The world market for pharmaceuticals currently placed at US$ 400 billion is projected to grow at an annual rate of 8% over the next five yrs. The growth in the Indian pharmaceuticals industry at around 15% p.a compares well with the indsutry's growth of 14% per annum in North American Region. India is ranked 5th in the World, and accounts for 8% of the worlds production of drugs and pharmaceuticals by volume.

The production of formulations dominated by the large-scale and multi-national companies has been increasing with steady YOY growth rate of 15% per annum. The production of bulk drugs has increased at higher YOY growth rate around 19% to 20% p.a in the last five years.

Imports are largely from China, Switzerland, USA, Germany, UK, France and Japan. The imports of formulations has been picking up growth at almost 25% per annum in the last five years.

The annual growth rate in exports between 1994-95 and 2000-01 has been 22%. Growth in exports of formulations has fallen down from 15% to 8% in 2000-01 at the same time imports of formulations have been growing steadily at 25%-26% p.a.

Investment in the pharma industry has grown from Rs.1380 crore in 1995 to Rs.2900 crore in 2000. And it is expected to grow 15%-16% more p.a.

The Indian Pharmaceuticals companies have recently made news with initiatives in the area of research and development. With approach 2005 it would become essential for the Indian pharmaceutical units to focus their business on innovations rather than just reverse engineering of the processes and products developed in western countires. India is expected to open two mega opportunities for local pharmaceutical companies R&D and Contract manufacturing. Chemecil has projected India's exports till year 2006-07, which are seen in Exhibit 12. Exports are projected to grow rapidly from Rs.9550 Crore in 2001-02 and nearly double by 2005-06 and further escalate to Rs.24,000 Crore by 2006-07. This reflects the tremendous export potential of the Indian pharmaceutical Industry.

China accounts for nearly 70-75% of total imports of paracetamol in the country. The share of imported paracetamol in total domestic consumption has also been rising. Due to this domestic manufacturers were forced to reduce their selling price.

The main strength of the Chinese pharmaceutical industry is the installation of large manufacturing capacities which render higher economic of scale At the end of 1999, China had over 1800 joint ventures with a total investment of US $ 1.5bln. It has special valley for pharmaceuticals where the output is estimated to have been US$ 240 mln in the year 2000.

The Dyestuff industry constitutes three sub-segments, namely dyes, pigment and intermediates. The dye intermediates are petroleum downstream products which are further processed into finished dyes and pigments. These are essential inputs in major industries like textiles, plastics, paints, paper and printing inks. In India the dyestuff industry caters mainly to the textile industry. Exports of dyes and pigments from India are also directed largely at the textile industry in Europe, South East Asia and Taiwan.

The Indian Dyestuff industry has a share of 6% by volume in the global dyestuffs production estimated at 2 million MT. Its production however has been declining during the last 5-6 yrs though the industry is self sufficient in raw material supply, as 95% of the raw material required is available locally. India has a share of 4.5 % in the approximately Rs.62,400 Cr, international trade in Dyestuffs with the industry moving gradually from import substitution export orientation. After having registered a steady growth, both in production and exports the industry faced a slump in 1998-99 due to the sudden the raw material required is available.

The SSIs are operating at a capacity of 60 -65% and are engaged in the manufacturing of low value items. As around 90% of the total dye and dye intermediates manufacturing units are located in the Western belt from Chiplun to Mehsana in the states of Maharashtra and Gujarat. The production of Dyes and Pigments in the large and medium scale sector has risen at 11% in 2001-02. Dyestuff industry is looking towards central research institutions like National Chemical Laboratory (NCL) and the Govenrment for technical as well as financial inputs for upgrading its technology. Exports of dyes and pigments makeup close to 80% of total exports in value which stood at Rs.2832 crore in 2000-01. China is a major exporter of dyestuffs to India.
The average investment by small scale unit for low end dyes with a capacity of around 300 MTPA was observed to be Rs.58 lakh. The annual turnover of the small scale units had also stagnated since 1998-99 to around Rs.3 to 3.5 crore.

Constraints and Concerns of the Dyestuff Industry:

1. The problems of market stagnation and overcapacity were identified as two most important constraints by almost 90% of SSI manufacturers and 75% of the non-SSI manufacturers during the survey.

2. Large Scale companies can also afford to install individual ETPs and can easily upgrade to cleaner and safer technologies.

3. The influx of cheaper imports was direct removal of QRs and reduction in tariff rates as part of the GATT agreement.

4. The average cost of effluent treatment facility for primary and secondary treatment ranges between Rs.35-40 lakh for a small scale unit with 400 MTPA capacity.

5. It was observed that SSIs preferred a combination of direct sale through intermediaries for marketing their products with more emphasis on the latter.

6. Industry experts and entrepreneurs revealed that the working capital requirement for the small-scale dyestuffs units amounts to nearly 33% of the total turnover.

The textiles and Garment market is expected by $24 billion per year after January 1 2005. Due to this there will be increase in the size of the textile market in the developed countries like USA and EU after January 1, 2005.The Indian dyestuff industry which largely caters to the textile sector will have greater market potential in both domestic market potential in both domestic market as also in other Asian and European textile markets in the post ATC-regime after 2005.

Overall Impact of WTO on the Indian Dyestuff Industry :

The impact of WTO agreements can be quantified by studying the trends in production, imports and exports of dyestuffs in the recent past. The total dyestuffs imports into India have increased from Rs.214.40 Cr in 1996-97 to Rs.388.92 Cr in 1990-00 at a CAGR of 22%. In terms of quantity, the imports of dye intermediates have been significantly higher than dyes. The surge in imports as seen above was primarily due to 15% price advantage of the profitability.The increase in cost due to technological upgradation should also be viewed in the light of the increased productivity and better quality once manufacturers upgrade to newer and cleaner technologies in the post WTO regime. China has emerged as the biggest competitor in the Indian Dyestuff Industry. The cost of capital in India ranges around 14% to 15%
whereas the same in other Asian countries ranges from as low as 6.3% in China to 12% in Indonesia. The annual output of dyes, pigments and dye-intermediates of China is estimated to be around 4,80,000- 5,00,000 metric tons as compared to India's dyestuffs production of around 1,20,000 metric tones. China's share in world dyestuffs production and value of exports is 24% and 35% respectively whereas India's production is merely 6% an 4.5%. The landed price of the various Chinese dyes and dye intermediates in India an other countries are almost 30 to 60% lower than those of Indian manufacturers depending upon the type of product. China also has strong infrastructure, since 1991 it has 13 free trade zones in the coastal areas to encourage export processing. The Shaoxing Economic Development Zone has a market set up to facilitate trading in dyestuffs since 1994. The city hosts 500 trading rooms and within 5 years about 300 companies and dealers have registered with this Dyestuff City. The big dyestuff industries in Hong kong, Taiwan, and multinational companies from Germany,Korea, Holland, Japan, Switzerland, and Singapore do business with them either directly or through agents in the city.
Despite all this facility there are various hindrances in the China dyestuff industries. It is exposed o challenges in the post WTO regime especially after its entry in WTO. It was protected till recently through direct subsidies and tax holidays is now exposed to competition on a level playing field with other international players. The removal of subsidies is likely to increase the prices of Chinese products in the world market. The Indian dyestuff industry is already witnessing the surge in the imports of Chinese dyestuffs in India. It is necessary to mention that India is committed to further reduction in the duty to 20% by 2005.Chinese imports into India have shown a substantial increase in products such as Vat, Pigments, Azo, and disperse dyes. The total imports of dyes and pigments from China have increased from 1161 MT valued at Rs.23.60 crore in 1996-97 TO 3444 MT valued at Rs.60.02 crore in 1999-2000.

India accounts for about 6% of world leather production, placed at nearly 10 million tonnes, though its share in world trade in leather products estimated to be US $ 68 billion is only2.3%. Italy is the leader in the global leather and leather products trade followed by China, USA and Korea. The industry is highly fragemented in both the developing and developed countries and has been facing serious problems of non-availability of raw material and growing consciousness for eco-friendly products inputs.

Today the leather and leather goods industry ranks sixth among the commodity and merchandise goods exports from India. Even the Indian market has been fragmented with about 2200 tanneries of which 2100 are small scale units and over 8000 leather product manufacturing units. Due to policy of reservation of this sector for SSIs it has been fragmented. India's share in leather and leather products in world trade has accounted between 2.1% to 2.5 % since 1995.

The industry has a large tanning capacity per day but it utilizes only 60-70% of its installed capacity. The turnover of the tanning of the tanning industry is estimated at Rs.8000-9000 crore for the year 1999-2000. The industry produces about 2 billion sq.ft of finished leather of which only 10-15% valued at US$240Mn. is exported. The problem relating to effective discharges of effluents which is a WTO compulsion is increasingly threatening the small and medium scale tanneries all over the country. The tanning industry is heavily dependent on indigenous raw hides and skins for its supply of raw materials which is very fragmented. Imports are low despite exemption from customs duties due to high import prices (3-4 times higher) and absence of appropriate machinery to process the imported hides and skins. As international pressures to supply good quality leather products mount, the leather manufacturers would have to increase the use of imported hides ans skins to improve the image of Indian Leather and Leather products. In the Indian tannin sector, the tiny units primarily engage in producing semi-finished leather, the small units engage in producing both semi-finished leather and finished leather and the large units are usually fully integrated units. There are many drawbacks in this industry, it needs to upgrade technology, it needs proper finance for high capital investment, poor & erratic Raw material, production and process and infrastructure.

There are nearly 4000 units engaged in manufacturing footwear in India. The industry is dominated by small scale units with the total production of 55%. The total turnover of the footwear industry including leather and non-leather footwear is estimated at Rs.8500-9500 crore including Rs.1200-1400 crore in the household segment. India's share in global leather footwear imports is around 1.4% Major competitors in the export market for leather footwear are China (14%), Spain (6%) and Italy (21%).

Lack of regular, sufficient and high quality supply of finished leather is the major drawback in the industry. Components like adhesives, fittings, etc are not available in the desired quantity. Some of the factors affecting the optimum capacity utilization by SSIs are lack of orders, lack o finance, shortage of raw materials, labour problems, regular power failures etc.

These two segments are essentially dominated by the small scale sector with LSIs having a very negligible share of less than 3% in garments. Due to increased export demand, the capacity for the leather garment industry has been rising and is presently 18 million pieces per annum. Production is placed at 12 million pieces per annum with capacity utilization at 60-75% with an aggregate turnover of Rs.2200 crore. The share of leather garments in total exports of leather and leather products has been rising and is presently around 24%, having grown at CAGR of 9%, since 1995-96 to reach Rs. 2104 crore in 2000-01. India's import in world import garments is around 11% . Our main competitors are China, Italy and Turkey.

Critical activities like designing, cutting and stitching for which CAD/CAM facilities are available the world over , are done manually in India which affects the quality and unit value realization of these products especially as these are sold in a buyer drives consumer market which is fast changing.

It has been assumed that the world imports will grow at rate of 1.5%. The Indian leather and leather products industry has projected a very positive and robust growth for the next five years.

Lack of international exposure and ignorance among SSI units in the leather industry about the implications of WTO and its impact can prove to be very harmful for the competitiveness of the industry.

World trade in cut and polished diamonds and Colored gemstones is estimated at US$ 13.8 billion of which 87% is of cut and polished diamonds. Western India (Mumbai and Gujarat),new York, Antwerp and tel Aviv being the main processing centers for diamonds and Thailand ,India and Israel for gemstones.

Though the Indian industry has the best skilled manpower in the making and designing of jewellery, it is highly dependent on imports of raw material due to its export intensiveness, Govt regulations (Exim Policy) have been very encouraging with imports of critical raw material lik rough falling under the free list and can be imported under'OGL'.The imports of precious metal like gold and silver can only be sourced through MMTC, HHEC and banks authorized by RBI. Imports of finished jewellery has been kept under the Restricted list,and the approval of the Regional Import Licensing Committee has to be taken by paying a import duty of 40.4%. Further to boost the exports of studded jewellery there is a 100% tax exemption on export income for the next 10 years.

The Indian diamond processing industry has grown tremendously over the years, accounting for 80% of the world production of the polished diamonds by cartage,90% by number of pieces and 55% by value. There are nearly 10,000 to 12000 diamond processing units in India, which are equipped with state of art technology for processing diamond.

There is a strong need for the industry to evolve a long time sourcing strategy for Roughs and should built buying tie-ups with other suppliers of roughs such as Argule, Ekati, etc .Inadequate training facilities to impart state of art know how for developing skilled manpower. As most of the exporters work on long credit periods because of the high cost of the inventory, resulting in extension of credit period by the banks, they end up paying high interest rate on overdue bill. Delays in imports and exports are common on account of inadequate infrastructure and lack of trained personnel's to do the same..There is a poor market intelligence and they are unaware of the latest cuts which again has lead to the decline in the export of the diamonds. Moreover lack of financial support by the government to invest in new machinery, participate in the Trade fairs, exhibitions etc.

The Indian gemstone industry is highly fragmented and family orinantated with Jaipur as its main hubb. The industry has been growing at the rate of 6.3% mainly due to the growing popularity of gemstone-studded jewellery across the globe with an estimate turnover at Rs 1000-1200 Cr.USA is the largest market accounting for 51% of the total gemstone exports followed by Hong Kong accounting nearly 15-20% of the total exports. Thailand and Hong Kong are jewellery-making centers, which are making there own world market for gemstones jewellery.

In an attempt to exercise control and explore the resources in the region of Orissa, which is known for its rich deposits of ruby and has about 20 varieties of various gemstones like rhodoline, garnet, aquamarine, Government of Orissa has announced a comprehensive mining policy allowing private and domestic investments in this sector. Thus allowing Orissa mining Corporation (OMC) to tie up with global mining major to explore for precious metals and stones, making it a huge potential for FDI in mining.

The difference in the finish and the quality of the stones effecting the image of the indian products in the international market is dependent on the technology used by the various player in the gemstone industry, where the large players are using the automated machines compared to the indigenously manufactured machines used by small/tiny player because of there lower cost. This results in effecting the quality of the product.

Selling their product in the international market is mainly done via wholesalers. Manufacturing is based upon the orders recived. Trade fairs and exhibitions are another source of interacting with the buyers the smaller manufactures carry out job-work for the larger manufacturers and sell to the domestic market.

Jewellery industry is mostly family oriented and focused on the domestic market. The strength of the industry is about 3.75 lank manufacturing units including the job workers.

Total quantity of gold used for domestic consumption is 900 tones of which 200 tones are recycled every year and the rest is imported.

The export industry mainly comprises of small to large units based in the SEZs/EPZs/ SEEPZ(Mumbai), MEPZ(chennai), NEPZ(Noida) supplying primarily diamond -studded jewellery) and few in domestic tariff area(DTA) catering to the ethnic population overseas and supplying plain gold jewellery. The main markets of USA, Middle East and Europe account for more than 80% of total jewellery exports.

As compared to the manually done designing, these day the manufacturers are using the latest software (Jewel 2D and 3D) which enables them to see a preview of the various designs/combinations of metals/metals with stones.

Domestic market : Growing popularity of branded jewellery and lack of proper market research and innovation in designs is slowly driving smaller manufacturers out of business.

Export market : There is a need for developing ties with the fashion leaders of the world so as to keep an update on the latest designs and fashions of the market, which effects the quality of the service and the product attracting foreign buyers.

Although India is an important cutting and polishing center for studs it faces stiff competion from China primarily due to very liberal governmental policies, availability of cheap land, labour, subsided power.

Coloured gemstone industry in India faces a major threat from Thailand, which is trading, and important processing centers and Italy being another competitor for the plain gold segment.

1. Venture into processing larger diamonds with the help of upgraded technology

2. Setting up of ties directly with dealers of rough, so as to have a continues availability of material.

3. The policies and plans on paper or in the pipeline need to be impimented faster so that India does not loose out on the competitiveness in the export market.

4. Indian designers need to interact with the international market so as to keep an update of the new technology and designs.