri 4 in 1 Agarbatti 3 in 1 Agarbatti Kevda Agarbatti Jasmine Agarbatti Rose Agarbatti Mogra Agarbatti Levender Agarbatti Sandal Agarbatti Camphor Special Agarbatti
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EXPORTS OF THE STATE
Andhra Pradesh has emerged as one of the progressive and dynamic states in the country because of its policies towards development of a sound infrastructure under stable political environment and visionary leadership.AP share in all India exports is estimated relatively moderate level of 5 %. y y y y y y y y y y y y y y y y y y y y y Agro based industries Engineering sectors (including softwares) Drugs/pharma and chemical industries together accounting for 3/4th of total exports. Agriculture and agro products, processed foods Engineering items including software Leather ,animal and marine products Chemicals , pharmaceuticals and allied products Mineral and mineral products Handlooms ,textiles, including cotton yarn Handicrafts Rice -------> Bangladesh,S.Korea,USA, Dubai,Srilanka Unmanufactured tobacco -------> Russia,Belgium,Italy Cashew -------> UK,Dubai Molasses -------> Russia Sunflower extraction -------> Germany,Switzerland Soya bean extraction -------> Singapore,Malaysia,china Mango pulp -------> S Arabia,Kuwait,Qatar,UAE Castor oil -------> Kuwait,Thailand Wheat------->UK,Iran Pickles -------> US, S Arabia,UAE,Kuwait Chillies -------> UK, Netherlands, USA, Sri Lanka, Bangladesh, the Middle East and the Far East, Nepal, Mexico, Canada, Saudi Arabia, Singapore, Malaysia and Germany.

AGRI EXPORT ZONE
Rice: There is scope for establishing an Agri Export Zone (AEZ) for Rice in East Godavari and West Godavari. · Price-wise AP can compete with several other countries. · Higher Nutrient content of certain varieties like brown rice, purple and black varieties are preferred in many developed countries and can also be promoted in developing countries. · The main focus for Andhra Pradesh is on Non- Basmati rice varieties, which include Sona Masuri, Samba Masuri, HR-47, IR-64, Krishnaveni and Kavya.

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Objective In a fast changing International Trade Environment, with a view to providing remunerative return to the farmers¶ community in a sustained manner, efforts will be made to provide improved access to the produce / products of the agriculture and allied sectors in the International markets by setting up Agri Export Zones. The AEZ is expected to give a focus and direction for exports of key agricultural produce with potential from the country. It involves a detailed action plan for the development of a specified geographic area /s for effecting systematically greater exports of a specific produce. Agri Export zones will be concerned with A to Z of Agri ± exports. The emphasis is on partnership on various agencies / systems and convergence of interventions of various agencies like APEDA, Ministry of Food Processing Industries (MFPI), and National Horticulture Board (NHB) etc. The focus will be on increasing exports of identified commodities. The Concept of AEZ¶s which aims to give fillip to agriculture exports, comprises the following
y y y

Identifying a potential zone based on agro-climatic requirements for a particular crop. Integrating various assistance programmes of Central and State Government agencies and providing fiscal incentives to exporters. Implementing the same through involvement of private and public partnership and integrating all the activities till the produce reaches the market.

Measures envisaged for promoting exports from such Zone 1) Financial Assistance Both central as well as state government and their agencies are providing a variety of financial assistance to various agri export related activities. These extend from providing financial assistance for training and extension, R&D, quality Up gradation, infrastructure, marketing etc. Thus whereas Central Government agencies like APEDA, NHB, Deptt of Food Processing Industries, Ministry of Agriculture provides assistance, a number of state governments have extended similar facilities. All these facilities have to be dovetailed and extended to promote agri exports from the proposed zones in a coordinated manner. 2) Fiscal Incentives The benefits under Export Promotion of Capital Goods Scheme, which were hitherto available to direct exporters, have now been extended to service exporters in the Agri Export Zones.Thus even service provided to ultimate exporters will be eligible for import of capital goods at a concessional duty for setting up common facilities. They shall fulfil their export obligation through receipt of foreign exchange from ultimate exporters who will make payments from their EEFC account.

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Exporters of value added agri products will be eligible for sourcing duty free fuel for generation of power, provided cost component of power in the ultimate product is 10% or more and the input out norms are fixed by the advance licensing committee of the DGFT. Agri Export Zone ± Hyderabad
y y y y y

It was set up to promote high quality Grapes & Mangoes. Districts covered are RangaReddy, Mahaboobnagar & Medak. The area around Hyderabad, the capital of Andhra Pradesh, has historically been the most suitable for the production of Grapes and Mangoes. The continuous belt across Ranga Reddy, Mahaboobnagar and Medak districts also have vast tracts of land suitable for cultivation of Mango and Grapes. Thomson seedless is popular among Grapes & Banginappli among Mango are being encouraged.

Most progressive farmers with their farms EurepGap Certified. Summary Details
y

y y

y

A number of activities have been suggested under the AEZ to facilitate exports, which include interventions at Farm level like appropriate agronomical practices, IPM & INM programmes, Demonstrations & Trainings, Drip, Post Harvest practices like usage of Plastic Crates, Precooling centers, Cold Storages, Pack houses and Marketing areas leading to an Integrated approach for export development. Creation of and up gradation of post harvest infrastructure required for Exports. Total project outlay is Rs 5721 lakhs over a 5-year period, with financial support from Government Agencies estimated at Rs 1542.5 lakhs and investment from Private entrepreneurs at Rs 4178.5 Lakhs. Expected to result in exports of 5500 MT of Grapes & 6000 MT over the next 5 years valued at Rs 2900 lakhs.

Progress so far:
y y y y y y y y y

State has announced the creation of an AEZ (Agri Export Zone) for Grapes & Mangoes covering the districts of RangaReddy, Mahaboobnagar & Medak. Department of Horticulture has been named as the nodal agency and an MOU in this regard was signed on 29th July 2002. Trainings of farmers have been conducted on various aspects like Pruning, INM, IPM etc post harvest aspects have been encouraged in a big way. For the year 2003-04, around 2500-3000 farmers planned to be trained. An exclusive Soil Testing Laboratory has been set up for the benefit of Farmers from AEZ. Exposure Visits have been organized for the farmers to IIP, Pack Houses. Above 30,000 plastic crates have been supplied so far. Shade net is being encouraged among Grape Growers for better quality produce. 2400 Ha of Grapes & Mango have been brought under area expansion.
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y

Buyer / Seller meets are organized for promotion of Mango Exports from the AEZ.

Exclusive Monitoring team for control of Pesticides. Agri Export Zone ± Vijayawada
y y y y y

It was set up to promote Banginapalli Mangoes from Krishna district. Banginapalli variety of Mango, rated one of the best in the world in unique to Andhra Pradesh and in particular to Krishna District. Krishna district has been traditionally a Mango growing belt with an area over 60,000 Ha. Major variety being Banginapalli, other varieties includes Collector, Chinna Rasam. Vijayawada is very well connected by road and rail to Hyderabad, Mumbai and Chennai where international airports are present.

Brief Details
y

y y

A number of activities have been suggested under the AEZ to facilitate exports, which include interventions at Farm level like appropriate agronomical practices, IPM & INM programmes, Demonstrations & Trainings, Drip, Post Harvest practices like usage of Plastic Crates, Precooling centers, Cold Storages, Pack houses and Marketing areas leading to an Integrated approach for export development. Creation of and up gradation of post harvest infrastructure required for Exports. Exclusive market yard for Mangoes at Gollapudi market yard.

Total project outlay is Rs 1790 lakhs over a 5-year period, with financial support from Government Agencies estimated at Rs 801lakhs and investment from Private entrepreneurs at Rs 989 Lakhs.
y

Expected to result in exports of 4000MT of Mangoes valued at Rs.1867 Lakhs.

Progress so far
y y y y y y y

State has announced the creation of an AEZ (Agri Export Zone) for Mango covering Krishna district. Department of Horticulture has been named as the nodal agency and an MOU in this regard was signed on 27th Sept 2002. Trainings of farmers have been conducted on various aspects like Pruning, INM, IPM etc post harvest aspects have been encouraged in a big way. For the year 2003-04, around 2500-3000 farmers planned to be trained. An exclusive Soil Testing Laboratory has been set up for the benefit of Farmers from AEZ. Exposure Visits have been organized for the farmers to IIP, Pack Houses. Above 20,000 plastic crates have been supplied so far.

Around 17 Pack Houses have been constructed in Nunna market for packing grading, washing etc with the assistance of NHB.
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Agri Export Zone - Gherkins
y y y y

y y

y

It was set up to promote export of Gherkins from Andhra Pradesh. Districts covered are RangaReddy, Mahaboobnagar, Medak, Warangal, Karimnagar, Nalgonda & Anantapur. Most suitable Soil & Climatic Conditions for cultivation of Gherkins. Complete cultivated under Contract Farming. Companies enter into arrangement with farmers providing them with Seeds, Pesticides, Fertilizers and technical assistance with assured buyback arrangement Availability of abundant and skilled labour, which is a prerequisite for Gherkin cultivation. Farmers from the AEZ have gained expertise of growing this crop several times and have acquired skills to produce exportable Gherkins to meet discerning taste of International Consumers. A DPR (Detailed Project Report) prepared by Department of Horticulture in association with M/s. Global Green co has been approved.

Brief Details:
y

y y

y

A number of activities have been suggested under the AEZ to facilitate exports, which include interventions at Farm level like appropriate agronomical practices, IPM, Drip, Crop Extension Literature, Post Harvest practices like usage of Plastic Crates, Produce Exchange Centers, Packaging Development, Cold Storages, Pack houses and Marketing areas leading to an Integrated approach for export development. Creation of and up gradation of post harvest infrastructure required for Exports. Total project outlay is Rs 2005 lakhs over a 5-year period, with financial support from Government Agencies estimated at Rs 373.5lakhs and investment from Private entrepreneurs at Rs 1631.5 Lakhs. Expected to result in exports of 88000MT of Mangoes valued at Rs.414Crores..

Progress so far:
y y y y y y

State has announced the creation of an AEZ (Agri Export Zone) for Gherkins covering RangaReddy, Mahaboobnagar, Medak, Warangal, Karimnagar, Nalgonda & Anantapur. Department of Horticulture has been named as the nodal agency and an MOU in this regard was signed on 5th May 2003. Department of Horticulture has brought out literature on package of practices for Gherkins. 10,000 Copies have been printed which are being distributed to the farmers. Drip irrigation is being encouraged in a big way. Financial assistance has been provided to the Metal Detector as requested by the Company. ISO, HACCP & Kosher certificates have been awarded for the units in Andhra Pradesh.

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SWOT ANALYSIS
STRENGTHS OF ANDHRA PRADESH AGRICULTURE IN THE CONTEXT OF EXPORT POTENTIALITIES  Stands among the top five Indian states in terms of cultivated land.  Large population mostly living in rural areas and deriving their livelihood from agriculture and allied activities.  Enterprising, receptive and hard working farmers.  Diverse soil types which facilitate cultivation of large number of crops round the year.  Strategically located in the South-central part of India with easy access to all parts of the country.  Climate is fairly congenial for a variety of agriculture and allied activities.  Second largest coast line in the country providing several gateways for international trade.  Rich natural resources  Rich livestock  Good scope for marine cultivation  Leads all other states in production of poultry.  Rich bio-diversity with respect to agriculture and horticultural crops.  Sincere support from the State Agricultural University (Acharya N. G. Ranga Agricultural University), presence of several ICAR institutes and an International Institute, ICRISAT in the areas of education, extension, research and training for the welfare of farming community. WEAKNESSES OF ANDHRA PRADESH AGRICULTURE IN THE CONTEXT OF EXPORT POTENTIALITIES            Long coast line often subjected to cyclones and storms. Comparatively high percentage of illiteracy of 66% compared to 48% of the country. About 60% of the Gross Cropped Area is under rainfed farming. Limited irrigation infrastructure. Low investment capacity of the farmers. Lack of adequate technical manpower and infrastructure to study the implications of WTA on the agricultural exports. Low marketable surplus due to high domestic consumption. No effective steps have been taken for consolidation of land holdings. Rural roads are unmotorable due to poor maintenance. Inadequate and erratic power supply to agricultural sector and also high cost of power. Lack of proper marketing infrastructure like cold storage facilities, processing facilities, grading facilities, market information network, advertisement etc.

OPPORTUNITIES OF ANDHRA PRADESH AGRICULTURE IN THE CONTEXT OF EXPORT POTENTIALITIES

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The existing diversified agro-climatic conditions, soils and cropping pattern offers great opportunities for producing diverse crops both for the international as well as domestic market.  Conducive environment for direct foreign investment in the state to build requisite infrastructure.  Sine the state occupies a pride place among several states in the country in different crops, there exists a greater opportunity to enhance their exports by creating requisite marketing infrastructure.  The spread of Information Technology sector in the state offers great opportunities to export the commodities (importersÕ need-based) by studying the price trends in the international markets.  The establishment of bio-technology industries in the state provides a greater scope for releasing pest and disease resistant varieties and promoting quality of production through cost effectiveness.  Greater scope for private enterprises participation (ex. contract farming) for enhancing quality of production and exports.  Herbs and medicinal plants are found in abundance in different parts of the state. The ÔAyurvedaÕ system of medicine is still very popular outside, because of the realisation of drawbacks of synthetic chemicals and drugs. This offers an opportunity to the state to explore marketing of such herbs and medicinal preparations overseas.  Location of several ICAR institutions, an International institution (ICRISAT) and other institutions facilitate exchange of expertise and materials to study the implications of WTA relevant to the state.  Large extension network system facilitate the farmers to shift their cropping pattern towards more profitable crops. THREATS TO ANDHRA PRADESH AGRICULTURE IN THE CONTEXT OF EXPORT POTENTIALITIES     Erratic distribution of rainfall may adversely affect the production. Droughts, floods and cyclones of high frequency and intensity. Limited scope for expansion of area under agriculture. Threats of extremism, absentee landlordism leads to ineffective utilization of land and other resources.  Superstitious beliefs of the farmers

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CONCLUSIONS & SUGGESTIONS
From the above analysis, it is clear that the farmers should be motivated to take up the agricultural and allied activities as a profit making business and to concentrate more on profitability rather than on productivity of crops. This implies that the farmers should produce and market their produce through cost effective technologies. To achieve this, the following suggestions should deserve special attention. Trained and skilled manpower should be provided in the fields of agricultural research, extension and marketing. The roles and responsibilities of the existing State Agricultural University, State Department of Agriculture and Marketing Department should be properly restructured. Networking of different scientific organizations located in the state should be improved so as to expand application of modern technology in the fields of production and marketing Since the state is having an easy access to all parts of the country and having 2nd largest coast line in the country, there is a greater opportunity to promote exports by developing both air-cargo and ship-cargo facilities with requisite infrastructure. The State Agricultural University and State Department of Agriculture should conduct an extensive research for generating cost effective technologies for agricultural production. The WTO Cell established in the state should conduct studies periodically regarding the implications of WTA on the state agriculture and allied sectors, suggest steps to safeguard the interests of the sector, should aim at exploiting the opportunities offered by this Agreement, conduct marketable surplus studies and export competitiveness of different agricultural commodities in the international market. There is a greater need to introduce sophisticated technologies in place of existing and outdated technologies to boost both quantum and quality of production, thereby, higher profits from the international market. There is a greater need to educate the farmers to adopt IPM and INM practices with more emphasis on adopting biological control and biofertilizers so as to reduce the cost and improve the quality of production. Agricultural research, extension and education system should be totally re-oriented by the State Agricultural University to meet the new requirements in the light of WTA. There is a greater need to start a fresh course in the area of International Agricultural Trade with a major focus on the Implications of WTA on Indian Agriculture to educate the farm graduates or post-graduates. The research agenda should focus on improving the profitability rather than productivity. Bio-technology should be given special attention regarding development of high yielding varieties with drought tolerance, pest and disease resistance and with higher quality. There is a greater need to invest substantially for infrastructure development such as cold storages, grading facilities, processing facilities, market information network etc., which will have a positive impact on export marketing. The Government should encourage private sector agencies to take up contract farming in the state so as to diversify agricultural production, disseminating scientific technology, supply of quality inputs, proper technical guidance etc for boosting the agricultural production and exports.

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Export Promotion Organizations should be established in the state and they should be entrusted the responsibilities of collecting marketing information on international trade, production, prices, quality standards, seasonality, marketable surplus etc., for analyzing and disseminating information among the producers and exporters. The export competitiveness of agricultural commodities should also be studied from time to time so as to encourage their exports which are having more comparative advantage in the international market. It also facilitates full exploitation of market access opportunities provided by the WTA. The expenditure incurred on export promotion activities does not go against the spirit of WTA, because they come under the Green Box provisions. A long term policy is essential to promote the agricultural exports on a sustainable basis. This policy should aim at proper selection of commodities for exports based on the need of other countries rather than on surplus oriented commodities. Besides implementing the above suggestions in a systematic manner, adequate attention should be paid to overcome the possible threats and mitigating the weaknesses for a proper and planned development of export oriented agriculture in the state. This should be carried out both from the shortterm and long-term perspective so as to carve out the states due share in the world trade. New investments in the sector focus on producing fruit concentrates and pulp, vegetable purees, pastes and powers, frozen fruits and vegetables, dehydrated products, oleoresins and cold chains. Palm cultivation and oil processing plants are already coming up capitalizing on the warm, humid conditions in the villages close to the coast. The state has to implement various schemes with main thrust on fruits & plantation crops, hybrid vegetables and seed distribution,forticulture under controlled conditions, spices and condiments, medical and aromatic plants, mushroom cultivation, precision farming, tissue culture, leaf analysis etc. the activities must include latest technologies, pre and post harvest technologies. Special emphasis must be made on oil palm development. Farmers are increasingly shifting to oil palm cultivation in Khammam, especially in Aswaraopet and Dammapet mandals of the district. The crop has found greater acceptability since the oil palm processing unit with five ton- capacity came into operation in the town. The seedlings are imported from Costa Rica. Some 31 mandals have been identified in Khammam as suitable for oil palm cultivation. The oil palm development programme was however taken up only in 19 mandals initially along with three mandals in East Godavari and two in West Godavari. The farmers who raised the crop in the initial years were successful in proving it as highly remunerative. The saplings planted in 2003-2004 and 2004-2005 have come up for fruiting. Some of the farmers have claimed to achieve better average than their counter parts in Malaysia as the yield per acre ranged from 13 tons to 16.5 tons. It is not a labor intensive crop. A farmer, Gottipolla Prabahkar Rao who raised oil palm in an area of 50 acres involving his brothers and relatives, said the average annual returns would not be less than Rs. 45,000 per acre against an investment of Rs 12,000 to 14,000. ³Our earnings are no less than that of software engineers´, he said. If the increase in demand for the edible oils in the international market is of any indication, the oil palm plantation would give more or less the same as an assured income for the next three decades, he added. The farmers have their voice in pricing the oil palm.

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About 90 per cent of the palm oil produced is used for food purposes and the remaining for non-food purposes. Even the oil palm sludge has a price. It is being used as aqua feed. Cashew is a dollar earning crop. Hence the cultivation must be improved. Cashew plantations are more in AP but cashew industries are less and due to financial problems by heavy taxation, cashew factory owners are paying less prices to cashew farmers. If taxation is reduced, cashew farmers can definitely get adequate price for their crop. AP ranks 1st in chillies and turmeric in area, production and productivity. Considerable increase in productivity of spices has been reported in research stations. The need is effective transfer of technology to progressive farmers. India faces competition mainly from China and Pakistan who offer chillies at low prices in international markets. Imports as whole chillies have fallen in the world market as exports of chilli powder and oleoresin have grown. Demand is growing for value added products using chillies such as chilli paste, curry powders and other sauces for the convenience food industry. Andhra Pradesh alone commands around 53.27% of the chilli production in India. The major chilly growing districts of Andhra Pradesh are Guntur, Warangal, Khammam, Krishna and Prakasam. Chilli has well established spot markets. Guntur, Warangal, Khammam in Andhra Pradesh; Raichur, Bellary in Karnataka are the major spot markets at the production centers. Guntur is Asia¶s largest market for chillies. The marketing season begins in the first week of March and peaks during the month of April, and closes by the middle of May. Around 35-40% of the crop that arrives here is estimated to be stored in the cold storages present at Guntur and surrounding areas. Normally, about 80 lakh to one crore bags of chillies (each bags carries approximately 35 to 50 kgs) is traded during the season in Guntur market alone. The market players estimate that trade worth nearly Rs 500 crores takes place in Guntur during season. Besides the highly popular Guntur Sannam (S-4) variety, other hybrid varieties like Wonder Hot, Ankur, Namdhari, and Indam 5 are traded in this particular market. It is estimated that there are a 100 odd exporters in this market. It is estimated that around 25-30% of the chilly crop is used for powder preparation, with the branded chilly powder manufacturers accounting for around 5% of the total volume. In the year 2007, 148500 tons of chilli was exported for the value 807.5 crores. The market players estimate that trade worth nearly Rs 500 crores takes place in Guntur during season. During the peak arrival period around 0.8 - 1 lakh bags of 35-50 kg is traded here daily. Nowadays India is facing a very tough competition in the international export market as price of the Indian chilli powder is considered too high and other competing countries are providing chilli at very competitive rates to the major importing countries. The exports can be further improved, provided India is able to meet the strict quality demands of the international market. Steps have to be taken by the government to encourage exporters in order to maintain India¶s dominance in the world market. There are no proper cultivation and marketing techniques of turmeric in the state though it ranks first in the country and the country ranks first in the world. Lack of minimum support price (MSP), high cost of labor and non availability of good farm mechanization tools continue to add to the woes of the farmers cultivating turmeric in Nizamabad district in Andhra Pradesh. The impact is so much that over the past three years, there has been a considerable decline in the
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total area under cultivation of turmeric and the overall production in the district. Nizamabad is the largest turmeric producing district in the state and it accounts for nearly 40% of the overall production of turmeric in the country. The overall area under turmeric cultivation has been declining every year right from 2005-06. It dropped from 11,959 hectare in 2005-06 to 9,829 hectare in 2006-07 and to 7,377 hectare in 2007-08. Similarly, there has been a drop in the overall production from the district from 53,815 tons in 2005-06 to 49,145 tons in 200607 and to 29,508 tons in 2007-08. According to officials, the farmers have been asking for MSP for quite some time but it is yet to be brought in. When farmers in the neighboring turmeric growing states such as Maharashtra get about Rs 4,000 per quintal, farmers here get only Rs 3,300 per quintal. Another drawback for the farmers is that there is no testing facility to quantify the µCurcumin¶ content in turmeric. µCurcumin¶ is one of the primary ingredients in turmeric that gives the bright yellow color to it. And, normally turmeric with high `Curcumin' content fetches good price. The cost of labor has gone up substantially. As against Rs 6070 per day, laborers are now demanding over Rs 100 per day. The working hours have also come down from 6-8 hours per day to 3-4 hours per day. Also, the increasing cost of cultivation including labor and other inputs and lesser realization from the market, has forced many farmers to switch over to other crops like paddy, soya bean and sunflower. At present there is no risk management tool available for the traders, farmers, industry, exporters to hedge their risk out of price uncertainty. As India is having major share in the international turmeric export market thus it is equally exposed to global uncertainly that affects trade time to time and thus on price. In such a scenario offering future trading would provide an opportunity to the hedge risk for market participants against volatile price movements. Turmeric price is quite volatile and showing marked fluctuations in daily price. Due to high volatility it reinforces the need of future trading to allow traders to hedge their risk. Other factors that indicate success of future trading is well developed spot market and large number of participants such as traders, farmers, exporters, industrial consumer etc that provide depth and width to the market.

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PHARMACEUTICALS AND BULK DRUGS
INDIAN SCENARIO:
Indian pharma industry (IPI) is one of the largest and most advanced among the developing countries. It has over the years made significant progress in infrastructure development, technological capability and hence produced a wide range of products. The industry now produces bulk drugs under all major therapeutic groups. It has a sizable technically skilled manpower with prowess in process development and downstream processing. It has a capital investment of about Rs. 2150 crores (CII 2002). It produced bulk drugs of value of Rs. 3777 crores and formulations worth Rs. 15860 crores in 1999-00. It is estimated that the figures for the above could rise up to Rs. 4344 and 17843 crores respectively (IDMA 2001). The balance of trade in the pharma sector, which was 16.05 in 1960-61 and 650.6 in 1990-91, has grown into an imposing 5129.0 (IDMA 2001). It is evident from the above statement that the rate of growth of value of exports is more than imports (Rs. 6631.0 crores of exports against Rs. 1502.0 crores of imports). There is an increasing interest and investments in R&D: Rs. 260 crores in 1998-99. Bulk drugs have grown at a rate of approximately 15%, formulations by 20% in the nineties. It provides employment for over 28,00,0000 persons both directly and indirectly (employment in ancillary industries and distribution trade) (OPPI) (Patel 2000). The industry is highly fragmented. It has about 250 large units and around 2500 small units in operation. At present 70% of requirement of the country in bulk drugs and all the demands for formulations are met by the domestic industry. Times are getting tougher for pharmaceutical companies. New registration procedures and the restructuring of health care systems around the globe are causing fierce price competition. Many companies are being forced to radically rethink their business models. The Indian pharmaceutical sector is emerging as one of the major contributors to Indian exports with export earnings rising from a negligible amount in early 1990s to Rs.29,139.57 crores (US$7.24bn) by 2007-08. The exports of Drugs, pharmaceuticals & fine chemicals of India have grown at a compounded annual growth rate (CAGR) of 17.8% during the five-year period 2003-04 to 2007-08. The Indian domestic pharmaceutical market size is estimated at US$10.76bn in the year 2008 and is expected to grow at a high CAGR of 9.9% percent till 2010 and thereafter at a CAGR of 9.5% till 2015. The pharmaceutical sector is emerging as one of the major contributors to Indian exports with export earnings rising from a negligible amount in early 1990s to Rs.29,139.57 crores by 2007-08. The exports of Drugs, pharmaceuticals & fine chemicals of India were growing at a compounded annual growth rate (CAGR) of 17.8% during the five year period 2003-04 to 200708. The total size of the industry is estimated at US$18bn at the end of the year 2007. The Indian domestic pharmaceutical market size is estimated at US$10.76bn in the year 2008 and is expected to grow at a high CAGR of 9.9% percent till 2010 and thereafter at a CAGR of 9.5% till 2015. Currently, the Indian pharmaceutical industry is one of the world¶s largest and most developed, ranking 4th in volume terms and 13th in value terms. The country accounted for 8
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percent of global production and 2 percent of world markets in pharmaceuticals. Most of the domestic pharmaceutical drug requirements are met by the domestic industry. In the segment of Active Pharmaceutical Ingredients (APIs) India ranks third in the world producing about 500 different APIs.

INDIAN PHARMA POLICY 
       To ensure availability of good quality medicines at reasonable prices To improve accessibility of essential medicines to the poorer sections Higher investments to increase production of good quality medicines To promote greater research and development in the pharmaceuticals sector by providing suitable incentives in this regard Pharma companies to become internationally competitive by implementing cGMP, GLP ,GCP & other international guidelines To facilitate higher growth in exports of APIs and formulations by reducing the barriers to international trade India as the preferred global destination for Pharma industry To facilitate implementation of the Health Policy of the country

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India's Trade in Pharmaceutical Products (2003-04 to 2007-08) (figs in US$ mn. & %) Commodity Name Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Exports of Drugs, pharmaceuticals & fine chemicals Imports of Medicinal & pharmaceutical products Exports Growth Rate Imports Growth Rate 3,312.99 644.17 24.76 8.59 3,972.81 705.08 4,994.52 1,027.75 19.92 9.46 5,939.75 1,292.32 25.72 45.76 7,241.44 1,660.01 18.93 25.74

CAGR (2003-04 to 2007-08) 22.2 22.9 21.91 28.45

The composition of Indian pharmaceutical exports during the years 2003-04 to 2006-07: India¶s Exports of Bulk Drugs, Formulations, Ayurvedic, Unani, Homeo & Herbal Products (figs. In Rs. Crores) Commodity Name Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Exports of Formulations 5,952.93 7,481.45 9,066.94 10,829.55 14,382.55 16,647.36 Exports of Basic Drugs, Fine 2,493.36 7,207.79 8,091.69 10,740.51 11,868.29 13,299.33 Chemicals & Intermediates Exports of Herbals 390.79 318.44 293.63 307.48 377.02 470.73 Medicants & Medicaments 743.88 192.75 399.82 233.07 259.54 321.44 of Ayurvedic System Medicants & Medicaments 8.19 10.30 2.11 1.87 2.74 3.05 of Homeopathic System Medicants & Medicaments 0.00 2.08 1.89 1.13 0.70 1.13 of Unani System Medicants & Medicaments 0.00 0.42 0.47 0.30 0.02 0.42 of Siddha System
Source: DGCI&S

As of 2007-08 the large markets for Indian pharmaceutical exports & suppliers of pharmaceutical products to:Top Importing Countries of Drugs, Pharmaceuticals & Fine Chemicals (2007-08) (figs. in Rs. Crores) Rank Importing Country Rs. Crores % Share in India's Exports 1 USA 5,534.68 19.1 2 Germany 1,357.72 4.7 3 Russia 1,199.02 4.1 4 UK 1,077.72 3.7 5 China 818.46 2.8

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6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Brazil Canada South Africa Nigeria Netherlands Spain Turkey Ukraine Viet Nam Israel Italy Mexico UAE Singapore Iran

752.62 738.03 650.35 644.08 504.17 485.88 485.47 475.88 466.07 430.83 428.16 426.28 412.13 401.23 366.21

2.6 2.5 2.2 2.2 1.7 1.7 1.7 1.6 1.6 1.5 1.5 1.5 1.4 1.4 1.3

As of 2007-08 the source countries for Indian pharmaceutical imports of India :Top Exporting Countries of Medicinal & Pharmaceutical Products to India (figs. in Rs. Crores & %) Rank Exporting Country Rs. Crores % Share in India's Exports 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 China Switzerland USA Germany Denmark Italy France UK Belgium Spain India Ireland Japan Korea Republic (South) Netherlands Austria Indonesia Poland Mexico Thailand 2,760.90 912.13 658.14 391.66 287.03 208.25 194.82 160.79 124.59 117.44 102.37 93.36 83.09 72.11 68.18 47.80 43.47 34.20 31.03 26.41 40.7 13.4 9.7 5.8 4.2 3.1 2.9 2.4 1.8 1.7 1.5 1.4 1.2 1.1 1.0 0.7 0.6 0.5 0.5 0.4

Source: DGCI&S

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Apart from these, some of the fast emerging markets (2005-06) are presented in table 18: Table 18: Countries of High Import Growth Rates in Pharmaceutical Products from India (200506) (figs. In Rs.Crores) Country Export Value Growth% South Africa 442.18 104.0 Israel 310.33 84.2 Turkey 426.22 78.5 Kenya 227.74 78.3 Singapore 378.50 58.5 UK 820.63 40.0 China 762.55 40.0 Russia 1,051.12 35.8 Italy 411.98 35.4 Vietnam 400.69 31.3
Source: WTO

ANDHRA PRADESH SCENARIO
Andhra Pradesh has a dominant position in this sector with a market size of $ 1.6 bn presently growing upto $ 8 bn to 10 bn by 2010, and is well known internationally for its skill in chemical synthesis and process engineering and its speed to market. The State intends capitalizing on these strengths, acting quickly in the window of opportunity provided by global regulatory change to build a strong and globally competitive pharmaceutical industry.  1/3rd of the national Bulk Drugs production from A.P  Hyderabad predominantly Bulk Drugs manufacturing hub  Hyderabad is a centre for institutes of excellence, chemical synthesis and for invention of new molecules  Hyderabad is connected to major international destinations by air  Visakhapatnam a strategic location is just 600 kms away from capital city Hyderabad  Visakhapatnam is well connected by air, road, rail and seaways ± Visakhapatnam port, Gangavaram port  The State produces a majority of 500 basic drugs produced in India  The half-year net sales of the pharmaceutical industry the State is Rs 4700 crores  The half-year net profits of the Pharma industry in the State is Rs 503.26 crores with a growth of 11.69%  Pharma production in the State will reach US$ 8 billion by the end of 2010 SKILLED HUMAN RESOURCES The State offers excellent opportunities for the growth of the pharmaceutical industry in the country due to availability of trained and skilled manpower research and development facilities, including the Indian Institute of Chemical Technology (IICT), Centre for Cellular and Molecular Biology (CCMB), National Institute of Nutrition (NIN), Centre for DNA Fingerprinting and Diagnostics (CDFD), Indian Immunological Ltd (IIL), S.P. Biotech Park, ICICI Knowledge
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Park, and many universities. In addition to this, to develop human resources required for the innovation led growth, Indian Institute of Life Sciences (IILS) was set up in Hyderabad in collaboration the industry, the Government and research institute to provide the following:  Post-Graduate and Ph.D Programmes in Pharmaceutical Sciences and Drug Discovery.  Train the students and researchers to cater to the needs of the industry.  Do collaborative research in association with international research institutes.  Collaborate with the Indian industry.

JAWAHARLAL NEHRU PHARMA CITY AT PARWADA, VISAKHAPATNAM Realizing the potential scope and imminent challenges in Pharma sector post 2005, the Government of Andhra Pradesh has developed Jawaharlal Nehru Pharma City at Parwada near Visakhapatnam in 2200 acres of land with world class infrastructure to support efficient and environment-friendly Pharma manufacturing. The Pharma City is being developed on a commercial format with private sector participation. M/s Ramky Pharma City (India Ltd) with the equity participation of Ramky and APIIC with 89%, 11% equity respectively. A Special Purpose Company in the name & style of Ramky Pharma City (India) Limited incorporated has entered into concession agreement with the Government of Andhra Pradesh to build, operate and maintain the Pharma city infrastructure and amenities. Environmental clearance was accorded by the Ministry of Environment and Forest, GOI in March,2005 Construction of CETP and marine outfall facility for letting out the effluents into sea and Hazardous Waste Management are certain important infrastructure components. The other facilities in the Pharma City are Storm water
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Discharge, Effluent Conveyance, Sewage Conveyance, Hazardous Waste discharge, Parwada Balancing Reservoir (Yeleru Canal), Underground & Overhead Reservoir. 450 acres were offered allotments to 41 Major and Medium Companies through BDMA. 100 acres was allotted to 3 Major and Medium Companies of non-BDMA

SWOT ANALYSIS OF THE PHARMACEUTICAL INDUSTRY
Preceding sections make an effort to place Indian Pharmaceutical industry in the global perspective, followed by an examination of the trends in growth of industry both in terms of the emerging markets and products; and also the trends in global competition. It may be useful now to present a SWOT analysis of Indian Pharmaceutical Industry4: STRENGTHS 1. India is regarded as having an edge over China in terms of qualified, English-speaking manpower and fair protection of intellectual property rights supported by well-developed judicial system. (Appendix IV gives more information on IPR status in India). 2. India has skilled scientists/technicians/management personnel at affordable cost leading to low cost of innovation/ manufacturing/capex costs/ expenditure to run cGMP compliance facilities and high quality documentation and process understanding. 3. The country has well developed chemistry, R & D and manufacturing infrastructure with proven track record in advanced chemistry capabilities, design of high tech manufacturing facilities and regulatory compliance. 4. The healthy domestic market with rising per capita expenditure is another significant strength enabling achievement of economies of scale. The country also has a strong marketing & distribution network. 5. India is considered a desirable destination for off shoring of data management functions for clinical trials and also due to its rich biodiversity and strength in Chemistry which are essential for drug discovery. 6. The country has significant ability to circumvent API Patents. India has filed a number of non-infringing process patents. The country has a recent success track record in circumventing formulation patents. Proven Legal skills to evaluate IP and commercial strategies are available at least in select top companies. The present domestic regulatory environment though in need of further improvement has been conducive to the growth of an emerging pharmaceutical industry. WEAKNESSES 1. Low investments in innovative R&D continue to be a major weakness of Indian pharmaceutical industry.
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2. Diffused nature of the Indian pharmaceutical industry means that only about 20 to 30 companies are large enough to bear the transactions costs associated with sustained exports to and compliance with entry regulations of the developed markets. 3. Majority of companies lack the ability to compete with MNCs for New Drug Discovery, Research and commercialization of molecules on a worldwide basis due to lack of resources. 4. Strong linkages between industry and academia which are essential for growth of the industry is lacking in India. 5. Comparatively small domestic market size due to low medical and healthcare expenditure in the country. 6. The country has at times shown inadequate regulatory framework or compliance and enforcement regime, reflected in occurrences such a production of spurious or low quality drugs. 7. Competency in API/Formulation, intellectual property creation, facility design and maintenance, global regulatory affairs, legal intricacies, and managing international work force is limited to a few players among the big players. 8. Rapidly increasing costs of skilled manpower such as scientists/ regulatory compliance personnel / pharmaceutical lawyers/ international business development personnel is pushing up the cost of innovation. Ability to evaluate contracts/alliances etc., is available only in top companies. Significant lacuna in this area exists and companies are falling into traps created by the competitors. Institutionalization of learning in the following areas is restricted  Regulatory affairs knowledge for different countries and continents  Process and product patents procedures knowledge for different countries and continents. 9. Sales and marketing knowledge is inadequate due to lack of understanding of international Pharmaceutical marketing/pricing practices and market environment in various countries. 10. Inadequate manufacturing practices in comparison to those accepted in developed world such as change of API source, change of manufacturing locations, equipment, etc., without proven stability/ bioequivalence may be creating inadequate technical work force for exports. The national drug regulatory system though evolved substantially, has been in the need of strengthening its manpower and systems requirements. 11. Inadequate emphasis on Biosciences in education system leading to slower development in areas related to Biology giving away advantage to China.

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OPPORTUNITIES 1. India is faced with significant export opportunities, such as, i. US$40 billion worth of drugs in the U.S.A and US$25 billion worth of drugs in Europe are expected to go off patent soon. Assocham estimates that Indian manufacturers may capture 30 percent of that market. This translates to an opportunity of US$19.5bn which is significant considering the country¶s current exports of approx. US$7.25bn. However the figures need to be appropriately deflated since Indian opportunity will lie in generics equivalent of branded or patented drugs, which would be cheaper. ii. Generic launches by Indian manufacturers have increased in the United States from 93 in 2003 to 250 by 2008. iii. Compulsory licensing provisions negotiated in the Doha Round, allows for countries to import cheaper generic versions of patented drugs in the interests of public health. Thailand and South Africa have already started such initiatives from which Indian firms have benefited. 2. Due to the cost advantage in contract manufacturing & Research multi-national companies find it compelling to shift their production bases to countries offering such cost advantage. Typical of the industry which requires approval of manufacturing facilities by various drug regulatory agencies of the world involving a very high cost, once such business finds base in India it would continue with it for at least one & half to two decades. 3. Licensing deals with MNCs for NCEs (New Chemical Entities) and NDDS (New Drug Delivery Systems) offer new opportunities for Indian manufacturers. 4. Marketing alliances for MNC products in domestic and international market is another emerging opportunity. 5. Contract manufacturing arrangements with MNCs is estimated at 10% of patented markets estimated at US$450bn which is approx. US$45bn. 6. India has a very high potential for developing as a centre for international clinical trials due to its rich diversity. 7. India can become a niche player in global pharmaceutical R&D and possibilities exist for expansion of biotechnology generics (also known as bio-similars) and biopharmaceuticals. 8. There is a possibility of greater returns from an Indian entry into mature and more remunerative markets like Brazil, Japan, CIS, Russia, etc. 9. The Work Programme for the European Medicines Agency 2007 identifies greater cooperation with India - especially in the field of traditional and herbal medicines and remedies. Emerging preference for traditional medicines and herbs in the developed markets including lifestyle products and food supplements also presents an opportunity for the country in traditional medicinal systems & Herbal based products.

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10. A rise in life expectancy generally, and increase in the population of the old, particularly in the developed world is causing higher expenditure from respective national health budgets compelling them to move to cheaper APIs and formulations which are India¶s forte. 11. Unleashing of a plethora of preferential trading arrangements, both bilateral and regional, offers opportunities for India to negotiate preferential access to partner markets for Indian pharmaceuticals in the long term and in a sustainable manner. THREATS 1. Product patent regime poses serious challenge to domestic industry unless it invests in research and development. 2. R&D efforts of Indian pharmaceutical companies are hampered by lack of enabling regulatory requirement. 3. Drug Price Control Order puts unrealistic ceilings on product prices and profitability. 4. Export effort is hampered by procedural hurdles in India as well as non-tariff barriers imposed abroad. For example: i. Indian manufacturers are prevented from bidding for government contracts as US permits bidders only from countries that are signatories to WTO Agreement on Government Procurement. ii. Indian manufacturers have to submit separate state level applications for marketing drugs in the United States as there is no nation-wide system of application even where FDA approval has been received. 5. Lowering of tariff protection has increased competition in domestic markets resulting in erosion of profitability. 6. Mergers and acquisitions by foreign companies¶ particularly multinational corporations of a few Indian generic leaders may completely change the direction of India¶s pharmaceutical movement neutralizing its thrust on generics and cost competitiveness. 7. The generics market in developed countries may be affected by a number of factors: i. The release of authorized generics by major drug manufacturers. ii. New midsized players, establishing themselves in the generics market. iii. Increased competition due to newer Chinese and East European manufacturers. (E.g. there has been massive state level investment by China in the biotechnology sector ± though at present India still has the edge due to IP laws.) iv. TA¶s entered into by the United States of America with third countries (e.g. the Morocco-U.S.A FTA) may be harmful to Indian pharmaceutical exports because of provisions for increases in patent terms, etc. The United States enters into a number of FTA¶s with different countries and while the exact text of these agreements differ from country to country, each of these agreements contains provisions which can be
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damaging to Indian exporters of pharmaceuticals partly also because of their provisions on patents. These FTA¶s contain a large number of provisions which increase patent terms for pharmaceuticals by allowing for patentability of new uses of discovered inventions and by increasing patent terms by taking into account the time taken to process claims (ever greening). These provisions go beyond TRIPS and hence it may not be possible to challenge these under the WTO Dispute Resolution process. However, the compatibility of these provisions with Article XXIV of the GATT needs to be examined. 8. Specific non-tariff and para-tariff barriers being increasingly adopted by other countries such as long transaction time taken for registration of drugs, insistence on completing long process for registration when the drug may actually have gone through the most rigorous process of registration such as the USFDA; insistence on allowing imports of only those drugs which are registered in some developed countries, etc.

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MARINE SECTOR
INDIAN MARINE INDUSTRY LOGISTICS
The global logistics industry was valued at US$3.5 trillion in 2005, whereas US logistics industry size was around US$900 billion, 25% of the global logistics industry. Logistics costs in India are estimated to be around 13% of the GDP, which comes to around US $94 billion in 2005-06. However, India¶s spending on logistics industry is much higher than the developed economies like the US (9.5%) and Japan(10.5%). Marine transport sector contributes over 0.2% to the country¶s GDP at constant prices (1999-2000 prices). Transport sector¶s contribution to the GDP has been increasing because of the growing economic activities in the country. Shipping industry plays a significant role in the Indian economy. India has 12 major and 187 minor/intermediate ports along its coastline of around 7,517km. Ports serve as the gateways to the international trade in India. Major ports in India together have handled 463.84m tonnes of cargo in 2006-07, a growth of 9.51% against the same period of the previous year. The petroleum-oil-lubricants (POL) accounted for 33.38% of the total traffic at major ports during AprilMarch 2007, while iron ore constituted 17.37%, coal 2.98%, container traffic 15.84%, fertilizer 3.04%, and others 17.49%.According to the Planning Commission, India¶s shipping fleet strength will be increased up to15m GRT by the end of 2011-12, with an estimated investment of US$17.7 billion. The port throughput will increase up to 1,008m tonnes, growing at a CAGR of 10.96% from 2007-08 to 2011-12. The following table gives the detailed data about the major ports of India for the

financial year 2005-06 and percentage growth over 2004-05 Cargo Handled (06-07) '000 tonnes % Increase (over 05-06) Vessel Traffic (0506) % Increase (over 04-05) Container Traffic (05-06) '000 TEUs % Increase (over 04-05)

Name

Kolkata (Kolkata Dock System & Haldia Dock Complex) Paradip Visakhapatnam Chennai

55,050

3.59%

2,853

07.50%

313

09.06%

38,517 56,386 53,798

16.33% 1.05% 13.05%

1,330 2,109 1,857

10.01% 14.43% 11.26%

3 47 735

50.00% 04.44% 19.12%

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Tuticorin Cochin New Mangalore Port Mormugao Mumbai J.N.P.T. Ennore Kandla All Indian Ports

18,001 15,314 32,042 34,241 52,364 44,818 10,714 52,982 463,843

05.03% 10.28% -06.99% 08.06% 18.50% 18.45% 16.86% 15.41% 9.51%

1,576 1,225 1,087 642 2,153 2,395 173 2,124 19,796

06.56% 09.38% 01.87% -03.31% 14.34% 03.06% 01.17% 09.48% 08.64%

321 203 10 9 159 2,267

04.56% 09.73% 11.11% -10.00% -27.40% -04.39%

148 4,744

-18.23% 12.07%

MARINE TRANSPORT IN INDIA
Shipping industry plays a significant role in the Indian economy as 95% of India¶s international trade by volume and 70% by value are seaborne. The fleet strength by the end of December 2007 was 850 vessels with 9.03 million Gross Registered Tonnage (GRT), of which overseas shipping accounted for 90.11% of the total capacity in terms of Gross Tonnage. According to the Planning Commission, Indian Shipping Industry¶s gross tonnage capacity will be increased up to 15 million GT (As per 3rd target) by the end of Eleventh Five Year Plan (2012) with an estimated investment of Rs. 800 billion.

EXPORT OF MARINE PRODUCTS FROM INDIA 2008-09
EXPORT TREND
Since the fall in the export earnings during 2003-04, the dollar earnings have increased steadily till 200809 EXPORT TREND OF MARINE PRODUCTS
Q: Quantity in MT, V: Value Rs. Crore, $: US Dollar in Million
Year Export Variation (%) U.V.

2002-03

Q V

467297 6881.31

+42827 +924.26

+10.09 +15.52 147.26

61

$ 2003-04 Q V $ 2004-05 Q V $ 2005-06 Q V $ 2006-07 Q V $ 2007-08 Q V $ 2008-09 Q V $

1424.90 412017 6091.95 1330.76 461329 6646.69 1478.48 512164 7245.30 1644.21 612641 8363.53 1852.93 541701 7620.92 1899.09 602835 8,607.94 1,908.63

+171.55 -55280 -789.36 -94.14 49312 554.74 147.71 50835 598.61 165.74 100478 1118.23 208.72 -70941 -742.61 46.16 61134.51 987.02 9.54

+13.69 -11.83 -11.47 -6.61 11.97 9.11 11.10 11.02 9.05 11.21 19.62 15.43 12.69 -11.58 -8.88 2.49 11.29 12.95 0.50

3.05

147.86 3.23

144.08 3.20

141.46 3.21

136.52 3.02

3.51

3.17

Frozen shrimp continued to be the single largest item of export in terms of value accounting for about 44% in the total export earnings. In terms of quantity, fish accounted for the major share at 40% (shrimp 21%) as could be observed from the table below.

MAJOR EXPORT ITEMS
Q: Quantity in Tons, V: Value in Rs. Crores,$: USD Million ITEM Share % 2008-09 Q V: 2007-08 Growth(%)

FROZEN SHRIMP

21 43.91

126042 3779.88

136223 3941.62

-7.47 -4.10

62

43.97

$: UV$:

839.30 6.66 238543 1722.29 375.23 1.57 50698 760.59 168.17 3.32 57125 632.35 142.87 2.50 31688 420.75 92.51 2.92 3434 99.00 21.82 6.36 21453 217.34 48.39 2.26 73851 975.75 220.33 2.98 602835 8607.94 1908.63 3.17

980.62 7.20 220200 1303.41 326.29 1.48 45955 744.13 185.66 4.04 34172 408.42 101.29 2.96 22414 258.88 64.72 2.89 2498 69.07 17.21 6.89 6541 118.11 29.62 4.53 73698 777.29 193.68 2.63 541701 7620.92 1899.09 3.51

-14.41 -7.50 8.33 32.14 15.00 6.16 10.32 2.21 -9.42 -17.89 67.17 54.83 41.05 -15.63 41.38 62.53 42.94 1.10 37.47 43.33 26.84 -7.73 227.98 84.02 63.35 -50.19 0.21 25.53 13.76 13.53 11.29 12.95 0.50 -9.69

FROZEN FISH

40 20.01 19.66

Q: V: $: UV$:

FR CUTTLE FISH

8 8.84 8.81

Q: V: $: UV$:

FR SQUID

9 7.35 7.49

Q: V: $: UV$:

DRIED ITEM

5 4.89 4.85

Q: V: $: UV$:

LIVE ITEMS

1 1.15 1.14

Q: V: $: UV$:

CHILLED ITEMS

4 2.53 2.54

Q: V: $: UV$:

OTHERS

12 11.34 11.54

Q: V: $: UV$:

TOTAL

100 100 100

Q: V: $: UV$:

European Union (EU) continued as the largest market during the year with a percentage share of 32.6% in $ realization followed by China 14.8%, Japan 14.6% , USA 11.9%, South East Asia 10%, Middle East 5.5% and Other Countries 10.6%.
MAJOR EXPORT MARKETS
Q: Quantity in Tons, V: Value in Rs. Crores, $: USD Million

63

Country

Share %

2008-09

2007-08

(%)
-14.99 0.52 -8.80 0.72 0.45 -10.18 1.48 5.09 -6.08 5.38 28.41 11.47 39.38 52.12 33.16 5.53 20.75 7.29 58.81 23.50 10.25 11.29 12.95 0.50

JAPAN

USA

EUROPEAN UNION

CHINA

SOUTH EAST ASIA

MIDDLE EAST

OTHERS

Total

10 14.34 14.60 6 11.87 11.91 25 32.53 32.63 24 15.06 14.77 15 10.14 10.01 5 5.53 5.51 16 10.54 10.57 100 100 100

Q: V: $: Q: V: $: Q: V: $: Q: V: $: Q: V: $: Q: V: $: Q: V: $: Q: V: $:

57271 1234.01 278.61 36877 1021.55 227.29 151590 2799.96 622.87 147312 1296.39 281.90 88953 873.09 191.08 27177 475.72 105.20 93654 907.21 201.68 602835 8607.94 1908.63

67373 1227.59 305.49 36612 1016.94 253.05 149381 2664.24 663.17 139792 1009.59 252.90 63818 573.97 143.50 25752 393.96 98.05 58972 734.62 182.93 541701 7620.92 1899.09

PORT WISE EXPORTS
Exports were affected from 19 land/air ports. The major ports to handle the export cargo during the year in the order of US $ earnings were Kochi (17.6%), JNP (17.3%), Pipavav (16.1%), Chennai (12.6), Vizag (10.5%), Calcutta (8.4%), Tuticorin (8%), Mangalore (2.8%), etc.

PORTWISE EXPORTS
Q: Quantity in Tons, Ports V: Value in Rs. Crores, $: USD Million Share % 2008-09 2007-08

Growth(%)
0.02 8.76 -2.64 21.19 32.69

KOCHI

Q: V: $:

16.35 17.48 17.57 21.04 17.28

98537 1,504.98 335.35 126853 1,487.28

98520 1,383.74 344.45 104670 1,120.86

JNP

Q: V:

64

$:

17.26 27.18 16.36 16.12 6.48 12.53 12.62 5.35 10.43 10.47 5.58 8.37 8.38 4.87 8.06 8.05 5.49 2.77 2.77 3.51 2.15 2.20 0.38 2.05 2.02

329.52 163866 1,408.35 307.69 39043 1,078.44 240.80 32277 897.93 199.85 33625 720.36 159.96 29354 693.76 153.59 33083 238.44 52.81 21146 185.16 42.04 2319 176.56 38.60

279.25 149734 1,075.31 268.79 42947 1,158.50 287.87 35535 1,018.60 253.66 27666 689.70 172.06 29697 654.64 162.97 26155 162.61 40.65 19297 111.22 27.80 2383 116.12 29.14

18.00 9.44 30.97 14.47 -9.09 -6.91 -16.35 -9.17 -11.85 -21.21 21.54 4.45 -7.03 -1.15 5.98 -5.75 26.49 46.64 29.89 9.58 66.48 51.24 -2.70 52.05 32.46

PIPAVAV

Q: V: $:

CHENNAI

Q: V: $:

VIZAG

Q: V: $:

CALCUTTA

Q: V: $:

TUTICORIN

Q: V: $:

MANGALORE/ICD

Q: V: $:

GOA

Q: V: $:

MUMBAI

Q: V: $:

AHMEDABAD

Q:

FOREIGN TRADE POLICY 2004-2009
1. ITEMS PERMITTED  No Quantitative restrictions on export.  Licence under Foreign Trade Policy not required for import of 125 species/groups of fish, crustaceans, molluscs and other aquatic invertebrates covered under FREE policy in Chapter 3 of ITC (HS) classification of Export &Import items under the EXIM policy.
65 

Import of five groups of live fish permitted under Restricted Policy (EXIM Code 0301)  Import of Whale Shark (Rhincodon types) and parts and products of the species is restricted. 2. PROMOTIONAL MEASURES  Central assistance to States for development of critical infrastructure for export such as roads, inland container depots, container freight stations, Export Promotion Industrial Parks and for equity participation in infrastructure projects.  Encouragements to State Governments for setting up Export Zones.  Declaration of Towns of Export Excellence to encourage setting up of critical infrastructure for export production, encourage common service providers and facilitate availability of better technological services and integrate benefits under the other schemes of EXIM Policy for the units in such towns.  (iv) Market Access Initiative Schemes for encouraging increased marketing efforts by exporters/Brand promotion  Schemes to promote the Concept of Total Quality Management. 3. IMPORT FOR EXPORT PRODUCTION  Advance authorization for duty free import of inputs for export production.  Duty free import authorisation (DFIA) Scheme: Scheme DFIA is issued to allow duty free import of inputs, fuel, oil, energy sources, catalyst which are required for production of export product. DGFT, by means of Public Notice, may exclude any product(s) from purview of DFIA. This scheme is in force from 1st May, 2006.  However, these Authorizations shall be issued only for products for which Standard Input and Output Norms (SION) have been notified. Pre-export Authorization shall be issued with actual user condition and shall be exempted from payment of basic custom duty, additional customs duty, education cess, antidumping duty and safeguard duty, if any. A minimum 20% value addition shall be required for issuance of such authorization.  Manufacturer exporters, merchant exporters tied to supporting manufacturers and service providers eligible for import of capital goods at 5% Customs duty linked to fulfilment of export obligation in 8 to12 years under EPCG Scheme. 4. EOU/EPZ/SEZ  Scheme of 100% EOU/Export Processing Zone/Special Economic Zone for export production continues.  No trading units permitted under the scheme.  SEZ to be set up for marine products in AP The Marine Products Export Development Agency (MPEDA), which works under the Union Ministry of Commerce, will set up the country¶s first special economic zone (SEZ) for marine products in Andhra Pradesh. Likely to be set up at Kara Agraharam near
66

Machilipatnam, the 260-acre SEZ would house 30-40 units from the private sector, specialising in the processing of various marine products 5. PACKAGE FOR MARINE SECTOR  Duty free import of specified specialized inputs/chemicals and flavoring oils as per a defined list shall be allowed to the extent of 1% of FOB value of preceding financial years export. Use of these special ingredients for seafood processing will enable us to achieve a higher value addition and enter new export markets.  To encourage the existing mechanized vessels and deep sea trawlers to adopt modern technology for scientific exploitation of our marine resources in an ecofriendly manner and boost marine sector exports, it is proposed to allow import of monofilament long line system for tuna fishing at a concessional rate of duty.  The present system of disposal of waste of perishable commodities like seafood after inspection by a customs official is very cumbersome and leads to development of unhygienic conditions. To overcome this, a self removal procedure for clearance of waste shall be applicable, subject to prescribed wastage norms. FOCUS MARKET SCHEME (FMS) Objective is to offset high freight cost and other externalities to selected international markets with a view to enhance India¶s export competitiveness in these countries. Entitlement Exporters of all products through EDI enabled ports to notify countries (as in Appendix 37C of HBP v1) shall be entitled for Duty Credit scrip equivalent to 2.5% of FOB value of exports for each licensing year commencing from 1st April, 2006. However additional Markets notified in Appendix 37C of HBP v1 shall be entitled for Duty Credit scrip on exports w.e.f 1.4.2007.

Sr.No

Focus Market Code

Country Code

Country

Countries in Latin American Block L 001 1 2 3 4 5 6 L 002 L 003 L 004 L 005 L 006

015 039 073 109 317 319

ARGENTINA BOLIVIA CHILE ECUADOR PARAGUAY PERU

67

7 8

L 007 L 008

427 433

URUGUAY VENEZUELA

Countries in African Block 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 A 001 A 002 A 003 A 004 A 005 A 006 A 007 A 008 A 009 A 010 A 011 A 012 A 013 A 014 A 015 A 016 A 017 A 018 A 019 A 020 A 021 A 022 A 023 A 024 011 035 041 050 053 057 061 063 067 069 085 087 115 116 117 135 141 143 167 169 199 227 229 231 ANGOLA BENIN BOTSWANA BURKINA FASO BURUNDI CAMEROON CANARY IS CAPE VERDE IS CAFRI REP CHAD COMOROS CONGO P REP ETHIOPIA ERITREA EQUTL GUINEA FR S ANT TR GABON GAMBIA GUINEA GUINEA BISSAU COTE D'IVOIRE LESOTHO LIBERLIA LIBYA

68

33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57

A 025 A 026 A 027 A 028 A 029 A 030 A 031 A 032 A 033 A 034 A 035 A 036 A 037 A 038 A 039 A 040 A 041 A 042 A 043 A 044 A 045 A 046 A 047 A 048 A 049

241 243 249 255 257 265 267 269 289 339 345 347 349 353 355 357 363 371 385 399 407 417 459 461 463

MADAGASSCAR MA;AWO MALI MAURITANIA MAURITIUS MOROCCO MOZAMBIQUE NAMIBIA NIGER REUNION RAWANDA SAHARWI A.DM RP SAO TOME SENEGAL SEYCHELLES SIERRA LEONE SOMALIA ST HELENA SWAZILAND TOGO TUNISIA UGANDA CONGO D.REP ZAMBIA ZIMBABWE

69

FOCUS PRODUCT SCHEME (FPS) Objective is to incentives export of such products, which have high employment intensity in rural and semi urban areas, so as to offset infrastructure inefficiencies and other associated costs involved in marketing of these products. Entitlement Exports of notified products (as in Appendix 37D of HBP v1) through EDI enabled ports to all countries shall be entitled for Duty Credit scrip equivalent to 1.25% of FOB value of exports for each licensing year commencing from 1st April, 2006.
VALUE ADDED FISH PRODUCTS Sl.No 1 Item 46 ITC(HS) Description Shrimp ± breaded, battered, marinated and other such prepared products Shrimp pickle Shrimp Curry AFD Shrimp, AFD Powder Shrimp IQF Raw Shrimp IQF blanched/cooked Shrimp in Tray/pouch packs Squid ± breaded, battered, marinated and other such prepared products AFD Squid Squid IQF raw Squid IQF blanched/cooked Squid in Tray/pouch packs Cuttlefish AFD Cuttlefish IQF Raw Cuttlefish IQF blanched/cooked Cuttlefish in tray/pouch packs

2 3 4 5 6 7 8

47 48 49 50 51 52 53

9 10 11 12 13 14 15 16

54 55 56 57 58 59 60 61

70

17

62

Cuttlefish breaded, battered, marinated and other such prepared products

18

63

Fish fillets / loins / steaks etc in tray / vacuum pouches

19

64

Braded fish fingers / fish fillets, precooked loins and other such prepared products

20 21 22

65 66 67

Fish pickle Fish curry Lobster cooked / half cut IQF/packed in tray / pouches Stuffed crab Breaded crab cakes/ Crab cake Pasteurized crab meat Raw crab meat/soft shell crab Mussel/clam meat pickle Surimi analogues Canned Tuna

23 24 25 26 27 28 29

68 69 70 71 72 73 74

Implications of the WTO on Indian Marine Industry, Issues and Policy Perspectives
Marine Trade and the Developing Economies Marine products, on account of their health attributes and high unit value, are claimed to be one of the fastest moving commodities in world markets. In the context of WTO-GATS, the nature of linkage between trade performance and environmental measures has become a major concern for the developing countries and export of marine products are considered to be the most environmentally sensitive products in the international market. Within the WTO, fish is treated as an industrial product within a potentially free global Market to be addressed within the NAMA negotiations, having been excluded from Agriculture negotiations. During the Uruguay round, fisheries were left out of the Agreement On Agriculture (AoA) at the insistence of some EU countries that benefited from the EU Fisheries subsidy regime. As a result, fisheries-related issues are covered by various other agreements. Most notably, fisheries subsidies fall under the discipline of the Agreement on Subsidies and Countervailing Measures (ASCM). The Doha and
71

the HK round proceedings include a number of issues of particular importance to international trade in fish and fishery products, i.e. fisheries subsidies, market access, environmental labelling, the relationship between WTO trade rules and environmental agreements. The main areas up for negotiation were tariff and non-tariff barrier reductions under the negotiating group on NAMA and specific mention of a reduction of fisheries subsidies under the WTO negotiating µGroup on Rules¶. Apart from the above many other WTO-GATS related issues have repercussions on the marine exports from the Asian countries, namely the outcomes from the Dispute Settlement Mechanism (DSM); the current process of clarification on the impact of ecolabels on trade; the relation between trade rules and Multilateral Environmental Agreements (MEAs); Technical Assistance and Capacity Building (TA & CB); and the provisions for Special and Differential Treatment (SDT).

Global Trends in Fishery Exports & Imports (US $ Billions)

Region

1976

2001

Exports World Developing Economies LIFDC Developing / World (%) LIFDC / World (%) 7.98 2.94 0.96 37 12

Imports 8.84 1.19 0.44 13 5

Exports 56.10 28.03 10.82 50 19

Imports 60.26 10.66 3.16 18 5

(LIFDC) Low-Income Food Deficit Countries Globally, fish has become a highly traded commodity, with 38 % (live weight equivalent) of total fisheries product being traded internationally in foreign markets, Vannuccini (2004). In terms of overall merchandise production and trade, the global share of developing countries was 37.5 % in 2001 but their share in global fish exports was over 50 The livelihoods of approximately 150 Million people depend on fisheries, aquaculture and associated activities and over 20 % of the world¶s 38 million fulltime fishers earn less than US$ 1 per day, World Bank (2006). According to Delgado (2003), global capture production of food fish has rapidly increased from 44.5 mln Tonnes in 1973 to 64.5 mln Tonnes in 1997. The vast majority of this production (over 90 % in 1997) has come from marine fisheries. During this period, the production of developed countries as a whole declined by about 3.6 mln Tonnes, whilst production in the developing world increased at an average annual rate of 3.4 %. The above evidence mirrors an overall shift in production towards developing countries away from developed countries. Part of this shift is probably the consequence of the establishment of 200
72

mile Exclusive Economic Zones (EEZs) that allow coastal nations to claim exclusive fishing rights. At the same time, capture fisheries is an industry in crisis as the natural resource limits of the oceans, coastal regions, and many inland water bodies have been reached, World Bank (2004). According to FAO estimates, 25 % of the world¶s major fisheries are over fished, and 40 % are fully fished, resulting in declining fish stocks and ecological change, World Bank. As per the FAO statistics, developing countries like China, Thailand, Vietnam, Chile, Taiwan, Indonesia, India, Peru and South Korea are the main exporters in terms of value of Fisheries products during the 2000-2005 periods. At the same time, with 34 % of the export Value (i.e. this may include intra EU trade), the EU is globally the most important exporter With Norway, USA, and Canada being other major players amongst developed countries, Lem (2004). Denmark, Spain, Netherlands, United Kingdom, Germany and France are the principal EU exporters. The export value of internationally traded fish and fisheries products was US$ 58 Billion (bln.) in 2002, exceeding the combined value of net exports of rice, coffee, sugar, and tea, World Bank website January 2006). Developed countries absorb 80 % of the value of world imports, with Japan, USA, and the EU being the principal destinations. Whilst LIFDC¶s account for 20 % of fishery exports in value terms in 2002, the share of all developing countries combined in fishery exports was 49 % by value and 55 % by quantity. The net receipts of foreign exchange (i.e. export Minus import values) for fishery commodities by developing countries increased from US$4.0 billion in 1982 to US$17.4 billion in 2002, Vannuccini (2004).

Indian Marine Trade & Services In India, till late seventies, the export of marine products mainly consisted of dried Items like dried fish, dried shrimp, shark fins and fish maws etc. However, later there was a Decline in the export of dried marine products, and subsequently the exports of processed Items continued to make steady progress in marine trade. The markets for Indian marine Foods were initially confined to Singapore, Sri Lanka and Myanmar to a great extent. When Frozen and canned items figured increasingly in the export basket, USA, France, Canada, Japan and Australia became the important markets for Indian marine products. During 1980¶s canned items slowly disappeared and frozen items became the prominent ones in India¶s seafood trade. India has the seventh largest capture fishery, and is second in importance in terms of aquaculture production. It is also a significant exporter, although per capita consumption of fish is low (5 kg per capita). The export of marine products grew to be one of the important item of India¶s exports from a 40.4 US$ in 1970-71 to US$ 1320.5 mln. In 2003-04 accounting for approximately 2.08 % of the total export from India. In 2003-2004 it has a share of 17.83 % in total agricultural exports, Reserve Bank of India (2004). Indian seafood exports are less than the global average, with about 12 % of its total fish production (wet weight equivalent) entering world trade. As a share of the marine fish production it is about 25 % of the total marine fish production. India has a coastal population Of 370 mln. People or 36 % of the country's total population, DOD (2002) and about 6.7 mln. People depend on fisheries for a livelihood, Government of India (2001). This includes Roughly 725, 000 full-time, and an equal number of part-time, fishermen engaged in fishing Operations and over one mln. People engaged in pre and post-harvest activities. While 48 % Of full-time fishermen are on the East Coast of India, 35 % are on the West Coast, and the Remaining 17 % are spread over other states and union territories. There are also about
73

300,000 people employed directly in the shrimp aquaculture sector and about 700,000 people In ancillary units, AAI (2002). Evolution of Fish and Fishery Product Exports from India, 1960±2002

India is currently the fourth largest fish producer in the world after China, Peru and Japan. Marine products form a bulk of the exports of agricultural products. More than 3 % of India¶s exports are marine products. Although tariff levels have been reduced recently (from an average of 60% to 35%), these remain high even by the standards of other major Asian Economies. From 1951 to 2003 India's fish production increased eight-fold from 7.52 lakhs Tonnes in 1950-51 to 6.2 lakhs tonnes in 2002-2003, accounting for over 5 % (approx.) of the world¶s total fish production, Directorate of Economics & Statistics (2004). In the realms of food production, the rate of growth of Indian fish production is second only to that of wheat. Over 70 % of total fish production of India is sold fresh in the domestic market, about 11 % are dried or salted, and about 6 % are converted to fishmeal, Government of India (2001). The impact of the Uruguay Round Agreement on the Application of Sanitary and Phytosanitary (SPS) agreement and the agreement on Technical Barriers to Trade (TBT) Adopted by WTO Members in 1995 is clearly depicted through the above figure. Implications of WTO-GATS on India Marine Industry The exports of inland and marine capture fishery products are of integral importance to government revenues and income and employment generation in India. Indian fisherman and fishery exporters face complex negotiations at the WTO-GATS level on tariffs and Fishery subsidies and bilateral and regional negotiations with the EU in the formulation of Economic Partnership Agreements (EPAs) and Fisheries Partnership Agreements (FPAs). In Addition, they need to comply with increased food safety standards. The impact of GATS and the implications on Indian marine trade & services are assessed in context of Tariff Measures, Non-tariff measures, Subsidies and Eco-labelling.  Market Access ± Tariff Measures Tariffs on fish and fishery products are generally quite higher in developing countries posing problems to the development of international trade. After the completion of the Uruguay round, the average weighted import tariffs on fish products were reduced to 4.5% in
74

Developed countries, Lem (2004). Although this may seem quite low, the average hides a number of very high tariffs for selected species and products (tariff peaks), as well as cases of tariff escalation where processed or value added fish products are subject to higher duty than unprocessed fish. Tariffs on primary fish commodities have declined significantly in developed countries and have decreased even in the developing countries of Asia, where they were previously much higher than in developed countries. Reductions in Average Tariffs for Fisheries Imports in Select Asian Countries Share of c.i.f value (percent) Country Tariff before WTO Tariff after WTO

China Thailand Philippines India Bangladesh

1991 1995 1994 1993-94

47 60 10-60 60

2001 1999 2000 20022003 20002001

11-23 5-30 2-15 35

1991-92

59

28

While average tariff levels have declined (See Table 2), it should be noted both that Most fish trade is in processed products of some sort, and that developed countries generally maintain higher tariff rates on processed fish commodities than on chilled fresh fish, a case of ³tariff escalation´ shown in Table 3. Yet even the tariff rates for processed products are fairly low (compared with meat out of quota, for example), and it is not plausible that tariffs are or will be a major constraint on the growth of fish exports from developing countries. Import duties in developed country markets continue therefore to present a barrier to processing and economic development in the fishery industries in many developing Countries, and also to developed countries outside the large trade areas, for example Non-EU Members .Tariff cuts on fish products would mean a reward to those who engage in economically µefficient¶ mass exploitation and hasten the depletion of the ocean¶s resources. Sustainable local suppliers would be forced out of their domestic market and the rape of the fisheries would intensify. Developed countries often have zero or relatively low levels of tariffs on fish, but there are cases of escalation with some peaks. EU rates are higher than in many developed countries i.e. on average are around 10%, but zero rates apply for ACP (African Caribbean and Pacific) and LDC states. As such the issue of concern to developing country exporters depends on their current exemption status and hence potential change in competitiveness arising from further liberalization (e.g. the extension of tariff exemptions to Non-ACP and LDC states which may radically alter competition in the supply of EU
75

Markets. Tariff Escalation for Some Developed-Country Fisheries Imports Share of border c.i.f. value (percent) Product European Union Conventional Skipjack Fresh Canned Mackerel Fresh Processed Scallops Fresh Processed Crabs/Lobsters Fresh Processed
10 20 8.2 7 7 6.7 7 6.7 8 20 2.8 7 10 9.6 7.2 7.2 20 25 0 0 0 9.6 0 7.2 22 24 0 0 3.5 9.6 3.5 6.4

Japan MFN GSP

GSP

The U.S. Seafood Regulation in December 1995 has mandated every processor and importer to comply with HACCP from December 1997. To ensure compliance with its food safety regulations, the U.S. Food and Drug Administration (FDA) require importers to meet one of two conditions. First, importers may obtain seafood from countries with voluntary agreements with the FDA. These agreements may document that the countries¶ seafood safety systems are equivalent to or in compliance with those of the U.S. Second, if these agreements do not exist, importers must have records demonstrating that foreign firms¶ products entering the U.S. have been processed in accordance with U.S. HACCP requirements. Such records may include a copy of the foreign firms¶ HACCP plan. EU requirements in this regard are more comprehensive than U.S. requirements. Implication of Tariff barriers for India: EU is India¶s largest trading partner. According to the Indian Export Import Policy 2002-2007, all marine products with a few exceptions under the Wildlife Protection Act 1972, can be exported free subject to pre-shipment quality inspection. 90% of Indian seafood exports comprise frozen fish, shrimp and cephalopod. The average tariff rate in Japan, the biggest Indian seafood market, is 4.1 %. US, the second
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biggest market for Indian seafood, has just a nominal 1 % tariff duty. EU, the third biggest importer, has an average tariff duty of 10.2 %, followed by China, the fourth biggest, which has a bound tariff rate of 18 %. The EU, Japan and the US extend preferential tariff treatment under Generalized System of Preferences (GSP) to Indian products including seafood. In general, tariff measures are not seen as a trade barrier by the Indian seafood industry to the US and Japanese markets. However, it is seen as a barrier to access some of the markets in developing countries, including China, as well as the EU market. India is still in List 1 of Annex 1 of the EC Decision 97/276/EC, amended by 99/136/EC, whereby all organizations exporting seafood to the EU require export-worthy certification of their processing facilities by an EU-nominated inspection agency. In the case of India, that agency is the Indian Export Inspection Council (EIC).  Market Access ± Nontariff Measures Non tariff measures include the SPS regulations and the growth in quality control regimes promoted particularly by the developed importing countries. The Uruguay Round Agreement on the Application of Sanitary and Phytosanitary (SPS) agreement and the agreement on Technical Barriers to Trade (TBT) adopted by WTO Members in 1995 have given a new direction to the international sea-food trade and services. These agreements are intended to ensure that requirements such as quality, labelling and methods of analysis applied to internationally traded goods are not misleading to the consumer or discriminate in favour of domestic producers or goods of different origin, Bostock . A key aspect has been the development of HACCP, which can impose significant costs from the viewpoint of the developing country supplier. SPS measures are unlikely to be relaxed and hence issues arise primarily in the form of mitigation and enhancement options. TBTs arise especially in the context of specification and labelling. Whilst the latter may assist in promoting (more) sustainable fishing practice they also again impose costs on producers. Areas such as eco-labelling are voluntary and there is scope for negotiation for those developing country suppliers wishing to participate. The SPS Agreement was set up to avoid sanitary standards being used as an unjustified barrier to trade by importing countries. There are several key principles including the sovereign right of a country to put protective measures in place, but these measures should not be more restrictive than necessary to achieve the appropriate level of protection. The Agreement stresses that SPS measures should be scientifically based as well as the importance of risk assessment in determining the appropriate levels of SPS measures. Of crucial importance are transparency in the development and implementation of measures and the adoption of international standards. The SPS Agreement gives status and legal force to the standards set by the Codex Alimentarius Commission. The Codex Alimentarius (food code) was created in 1963 by FAO and WHO to develop food standards and guidelines and has become a global reference point for consumers, food producers and processors, national food control agencies and the international food trade. The SPS Agreement applies only to measures covering food safety, animal and plant life and human health. Other technical measures outside this area come within the scope of the TBT Agreement. The SPS and TBT Agreements are thus complementary and mutually reinforcing. The TBT Agreement tries to balance the trade facilitating aspects of standards against their trade distorting potential by obligating countries to ensure that technical regulations and standards, including packaging , marking and labelling requirements and procedures for assessment of conformity with technical regulations and standards, do not create unnecessary obstacles to international

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trade by: y y y

or discriminate in favour of domestic producers or goods of different origins. It does this Encouraging ³standard equivalence´ between countries; promoting the use of international standards; and mandating that countries notify each other of changes in their standards via Enquiry points.

The EU has been at the forefront in developing food safety standards and has had a profound influence on the development of the seafood export industry in developing economies. EU standards are enforced and regulated at the country level and thus a restriction of exports to the EU under the regulations affects all members of the export community. EU legislation for all food products has recently been brought under one directive and the scope has been extended to all aspects of the supply chain from "farm to fork". This legislation supersedes the individual commodity based directives. All the steps in the chain from primary producers (fishermen and aquaculture units) need to take on board, in a more structured manner, the principles of HACCP systems and other quality assurance needs thus broadening the scope of the competent authority in regulating the industry. The need to ensure that quality assurance measures are instituted prior to arrival at the processing factory gate poses a major challenge to export industries, particularly for the small-scale and Non-industrialized sectors of the industry. Of even greater concern is the fact that in order for the µfarm fork¶ principle to be seen to be working a system of traceability of products throughout the chain will need to be instituted, Bostock. Imports into the USA are regulated under the Federal Regulations, often referred to as 21 CFR 123. These regulations apply to domestically produced products and imports. They require that processors of fish and fishery products operate preventive control systems that incorporate the seven principles of HACCP. While new regulations with regard to quality control, such as HACCP, have been adopted by all major importing countries and made compulsory for their fish processing industries, one notable exception is Japan. While some firms in Japan have neither HACCP nor external suppliers. Standards for imports of fish and fishery products into Japan are governed by the legislation set out in the Food Sanitation Law and the Quarantine, Bostock . Implications of Non-tariff barriers for India: According to the Seafood Exporters Association of India (SEAI), since February 2002, there were several cases of rejection of Indian shrimp imports in the EU market on account of detecting traces of prohibited carcinogenic Antibiotics like nitrofuran and chloramphenicol as well as other bacterial inhibitors like Amino-glycosides and macrolides. Following the EU requirements, on 17 August 2001 India issued a notification specifying the limits for various antibiotics, pesticide and heavy metal residues in seafood products, ITN (2002). International Organization of Standardization (ISO) 9000 is recognized under the Export-Import Policy of Government of India. Firms, including seafood firms, enjoy certain privileges if they are ISO 9000 firms. Under the 19972002 Export-Import Policy, Government of India, exporters with ISO 9000 were given Special Import License (SIL) up to 5 % of f.o.b. value. Certification against ISO 9000 is beginning to emerge as a major industry in India. There are many auditors with experience in assessment of quality management against ISO 9000, and the certifiers in India with the highest credibility in the international market are those under multinational companies.

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Fishery Subsidies There is considerable debate as to what fisheries subsidies actually are and what they include which complicates any discussion of their implications for markets, resources and livelihoods. World Bank (2004) defines fishery subsidies as ³government actions or inactions that are specific to the fisheries industry and that modify ± by increasing or decreasing ± the potential profits by the industry in the short, medium or long-term´. The WTO¶s definition of subsidies in the Agreement on SCM include: Specific financial transfers from state to the industry; The state foregoing normally collectable revenue (e.g. tax free fuel); Provision of services or investments to industry; State purchases of industry outputs other than on commercial terms and also includes all form of state income or price support. Subsidies can also be categorized in relation to the rights of members to make complaint and take action (countervailing measures) and can be Prohibited: export enhancing subsidies or subsidies giving preference to domestic producers or grants tied to the use of domestically produced goods; and Actionable: a subsidy that may be challenged on the basis of causing µadverse effects¶ to the interests of other WTO members. Subsidies may occur in a wide range of fishery components especially on the catch side and indirectly via research and development or support to poor fishing communities. Key issues include perceived distortions that arise especially from EU subsidies (also Japan) with action by other developed (and some developing) country exporters seeking their reduction. There is also a widespread perception and/or concern amongst developing countries that subsidies facilitate the continued operation of excess capacity in long distance fishing fleets with adverse consequences for sustainability. These aspects have led to debates in a number of international forums. Ongoing scope for negotiation and change may have important implications for the management of common pool resources in the form of fish stocks. The Declaration of the fourth WTO Ministerial Conference (Doha, 2001) stipulates that ³In the context of these negotiations, participants shall also aim to clarify and improve WTO disciplines on fisheries subsidies, taking into account the importance of this sector to developing countries´. As a result, several proposals from WTO members aiming to reduce fisheries subsidies were tabled, mostly attempting to reduce or eliminate those subsidies that increase fishing capacity, Lem (2004).Most of the literature on subsidies in fisheries focuses on marine capture fisheries rather than aquaculture. Study like that of the OECD (2003) presents a simple qualitative economic model which considers the effects of giving Government Financial Transfers (GFT) to fisheries and suggests that in the main where there is catch control or preferably effective fisheries management; government financial transfers have no effect on the total catch or the price of fish. A key theme of a study by MRAG (2000) is the interaction between context and subsidy. The study argues that bilateral access agreements are the kind of subsidy that have most impact on developing country coastal and island states. The study summarizes both the negative and positive impacts from the access agreements organized under three headings: biomass and stocks; economic and social. These impacts are very context specific and vary considerably in magnitude and are difficult to isolate from other factors affecting the sector. The role played by good fisheries management systems was highlighted in the case studies. The bulk of subsidies are aimed at offshore fisheries which are largely commercial requiring mechanized oceangoing vessels rather than coastal or inshore fisheries that are largely artisanal in nature. Some of these subsidies have implications for developing country fisheries and livelihoods of poor people. Transparency regarding subsidies is an issue: few members of the WTO have complied with their obligation to report subsidies. The political sensitivity of the
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subsidies issue is highlighted by the use of euphemisms for subsidy: e.g. µgovernment financial transfers¶ and µeconomic incentives¶. There are also large inconsistencies in the data that is publicly available. There has been more attention in the literature on the trade effects of subsidies than their effects on sustainability. Most discussions of subsidies largely focus on the fisheries sectors in developed or middle-income countries. This is due both to their scale and the ease of access to data. Moreover, MRA stresses, subsidies on deep water fleets from developed countries ³are likely to have a much greater impact´. Subsidies are also seen as a driving force in creating the overcapacity in the fishing industry which leads to over-fishing. According to World Bank estimates (as quoted in Milazzo, 1998) annual subsidies to the fisheries sector are of the order of US$14 billion to US$20 billion, whilst WWF (2005) estimates that fisheries subsidies amount to at least US$15 billion per annum. OECD (2005) states that ³governments pay out some US$ 6 billion a year to support the fisheries sector in OECD countries´ in order to help manage fish stocks, to modernize fishing fleets, and to assist communities and regions that can no longer make a living out of fishing to develop other economic activities. UNEP (2004) describes the dual impacts of fisheries subsidies on trade and the environment, whilst WWF (2005) states that ³once a hidden problem, inappropriate subsidies are now widely recognized as contributing to the profound crisis of over fishing that threatens fish stocks and human welfare around the world´. According to the World Bank (2004), formal access of foreign vessels to fishing grounds within the EEZ of fish-rich countries is usually regulated under fishing agreements and many fishing agreements are heavily subsidized by industrial countries (e.g. the EU pays 83% of the license fee, the vessels themselves only 17%). The type of subsidy most frequently found in developing countries is in form of bilateral or multilateral development projects. However, there are some fishing subsidies in developing countries, for example: port facilities owned and managed by the public sector; subsidized lending and credit provision ± in some cases in order to adopt new technology; sales tax exemptions for inputs used by the fishing industry; subsidized fishing inputs in the form of import tax exemptions. Implication of Subsidies for India: Within the framework of the SCM Agreement, only export subsidies are to be treated as prohibited ones. Even if we treat the entire annual budget of Marine Products Export Development Authority (MPEDA) as a prohibited subsidy, which may not be the case if we do a careful analysis of all their schemes, it amounts to less than half % of the annual seafood export value. Even though fisheries subsidies are small, from an overcapacity and over-fishing point of view, their role is to be better recognized in India. Fuel subsidies in terms of tax revenue foregone are extended in several Indian States to the fishing industry and it has become an important consideration for trawler operators to decide whether or not to undertake a particular fishing trip. Also, the criteria for subsidy schemes are often based on political, not legitimate social, considerations. In India, there are instances of misuse of subsidy schemes by fishermen themselves. The vessel owner would sell his fuel quota illegally in the open market and he would buy fuel for his fishing operation from the open market. The net benefit in such a transaction is in favour of the owner since the fuel quota is in his name, whereas the operational costs of fishing are collectively shared between the owner and crew. The owner thus privatizes his benefits by exclusively enjoying the proceeds of the sale of his fuel quota in the open market, and socializes his costs since running costs of a fishing operation, including costs of fuel, are shared among the owner/s and workers and treated as common expense. In this case, the owner of the fishing vessel is only partially bearing the burden of costs of fishing operation. Under the SCM Agreement perhaps the most important aspect to consider in relation to fisheries subsidies in the Indian context, arguably in developing countries
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in general is the revenue foregone rather than government financial transfer. Irrespective of the nature of the fisheries, whether or not targeting high-value-low-volume, or low-value-high volume fisheries, there are no fee either to enter the fishery or to access fisheries resources, both for the rich and poor fishers. A mechanism to generate revenue by taxing fish exports, or high value shrimp fisheries and aquaculture, should be considered. At least one or two % of the landed value of fisheries, based on ownership pattern of fishing assets, should be appropriated through user fees. In the light of recent changes in legal regimes for foreign investment in India, it is possible for excess fishing capacity in other countries to end up in the Indian EEZ. Vessel buyback schemes with the intent of reducing domestic fishing capacity (e.g. South Korea and Taiwan) could result in such fishing capacity ending up in Indian waters if subsidies are provided to vessel owners of distant water fishing nations to transfer their excess fishing capacity to Indian companies. They could effectively end up competing for the same fisheries resources with the domestic sector, mainly comprising fishing vessels below 20 m length. This can deny a level playing field to Indian fishing vessels and it could also give riseto fishing conflicts in the EEZ. There should also be protective measures within national legislation to prevent subsidized distant water fishing vessels from gaining unfair access to the national resources.  Eco-labelling A number of fisheries related eco-labels already exist (e.g. Marine Stewardship Council (MSC), Responsible Fisheries Society of the United States, Global Aquaculture Alliance) for labelling species that are judged to be sustainably fished. The objective of such ecolabeling programmes is to create market based incentives for better management of fisheries by creating consumer demand for seafood products from well managed Stocks or from sustainable aquaculture, Lem (ibid). The DDA also addressed labelling requirements for environmental purposes (i.e. ecolabels), in order to clarify the impact of eco-labelling on trade and examine whether WTO rules stand in the way of eco-labelling policies. While certification and labelling schemes may in some cases offer the opportunity of higher prices and access to niche markets, there are concerns (but little evidence) over the possible negative impacts on developing country producers (MacFadyen, 2004; Bostock et al, 2004). Although eco-labeled products are not yet prominent in any market, concerns are based around a number of issues, such as: Legitimacy and credibility; a mismatch between certification requirements and the reality of tropical small-scale fisheries and potential distortions to existing practices and livelihoods, Gardiner and Viswanathan, (2004). Implications of Eco-labelling for India: There are several concerns about ecolabeling in developing countries and specifically India. Firstly, there is fear of losing access to marketif eco-labeled fish and fish products gain greater preference in import markets. Secondly, there is worry about the affordability of costs associated with adjusting fisheries to comply with ecolabeling standards, and about costs of certification and chain of custody and whether or not the market, if they go for certification, can adequately compensate their higher costs. Thirdly, there is apprehension that fishers in the small-scale artisanal sector would lose their autonomy if they have to comply with standards that are developed and applied by external agencies to their fish exports without taking into account the specific aspects of their fisheries. Fourthly, there are doubts about the practicability of eco-labelling in multi-species, multi-gear fisheries since the unit of certification is the fishery in its entirety. Apart from the above, several concerns about the implications of voluntary ecolabeling for the artisanal and small-scale
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fisheries in developing countries have been expressed, particularly in the context of the ecolabeling programme in fisheries, viz., the MSC, which was established in 1997, ICSF (1998). In the history of MSC from 1997 to 2002, for example, there are no fisheries from developing countries that have been certified, although there are potential candidates for MSC certification from developing countries including a couple of village-specific crab, mackerel and sardine fisheries from Tuticorin in Tamilnadu.

Summary and Policy Implications
Over the last couple of decades the policy space available for the developing countries has shrunk dramatically. And if the developed countries have their way in the current NAMA negotiations, it will shrink over the next decade making economic development in the developing world all but impossible. The impact of the Doha and HK round related to fisheries is not confined to NAMA. Fish related products and fishery services are one of the µsectoral initiatives¶ that would see the early elimination of tariffs. Perversely, tariff cuts on fish products would reward those who engage in economically µefficient mass exploitation and hasten the depletion of the ocean¶s resources. How best the benefits of tariff reductions compare with the costs of non-tariff measures should be looked into in the context of small producers and exporters of seafood. Sustainable local suppliers would be forced out of their domestic market and the rape of the fisheries would intensify. India should also cross-link adoption of effective fisheries management and habitat protection measures in their national waters to greater access to the export market for durable goods such as textiles and garments in the US and EU markets, as suggested by Abrego. Eliminating bad subsidies and targeting good subsidies for fisheries management and human development should be adopted at a regional level to prevent good policy regime of one country from being undermined by the bad policy regime of another. Given the pattern of fish production and consumption in India, market access is an important consideration for Indian fishers and seafood exporters. Fishers certainly benefit from the export market because export varieties of fish generally command a higher price in India. Among the ETBs faced by seafood and shrimps from India pertain to the level of pesticides and antibiotics. Various antibiotics and chemicals like oxolinic acid and oxytetracyclines without any specified limit are totally banned. Consignments containing DDT, Aldrin and Heptachlor are bound to be rejected. The EU directive has also imposed process standards requiring hygiene during handling, processing and storage of marine products. US ban on Indian shrimp products was a unilateral restriction on environmental reasons. In 1996, US banned shrimps from entry unless harvested by aquaculture caught with turtle excluding devices, or by manual instead of mechanical means or in cold water. 

Policy Implications 
The livelihood of vast masses of poor people is threatened by the ongoing negotiations in NAMA, most importantly of those involved in fishing. Any drastic changes in tariff or other rules of market access will have direct consequences for them. TheGovernment must therefore give special consideration to this fact and any deliberation on NAMA must entail special discussions on the impact on employment and livelihood in such sectors. Unfortunately the Indian government has virtually accepted the contents of the
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earlier discredited as the basis for NAMA negotiations. The majority of WTO members in Cancun had rejected that historically, all late industrializes including the USA developed their industry behind high protection. The key issue concerning NAMA is that while developing countries protect their markets through higher tariffs, the main mode of protection for the developed countries is through non-tariff measures, particularly through the use of technical barriers. Such barriers in the developed countries are not being discussed simultaneously or with the same priority. Therefore a further reduction in tariffs as is being negotiated in NAMA will not lead to any greater market access for the developing countries including India but will certainly ensure greater market access for the developed countries. Any further steep reductions in tariffs on industrial products will accentuate the process of de-industrialization of fishing sector, which has already commenced with tough import competition being faced by many sectors in small and medium industries. Indian Government's mandate at such future negotiations must be comprehensively debated and decided by an explicit consensus to be evolved in the Parliament.  The major fishing companies in developed countries use massive factory ships to process their catch. Thus small countries, whose waters are the source of the fish gain do not benefit through jobs and development of local industry. The companies have been pressing their government to cure commitments on µservices related to fisheries¶ in the GATS negotiations that will entrench their control over processing of the resource and of its global marketing and prohibit the source countries from reasserting control over the benefits from the resource. Small-scale fishers in India point out that their problems arise from the open access regime for foreign trawlers, not from subsidies. From their perspective, blanket rules that prohibit subsidies would restrict the right of governments to support small fishers and protect the food security of coastal communities.  In lieu of meeting the costs of fisheries management, seafood exporters should demand a reduction in tariffs on Indian seafood imports in EU and Japanese markets, where the average tariffs are 10.2 % and 4.1 % respectively. EU and Japan are already in the process of rewarding better fisheries management regimes in their seafood import markets. A one percent tax on exports can fetch US$12 mln. per year at current levels of export revenue earnings, which could provide sufficient financial resources to introduce fisheries management measures. A verifiable environment management system, under the ISO 14000, can be adopted in marine fisheries and shrimp aquaculture to demonstrate effective fisheries and aquaculture management measures to the import markets. As long as fishmeal continues to be the main feed, and brood stock comes from the wild and post larvae are collected from the coastal waters, shrimp aquaculture should be treated as a subset of marine fisheries.  Some of the HACCP measures are difficult for small-scale beach-based fishers to meet and hence they will not be in a position to access the international market. Similarly, unless the State invests on behalf of the industry in expensive quality
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control measures, high compliance costs with seafood safety standards could push out small processors and exporters from business. How best the benefits of tariff reductions compare with the costs of non-tariff measures should be looked into in the context of small producers and exporters of seafood. Being a highly sensitive item from the health and environment point of view, compliance costs of the seafood industry are bound to be quite high in relation to other durable exports from developing countries. US lost the case at WTO when India and other affected countries challenged the ban. However, the ban since 1996 adversely affects the Indian shrimp exports.  Although there have been significant impacts on the fishing industry as a result of turtle protection measures there does not seem to be any significant impact on the exports of India as a result of MEAs. It is quite likely that, in future, MEAs might play a major role in the seafood exports of India if MEA obligations are to be met to maintain market access. In fact, fish trade is fast emerging as an area with potential conflicts between MEA obligations and trade rules.  In developing countries, the fisheries administration is fragmented, with responsibility divided among such an array of actors (In India, around 11 ministries across the central and state governments) that any sectoral coherence in policy is very difficult to secure. Similarly, there is usually no clear policy to address the problem of over-capacity. For instance, the State of Goa has 1128 registered trawlers and this is far above the saturation point compared to the fact that the Food and Agricultural Organization of the United Nations following a study recommends 30 trawlers per 10 kilometres of coastline. Given that Goa has 105 kilometres of coastline the number of trawlers should have been around 315 but it has instead 1128 of them, Rodrigues (2005). A comprehensive central policy in this regards need to be immediately evolved.  India should start in earnest putting in place a fisheries management plan. Subsidies to the industry to adopt and implement such a plan should be defended as nonactionable subsidies. The EC position on non-actionable subsidies is also of relevance to developing countries like India since several of the proposed subsidies in this category can also be defended within the framework of special and differential treatment of developing countries.  Under Article 4 of Agreement on Sanitary and Phytosanitary Measures, members are in the process of bilateral determination of the equivalence of SPS regulations and regulatory processes between importing and exporting nations. (While the international standards of US, EU and Japan are more an extension of their domestic standards, such standards in India are exclusively applied to its export market. India, for example, does not have any quality standard for seafood for its own domestic consumers and needs to establish the equivalent.

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KEY FINDINGS AND HIGHLIGHTS
India has one of the largest merchant shipping fleet among the developing countries and is ranked 20th in the world. The fleet strength by the end of December, 2007 was 850 vessels with 9.03 million gross Registered Tonnage(GRT) The coastline of India is punctuated with 12 major ports: Kolkata, Chennai, Cochin, Ennore, Jawaharlal Nehru Port Trust (JNPT), Kandla, Mormugao, Mumbai, New Mangalore, Paradip, Tuticorin and Vishakhapatnam. - All major ports together have handled total 519.16 million tonnes of cargo in 2007-08, registering growth of 11.94% as compared to 463.77 million tonnes during 2006-07. The Shipping Corporation of India Limited (SCI) is the largest shipping company in India with a significant presence on the global maritime map. It is the country¶s premier shipping line owning 79 vessels, with 2.73 million GRT and 4.76 million DWT as on December 31, 2007 and has a share of about 30.2% of the total Indian tonnage. India¶s total cargo traffic by all ports is expected to grow at a CAGR of 10.96% during 2007-08 to 2011-12, out of which non-major ports would grow at a CAGR of 12.58% and major ports would grow at a CAGR of 10.32%.

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HANDICRAFTS STATUS OF HANDICRAFTS INDUSTRY IN INDIA
The roots of Indian art and crafts are entrenched very deep and they are capable of influencing the generations passing by. The present status of craft in India owes much to the rich craft traditions of the past. Most of the crafts from the past continue to flourish due to their utilitarian nature, their availability to the common people, and popularity in domestic and foreign markets. India is one of the important suppliers of handicrafts to the world market. The Indian Handicrafts Industry is highly labor intensive cottage based industry and decentralized, being spread all over the country in rural and urban areas. Numerous artisans are engaged in crafts work on part-time basis. The industry provides employment to over six million artisans (including those in carpet trade), which include a large number of women and people belonging to the weaker sections of the society.In addition to the high potential for employment, the sector is economically important from the point of low capital investment, high ratio of value addition, and high potential for export and foreign exchange earnings for the country. Although exports of handicrafts appear to be sizeable, India¶s share in world imports is miniscule. It is a sector that is still not completely explored from the point of view of hidden potential areas. India, a country with 26 states and 18 languages and more than 1500 dialects offers an enormous range of handicrafts from each of the states.There is a great demand for rich brocades and zari work. The repertoire of saris ranges from Banarsi Amru, Tanchoi from Surat, Paithani, Patola, and Kancheevaram to the cotton saris from the tribal regions of Bihar and Madhya Pradesh etc, to enchant the modern Indian woman. There is a profusion of materials available to the consumers these days. One can get a variety of garments made of different silks and mixed fabrics. Richly embroidered garments, woven shawls and household items are in vogue these days. Mainly craftsmen from Kashmir, Punjab, Gujarat, Rajasthan, Madhya Pradesh, North Eastern states etc create these products. There is a flourishing market for pherans and tablecloths from Kashmir. Woolen shawls from Himachal and North Eastern states too are popular. Products like bed sheets, table mats, napkins, household furnishings etc made out using the various styles of textile printing ranging from tie and dye, block printing, hand printing etc are in great demand now a days. India has an obsession with gems and jewelry since ancient times when India was referred to as the 'golden bird'. This obsession is strong till date and India has become the largest importer of gold in the world. A variety of local jewelry traditions (of different states) are present in India with the modern day gem and diamond cutting and polishing industry. The present day jewelry tradition of India is a fine example of assimilation between traditional and modern designs and techniques. The increasing demand for Indian jewelry and gems has made this craft tradition into a full-fledged large scale organized industry, which is growing by the day. Gems and semi precious stones are not only used in making jewelry, but for medicinal purposes. People wear them under the prescription of astrologers, as it is strongly believed in India that Gems and semi precious stones, affect ones future and destiny. Carpet weaving industry is the largest export oriented craft industry from India. Not only there is a great demand for costly silk carpets from Kashmir, which has become the status symbol in traditional Indian homes, but there is also demand for woolen and non-woolen carpets.

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A variety of floorings and traditional durries are flooding the markets these days and decorating the floors of Indian homes. There is a huge domestic market for a hoard of utilitarian craft items such as bedcovers, sheets, cushions, curtains, tablemats, bags, metal furniture, mats, boxes, cabinets, wood furniture, toys, utensils, garden pots, terracotta items, brass and silverware, leather products, papier-mâché products, cane, jute and coir items, carpets, rugs, durries etc. Most of the units producing utilitarian craft items have attained the status of small-scale industry. The demand for decorative items such as traditional wall hangings, silver cutlery, brass pots, embellished wooden sculptures, marble and wood inlay work, silk carpets, wrought iron furniture and decorative pieces, traditional paintings, enameled furniture, stone and wood carvings, metal, wood and stone sculptures etc is also on the rise in India and abroad. The popularity of these handicraft products is increasing in the domestic markets due to the increasing demand for traditional goods. Although each crafts pockets has its particular problems, a few selected craft pockets are identified based on their past performance for immediate remedial attention to stimulate a quantum in exports of handicrafts in the coming years. Moradabad(UP) Saharanpur (UP) Jodhpur (Raj.) Narsapur (A.P.) : : : : For Artmetalwares and imitation jewellery For Wooden handicrafts& Wrought iron handicrafts For Wooden, Wrought Iron and Sea Shell handicrafts For Lace and Lace goods

TRADE POLICY
Handicraft items fall under the ITC (HS) code 97. Paintings, drawings and paintings, domestic articles of wood etc. which come under 9701, original engravings falling under 9702, original sculptures categorized under 9703 and items under the code 9704 are freely importable. Imports of items in 9705 are restricted

MAJOR PRODUCT CENTERS FOR SELECTED HANDICRAFTS OF INDIA
Artmetalware: Moradabad, Sambhal, Aligarh, Jodhpur, Jaipur, Delhi, Rewari, Thanjavur, Madras, Mandap, Bidar, Kerala & Jagadhari, Jaisalmer Wooden Art wares: Saharanpur, Nagina, Hoshiarpor, Srinagar, Amritsar, Jaipur, Jodhpur, Jagdalpur, Bangalore, Mysore, Chennapatna, Madras, Kerala & Behrampur (WB) Hand printed Textiles & Scarves: Amroha, Jodhpur, Jaipur, Farrukhabad, Sagru & Sanganer Embroidered goods: Kutch (Gujarat), Jaisalmer, Baroda, Lucknow, Jodhpur, Agra, Amritsar, Kullu, Dharmshala / Chamba & Srinagar Marble & Soft Stone Crafts: Agra, Madras, Baster, Jodhpur

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Paper Machine Crafts: Kashmir, Jaipur Terracotta: Agra, Madras, Baster, Jodhpur Zari & Zari Goods: Rajasthan, Madras, Baster Imitation Jewellery: Delhi, Moradabad, Sambhal, Jaipur, Kohima (Tribal) Artistic Leather Goods: lndore, Kolhapur, Shanti Niketan (WB)

INDIAN HANDICRAFTS EXPORT
Indian Handicrafts Export is one of the most important sources of revenue in the country. India is known to be the largest exporter of handicraft items among all other developing countries. The handicraft industry of India has ensured opportunities to more than six million craftsmen including females who can utilize their talents to earn a proper livelihood. Indian handicraft industry comprises of both men and women workers, which has led to a flourishing economy in these weaker sections of the country. The revenue generated from the exporting of handicraft items in India during 1998-99 was USD 1.2 billion. The export production of Indian handicrafts industry is highly significant due to:
y y y

Low capital investment High ratio of value addition Potentially active for export and foreign exchange income

India has a very less amount of shares in the global market, as the handicrafts sector has not yet been sincerely explored so as to bring out the hidden potentiality within the artisans. The major states in India that are involved in exportation of handicraft items include Uttar Pradesh, Andhra Pradesh, North Western state of Rajasthan, and the coastal state of Gujarat. The two broad sections in Indian handicraft items are:
y y

Consumer goods for daily use Decorative items manufactured by the skilled craftsmen

The Indian handicrafts industry exports the following products by and large:
y y y y y y

Cloth Paintings Design & Development Floor Paintings Handmade Paper Kashmiri Paintings Pottery

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The various handicraft items that are exported worldwide include the following:
y

y

y

y

y

Textile based handicrafts- the hand printed textile designs include block and screen painting, kalamkari, batik, and bandhanis. These materials are widely used in bed-covers, bed-sheets, upholstery, dress materials, and tapestry. Clay, Metal and Jewelry- the chief metals used for handicraft items include brass, copper, bronze, and bell metal. These are used for manufacturing various wares, which are carved out in multifarious designs both traditional and contemporary. Woodwork- Toys, furniture, decorative items, and other articles are carved out of wood in multi-faceted designs and are also available in a wide range. Lacquered woodwork is quite eminent in Indian handicrafts industry. Stone Craft- Various handicraft items in India are manufactured in stones. Marble, alabaster, and soapstone are used as the primary materials for these products. These stone crafts are then adorned with semiprecious stones. Glass and Ceramic- the artistic crafts of glass and ceramic are found in varied range of designs, which are a perfect blend of the Western style and Indian aesthetics. These products are available in various shapes and colors.

Indian Handicrafts Export is performing best in the following segments:
y y y y

Jodhpur (Raj)- Wooden, Wrought Iron and Sea Shell handicrafts Moradabad (UP)- Art metal wares and imitation jewelry Narsapur (A.P)- Lace and Lace goods Saharanpur (UP)- For Wooden handicrafts and Wrought iron handicrafts

The major clients of Indian Handicrafts Export are as follows:
y y y y y y y y

Shawls and Art wares have got their markets in Saudi Arabia, U.S.A. Japan and U.K Hand printed textiles and scarves have occupied a market in U.S.A., U.K., Germany and Canada Art Metal wares have their markets in U.S.A., Germany, U.K. and Italy Imitation Jewelries are highly consumable in U.S.A., U.K., Saudi Arabia and Germany Wood Wares are widely popular in U.S.A., U.K., Germany and France Zari and Zari goods have found markets in U.K. U.S.A., Japan and Saudi Arabia Embroidered and Crocheted Goods have occupied a huge market in U.S.A., Saudi Arabia, U.K., and Germany Miscellaneous handicrafts have markets in U.S.A., Germany, U.K. and France

India's Exports of Handicrafts by Major Items (excl. carpets) SI.No Product 1 Artware of Aluminum 2000-2001 44.996 2001-2002 26.0128 2002-2003 47.8835
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2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33

Artware of Copper,Brass,Bronze & Silver 300.3095 Alloys Bidriware 1.2727 Carpets, numdhas, etc. as artware 6.3683 Carpets,Rugs,Tapestries etc 3.821 Carving Sets As Artware(other than 0.4451 Precious) Doll and Toys As Artware 0.1686 Embroidery As Artware 5.9859 Handicrafts 669.185 Hornware As Artware 2.0662 Inlaid With Ivory, Metal etc. 0.0784 Ivory Manufactures As Artware 0.0843 Lacquered Wooden Ware 0.4766 Leather Goods As Artware 4.5827 Namdas 2.5473 Nirmal Ware 0.018 Other Decorative Articles of Jute 2.0417 Other handicraft goods, as artware. 512.469 Other As Artware 146.5394 Others 80.4916 Paper Mache Articles As Artware 1.472 Pottery Artware 1.2541 Scrvs & Similar Articles of Silk 0.3671 Scrvs & Similar Articles of Wool 0.216 Shawls of Silk 0.7632 Shawls of Wool 2.1297 Shawls, scarves and similar articles of 3.4761 silk and wool as artware Stone Work(Albstr,Marble,etc)As 33.0523 Artware Wall Hangings/Wall Plaquers of Jute 1.2327 Wood work as artware 110.9678 Wood Work of Rose Wood (incl. 16.5707 Carving) Wood Work of Sandal Wood (incl. 1.8719 Carving) Wood Work of Sheesham Wood(incl. 8.6789 Carving)

237.3776 1.3457 2.2596 1.6044 0.3027 0.2448 2.6728 547.6794 2.312 0.1688 0.1896 0.235 5.0877 0.6552 0.0409 1.6034 414.1183 132.8542 84.0688 1.2376 1.4937 0.1198 0.7047 0.4697 2.338 3.6322 23.7409 1.343 102.7041 10.7919 0.517 6.1278

336.0513 1.4109 2.5354 2.2075 0.2472 0.4734 4.4501 782.1414 2.7836 0.5127 0.1027 0.102 5.8211 0.3279 0.0057 0.9948 616.4212 211.7264 123.7453 1.5253 1.5174 0.2232 0.6348 0.6752 1.3832 2.9164 19.2579 1.4277 139.893 8.1272 1.7497 5.2243

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Wood Work of Walnut Wood (incl. 2.7996 Carving) 35 Zari goods as artware 2.8515 36 Zari Goods, Imitation 2.5084 37 Zari Goods, Real 0.3431 Currency: US $ Million Source: DGCIS 34

0.7948 1.2242 1.0165 0.2077

0.4317 1.1175 1.0358 0.0817

India is exporting around 40 items of handicrafts, whose percentage of exports is increasing year by year respectively.

INDIA'S COUNTRY WISE EXPORTS
SI.No Product 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Albania Algeria Angola Argentina Armenia Australia Austria Azerbaijan Bahrain Bangladesh Belarus Belgium Benin Bhutan Bolivia Bosnia & Herzegovina Botswana Brazil Bulgaria Burkina Faso Burundi Cambodia Cameroon Canada Chad 2000-2001 0.0476 0.3481 0.0213 1.1218 11.2893 1.4684 0.1867 0.3012 0.0001 9.0019 0.0187 0.0088 0.0108 0.0214 0.9471 0.0425 0.0173 0.001 0.0192 15.2344 0.0279 2001-2002 0.0003 0.1428 0.0057 0.7347 10.5568 1.2671 0.2683 0.3239 9.5755 0.0459 0.0146 0.0005 0.0455 0.8573 0.075 0.0145 0.0003 0.0353 0.0105 12.8124 0 2002-2003 0.0264 0.2653 0.0706 0.1741 0.0272 11.9549 1.2159 0.0099 1.0058 0.3249 0.007 14.5125 0.0237 0.0002 0.1179 0.0005 0.0213 0.9793 0.0661 0.0464 0.0297 0.0017 0.0263 17.6554

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26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63

Chile China Colombia Congo Rep Costa Rica Croatia Cuba Czech Rep. Denmark Dominican Rep. Ecuador Egypt El Salvador Estonia Ethiopia Finland France Gabon Guatemala Georgia Germany Ghana Greece Guinea-Bassau Haiti Honduras Hong Kong Hungary India Indonesia Iran Iraq Ireland Israel Italy Ivory Coast Jamaica Japan

2.4082 1.8449 0.3479 0.1444 0.1117 0.0436 0.018 0.7584 10.011 0.1216 0.0686 0.1932 0.0074 0.0103 1.4499 31.013 0.0132 0.0493 37.554 0.0545 4.4266 0.0014 0.0006 4.1806 0.4203 0.4126 0.3776 0.2522 1.8416 6.5798 27.9376 0.0313 0.0275 11.3249

1.5293 1.5577 0.402 0.1116 0.1886 0.0839 0.0128 0.441 5.5817 0.1038 0.2886 0.7184 0.0016 0.033 0.9708 29.4103 0.0094 0.0048 0.0223 30.4357 0.1126 4.6484 0.064 0.0009 2.3241 0.3918 0.6598 0.4719 0.0809 1.2183 5.2333 19.89 0.036 0.0267 11.2172

1.0879 3.2492 0.3603 0.123 0.1437 0.0373 0.0034 4.3204 11.5208 0.0465 0.1421 0.3929 0.0188 0.0059 0.3913 1.9661 37.5341 0.1746 0.0247 0.0191 47.2585 0.238 8.0068 0.0021 0.0221 0.07 2.5027 0.567 0.7394 0.8357 0.004 1.8926 4.5088 24.0536 0.0061 0.0031 12.2407
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64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101

Jordan Kazakhstan Kenya Kingdom of Saudi Arabia Kuwait Kyrgyz Rep. Lao P D R Latvia Lebanon Lesotho Libya Lithuania Luxembourg Madagascar Malawi Malaysia Maldives Mali Mauritius Mexico Moldova Morocco Mozambique Namibia Nepal Netherlands New Zealand Nicaragua Nigeria Norway Oman Pakistan Panama Papua New Guinea Paraguay Peru Philippines Poland

0.4 0.4205 0.4118 4.8315 1.4898 0.4702 0.0256 0.5694 0.0015 0.071 0.0448 0.0095 0.0382 2.4922 0.0425 0.0023 1.5031

0.3818 0.1003 0.5344 5.8023 1.3933 0.3573 0.0082 0.0771 0.6612 0.0055 0.0427 0.0726 0.0664 0.0278 0.073 2.5981 0.4731 0.0191 1.2157

0.6395 0.1189 1.2716 8.4346 1.9546 0.3536 0.0441 0.7514 0.0486 0.0946 0.0888 0.0698 3.1185 0.1165 0.0131 1.1113 1.2173 0.0028 0.0717 0.0023 0.2612 37.3164 1.5328 0.0021 0.6716 3.75 2.4774 0.0611 0.3918 0.0173 0.0193 0.1515 0.3496 1.2334
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0.0472 0.0006 0.3068 29.243 2.176 0.0182 0.6969 3.7595 2.1622 0.0502 0.0792 0.0012 0.0053 0.1906 0.6124 1.5123

0.0015 0.0001 0.205 25.8394 2.6102 0.0078 0.7392 2.258 2.2903 0.1954 0.3229 0.016 0.1113 0.1309 0.5646 0.988

102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139

Portugal Puerto Rico Republic of Korea Romania Russia Rwanda Senegal Singapore Slovak Republic Slovenia South Africa Spain Srilanka Sudan Sweden Switzerland Syria Arab Rep. Taiwan Tajikistan Tanzania Thailand Togo Trinidad & Tobago Tunisia Turkey Turkmenistan UK Uganda Ukraine United Arab Emirates Uruguay USA Uzbekistan Venezuela Vietnam Yemen Arab Rep. Yugoslavia Zambia

2.3708 0.0387 1.2363 0.2481 2.8932 0.0334 3.4346 245.9932 0.0748 3.9682 21.8287 1.5123 0.1709 6.1843 2.7547 0.1095 1.2094 0.0171 0.3656 0.6845 0.0398 0.1807 0.4545 0.5891 0.0322 61.6174 0.0946 0.3216 14.6376 0.2161 294.8517 0.3619 1.1523 0.278 0.3741 0.0957

2.1359 0.0132 1.2664 0.1558 1.8073 0.0481 3.9252 248.842 0.1858 3.4547 19.0162 1.4411 0.1952 4.5337 2.6746 0.4074 1.2375 0.0265 0.3126 1.3595 0.0097 0.2402 0.3048 0.7913 0.0932 56.1987 0.1195 0.1803 12.205 0.1417 219.176 0.1939 0.7436 0.2724 0.5225 0.1048 0.0992

4.0005 0.0668 1.2472 0.2227 2.2682 0.0208 0.03 4.7473 0.2401 5.2272 30.4608 1.14 0.2306 6.9689 4.0621 0.2766 0.9616 0.0448 0.3519 1.614 0.0035 0.2843 0.2043 1.4939 0.1353 79.1673 0.2608 0.0954 20.9196 0.0253 324.6047 0.1218 0.8946 0.1392 0.5567 0.1146 0.0579
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140 Zimbabwe Currency: US $ Million

0.0447 Source: DGCIS

0.0794

0.0787

Indian Handicrafts industry has great growth perspective as it can export to all the countries of the globe as the today¶s scenario of business is global.

INDIA'S CUMULATIVE EXPORT
SI.No Product 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 April'2002 August'2002 16.9873 -

Art ware of Aluminum Art ware of Copper, Brass, Bronze & 142.0969 Silver Alloys Bidriware 0.5978 Carpets, numdhas, etc. as art ware 1.0207 Carpets, Rugs, Tapestries etc 0.8303 Carving Sets As Art ware(other than 0.144 Precious) Doll and Toys, As Art ware 0.0842 Embroidery, As Art ware 1.728 Handicrafts 320.5616 Horn ware As Art ware 1.3027 Inlaid With Ivory, Metal, etc. 0.0463 Ivory Manufactures, As Art ware 0.061 Lacquered Wooden Ware 0.0558 Leather Goods, As Art ware 2.3498 Namdas 0.1904 Nirmal Ware 0.0057 Other Decorative Articles of Jute 0.541 Other handicraft goods, as art ware. 253.8943 Other, As Art ware 86.0599 Others 49.0565 Paper Mache Articles, As Art ware 0.6338 Pottery Art ware 0.7593 Scrvs & Similar Articles of Silk 0.0371 Scrvs & Similar Articles of Wool 0.1196 Shawls of Silk 0.295 Shawls of Wool 0.5702 Shawls, scarves and similar articles of 1.0219

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28 29 30 31 32 33 34 35 36 37

silk and wool as art ware Stone Work(Albstr,Marble,etc)As Art 7.7324 ware Wall Hangings/Wall Plaquers of Jute 0.5484 Wood work as art ware 56.2957 Wood Work of Rose Wood (incl. 3.8305 Carving) Wood Work of Sandal Wood (incl. 0.949 Carving) Wood Work of Sheesham Wood(incl. 2.0248 Carving) Wood Work of Walnut Wood (incl. 0.3329 Carving) Zari goods as art ware 0.5966 Zari Goods, Imitation 0.573 Zari Goods, Real 0.0236 Source: DGCIS

Currency: US $ Million

These statistics show the percentage of each handicraft item exported to the international markets and gives us a clear idea of how the business is and what further can be done.

COUNTRY-WISE EXPORTS OF HANDICRAFTS
The major buyers for handicrafts (other than carpets) are as under: Art Metal wares Wood Wares Hand Printed & Textiles & Scarves Embroidered & Crocheted Goods Shawls as Art wares Zari & Zari goods Imitation Jewellery Miscellaneous Handicrafts : : : : : : : : U.S.A., Germany, U.K. & Italy U.S.A., U.K., Germany & France U.S.A., U.K. , Germany & Canada U.S.A., Saudi Arabia, U.K., Germany Saudi Arabia, U.S.A. Japan & U.K U.K. U.S.A., Japan & Saudi Arabia U.S.A., U.K., Saudi Arabia & Germany U.S.A., Germany, U.K. & France

HANDICRAFTS INDUSTRY IN ANDHRAPRADESH
Handicrafts have always been a remarkable feature of Indian art and crafts. Andhra Pradesh is yet another great site offering ample astounding handicrafts. The artisans still make these extraordinary handicrafts with dexterity. Whether it is needle craft or bronze castings, metal craft
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or stone craft, Andhra Pradesh has a wide array of handicrafts that can become a part of your lifestyle. The eminence of these handicrafts lies in their traditional method of creation. These handicrafts are loved and adored not only by Indians, but people from all parts of the world. Many inhabitants of the state still rely on the handicraft industry. Scroll down to get more information about the famous handicrafts of Andhra Pradesh. Banjara Needle Crafts: Banjara Needle Crafts The embroidery and mirror work, created by the 'Banjaras' (Gypsies) on fabrics, have become the part of each person's wardrobe in India. These people employ their dexterity in needle craft and create incredible designs on clothes. This work of art is known for its intricate and colorful designs. Budithi Brassware In Srikakulam district, Budithi is a small village that is known for its astonishing brassware. The items carved out of alloys range from traditional to modern ones. The exclusive art articulates in the form of traditional utensils and contemporary pots. Brass is commonly used to make the objects. These objects are adorned with geometric patterns and floral designs. Durgi Stone Craft Durgi is a small town, located at a distance of 10 km from Macherla. The traditional skill of making sculptures is still practiced and taught at the School of Sculpture and Stone Carving situated here. From generation to generation, these skills have been passed and the ancient methods are still observed to create the masterpieces of art. Veena Manufacturing 'Veena' is the one amongst the oldest musical instruments of India. No composition of Carnatic music is complete without the cadence of this instrument. Bobbili town is much acclaimed for manufacturing Veena. The instruments made here are known for their fullness of tone. Moreover, they are available in different designs and patterns. Bidri Craft Bidri craft is another craft that serves as the pride of Andhra Pradesh. This unique art of silver inlay on metal has always been enthralling people with its lure. The historical events reveal that this craft was brought by Iran migrants to India. The artisans practiced this art and brought it on the world wide panorama. In the present day, Bidri craft has been customized to produce cufflinks, name plates and many more things. Dokra Metal Crafts Dokra Metal craft is quite prevalent in the tribal regions of Andhra Pradesh. In Adilabad district, the places like Chittalbori and Ushegaon are the main promoters of this art. The notable fact
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about Dokra craft is that each piece is different from the other. All the objects are created niftily by hand, boasting of individualistic touch. Dokra craft produces objects like figurines, horses, drummers, atypical spoons and tribal Gods. Nirmal Arts Nirmal town of Adilabad district is known for its wide range of handicrafts. The skilled craftsmen make the objects appear authentic with their brilliant use of colors and traditional techniques of creating objects. The colors are extracted from the natural dyes. The popular 'Moghul' miniatures are made on 'Ponniki', which is a soft white wood. It is further strengthened with coatings of tamarind seed paste, fine muslin and pipe clay. Bronze Castings Andhra Pradesh has been known world-wide for its amazing Bronze castings. These castings require special skills to create incredible idols. The craftsmen are required to study details of the 'Shilpashastra'. The aesthetics of the idols are made by their physical measurements, proportions, description of the deity, characteristics and symbolism. While exercising solid casting of icons, the mould is prepared by several coatings of different clay on a finished wax model. This process provides the fine curves to the cast-image. Kondapalli Toys Kondapalli toys are famous for being eco-friendly and different from others. Made out of softwood, known as 'Tella Poniki', the toys of Kondapalli utilize sawdust, tamarind seed powder, enamel gums and watercolors in their creation. As and when a toy is carved out from wood, it is further shaped with a paste made of tamarind, wood and sawdust. After the whole process, 'Sudda' (white lime) is applied on the toy and then, it is left for a day or two to dry. Subsequently, the artists paint the toys in different colors, indicating the character of the image. Lacquer Ware In Andhra Pradesh, Etikoppaka is famous for its amazing lacquer ware. This craft involves application of lacquer on wood. Lacquering could be done either by hand or machine. The handlathe is preferred to shape delicate items. The lac is applied when the objects get arid. In this process, the lacstick is hard-pressed against the woodenware meant to be lacquered. Since the object keeps on revolving, the friction generates heat, which softens the lac and facilitates the color to get stick. With the help of brush, designs are painted on the figures, objects and toys. The lac bangle is the most popular lacquer ware that also comes embellished with stones, beads, glass and mirrors.

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EXPORT PROSPECTS
The rising import demand of handicrafts at an annual rate of 15 percent, indicate that the world market for handicrafts in the near future would be sizeable. Certain factors like strong preference for genuine handmade artistic products (handicrafts), lack of interest in similar machine made substitutes and demand for ethnic handicrafts, further substantiate the grounds for increase in world demand. India, though being one of the major producers and suppliers of handicrafts to the world market, holds a miniscule share of 3 percent of the world imports. Despite the existence of a fairly large production base and a large number of craftsmen, India has not been able to take due advantage of the growing overseas markets for handicrafts. Some of the reasons attributed to the lower share are: y y y y y        The Production and supply of handicrafts have continued to be inadequate and erratic. The quality and finish are not up to the mark. The price standard is not maintained. The product development and improvement is not well conceived and adopted. Major Distribution Channels which are used by other countries such as: Wholesalers Importers/distributors Commission agents/sales representative Department stores Mail-order Internet sales Tele-shopping should be introduced into the industry to enhance the growth and sales of the industry at the domestic as well as international markets.

Similar is the case of Andhra Pradesh which has a large production base of handicrafts supported by an equally large number of artisans. However, some of the items like crochet lace goods, art metal wares (especially Bidri wares) and wood wares, because of their unique artistic and aesthetic values have found favour in the overseas markets, but the share of the State in all-India exports of handicrafts was reckoned at less than one per cent during 200203. Considering the adequate production potential, the prospectus for export of handicrafts from the state appears to be bright provided corrective measures as suggested above are taken by various agencies at central, state and industry levels.

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SWOT ANALYSIS OF THE INDIAN HANDICRAFTS INDUSTRY
STRENGTHS
y y y y y y y y

Abundant and cheap labour hence can compete on price Low capital investment and high ratio of value addition Aesthetic and functional qualities Wrapped in mist of antiquity Handmade and hence has few competitors Variety of products which are unique Exporters willing to handle small orders Increasing emphasis on product development and design up gradation

WEAKNESSES
y y y y y y

Inconsistent quality Inadequate market study and marketing strategy Lack of adequate infrastructure and communication facilities Capacity to handle limited orders Untimely delivery schedule Unawareness of international standards by many players in the market

OPPORTUNITIES
y y y y y

Rising appreciation for handicrafts by consumers in the developed countries Widespread novelty seeking Large discretionary income at disposal of consumer from developed countries Growth in search made by retail chains in major importing countries for suitable products and reliable suppliers. Opportunities for agencies to promote marketing activities Use of e-commerce in direct marketing

THREATS
y y y y y

Better quality products produced by competitors from Europe, South Africa, South Asia, etc. Better terms of trade by competing countries Consistent quality and increasing focus on R&D by competing countries Better packaging Stricter international standards

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IT SECTOR THE GLOBAL SCENARIO OF IT INDUSTRY:
Denmark and Sweden once again lead the rankings of The Global Information Technology Report 2008-2009, released for the eighth consecutive year by the World Economic Forum. The United States follows suit, up one position from last year, thus confirming it¶s pre-eminence in networked readiness in the current times of economic slowdown. Singapore (4), Switzerland (5) and the other Nordic countries together with the Netherlands and Canada complete the top 10.The Report underlines that good education fundamentals and high levels of technological readiness and innovation are essential engines of growth needed to overcome the current economic crisis. Under the theme ³Mobility in a Networked World´, this year¶s Report places a particular focus on the relationship and interrelations between mobility and ICT. With record coverage of 134 economies worldwide, the Report remains the world¶s most comprehensive and authoritative international assessment of the impact of ICT on the development process and the competitiveness of nations. The Report is produced by the World Economic Forum in cooperation with INSEAD, the leading international business school, and is sponsored by Cisco Systems.

RANKINGS IN FULL
Rank 1 2 3 4 5 6 7 8 9 10 Country Denmark Sweden USA Singapore Switzerland Finland Iceland Norway Netherlands Canada Score 5.85 5.84 5.68 5.67 5.58 5.53 5.50 5.49 5.48 5.41

IN 2008 IN ASIA-PACIFIC
Internet penetration ranges from below 1% in economies like Timor-Leste, Myanmar, Bangladesh, Cambodia, Lao P.D.R. and Nepal, to above 65% in Japan, Republic of Korea, Australia and New Zealand. During 2006, India was the top country to add an average of 6.3 million new mobile subscribers every month. However China represents almost 43% of the entire Asia-Pacific mobile market in
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terms of subscriber numbers. The domestic penetration in China still hovers at around 35%. India has overtaken China in terms of mobile growth rates. India has growth rates of 91% per annum since 2001. With just total mobile penetration rates of over 14%, potential for growth is enormous.

INFORMATION TECHNOLOGY IN INDIA
The Indian Information Technology industry accounts for a 7% of the country's GDP and export earnings as of 2008, while providing employment to a significant number of its tertiary sector workforce. In March 2009, annual revenues from outsourcing operations in India amounted to US$60 billion and this is expected to increase to US$225 billion by 2020. The most prominent IT hubs are IT capital Bangalore and presently growing Chennai. The other emerging destinations are Hyderabad, Pune, Delhi, Coimbatore and Kolkata. Technically proficient immigrants from India sought jobs in the western world from the 1950s onwards as India's education system produced more engineers than its industry could absorb. However, there are severe skills shortage among engineers, especially who lack in soft skill and technical skill, as a result engineering graduates remain unemployed after being pass out from college or university. India's growing stature in the information age enabled it to form close ties with both the United States of America and the European Union. Out of 400,000 engineers produced per year in the country, 100,000 possessed both technical competency and English language skills, although 10% of India's population can speak in English out of 100. India developed a number of outsourcing companies specializing in customer support via Internet or telephone connections. By 2009, India also has a total of 37,160,000 telephone lines in use, a total of 506,040,000 mobile phone connections, a total of 81,000,000 Internet users comprising 7.0% of the country's population, and 7,570,000 people in the country have access to broadband Internet making it the 12th largest country in the world in terms of broadband Internet users. Total fixed-line and wireless subscribers reached 543.20 million as of November, 2009.

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103

INDIA'S IT INDUSTRY (USD BN) [SOURCE:NASSCOM]
Particulars FY 2004 FY 2005 FY 2006 FY 2007E

IT Services

10.4

13.5

17.8

23.7

- Exports

7.3

10.0

13.13

18.1

- Domestic

3.1

3.5

4.5

5.6

ITES-BPO

3.4

5.2

7.2

9.5

- Exports

3.1

4.6

6.3

8.3

- Domestic

0.3

0.6

0.9

1.2

Engineering services, R&D and Software products 2.9

3.9

5.3

6.5

- Exports

2.5

3.1

4.0

4.9

- Domestic

0.4

0.7

1.3

1.6

Hardware

5.0

5.9

7.0

8.2

Total IT industry

21.6

28.4

37.4

47.8

- Exports

13.4

18.2

24.1

31.9

- Domestic

8.3

10.2

13.2

15.9

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TOP SIX IT HUBS IN INDIA
Ranking 1 2 City/Region Bangalore Chennai Description Popularly known as the capital of the Silicon Valley of India is currently leading in Information Technology Industries in India. Chennai is the second destination in India for IT. most preferred

3

NCR

The National Capital Region of India comprising Delhi, Gurgaon, Faridabad, Noida, Greater Noida and Ghaziabad are having ambitious projects and are trying to do every possible thing for this purpose. Hyderabad which has good infrastructure and good government support is also a good technology base in India. Kolkata which is slowly becoming a major IT hub in near future. Some of the well known technological corporations are situated. The booming city is the home to a good number of Software companies. With the arrival of the TIDEL Park II and the SIDCO IT Park, Coimbatore known for its attractive climate and skilled manpower is expected to outsource Bangalore and Chennai.

4

Hyderabad

5 6

Kolkata Pune

7

Coimbatore

Engineering Services include Industrial Design, Mechanical Design, Electronic System Design (including Chip/Board and Embedded Software Design), Design Validation Testing , Industrialization and Prototyping. IT Enabled Services are services that use telecom networks or the Internet. For example, Remote Maintenance, Back Office Operations, Data Processing, Call Centers, Business Process Outsourcing, etc. E Business (electronic business) is carrying out business on the Internet; it includes buying and selling, serving customers and collaborating with business partners.

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MAJOR TRENDS
TRENDS IN HIRING

The bar chart shows that the recruitment of engineers and IT professionals in the industry is growing at the Compound Annual Rate of 14.5% approximately. In the FY06, the direct employment in the IT-ITES sector was 1.3 million people and the indirect employment was 3 million approximately. Trends in Salary Hikes Along with abundant growth opportunities, IT sector is one of the highest paying sectors. The average increase in salary in IT sector across the levels was around 16% and the average increase in the ITeS BPO sector across the levels was in between 16%-18% Requisites for balanced salaries End to poaching Review of compensation according to the skills Developing talent in-house Entry of talented freshers in the industry

IT: SUCCESS FACTORS
Increasing number of skilled professionals in IT. The demographic factor. Approximately 60% of the population of India lies in the age group of 15-65. More than half of the population of India is below the age of 25. So in the future, the number of working people is going to be more than the number of dependants. The vast academic infrastructure of India. In the year 2006, Total Enrollment in colleges was 9.3 million and India produced 441,000 Technical graduates. India has the second largest English-speaking workforce in the world.

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ROLE

OF

THE

SOFTWARE

INDUSTRY

IN

INDIA

Software Industry in India is a crucial part of the economy in the 21st century. Since the boom of the software industry towards the end of the 20th century saw a growth of job openings in various IT and IT enabled companies in India. Additionally India also looked forward to a chunk of outsourcing job being delegated to its newly established companies. Software exports to different countries were looked upon with great prospects because of the presence of some of the best people in the Indian software development.

GRAPHS SHOWS THE IT EXPORTS STATUS:

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GROWTH OF SOFTWARE EXPORTS:

IT SECTOR IN ANDHRA PREDESH:
BACKGROUND OF THE HYDERABAD IT COMPANIES The role played by the Hyderabad IT companies in the growth of the software industry in India has been an important one. Since 1990, Hyderabad has seen a steady growth of IT companies establishing their offices and headquarters in the city. The growth of the software industry has even led to the establishment of an IT Park called HITEC City. In this IT Park there are many renowned national as well as multinational companies that have established base in India through Hyderabad. TYPES OF IT COMPANIES IN HYDERABAD

The software companies of Hyderabad are related to the following
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IT companies - These companies are mainly involved in the development of various software programs for various industrial sectors. Companies in this category are both Indian as well as multinational conglomerates who have established base in India. They
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cater to the demands of both the domestic as well as international market. Thus this segment of the Hyderabad IT companies plays a major role in earning export revenues for the government.
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ITES companies - ITES is better known as IT enabled services. They are also popularly known as the BPO companies (Business Process Outsourcing). These companies mainly deal in operations of the parent company dealing with a particular product or service. This segment of the software industry forms a big part of the Hyderabad IT companies. Both Indian and international companies are a part of this group of IT companies. Computer Hardware companies - There are several reputed brands of computer hardware companies that are a part of the Hyderabad IT companies. Some of the companies are international brands that have established base in the conducive environs of Hyderabad IT industry in a bid to expand their sales network in India. OF THE GOVERNMENT

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The role of the State government in the growth and development of the software industry in Hyderabad has been a crucial one. Companies received due invitation from the government to come to Hyderabad and set up base for their operations in India. Land allocations were done in specific areas for the companies and this was furthermore followed by the establishment of an IT Park called HITEC City in Hyderabad that allowed companies to build up their companies with state of the art structures and modern amenities. MAJOR IT COMPANIES IN HYDERABAD

The following are some of the renowned names of Hyderabad IT companies that has established base in the city.
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Google Inc - A leading name in Internet search engines, Google's functional areas apart from search engine operations include online mapping services, free web mail services, advertising and social networking among others. IBM - IBM (International Business Machines) IBM is a multinational company based out of U.S.A and deals in areas of IT consultations, software development and hardware. Infosys Technologies Limited - One of the leading Indian owned multinational company, Infosys is based out of Bangalore in Karnataka. It is a major player in IT consulting and service provider. Hewlett-Packard Company - One of the largest IT companies in the world, HP deals in computer hardware as well as storage and networking software development. Microsoft Corporation - A leader in the realm of software development, Microsoft Corporation functions as a developer of software program packages for almost all industrial
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sectors.
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Tata Consultancy Services Limited (TCS) - TCS is an IT venture of the Tata group of Companies in India. Its headquarters are in Mumbai. Mainly dealing in providing information technology services TCS has also diversified in the area of outsourcing services over the years. Amazon.com, Inc. - This Company is based in Seattle, U.S.A. It deals mainly with online commerce and retailing. The products range books, clothing, furniture, food, toys to even DVDs and video games.

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IT INDUSTRY IN HYDERABAD
Hyderabad is rightly known as the high-tech city. IT in Hyderabad is renowned world over. Hyderabad is the hub of information technology in our country. Hyderabad city is today known not only for its IT and IT Enabled Services, but also Pharmaceuticals and Entertainment industries. Many call centers, Business Process Outsourcing (BPO) firms, dealing with IT and other technological services were set up in the 1990s making it the hub of BPO firms. Ramoji Film City, the largest film studio in the world is located on the outskirts of the hi-tech city. The progress of a township with state-of-the-art services called HITEC City encouraged several IT and ITES companies to setup operations in the city. A rapid growth of technology in this area has led civic boosters to call the city "Cyberabad". Hyderabad has also been referred to as the second Silicon Valley of India after Bangalore. There have been widespread investments in digital infrastructure within the city, which includes several multinational corporations having established centres in the city. The major areas where such campuses have been setup include Madhapur and Gachibowli. Hyderabad also has the merit of being The Software Training Capital. The city offers innumerable number of software courses that are taken up by thousands from all over the world. Hyderabad is on the brink to become a global city as it has been selected as the location for India's first Fab City, a silicon chip developing facility, being setup with an investment of $3 billion by the AMDSemIndia syndicate.

FUTURE OF THE HYDERABAD IT COMPANIES
Despite the boom of the Hyderabad IT companies along with those in other parts of the country the economic recession had resulted in rough times for this industry. The slowdown in the US as well as the European economies had affected the progress of many Indian companies. Faced with the threat of a closure some of the companies tried option of cost cutting as a result of which many lost their jobs. All further recruitments to these companies were also stopped.

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However things are brightening up with the recession being officially declared as over. Companies are again recruiting along with adequate retention. It may therefore be safely concluded that the Hyderabad IT companies are headed for a positive and futuristic growth owing to favorable times and favorable environment that the city has successfully provided the companies from around the world. The Indian IT industry and electronics is the fastest growing sector of Indian industry. It has recorded a production of Rs. 68,850 crore during the year 2000-01, and is likely to achieve a production of Rs. 368,220 crore during the year 2008-09. Thus the industry has grown by a factor over by five times during the last eight years. The software industry which was worth Rs. 37,750 crore in 2000-01 is likely to achieve a production of Rs. 273,530 crore during the year 2008-09. Software exports have become an important part of India¶s exports, and India¶s international image. Indian Software exports have risen from Rs. 28,350 crore in 2000-01 towards estimated figure of Rs. 216,300 crore in 2008-09. This success in software has been built on the foundations of public investments in human capital, outward orientation in policies, and a highly competitive private sector industry. The Economic Planning Group maintains a database of production and exports data relating to Electronics and IT-ITeS industry. This data is collected from different manufacturing and service industry and industry associations. The data is released on as annual basis through the Annual Report of DIT. IT MAGNATES ON HYDERABAD
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Shakti Sagar, President and CEO, Hyderabad Software Exporters Association & ADP Wilco. Ashok Soota, Chairman and Managing Director, MindTree Consulting. Arun K Maheswari, President and CEO, Computer Sciences Corporation India. Rajat Gupta, Managing Director, McKinsey & Co.

IT: Success Factors: Increasing number of skilled professionals in IT. The demographic factor. Approximately 60% of the population of India lies in the age group of 15-65. More than half of the population of India is below the age of 25. So in the future, the number of working people is going to be more than the number of dependants. The vast academic infrastructure of India. In the year 2006, Total Enrollment in colleges was 9.3 million and India produced 441,000 Technical graduates. India has the second largest English-speaking workforce in the world.

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MAJOR Domain

STEPS

TAKEN of

FOR the

PROMTION

OF IT

IT

INDUSTRY Industry

A wide variety of services come under the domain of the information technology industry. Some of these services are as follows:
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Systems architecture Database design and development Networking Application development Testing Documentation Maintenance and hosting Operational support Security services

The information technology (IT) industry has become of the most robust industries in the world. IT, more than any other industry or economic facet, has an increased productivity, particularly in the developed world, and therefore is a key driver of global economic growth. Economies of scale and insatiable demand from both consumers and enterprises characterize this rapidly growing sector. The Information Technology Association of America (ITAA) explains 'information technology' as encompassing all possible aspects of information systems based on computers. Both software development and the hardware involved in the IT industry include everything from computer systems, to the design, implementation, study and development of IT and management systems. Owing to its easy accessibility and the wide range of IT products available, the demand for IT services has increased substantially over the years. The IT sector has emerged as a major global source of both growth and employment. Features of the IT Industry at a Glance
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Economies of scale for the information technology industry are high. The marginal cost of each unit of additional software or hardware is insignificant compared to the value addition that results from it. What contribution can information technology (IT) make to India¶s overall economic development? This paper provides an analytical framework centred around the concepts of comparative advantage, complementarities, and innovation. There is strong evidence that India has a strong and sustainable comparative advantage in software development and IT112

enabled services. Complementarities in particular some form of domestic hardware industry as well as growing demand for software within the domestic market are also important to sustain the growth of the IT sector, as well as to broaden its developmental impact. The paper also reviews innovative experiments of IT use to improve interactions between citizens and governments, farmers and corporations, and students and teachers in rural areas. The paper concludes with a brief discussion of opportunities for future growth in IT-enabled services, constraints to such dynamics, and possible policy responses.

IT PROMOTION
Andhra Pradesh ± the most preferred destination for IT industry The State of Andhra Pradesh has been at the forefront of India¶s IT growth. The NASSCOM KPMG report of 2004 projects India¶s software exports in IT&ITES/BPO sector at $49 Billion (Rs.2,30,300 crores) by 2009 with direct employment opportunity for 20 lakh graduates. Andhra Pradesh aims to achieve Rs.69,000 crores in software export turnover and seeks to create employment for 3 lakh employees directly. It is estimated by NASSCOM that every direct job creates four indirect jobs hence it is expected to create indirect employment for 12 lakhs in the State by 2009. McKinsey Report projects India¶s electronics manufacturing opportunities to be $47 billion (Rs.2,20,900 crores) industry by 2009. Andhra Pradesh wishes to attain a leading position by building a $12 billion (Rs.56,400 crores) IT hardware and Electronics manufacturing industry. In December 2004, Gartner in its report ³IT Outsourcing to India ± Analysis of Cities´ has mentioned that Hyderabad would be the IT Hotspot by 2010 and has rated it high on account of Infrastructure and Human Resources. Andhra Pradesh provides the right climate for the growth of IT business and is now the most preferred destination in the country. Hyderabad is home for many major MNC IT giants and fortune 500 companies. ICT Policy 2005-2010 :

The Government have formulated a new ICT Policy 2005-2010 to make Andhra Pradesh the most attractive and preferred destination of the IT Companies in the world. Promotion of Tier²II locations: The following incentives are offered for setting up IT Units in identified Tier II locations:
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A subsidy of Rs.50 lakhs to the first five anchor IT / ITES companies employing more than 250 employees in IT or 500 employees in ITES in any Tier-II location. Rs.15 Lakhs as recruitment assistance for employing minimum 100 employees in IT & 200 employees in ITES within two years of commencement of commercial operations in the Tier-II city.

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SWOT ANALYSIS OF IT INDUSTRY:
Strengths
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Weaknesses ‡ Absence of practical knowledge ‡ Dearth of suitable candidates ‡ Less Research and Development ‡ Contribution of IT sector to India 's GDP is still rather small. ‡ Employee salaries in IT sector are increasing tremendously. Low wages benefit will soon come to an end.

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Highly skilled human resource Low wage structure Quality of work Initiatives taken by the Government (setting up Hi-Tech Parks and implementation of egovernance projects) Many global players have set-up operations in India like Microsoft, Oracle, Adobe, etc. Following Quality Standards such as ISO 9000, SEI CMM etc. English-speaking professionals Cost competitiveness Quality telecommunications infrastructure Indian time zone (24 x 7 services to the global customers). Time difference between India and America is approximately 12 hours, which is beneficial for outsourcing of work.

Opportunities
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Threats
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High quality IT education market Increasing number of working age people India 's well developed soft infrastructure Upcoming International Players in the market

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Lack of data security systems Countries like China and Philippines with qualified workforce making efforts to overcome the English language barrier IT development concentrated in a few cities only

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BIBLIOGRAPHY 
Strategy Papers of Government of Andhra Pradesh.  Decisions To-Day (Andhra Pradesh), Issue No: 7, Vol.1, 30th Jan 2002 Reportable Decisions of A.P. High Court on all Subjects.  Agricultural and Processed Food Products Export Development Authority, µExport Statistics for Agro and Food Products in India, 2005-06¶.  Centre for Monitoring Indian Economy, µIndia¶s Agriculture Sector¶.  Chatterjee, Somnath and Mohan, Rakesh, Office of the Economic Adviser, Ministry of Industry, Government of India, µStudies in Industrial Development: India¶s Garment Exports, February 1993¶.  Confederation of Indian Industry and McKinsey & Company, µFAIDA:Modernising the Indian Food Chain¶. Confederation of Indian Industry, µNew Heights in Agriculture¶, Report of the Task Force.

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