A

GLOBAL / COUNTRY STUDY AND REPORT

ON

“VENEZUELA”

Submitted to

Gujarat Technological University

IN PARTIAL FULFILLMENT OF THE

REQUIREMENT OF THE AWARD FOR THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

UNDER THE GUIDANCE OF

PROF. HIMANI SHETH

[ASSISTANT PROFESSOR]

Submitted by

Section A

Batch 2010-12

MBA SEMESTER IV

------------------------------------------------------------------------------------------------

L.J. INSTITUTE OF MANAGEMENT STUDIES

MBA PROGRAMME

Affiliated to Gujarat Technological University

Ahmedabad

MAY 2012

Student’s Declaration

We, L.J.I.M.S Section-A, hereby declare that the report for Global /

Country Study Report on “VENEZUELA” is a result of our own work and

our indebtedness to other work publication, references, if any, have been

duly acknowledged.

Place: Ahmedabad

Date : 2nd May, 2012 (L.J.I.M.S Section-A)

Institute’s Certificate

Certified that this Global / Country Study and Report on “VENEZUELA” is

the bonafide work of students of L.J. Institute of Management Studies

(Section-A), who carried out the research under my supervision. I also

certify further, that to the best of my knowledge the work reported herein

does not form part of any other project report or dissertation on the basis of

which a degree or award was conferred on an earlier occasion on this or

any other candidate.

Preface

Country Report is an integral part of our academic curriculum. During the

Report a student gets an opportunity to set the practical aspects of theory.

Theory makes the concept clear.

We feel great pleasure in submitting this piece of work as our report. We

hope that this work will provide fruitful result in the eyes of the reader. It is

hence expected that creating of this shall benefit the reader in all aspects.

The Report deals with nearly all the aspects of VENEZUELA. We have

tried our best to cover nearly all the aspects related to VENEZUELA.

It is done in a very cordial manner. This research is an attempt to present a

report on account of little practical knowledge. In our opinion, the readers

will be satisfied with the Report in all ways. We guarantee the original work

and authenticity of this.

Acknowledgement

A journey is easier when we travel together. Interdependence is certainly

more important than independence. It will always be us pleasures to thank

those who have helped us in making this project a lifetime experience for

us.

It is our privilege to thank Dr. P. K. Mehta, Director of L. J. Institute of

Management Studies to give us an opportunity to make our Global Report

with this institute.

It is our privilege to thank Prof. Himani sheth, whose guidance has made us

learn and understand the finer and complicated aspects of VENEZUELA.

The greatest credit goes to the blessings bestowed upon us by Almighty

God without whose desire we could not have even moved a step forward

and to our parents who are always a constant source of inspiration in all

our endeavors.

TABLE OF CONTENT

SR.

NO.

PARTICULARS PAGE

NO.

PART - I (COUNTRY ANALYSIS)

1 DEMOGRAPHIC PROFILE 2

2 GENERAL ECONOMIC & INDUSTRY OVERVIEW 6

3 LEGAL ASPECTS 9

4 MEDIA 13

5 TECHNOLOGY 17

6 GENERAL OVERVIEW OF TRADE & COMMERCE 20

7 RELIGION & ASTHESTICS 32

PART – II (INDUSTRY ANALYSIS)

1 MEDICAL TOURISM 36

2 NETWORK SECURITY SERVICE 49

3 TEXTILE & COTTON 67

4 CONSTRUCTION MATERIAL 82

5 VACCINE 95

6 AUTOMOBILE & AUTOCOMPONENT 108

7 AGRICULTURE 121

8 PETROLIUM 131

9 SECURITY SURVELLIANCE 142

10 FOOD - CUMIN 154

CONCLUSION 168

1

PART – I

SEMESTER III

2

DEMOGRAPHIC PROFILE

3

INTRODUCTION

Venezuela is situated at the north region of South America. Caribbean Sea is at north

side; Brazil is at south side; the Atlantic Ocean and Guyana is at east side and

Colombia is located at west side of the Venezuela.

The total area of the Venezuela is 917.450 km2 (354,227.44 square miles). If we talk

about climate than Venezuela is close to the equatorial line, and there are different

climates in different regions of the country starting from tropical to temperate.

Venezuela is having 4 Time Zone (GMT). The average temperature in the country is

warm during entire year. Caracas is having around 82º F (28º C).The language spoken

is Spanish in Venezuela. On the other hand, English is also widely spoken in the

tourism industry and for the business environment.

The currency which is used in Venezuela is the "Bolivar". The rate of exchange is fixed

by the government who controls money exchange. The only foundation authorized to

perform currency exchange activities is the Venezuelan Central Bank through the

approved Banks and other financial institutions. The Law on Foreign Exchange Crimes

prohibits and sanctions cash exchange activities outside the approved financial system.

Since January 11th 2011, the official exchange rate is 1 US Dollar is equal to 4.30 VEF.

The Venezuelan culture is a combination of European, African and local indigenous

roots with high manipulate of Spain. Venezuela’s people are popular for their easy-

going nature and fun-loving spirit, therefore there is no cultural prohibitions influence the

way business is conducted. Roman Catholicism is the overpoweringly leading religion

and such religion does not affect business practices in Venezuela.

4

DIPLOMATIC RELATION

Traditionally, Venezuela maintains comprehensive smooth relationship and the state

love been always characterized to be concern of the planetary entities and

organizations. Notwithstanding, the Chair Composer's left disposal intends to locomote

the state towards what he calls the XXI Century Socialism, which implies the rejection of

the politic- scheme imperialism and especially the government of the Unitary States of

Land, with whom he maintains a long recital. At the one instant, the relations with

countries similar Ussr, Dishware and War, or suchlike Island, Iran, Byelorussia and

Syria soul been strengthened by him.

There are no restrictions to do business deals with other countries. In Venezuela, all

standard international restrictions such as anti-drug, anti-fraud or anti-counterfeit are

considered as government policies.

GOVERNMENT

According to the stream Composition of 1999, the Bolivarian Republic of Venezuela is a

dry governed by Laws with participatory and participative Authorities. According to the

Composition, the positions in the world incumbency addressable are:

President of the Commonwealth is elected by majority of logical votes in universal,

plain and arcanum suffrage, for a 6 period point, the close elections faculty be in

2012.

Latin-American and Andean Parliament Deputies and Human Construction

Deputies are elected by universal, move and concealed franchise for a phase of 5 life.

Close elections for this present jazz send in 2015.

States Governors, Tell Legislative Bodies, Mayors and Municipal Legislative Bodies are

elected by coupler, unswerving and inward enfranchisement for a phase of 4 year.

5

The prevalent Chairperson is Mr. Hugo Chavez, who has repaired his occupation since

1999, although he faced a coup d'état in 2002 which conveyed him to prison for 3 life. In

Mr. Chavez body, individual elections took determine and distinguished commencement

and legislative reforms were prefab. The presidency, through its political parties has the

administrative curb of almost all regions of the region.

6

GENERAL ECONOMIC & INDUSTRY OVERVIEW

7

The Constitution guarantees the right to engage in any lucrative or commercial activity.

This right, however, is subject to the limitations stipulated in the Constitution and to

those established by law with respect to security, health or other matters of national

interest.

Although oil related activities have been the major activity in the country for the last few

decades, representing around 25% of the total Gross Internal Product (GIP), there are

other sectors of the economy to be considered, for instance industry contribute around

15%, construction contribute 6% and agriculture contribute 5%. Economic activities are

developed by both private and public owned companies, the government having a rising

participation in all sectors of economy. The country is currently in a period of general

economic decline, with signs of recession and one of the highest rates of inflation in the

world, which for the year 2010 was 27.2 %.

The Venezuelan financial system is under the oversight, supervision and regulation of

the Superintendence of Banks and Other Financial Institutions. The General Banking

Law enacted in 2001 is the main legal body. Universal banks, commercial banks,

mortgage banks, investment banks, development banks, second floor banks, financial

lenders, and savings and loan institutions, are regulated by general banking law. There

are private and public owned financial institutions.

The capital Markets Law enacted in 1998 regulates the bingle of fund industry

transactions under the superintendence of the Nationalistic Charge of Securities. At the

source of 2010 the Chairman announced that Venezuela was in transmutation towards

a new securities scheme. He alleged that he would make a new World Securities

Method. On January 24, 2011, it was publicized in the Formalized Gazette, the

Conception regarding the Lettering, Intervention and Execution of Securities in the

Bicentenary Semi public Stem Market. These changes testament alter deep changes in

the securities systems in the country, the consequences of which are non effervescent

hard to venture. It is careful tho' that it goes along with the flow it.

8

There are no circumstantial restrictions to use the account, as lengthy as the law and

the infirmary's part rules are followed. The investor can use all products offered by the

cant institutions, for model finances loans, as endless as the conditions imposed by the

banks are fulfilled.

INFRASTRUCTURE

The city of Venezuela is Caracas, which is located in the central-north endeavor of the

state. Caracas has some 5 million inhabitants. Else pupil cities in Venezuela are Port,

Metropolis, Metropolis, Barquisimeto, Puerto la Cruz, Maturin and Puerto Ordaz.

The land is considerably formulated by several highways, and regarding air facility, all

statesman cities mortal airports. The country is well served by all the major English and

Denizen airlines. Direct flights are easy to Bogota, San Jose, Panama, Lima, Rio de

Janeiro, San Juan, Mexico, City and others. For travelling within the land, there is a

primary material of topical airlines bringing virtually every great port in Venezuela. Since

sunset several geezer hood, primary airports and sea ports are administrated by

Venezuela's non combatant.

Telecommunication services {such as sound, fax and squealing zip cyberspace memory

are widely undo throughout the state. Also every great outside traveler companies

suffice Venezuela, including, FedEx, UPS and DHL. Localized backstage traveler

services are also purchasable. Semi public services equivalent facility, electricity and

gas distribute are publicly owned.

9

LEGAL ASPECTS

10

The Venezuelan judicial system has always been perceived as impartial. Nevertheless,

in the last few years, the situation has changed drastically. With the growing

interference of the president over the judiciary in the last years, the decisions in which

the government is a party are never unfavorable for the latter.

In general terms, disputes must not be resolved in the country, but sometimes it is a

condition imposed by the government in the negotiation of contracts involving sensitive

sectors of the economy. There is no political method of resolving disputes; however, it is

possible to resolve some kind of disputes, e.g. disputes over contracts, by negotiation

between the parties. Regarding alternative dispute resolution, Venezuela has one of the

most modern Commercial Arbitration laws in Latin America. The Law on Commercial

Arbitration (LCA) was enacted in 1998, and it substitutes the old rules contained in the

Civil Procedure Code and represents an important improvement in Venezuelan

arbitration.

Today, in Venezuela, there are two main centers that offer their mediation and dispute

resolution services at a commercial and institutional level: (i) the Arbitration Center of

the Chamber of Caracas (CACC, after its initials in Spanish), and (ii) the Business

Center of Conciliation and Arbitration (CEDCA, after its initials in Spanish), sponsored

by the Venezuelan-American Chamber of Commerce. Both private institutions offer their

services to important national and international companies involved in commercial

disputes.

There are several judicial procedures in Venezuela, and all of them take different time

periods in accordance with the matter handled. Currently, the Venezuelan judicial

system has accumulated work, which hinders effective and prompt justice, and, in

particular, this is the case of the Civil Courts of the Metropolitan Area of Caracas. The

Venezuelan Judicial Power is establishing a new judicial system in order to accelerate

processes and implement oral procedures in order to speed up such processes.

11

According to Venezuelan laws, in general, a litigious matter should not take more than 6

to 12 months in first instance courts, which includes all procedures regarding summons,

answer to the complaint, evidence and decision. However, because of the

abovementioned accumulation of work, there are processes that have taken from 2 to 5

years, or even longer, due to complications or delays of the judicial institutions.

In Venezuela, foreign decisions are valid, provided that they comply with the

requirements stipulated in the International Private Law regulation, namely: 1. decisions

must be issued for civil or commercial matters or, in general, for matters of private

juridical relations; 2. decisions must have res judicata effect pursuant to the laws of the

State where they were issued; 3. decisions must not involve real rights regarding real

state located in the Republic, and they must not take from Venezuela the exclusive

jurisdiction that may correspond to the country to know of the matter; 4. the courts of the

State that issued the decision must have jurisdiction to hear the case in accordance with

the general principles of jurisdiction stipulated in Chapter IX of this Law; 5. the

defendant must have been duly summoned, with enough time to appear, and the

defendant must have been granted procedural guarantees that ensure a reasonable

defense; and, 6. decisions must not conflict with a previous decision with res judicata

effect, and no trial must be pending before Venezuelan courts involving the same

subject and the same parties, and initiated before the issuance of the foreign decision.

In order to enforce a foreign decision, such decision must be final pursuant to the laws

of the country where it was issued. This judicial procedure is known in Venezuela as

exequatur. In Venezuela, the exequatur procedure is handled by the Supreme Court of

Justice, with the exception of non-litigious jurisdiction cases, which must be heard by

the Superior Court for Civil Matters.

All decisions issued in Venezuela can be enforced in other countries, provided that they

comply and do not conflict with the laws of the country where they are to be enforced

12

and with international law regulations. The structure and distribution of the judicial

courts are established in the constitution. The head of the court system is the Supreme

Court, body in charge of controlling the legality of the actions of the public power, based

on their constitutionality. This Court is made up of 32 Magistrate Judges appointed by

the National Assembly for a 12 year period. Other special or regular Courts are created

by law. The Supreme Court is empowered to repeal laws if deemed unconstitutional, to

decide over conflicts of jurisdiction of the Courts and act as a final appellate court. The

Judicial Power also comprises courts with ordinary jurisdiction, Superior Courts, First

Instance Courts and Municipal Courts for Civil, Mercantile and Transit Matters.

The Special Jurisdiction works in parallel with the Ordinary Jurisdiction and is made up

by courts that will hear about certain specific matters, such as: Courts for the Protection

of Children and Adolescents, Labor Courts, Contentious-Administrative Courts, Courts

for Contentious and Tax Matters, Measure Enforcement Courts and Maritime Courts,

among others. Venezuela belongs to the continental or civil law system, which is based

on the supremacy of written law, as opposed to the common law system of the United

States, Canada, the UK and the Commonwealth countries. There is only one legal

system within its territory. Finally, the investor cannot choose to be subject to the

country's jurisdiction or not. Some laws are applicable only to nationals, but a great

number of them are territorially applicable, and will be enforceable to all individuals in

the Venezuelan territory.

Venezuela belongs to the continental or civil law system, which is based on the

supremacy of written law, as opposed to the common law system of the United States,

Canada, the UK and the Commonwealth countries. The National Assembly discusses

and makes approval for laws. Once laws are approved by the National Assembly, they

are sent to the President for their enactment into law and publication in the Official

Gazette of the Bolivarian Republic of Venezuela, along with the corresponding order of

due compliance.

13

MEDIA

14

The privately owned media derives most of its revenues from advertising, subscriptions,

sale or distribution of copyright materials. A good portion of the Venezuelan Television,

Newspaper and radio markets are state-controlled. The government own news agency

is Agencia Bolivariana de Noticias.

The major private television networks are RCTV, Televen Venevision ,Globvision. State

televisions include Venezolana de Television, TVES VIVES (Cultral Network)

and TeleSUR (Caracas-based pan-Latin American channel sponsored by seven Latin

American states). The local community-run television stations are Televisora

Comunitaria del Oeste de Caracas (CatiaTVe). The Venezuelan government also

provides funding to Avila TV, Buena TV and Asamblea Nacional TV (ANTV). The major

Venezuelan newspapers include El Nacional, Últimas Noticias and El Universal; all of

which are privately owned and based in Caracas. There are also many regional

newspapers.

PHASE OF MEDIA DEVELOPMENT

Venezuela had been the 9th country in the world to have had television introduced in

1952 by Marcos Pérez Jiménez. By 1963, about a quarter of the Venezuelan

households had televisions; a figure that rose to 45% by 1969 and to 85% by 1982.

During a period the political system was dominated by Accion Democratica (AD)

and COPEI (1958–1998).Both parties had promised Congressional seats to publishers

in exchange for favorable coverage. In 1983, a deal with Jaime Lusinchi's presidential

campaign resulted in 4 representatives of the Bloque DeArmas publishing group being

elected to Congress on AD slates. And COPEI in 1968 stuck on behalf of Rafael

Caldera, promising Miguel Angel Capriles a Senate seat and the right to designate 11

Congressional candidates.

After the 1998 election of Hugo Chavez, the Venezuelan press "failed miserably in their

duty to provide information. Instead, the media owners and their editors often used the

15

news both print and broadcast to spearhead an opposition movement against Hugo

Chavez."

Encouraged by all kinds of verbal attacks by Chavez and other officials, editors began

routinely winking at copy containing unfounded speculation, rumor, and unchecked

facts. In 2009, the government reviewed the broadcast licences of hundreds of radio

and television stations and declared that many have been operating without a license or

without having paid the appropriate regulatory fees. Hence, over 60 radio stations were

closed.

In 2010, declassified US State Department documents showed, over $4m of funding (in

the previous 3 years) had been done to the Venezuelan journalists and the private

media opposed to the Bolivarian Revolution, part of a larger $40m funding for the

opposition groups.

CATEGORY OF MEDIA

Print Media

Broadcast Media

CENSORSHIP IN VENEZUELA

Censorship in the country of Venezuela is ranked at 114th out of the 169 countries as

according to Reporters without Borders. The Law on Social Responsibility of Radio and

Television (Ley de Responsabilidad de Radio y Television in Spanish) has stimulated

various debates on the freedom of expression and the journalism in the country.

According to law, the television or radio stations could be penalized for showing the

news coverage of internal conflicts and wars before 20.00hrs.

16

UNDER SURVEILLANCE

During, December 2010, the government of Venezuela led by Chavez passed a law for

the regulation of the content on the internet. The National Assembly, controlled by a

pro-Chavez majority, approved a law named "Social Responsibility in Radio, Television

and Electronic Media" (Ley de Responsabilidad Social en Radio, Televisión y Medios

Electrónicos). This law was intended to exercise control over content that could "entice

felonies", "create social distress", or "question the legitimate constituted authority".

17

TECHNOLOGY

18

HARDWARE

There is virtually no hardware manufacturing in Venezuela. Some PCs are assembled

in Venezuela under no registered brand; these computers are called "clones" and are

low cost machines that lack of warranty in most of the cases. However, many well-

known hardware resellers have subsidiaries or joint-companies in Venezuela.

SOFTWARE

Companies are still finding the greatest sales opportunities in the telecommunications

sector, banking industry and petroleum industry. Venezuela's and Latin America’s

largest software developer is INTESA. Venezuelan Information Technology Market

(Millions of Dollars) consists of millions of dollars and has a good scope due to

innovative development in the technology sector. Lot of new technologies has been

imported with the assistance of Western countries as well as China.

The Venezuelan government is in the process of developing technological infrastructure

based on open-source software with the goal of achieving technological sovereignty.

The National Central Foundation of Development and Investigation in Free

Technologies (CENDITEL) has proposed developing a platform that offers the

necessary services for the development of free software across the nation.

CENDITEL, with the participation of diverse free software development communities

in the country, is working to develop and establish standards and best practices for

the development of free software. For that purpose, it is using a platform composed

of tools that integrate services and automate processes related to software

development. The following criteria are being used to develop this platform:

19

COMPONENT-BASED

This will permit the platform to adapt to any project and to the needs of various work

groups, since they will be able to incorporate other tools according to the needs of

the user.

FLEXIBLE

It cannot be a platform that restricts work groups to one particular structure; neither

can it be a platform that only allows you to work in one fixed way. The platform

would allow you to organize the work according to the needs of the users, while

applying improvements step by step, and best practices in an environment that

fosters contribution.

SCALABLE

The platform would be capable of evolving with the time, according to technological

advances.

20

GENERAL OVERVIEW OF TRADE AND

COMMERCE

21

ENVIRONMENTAL ISSUES

Environmental regulation is not considered one of the important issues in the current

administration. This government has not made any important changes in the current

regulation and it is certainly not one of its priorities. Environment in Venezuela is

regulated by the Organic Law of Environment. Citizens and all type of companies, shall

execute their activities according to the plans established and the provisions of the Law

and any other legal instrument applicable to this matter. In addition, they are

responsible for the formulation and execution of projects involving the use of natural

resources and biological diversity and shall create a permanent process of

environmental education in order to promote the conservation of the ecosystem and a

sustainable development.

Finally, every activity carried out by companies or individuals must be accomplished

according to the provisions of the law, in order to safeguard the environmental stability

and a peaceful place of living. If any citizen or company breaches the provisions of the

Law and causes damage to the environment, they will be sanctioned with the payment

of a fine and up to ten years of prison.

LICENSES

The Law on Intellectual Property (LIP) establishes the regulatory guidelines for licenses.

The compulsory license system allows any interested party, particularly, local industrials

and entrepreneurs, to obtain a license either for a local production or importation of the

invention. The applicant does not have to show technological and economical capacity

to exploit the invention; however, it is necessary to prove that the proposed user tried to

obtain a contractual license from the patent holder on reasonable commercial terms and

that such effort was not successful within a reasonable period of time. There might be

additional requirements for certain products, depending on its characteristics (form,

size, etc). There is no limit established for royalties from licenses.

22

Local antitrust and competition laws apply to licenses and license agreements are

considered vertical agreements and they are subject to the Rule of Reason. Instead of

establishing a general rule, the anticompetitive consequences are weighed against the

particular agreement or business justifications. The typical agreements foreign

corporations enter into with their wholly owned subsidiaries are, among others,

Technical Assistance Agreements, Software License Agreements and Mark License

Agreements.

EXCHANGE CONTROL

Currency exchange is controlled by the Government. According to the limitations set

forth in this matter, the Venezuelan Central Bank has the exclusive right to perform

currency exchange activities through its authorized dealers (Banks and other financial

institutions). The Exchange rate is fixed by the government. The Currency

Administration Commission (CADIVI) is the governmental office in charge of

administering the exchange control regime.

Currency exchange activities performed outside the authorized financial institutions are

strictly forbidden and penalized. The Law on Foreign Exchange Crimes establishes

several requirements for business transactions in foreign currency and penalizes foreign

exchange transactions that violate the exchange control regime, the purchase of foreign

currency under false pretences and the use of foreign currency purchased from the

Central Bank for purposes different from those that induced the acquisition request and

authorization. This Law also imposes criminal sanctions on those who publicly or

privately offer goods and services nominated in foreign currency, in contravention to the

applicable laws, and exporters who do not reintegrate or sell to the Central Bank the

export proceeds. All foreign currency that enters the country must be sold to the Central

Bank at the official exchange rate. In the same way, all transfers out of the country must

be intermediated by the Central Bank. In both cases, there is a strict control of the

23

legality of those transactions, which must be within the scope of the authorized

transactions regarding the Exchange Control Law.

Foreign investors can acquire foreign currency from the Central Bank for dividend

remittances abroad and for the recovery and remittance of divestments. There are

several reporting requirements for every transfer of money in or out of the country.

EXPORTS

Venezuela has developed a policy of expansion and incentive for the exportation of

nontraditional products, (i.e. products other than oil, gas, iron and aluminum).

Nevertheless, some products might be subject to an export restriction. These

restrictions can be total or limit the exports to a determined amount (i.e. exports of gold).

Depending on the destination or the nature of the product, an exporter may be

requested to fulfill specific prerequisites such as export licenses, sanitary certificates, or

certificates of origin. Usually there are no export duties.

IMPORTS

No license or governmental permit is required for importing goods. However, there are

goods subject to restrictions and previous licenses. Venezuelan tariffs are usually set on

an ad-valorem basis. However, sometimes, import duties are calculated on a specific or

mixed basis. According to Rule 989, which contains Venezuela’s custom Tariffs, there

are four levels of tariffs applicable for imported goods. The highest range is up to 20%,

the middle 15% and 10%, and the lowest is 5%. Vehicles are an exceptional case with

tariffs up to 35%. Customs services tax is 1% of the value of the merchandise imported

into the country. Some products might be subject to import quotas in determined

periods of time. Quotas were imposed a few years ago on the import of cars from

Colombia.

24

STRUCTURES FOR DOING BUSINESS

GOVERNMENTAL PARTICIPATION

There is a policy towards promoting a greater governmental role in all sectors of the

economy, not just as a regulator, but also as an active participant. So, it is possible that

the government will seek to participate in the ownership or operation of certain

companies if there is an interest in the activity involved. Sometimes, when the

companies need an authorization from the government or its entities to develop certain

economic activities, the government will impose certain conditions, one of which could

be the participation in the ownership of the company and the incorporation of a mixed-

capital company. In some cases, the government seeks only a minority ownership of the

stockholding, but in other cases the conditions imposed on the investor can be harder

and the government might not accept less than the majority. Also, sometimes the

control of the company’s operation is an issue, in those cases, the investor might have

his investment limited to a partial ownership without important decision rights.

In the last few years, the policy towards fostering a greater governmental role in all

sectors of the economy has been materialized into several expropriations and taking

over the activities of significant private players in different sectors of the economy such

as banking, insurance, agro industry, manufacturing and retail. The investor liability will

depend in great part on the rules established in the agreements signed with other

partners or investors, as well as in the articles of incorporation and By Laws.

Restrictions on capitalizations will depend on the type of corporation incorporated. In

general, there is no minimum or maximum share capital required for stock corporations.

The shareholders must subscribe the total capital stock and pay at least 20% of the

stock subscribed by the time of incorporation. Although no minimum amount of capital

stock is required, particular requirements may be applicable on certain business areas.

With regard to capital contributions, limited liability companies are required to have a

minimum capital of Bs. 20 and a maximum capital of Bs. 2,000. Investments may be

made in cash or by capitalization of goods. All profits derived from stock sales of

25

companies incorporated in Venezuela are subject to taxation. Transfers of stocks made

through the stock exchange are subject to a proportional tax of 1% of the price withheld

by the stock exchange. The purchase of an ongoing business or some of it assets is

subject to a tax withholding of 5% of the gross sales price. The Tax should be withheld

by the purchaser and paid to the national treasury.

JOINT VENTURES

Foreign investors can enter into joint-ventures. It is advisable to provide in detail all the

rights corresponding to minority shareholders as there are very few minority protection

provisions in the Commercial Code. When the investor has already a company

incorporated in the country, it is necessary to file before the relevant Mercantile Registry

Office a Shareholders’ Meeting Minute where the joint venture is approved and its terms

are established.

The incorporation of a new company can take up to one month. The registry of a

Shareholders’ Meeting Minute usually takes 10 business days. There is a registration

fee for incorporation of the company equivalent to (1%) of the capital stock or the capital

allocated to the branch, plus administrative fees payable to the Registry Office.

In general, there are no restrictions on foreign shareholders to be a participant,

manager or director, except in certain sensitive industries including:

Sectors reserved to national enterprises by Foreign Investment Regulations:

Television and radio broadcasting and Spanish language newspapers. Services in

areas that require the participation of professionals whose practice is governed by

national laws.

Areas reserved by special laws to national companies. i.e. Oil & Gas Companies

operating in all other sectors may be formed with up to 100% of foreign ownership.

Such companies may remain as foreign-owned companies indefinitely.

26

Nevertheless, it is important to point out that the Mercantile Registry Offices may

request a copy of the passport and visa (Labor or Business) of the shareholders and

often request the same documents for at least one of the foreigners appointed as

manager or directors. In stock corporations, shareholders are only liable for the

company acts only up to the subscribed capital. However, shareholders can be held

liable in environmental matters. In addition, recent precedent-setting decisions from the

Supreme Court have pierced the corporate veil in employment matters and other public-

interest issues, and established that group member companies are joint and severally

liable in these situations.

In general, there is no minimum or maximum share capital required for stock

corporations. The shareholders must subscribe the total capital stock and pay at least

20% of the stock subscribed by the time of incorporation. Although no minimum amount

of capital stock is required, particular requirements may be applicable on certain

business areas (such as banking). With regard to capital contributions, limited liability

companies are required to have a minimum capital of Bs. 20 and a maximum capital of

Bs. 2,000 (which can be considered below the minimum amount for most business

areas). Investments may be made in cash or by capitalization of goods. Certain tax

advantages apply to joint ventures as well as tax payers whose income derives from the

manufacture of industrial products and agro- industries, tourism, agriculture, and fishing.

LIMITED LIABILITY COMPANIES

The Venezuelan Commercial Code provides four different types of corporations; one of

them is the limited liability company. In order to legally incorporate a corporation in

Venezuela, the law requires registration of the articles of incorporation and By-Laws

before the Mercantile Registry Office and its subsequent publication in a local

newspaper. Additionally, shareholders must file the evidence of payment of the capital

contribution. Failure to fulfill all legal requirements results in the company not being

considered legally incorporated and, therefore, the shareholders, the administrators and

27

any other person who has acted on behalf of the company, will be deemed personally

liable for all ventures the company enters into.

The incorporation of a limited liability company takes approximately one month,

counting from the moment all documents are delivered and the capital is transferred to a

Venezuelan bank account. There is a registration fee for incorporation of the company

equivalent to 1% of the capital stock or the capital allocated to the branch, plus

administrative fees payable to the Registry Office.

In general, there are no restrictions on foreign shareholders except in certain sensitive

industries including:

Sectors reserved to national enterprises by Foreign Investment Regulations:

Television and radio broadcasting and Spanish language newspapers. Services in

areas which require the participation of professionals whose practice is governed by

national laws.

Areas reserved by special laws to national companies. i.e. Oil & Gas (reserved to

the State, with few exceptions)

Companies operating in all other sectors may be formed with up to 100% of foreign

ownership. Such companies may remain as foreign-owned companies indefinitely.

Nevertheless, it is important to point out that Mercantile Registry Offices may request a

copy of the passport and visa (Labor or Business) of the shareholders and often request

the same documents for at least one of the foreigners appointed as manager or

directors. With regard to capital contributions, limited liability companies are required to

have a minimum capital of Bs. 20 and a maximum capital of Bs. 2,000 (which can be

considered below the minimum amount for most business areas). Investments may be

made in cash or by capitalization of goods.

All profits derived from stock sales of companies incorporated in Venezuela are subject

to taxation. The purchase of an ongoing business or some of it assets is subject to a tax

28

withholding of 5% of the gross sales price. The Tax should be withheld by the purchaser

and paid to the national treasury.

PARTNERSHIP

Partnership and Limited Partnership exist in Venezuela’s Commercial Law. In general,

there are no restrictions on foreign shareholders to be a partner, except in certain

sensitive industries. The extent of the capital owned by the national partner will be

established in the regulation regarding the particular industry. There is a registration fee

for the incorporation of the company equivalent to 1% of the capital stock or the capital

allocated to the branch, plus administrative fees payable to the Registry Office.

In General Partnerships, the Partners liability is joint and unlimited before third parties.

However, creditors can only pursuit partners after having pursuit the society. In Limited

Partnerships, there are two kinds of partners, the first are jointly and limited liable for

social obligations and the second have their liability limited to a certain amount of

capital. All profits derived from stock sales of companies incorporated in Venezuela are

subject to taxation.

SOLE PROPRIETORSHIP

The Venezuelan Commercial Code establishes the figure of the sole proprietorship. The

sole proprietorship is not considered a company, but it allows a person to develop a

certain activity without the need to incorporate a company. The sole proprietorship is

registered before a Mercantile Registry Office. The registration of a sole proprietorship

takes approximately one month. There is a registration fee for incorporation of the sole

proprietorship in the order of approximately USD 500. The investor as a sole

proprietorship is personally liable, his personal assets can be seized for the payment of

debts. There is no assigned capital as the sole partnership assets are the ones of the

sole partner.

29

The investor and the sole proprietorship are the same person before the fiscal

authorities; in consequence the personal and commercial tax obligations must be

fulfilled by the investor. The investor must keep its personal and commercial accounts

separated.

SUBSIDIARIES/BRANCHES/REPRESENTATIVE OFFICES

Subsidiaries, branches and representation offices can be established by the investor.

The Representative Offices are only treated and permitted in the scope of the General

Law of Banks and Other Financial Entities, serving as an intermediate between their

constituents and natural or legal persons who received credits granted by them. The

registration of subsidiaries and branches takes approximately one month, counting from

the moment all documents are delivered and the capital is transferred to a Venezuelan

bank account.

Representative Offices need an authorization issued by the Superintendence of Banks

and Other Financial Entities, and has to fulfill every requirement and formality

established by such Superintendence through general rules. The issuance of this

authorization can take a few months. The cost of the registration of a subsidiary or a

branch office depends on the amount of its registered capital. There is a registration fee

for incorporation of the company equivalent to 1% of the capital stock or the capital

allocated to the branch, plus administrative fees payable to the Registry Office in the

order of approximately USD 500. The Representative Offices shall constitute and

maintain a pledge with a financial institute or insurance company domiciled in

Venezuela, in order to guarantee the fulfillment of the obligations acquired during its

activities.

Branches are treated by the Venezuelan Commercial law as local corporations;

therefore, branches are authorized to carry out business without other limitations than

the legal provisions applicable to companies organized in Venezuela. Branches are not

regarded as different or autonomous entities, so parent companies retain full liability for

30

the branch’s operations. In terms of limits of liability, even though an amount of capital

must be allocated to the branch by the parent company, branches’ liability is determined

by the parent company’s capital.

On the other hand, parent companies are only liable for the acts of their stock

corporation subsidiaries as shareholders and only up to the subscribed capital.

However, parent companies can be held liable in environmental matters. In addition,

recent precedent-setting decisions from the Supreme Court have pierced the corporate

veil in employment matters and other public-interest issues, and established that group

member companies are joint and severally liable in these situations.

TRUSTS AND OTHER FIDUCIARY ENTITIES

There is a fiduciary entity recognized in Venezuela, the Fideicomiso or trust, which is a

juridical relationship, where the grantor transfers one or more assets to a trustee, who is

obliged to use such assets in favor of a third party called beneficiary. Transferred assets

and the ones that substitute them do not belong to the common pledge of the trustee’s

creditors. Unless otherwise provided in the law, the trustee will only be subject to

comply, with said assets, the obligations derived from the trust or its execution; in

addition, the trustee could oppose any precautionary or enforcement measures

requested by the creditors on the occasion of debts that are not related to the trust or its

execution. The investor can be a grantor or a beneficiary, but not a trustee. Only banks

and insurance companies incorporated in the country can be grantors, and they must be

authorized by the president through a resolution of the Treasury or the Ministry of Public

Works, respectively.

REQUIREMENTS FOR THE ESTABLISHMENT OF A BUSINESS

ALIEN BUSINESS LAW

The company incorporated in Venezuela is subject only to Venezuelan Law. The

incorporation, administration and operation of businesses in the country must follow its

rules and cannot be subject to alien business laws.

31

ANTITRUST LAW

The competition issues are treated in the Venezuelan Constitution of 1999 and the

antitrust is regulated under the provisions of the Promotion and Protection of Free

Competition Act of 1992, known as Procompetencia Act, both established the general

framework for each matter and both are the current applicable laws. Procompetencia

Act is applicable to public or private corporations engaged in economic activities. There

is no filing requirement.

ENVIRONMENTAL REGULATIONS

All economic activities are subject to environmental regulation. There might be some

added costs involved for companies developing certain activities.

GOVERNMENTAL APPROVALS

There are no governmental approvals required for the incorporation of companies in

Venezuela.

INSURANCE

Except for companies developing activities in certain economic sectors, there is no need

for companies to carry insurance.

LICENSES/PERMITS

There are several permits, licenses and authorization required, depending on the

business activities conducted. The applications for licenses and permits will depend on

the rules established by the relevant authorities regarding every particular activity, i.e.

licenses and permits required for pharmaceutical laboratories by the Ministry of the

Popular Power for Health. The time estimation will depend on every kind of license or

permit.

32

RELIGION & AESTHETICS

33

The Venezuelan people have a rich cultural in their heritage. More than 93% of

Venezuelans lives in urban areas in the northern part of the country. Above 96% of the

population is Catholic. The rest belong to other churches, mainly the Protestant church.

Venezuela's heritage, art, and culture have been heavily influenced by

the Caribbean context. Venezuelan culture has been shaped

by indigenous, Spanish and African influences. Original culture was subsequently

assimilated by Spaniards; over the years, the mix culture had diversified by region.

Heritage rules are wrongfully prescribed and there is no field distinction in position of

sexuality, education or canal. The higher position one holds, nevertheless, the many

palmy one is in maneuvering Venezuela's complicated licit and interpersonal method.

Children are traditionally cared for by their parents, although the extended kin may also

modification a star role in the upbringing. Venezuela provides disentangled and required

education finished score twelve for all its aggregation.

In general only 20-30% of Venezuela’s population goes on to obtain a university degree.

Since the 1950s there has been an increasing proliferation of private universities

although by far the ones with the best reputations are public ones. There are a series of

master’s level graduate programs but doctorates at the Ph.D. level are quite rare.

MUSIC OF VENEZUELA

The music of Venezuela is an expression of the Venezuelan culture, which contains

diverse Music genres, traditional and moderns according with the features of

each geographic region; although it is frequent to find different musical styles in the

same region. The diversity in musical expressions found in Venezuela can be seen as

the result of a mixture of African, native Indigenous, European (especially Spanish)

influences, as well as more modern American and Caribbean musical forms, such

as Trinidadian and Cuban.

34

SYMBOLS

The national flower is the orchid. This kind of orchid is also known as Flor de Mayo. The

national tree is the araguaney called aravanei by the caribes, it can be found mostly in

regions with temperate weather. It can reach a height between 6 and 12 meter. The

national bird of Venezuela is the turpial.

35

PART – II

SEMESTER IV

36

CHAPTER – 1

MEDICAL TOURISM

37

INTRODUCTION

Medical tourism, the act of travelling abroad in search of health care, has grown

significantly in recent decades with an increasing number of countries seeking to

become key exporters of medical services. Medical Tourism refers to movement of

people to the country providing the service for diagnosis and treatment. During the past

few years, the number of people going out of their home country to consume health

services has drastically augmented. Medical Tourism industry offers unbelievable

potential for the developing countries for the reason that of their low-cost advantage.

The main benefits of medical tourism are improvement in export earnings and

healthcare infrastructure. There are lot of countries such as Thailand, India, Singapore,

Malaysia, South Africa, Jordan, Cuba and Lithuania are combating for a share of the

market. In order to realize the full potential of the industry, it is vital for these countries to

develop a strategic plan to coordinate various industry players such as the medical

practitioners, private hospitals, policy makers, hotels, transportation services and tour

operators. This report presents the strategy that needs to be implemented by India, one

of the key destinations for Medical tourism, in order to achieve industry-leadership.

Studies on health-related mobility have long focused on the South-North migration of

patients. Recently, more attention has been paid to movements in the converse

direction, patients from developed countries travelling to developing countries in search

of health care, also referred to as medical tourism. Factors such as increasing health

care costs, the aging of the population, long waiting lists for surgeries and globalization

in general have driven the flow of patients from industrialized countries seeking

treatments abroad. On the other hand, some of the factors that have enabled

developing countries to offer medical services to foreign patients include lower labour

costs, high-quality health care facilities and services at affordable prices.

38

MEDICAL TOURISM AS AN INDUSTRY

Medical tourism is an economic activity that involves trade in services from two distinct

sectors, health care and tourism; it is not necessarily clear which kinds of treatments are

encompassing in “health care.” Medical tourism can be basically be defined as provision

of ‘cost effective’ private medical care in partnership with the tourism industry for

patients needing surgical and other forms of treatment. This process is being facilitated

by the corporate sector involved in medical care as well as the tourism industry – both in

private and public. In many developing countries it is being enthusiastically promoted by

the government’s policies. India’s National Health policy 2002 says: “To capitalise on

the comparative cost advantage enjoyed by domestic health facilities in the secondary

and tertiary sector, the policy will encourage the supply of services to patients of foreign

origin on payment. Providing of such services on payment in foreign exchange will be

regarded as ‘deemed exports’ and will be made entitled for all fiscal incentives extended

to export earnings”.

MEDICAL TOURISM IN VENEZUELA

As health care costs skyrocket, patients in the developed world are looking overseas for

medical treatment, Venezuela, are capitalizing on its low costs and highly trained

doctors to attract to these "medical tourists." Even with airfares, the cost of going to

Venezuela for surgery is far cheaper, and the quality of services is often better than that

found in the United States and United Kingdom. Indeed, many patients are pleased at

the prospect of combining their cosmetic, dental or other surgery with a trip to the World

famous Venezuela.

With the world community becoming intermeshed, the practice of leaving your home

country for medical procedures, both those necessary for health or cosmetic purposes,

has become common. A few countries have become identical with medical tourism,

offering everything from heart surgery, liver transplants, and dental surgery to cosmetic

procedures, while others concentrate in one area of the medical field.

39

While a very few of Asian countries have become experts in everything from root canals

to hip replacements, South America is an up and coming place to go for cosmetic

surgery. With prices significantly cheaper than in the United States or Canada,

Venezuela has become a high-traffic destination for medical tourism. The clinics in

Venezuela are targteted towards the North American upper class, and with prices that

are considerably less as compared to US, they are coming in droves. The procedures

that are offered are as numerous and wide-ranging as in the best clinics in North

America and the well qualified surgeons are of high repute.

Venezuela is among top three countries in the world for plastic surgery procedures. All

clinics and hospitals are supervised by the Venezuelan National Health Department and

private clinics are equipped with modern technology.

Venezuela is a famous international medical tourism location because of the

competitive prices. At Surgical Services International (SSI) clinic in Margarita Island for

example, a face lift costs £2,390 where as in a UK private hospital you are likely to pay

between £4,300 up to £6,000 and all-inclusive-packages are available which include

accommodation, travel assistance, surgery and pre and post op support.

Accreditation and prerequisite of cosmetic surgeons and doctors in Venezuela

Doctors study for six years at university before graduating as a general doctor, followed

by two years of rotating residency. To train as a surgeon involves three years of

postgraduate general surgery study followed by three years of plastic reconstructive and

maxillofacial postgraduate training.

Many doctors study in Venezuela, including their specialty in plastic surgery, but some

train in the USA or Brazil. There are medical schools at Central University (Caracas),

Los Andes University (Merida) and Zulia University (Maracaibo).

40

Cost comparisons of Major Medical treatments between India and Venezuela

(This table show Average costs of Medical treatments in countries in terms of USD)

INDIA

VENEZUELA

KNEE ARTHOSCOPY 2000 USD

4800 USD

CORONARY BYPASS 7500 USD

16500 USD

HIP REPLACEMENT 5600 USD

11000 USD

LASIK EYE SURGERY 850 USD

1200 USD

LAPROSCOPIC HERNIA SURGERY

2000 USD 3200 USD

PROSTRATE SURGERY 5500 USD

6500 USD

GASTRIK BYPASS 10500 USD

10500 USD

LAP BAND SURGERY 8500 USD

8500 USD

TOTAL KNEE REPLACEMENT

7500 USD 10000 USD

(Source: www.novasans.com)

(This chart shows Average costs of Medical treatments in countries in terms of USD)

41

The table and chart clearly shows that Cost of Heart Bypass surgery in INDIA is almost 50% less than that of Venezuela. In fact India provides bypass surgery at lowest cost as Compared to any other country in the world.

Hip replacement cost in India is just 50% of that in Venezuela.

Cost Laparoscopic Hernia surgery is just 60% of that in Venezuela.

Total knee replacement cost in India is 75% of Venezuela’s cost

Thus looking at these tables we can clearly see that India is better in this medical

Treatments As compared to Venezuela, especially in terms of cost advantage. So there

is huge potential for India to get medical tourists from Venezuela for coronary Bypass,

hip replacement and Total Knee replacement as they are cheapest in India as

compared to whole world.

42

MEDICAL TOURISM POLICY IN INDIA

Following are the major points which are covered under government policy

Establishing a medical tourism council

M.O.U with private hospitals for provision of high quality care

Accreditation of service provider so as to ensure quality

MEDI CITY

Creating Potential for private participation in public hospitals

Investment in Capacity Building School of public health and Hospital Management

Wellness Tourism

Reduce problems in visa process and allow visa-on-arrival for patients.

Follow an Open-Sky policy to increase the inflow of flights to India.

Create Medical Attaches to Indian consulates that promote medical services to

potential Indian visitors.

INVESTMENT POLICY

For facilitating investment the policy recommendations include:

Recognize health care as an infrastructure sector, and extend the benefits Under

sec 80-IA of the IT Act. Benefits include tax holidays for five years and

concessional taxation for subsequent five years.

Promoting Health sector for Foreign direct investment

Providing loans at low interest rates and reducing excise duty for medical

equipment.

Facilitating clearances and certification like medical registration number and anti-

pollution certificate

43

Objectives of National Association of Health Tourism (NAHT)

Building the India Brand in foreign countries

Promoting Inter-Sectoral Coordination

Information Distribution using Technology

Standardization of Services

VISA assistance for medical tourist:

M VISA: ‘M VISA’ is valid for one year or the duration of treatment, whichever is less.

The ‘M-VISA’ enables Medical Tourists to travel to India up to three times in one year

for seeking medical attendance in reputed/ recognized specialized hospitals/ treatment

centers/Indian system of medicine.

MX Visa: Person/s accompanying a patient traveling to India for medical care on

aforesaid medical visa is conditionally entitled for Medical Escort visa called “MX

(Medical X) Visa”. Two family members or attendants accompanying the patient can

come with such patients.

44

POTENTIAL FOR MEDICAL TOURISM IN INDIA

India is one of the most preferable destinations for global medical tourists

Medical Tourism is spoken to be as a dollar booming business for India.

In & around 1.3 million tourists by 2013 at a CAGR of 19%

India will capture approximately 2.5% of International market

There has been an outstanding growth backed up by investments in healthcare

sector inclusive of pharmaceutical and healthcare technology and hospitality

industry.

Facilitations by Medical Tourism Corporation - medical travel to India, finest hospital

services with the most skilled doctors, physicians and surgeons taking care of the

tiniest things, starting from procuring visas, good accommodation, hospital charges

for the treatment, to the airfare and travelling within the country.

Indian hospitals are JCI accredited.

There are several super specialty hospitals which are dedicated to provision of

cardiology and cardiothoracic surgery, orthopaedic surgery (including knee and hip

replacement surgery), organ transplant surgery (including liver, kidney),

Neurosurgery, Ophthalmology, Psychiatry, General Medicine and General Surgery,

Cancer management, Cosmetic treatments, Paediatric Surgery, Paediatric

Neurology, Urology, Gynaecology / Obstetrics / Surrogacy, and Dental care.

Emerging Trends/drivers:

Affordable and inexpensive costs (Around 30%-70 % lower than the costs in the US)

Vastly skilled, long experienced and highly trained doctors, physicians and

surgeons, of international reputation, supported by a strong, comprehensive and well

trained paramedical staff comprising of nurses, technicians, attendants, care takers,

clinical co-ordinators, and nutritionists.

45

The facilities offered and the technological expertise used by the doctors is world’s

first class and latest & the hospitals use highly rated and safe implants and

consumables.

There is waiting time involved is virtually zero.

Core competent quality, high end technological support, tourist attraction as well as

tourism infrastructure & facilities.

Eradication of communication gaps.

India has been a tourist hot spot and has lured foreigners predominantly backed by

its mysticism, spirituality, exotic locales, and rich history and culture.

Spa & yoga treatments in India as well as Ayurveda and naturopathy have always

enticed tourists.

Indian Medical tourism gives a combination of a Medical Trip & a Pleasure Trip

Today Indian healthcare is seen to be on par with global standards.

MEDICAL FACILITIES IN GUJARAT

Gujarat provides cardiac, Neuro-surgery, orthopaedics, eye surgery, dental

treatment and Cosmetic Surgery.

Gujarat offers holistic medical services as well as cost effective treatment.

Private Specialty Hospitals are located in Ahmedabad, Surat and Baroda in Gujarat

state.

Gujarat runs hospitals for TB and Mental illness and also provides with traditional

therapies.

Private hospitals have signed MoUs are signed with for providing high-quality

healthcare.

46

BUSINESS OPPORTUNITIES & CHALLENGES IN FUTURE

Role of Government

Acts as a Regulatory body to build consumer trust

Acts as a Facilitator to encourage private investment in medical infrastructure.

The government must actively participate in promoting FDI in healthcare sector.

Must provide low interest rate loans, reducing import/excise duty for medical

equipment.

An integrated marketing communications campaign should be formed.

Role of private sector

Private hospitals must plan to integrate horizontally for providing end-to-end

healthcare aids to consumers. Eg, Apollo multi specialty hospitals is under planning

of setting up spas and alternative clinics to attract more foreign tourists.

Indian hospitals should get tie-ups with foreign institutions for assured supply of

medical tourists.

Medical Tourism - Opportunities and Challenges for India

India has become the world's preferred healthcare destination.

India's main USP in the regard of Medical tourism was prospective low-cost

treatment by highly professional doctors. Also India will project itself being a great

holistic medical destination as compared to other countries.

India offers best quality treatment as well spiritual and mental healing as well.

47

MEDICAL TOURISM CELL AT VENZUELA - A BUSINESS PLAN

India has been very well developed in the sector of medical services. We plan for

initiating our medical tourism cell in Venezuela wherein we can give the best

services to the residents therein welcoming them to India to take the best advantage

of hassle free & safe as well as hygienic medical services through the best

experienced & practicing medical experts.

We plan to focus for tie-ups with the few best existing hospitals of Gujarat&

especially Ahmedabad for providing medical services by inviting Venezuelan

residents here & giving them the best possible service.

We plan to make tie-ups with hospitals like Shalby for knee replacement, which is

one of the most well known hospitals of India for Knee replacements.

Our main focus would be on various surgeries, organ replacements as well as

cardiac treatments for which we would keep our desks in all the emerging hospitals

of Venezuela.

Our motto behind our strategy of tie-ups with the existing expert hospitals is to curb

the financing costs of infrastructure, hiring best medical practitioners & use the same

for expanding our medical services in newer & better ways. Also it would be a new

initiative so incurring huge costs at this level would not be so feasible. It requires

more & more research before starting up an all in all a new hospital & inviting

residents & non-residents from various countries to take the advantage of the same.

The population of the country is not so high in numbers. SO initially we don’t expect

huge population to visit our country till we develop ourselves & win the trust of the

residents there.

The cell will make tie-ups with the insurance companies of Venezuela providing best

plans to people who wish to come to our lands for availing the benefits of medical

services.

Our main focus is on aged people as well as females, as females are usually found

having the issues of Knees.

48

Though Venezuela is well known for its Cosmetic medical treatments, we plan to

invite the patients showing them the best cost comparison & also dragging their

attention for taking advantage of combined medical services like cardiac service,

surgeries & replacement altogether under one roof at our hospitals in which India

ranks at a high & different level. Thereby we aim to cross sell & widely expand our

selves.

The cell will start its own Website providing regular updates & information of our

medical tourism services, its success as well advantages to the people at large.

The cell would operate dynamically based on our instructions as well as the

requirements of the residents in Venezuela.

49

CHAPTER – 2

NETWORK SECURITY SERVICE

50

OVERVIEW OF INDIAN IT INDUSTRY

The year 2011-12 was covered by growing global uncertainties. Global recovery has

stalled, growth prospects have dimmed and downside risks have escalated. Global

output has increased by 3.8 percent in 2011 as compared to 5.2 per cent in 2010. The

growth of the Indian Economy has also slowed down and was grown at 6.9 percent in

2011-12 as with comparison to 8.4 per cent in 2010-11.

By contrast, the Indian IT-BPO Industry (including hardware) continued to exhibit

resilience. It weathered uncertainties in global business environment and reached a

significant milestone in the year 2011-12 by generating aggregate revenue of US $ 101

billion, a growth of about 14.7 percent over 2010-11. Thus, the year 2011-12 was a

landmark year for the Indian IT-BPO Industry.

US continue to drive IT-BPO exports growth. Export revenue from the US was grown by

over 17 per cent in 2011-12, thereby retaining its largest market share at 62 percent.

Growth was being driven by higher demand for IT services and support. Continental

Europe and UK, the second largest markets for Indian IT-BPO exports was decline in

the last three years. In 2010-12, their combined share was set to be about 28 percent

with UK at US $ 12 billion and Continental Europe at US $ 8 billion.

The Indian domestic IT market was continued to grow in 2011-12. The revenue from the

domestic market (IT Services, software products and BPO) had grown from US $ 17.3

billion in 2010-11 to US $ 19 billion in the year 2011-12, an anticipated growth of about

9.8 percent. IT services is one of the fastest growing segment in the Indian domestic IT

market.

The sector is responsible for creating significant employment opportunities in the

economy. Direct employment in the IT-BPO sector was grown by over 9 per cent to

reach 2.77 million, with over 230,000 jobs being added in 2011-12.

51

STRENGTHS OF INDIAN IT INDUSTRY

One of the largest pools of technically qualified high class is IT service provider.

Enormous skilled human resource is similar to developed countries leading to

lower man power cost nearly one tenth of those in developed nations, thus giving

India a comparative profit. Offers a wide range of services from support / data

processing to highly developed and complex software systems etc. Rich experience

of functioning with large global companies and enjoy high credibility.

QUALITY OF INDIAN IT EXPERTISE

Today the world recognizes India as a source of high quality IT workforce. Over 75% of

world wide SEI CMM level 5 certified companies from Indian origin. The Capability

Maturity Model (CMM) for Software describes the principles and practices underlying

software process maturity and is intended to useful software organizations to become

better the maturity of their software processes in terms of an evolutionary path from ad

hoc, chaotic processes to mature, disciplined software processes.

Over 300 Indian computer software and services have already obtained ISO 9000 or

CMM level II certification. It is because of this high quality of Indian IT sector that the

majority of multinational companies in IT have either their software development

or research centre in India. 1/3 of the e-commerce start-ups in the Silicon Valley

continue to be lead by Indian. Export of Computer Software / Services (including ITES /

BPO) registered a growth of 6.2 % (2.95 % in US$ terms) during the year 2009-10 over

the year 2008-09. In value terms, export of this sector during 2009-10 was estimated

to be Rs. 241950 crore (US$ 51 billion) up from Rs. 227834 crore ( US$ 49.54 billion)

estimated in the year 2008-09.

52

TYPES OF INTERNET SECURITY THREATS

The Internet hosts a large amount of information and the ability to reach around the

world to share information and communicate. Due to the inherit openness of the

Internet, it does have perils that required to be believed. Understanding these threats

can help neutralize them.

SPAM

Spam, or unsolicited commercial e-mail, may seem like the least of Internet security

threats, but it really robs people of their time in having to continuously clean out the junk

in their in-boxes. The other major problem with spam is that it brings in viruses through

attachments and tricks people redirected to malicious websites. Spam can be a

gateway to more severe threats.

VIRUSES

Viruses can come from discs, websites, email and other computers. Viruses come in

many types and strengths. A virus can be a program that simply damages your

computer to slow down, or it can totally wreak havoc on your computer system, forcing

you to reformat your computer. The best way to restrict viruses is to avoid downloading

software that you are unsure about. Viruses can work to quickly disable or control your

computer, or they may wait for a certain date to activate. Most antivirus software can

restrict viruses quite easily.

ADWARE/MALWARE

Malware means malicious software. It is code that installs itself on your computer

without your ever knowing how you got it or where it came from. Malware may easily

slow your computer down by reporting to other websites what you are doing, such as

which websites you are surfing, or it can cause unending pop-up ads. Malware can be

used to steal personal information, or it can completely take over your computer

management. Many programs are aimed at stopping and taking off malware, similar to

the way antivirus software works.

53

INFORMATION THEFT

The silent security threat of the Internet is information theft. Many people already know

that identity theft is a major problem; apart from identity theft is done easily online.

Criminals hack in to large databases of consumer information to steal your identity, but

individual information can also be access from your computer when you get infected

with a virus or malware. Your bank account number and passwords can be stolen from

you as they are transmitted online.

FIREWALL

A firewall is a serving system that lies between your computer network and the Internet.

When used perfectly, a firewall restricts unauthorized use and access to your network.

The job of a firewall is to carefully psychoanalyse data entering and exiting the network

based on your configuration. It remove/restrict information that comes from unsecured,

suspicious locations. A firewall plays a crucial role on any network as it provides a

protective barrier against most forms of attack coming from the outside world.

Firewalls can be either hardware or software.

HARDWARE FIREWALLS

Hardware firewalls can be bought as a stand-alone product but more recently hardware

firewalls are typically found in broadband routers, and should be accepted as an

important part of your system and network set-up, especially for anyone on a broadband

connection. Hardware firewalls can be operative with little or no configuration, and they

can protect every client on a local network. Most hardware firewalls will have at least of

4 network ports to connect other computers, but for large strong networks, business

networking firewall solutions are available.

A hardware firewall uses packet filtering to check the header of a packet to find out its

source and destination. This information is compared to a set of predefined or user-

created rules that search whether the packet is to be forwarded or dropped.

54

USE OF FIREWALLS IN ORGANIZATIONS:

Financial institutions:

To secure client logins in net banking.

To protect details of account holders.

To protect financial transactions.

Corporate:

To protect the various confidential data and information.

To secure the transactions between customers and suppliers.

To improve the productivity of employees through the restrictive use of internet.

Government institutions:

To protect various securities related information of country.

To secure transactions of various insider informations.

To protect confidential data’s of various government departments.

Hospitals:

To protect the data of patients.

55

Educational institutions:

To restrict the use of internet by students.

IT industry in Venezuela

IT industry in Venezuela has not grown upto the mark. But due to the government

programmes, there are growing numbers of internet users in Venezuela.

Internet penetration:

Year 2007 2008 2009 2010 2011 2012* 2013* 2014*

Internet users (‘000) 5,761 7,278 8,918 9,669 10,416 11,486 12,390 13,416

Internet penetration (per

100 people)

21.1 26.2 31.6 33.8 35.8 38.9 41.3 44.0

(* shows estimated growth by Economic Intelligence Unit)

So as shown in the above table, the internet penetration is increasing and is expected to

grow more in the future.

56

Government programmes are an important factor in the development of the Internet

sector in Venezuela. Although the fiscal accounts will remain in deficit in 2012-16, we

expect the government to continue to promote the use of wireless fidelity (WiFi)

technology to expand Internet access. Its wireless Internet project has provided free

wireless broadband access in parts of the capital, Caracas, since 2005, with a view to

expanding the network to other parts of the country.

IT literacy programme by Venezuelan government:

The government of Venezuelan President Hugo Chavez has helped establish some 777

Infocentros nationwide, sites that make information and communication technology,

primarily internet-connected computer terminals, available to the general public. Staff at

these Infocentros also provides instruction in how to utilize such technology. An

estimated 3.4 million people have visited these computer and internet centres.

1,267,778 people have become literate in informational technology thanks to programs

implemented by the Venezuelan government named Infocentros.

POTENTIAL REQUIREMENT OF FIREWALL

As we have seen above the increasing growth of internet in Venezuela. With the

growing use of internet, there are also increasing cases of cyber crime. Venezuela is

also facing various cyber crimes like hacking of websites and user accounts. Though

the Venezuela is very restricted country we are not able to find this type of cyber crimes.

Some information that we got are shown below,

The anonymous hactivist group from Venezuela today hacked and brought down

the Petróleos de Venezuela, a Venezuela state-owned petroleum company’s website

PDVSA.com.

Venezuelan authorities have detained a 17-year-old after hacking into multiple

government Web sites and posting photos of President Hugo Chavez and his close ally,

Cuba's Fidel Castro. The boy modified 23 Web sites including those of the vice

president's office, the National Guard and the investigative police.

57

The U.S. state department has labelled Venezuela’s consul general in Miami and

ordered her out of the country after some Mexican students said she had expressed

interest in their offer to hack the U.S. government websites and nuclear plants.

POTENTIAL CUSTOMERS IN VENEZUELA

There are basically two sectors contributing to the GDP. One is industrial sector and the

other is service sector. The industrial sector has contribution of 35.6% in GDP and

service sector has 60.6%.

The industrial sector mainly consists of oil companies (CITGO Petroleum Corporation

and PDVSA). The service sector consists of financial institutions, media and airlines.

Venezuelan financial system had a high profitability in 2011, with profits skyrocketing

91% compared to 2010 and hitting VEB 14.4 billion (USD 3.35 billion). This economic

result is attributable to several factors, including foreign exchange profits from

operations made through the Transaction System for Foreign-Currency Denominated

Securities (Sitme), the structure of deposits, interest return on bond investments and the

increase of loans.

So our potential customers are oil companies and financial institutions.

58

Competitors and their Product Comparison

Features Cyberome Cisco

ASA

IBM Sonicwall Watch

Gaurd

Stateful Identity

based Firewall with

patent pending

‘Layer8’ technology

Y N N N N

All Security Features

on Single Appliance

Y N Y Y (WAF

appliance to

secure web

applications)

N

On-Appliance as

well cost free

External Reporting

Y N Y (Proventia

Management

Site

Protector

required)

Y (Additional

cost of I-

view)

Y (Install

WSM on a

separate

machine)

IM Logging and

Reporting

Good Poor Poor Poor Poor

Extensive Logging

and Log Viewer

Y N N N N

SSL Licensing One

single

license

Per

user

based

License

- Per User

License

-

59

Load Balancing and

Multilink

Management

Y N N Limited

On Appliance Self

Service Anti Virus

and Anti Spam

Quarantine Area

Good Poor Poor

Price comparison to

Cyberome

High High Low Low

POLICIES FOR IT/ITES INDUSTRY IN INDIA

In order to promote the industry, action has been taken on a continuing basis to

rationalize the tariff structure by making suitable changes in fiscal policy as part of

annual budgetary exercise. An outward looking and liberal trade policy is one of the

main features of India’s economic reforms. Approvals for all foreign direct investment up

to 100 per cent in the electronics hardware-manufacturing sector are under the

automatic route. The salient features of the existing Foreign Trade Policy applicable to

electronics hardware industry are brought out below:

The general Export Promotion Capital Goods (EPCG) Scheme allows import of capital

goods at 3 per cent customs duty, subject to an export obligation equivalent to 8 times

of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 8 years

reckoned from Authorization issue-date. However, a Zero duty EPCG Scheme is

available to exporters of electronic products. It allows import of capital goods at zero

percent customs duty, subject to an export obligation equivalent to 6 times of duty

saved on capital goods imported under EPCG scheme, to be fulfilled in 6 years

reckoned from Authorization issue-date.

60

Supplies of Information Technology Agreement (ITA-1) items and notified zero duty

telecom/electronic items in the Domestic Tariff Area (DTA) by Electronics Hardware

Technology Park (EHTP)/ Export Oriented Unit (EOU) units are counted for the purpose

of fulfilment of positive Net Foreign Exchange Earnings (NFEE).

Special Economic Zones (SEZs) are being set up to enable hassle free manufacturing

for export purposes. Sales from Domestic Tariff Area (DTA) to SEZs are being treated

as physical export. This entitles domestic suppliers to Drawback/DEPB benefits, CST

exemption and Service Tax exemption. 100per cent Income Tax exemption on export

profits available to SEZ units for 5 years, 50 per cent for next 5 years and 50 percent of

ploughed back profits for 5 years thereafter.

The salient features of the existing tariff structure applicable to electronics hardware

industry are brought out below:

CUSTOMS

Peak rate of basic customs duty is 10%.Customs duty on 217 tariff lines covered under

the Information Technology Agreement (ITA-1) of WTO is 0%.

All goods required in the manufacture ofITA-1 items have been exempted from customs

duty subject to actual user condition. Customs duty on specified raw materials /inputs

used for manufacture of electronic components is 0%. Customs duty on specified

capital goods used for manufacture of electronic goods is 0%.

In order to promote indigenous manufacture of mobile handsets; parts, components and

accessories for the manufacture of mobile handsets; sub-parts for the manufacture of

such parts and components; and parts or components for the manufacture of battery

chargers, PC connectivity cables and hands-free headphones of such mobile handsets

and sub-parts for the manufacture of such parts and components are exempted from

basic customs duty and excise duty. They have also been exempted from Special

Additional Duty of Customs (SAD) up to 31.3.2012.

61

A concessional import duty structure of 5%additional duty of customs (CVD) and

NilSAD has been prescribed on parts of inkjet and laser-jet printers imported for

manufacture of such printers.

A concessional import duty structure of 5%CVD and Nil SAD has been prescribed on

parts for manufacture of DVD writers, Combo drives and CD Drives subject to actual

user condition.

CENTRAL EXCISE

The standard rate of excise duty (CENVAT) is 10%.

Microprocessors, Hard Disc Drives, Floppy Disc Drives, CD ROM Drives, DVD

Drives/DVD Writers, Flash Memory and Combo-Drives are levied concessional excise

duty of 5%.

POLICY FOR 'IT' INDUSTRY IN GUJARAT

The Information Technology Policy announced by the Government of Gujarat has

emphasized the need to accelerate development of IT Industries in the State of Gujarat

which has potential to create large scale employment opportunities. Information

Technology Industry in India is a fast growing segment of the Indian economy, with

growth rate exceeding 40% per annum. Incentive Policy for IT Industry is to take into

account the specific characteristic of this industry. Therefore, these incentives would be

applicable anywhere in the State of Gujarat. Since the investment in tangible assets

tends to exceed the investment in intangible assets, this policy has also defined

intangible assets and incentives have been given to these as well so as to enable faster

growth of IT industry and greater proliferation of IT culture in the State. This 'IT Incentive

Policy' would be subject to review after a period of two years in view of rapid

technological changes in this sector.

Capital Subsidy at a rate of 25% for Eligible new IT units on total eligible capital

investment. Special Incentives in the form of Capital subsidy to large units on a

graduated scale. IT units would be eligible to a Turnover Incentive at a rate of 5% of the

62

eligible annual turnover with a ceiling of Rs. 50 lakhs. Sales Tax holiday on all IT

Software in the next 5 years.

Incidence of Sales Tax on Computer Hardware, Peripherals, etc., would be reduced.

A special Connectivity Incentive where Government would subsidized leased line rental

upto 500 Kms., to an extent of 50% of the lease rentals. IT units would be completely

exempted from power-cuts. In Gandhinagar, Technology Parks and Info cities would

have 50% higher FSI. A new Commissioner of IT for administering this Scheme. A State

Level Committee to interpret and decide the decisions regarding incentives.

FOREIGN INVESTMENT POLICIES

The Constitution guarantees the right to engage in any lucrative or commercial activity.

This right, however, is subject to the limitations stipulated in the Constitution and to

those established by law with respect to security, health or other matters of national

interest. Besides, the State may reserve for itself the right to exploit certain industries or

public services, such as, the Oil and Gas industry.

In order to classify the company as foreign, mixed or national, the appropriate agency

considers both the percentage of equity held by the foreign investor and the degree of

control that the foreign investor is entitled to exercise over the technical, financial,

administrative and commercial management of the company:

Foreign (more than 49% foreign equity);

Mixed (49% or less but more than 19.9% foreign equity); and National (less than 20%

foreign equity).

Shares owned by foreign investors with no decision power in the technical, commercial,

administrative and financial management of the company, are not computed for the

purpose of classifying the company as foreign, mixed or national.

The allowed proportion of foreign investment depends on the sector in which the

company is planning to develop its activities. There are some reserved sectors in the

economy, which require local participation. These sectors are the following:

63

a. Sectors reserved to national enterprises (that is, companies which have a maximum

of 19.9% of foreign capital) by Foreign Investment Regulations:

i. Television and radio broadcasting and Spanish language newspapers.

ii. Services in areas requiring the participation of professionals whose practice is

governed by national laws.

b. Areas reserved by special laws to national companies, i.e. Oil & Gas (reserved to the

State, with few exceptions)

Companies operating in all other sectors other than the ones mentioned may be formed

with up to 100% of foreign ownership and may remain as foreign-owned companies

indefinitely.

Traditionally, the most attractive areas for foreign investment have been the ones

related to natural resources, especially, hydrocarbons. Foreign investments have also

been made in manufacturing activities, telecommunication and banking, in which the

main investor countries are: United States of America, Japan, Spain, Netherlands,

France, Italy, Colombia and Brazil.

Foreign investors may acquire equity participation in local companies with no other

limitations than those established for the particular economic activity in the applicable

legislation.

When the foreign investor creates a new company or other business organization, this

new company will be registered before a Mercantile Registry Office. One of the

information that must be disclosed is the nature of the economic activities that will be

developed by the company. However, it is also possible for foreign investors to acquire

equity participation in local companies. In both cases, it is important and prudent to

register the foreign investment before the Superintendence of Foreign Investments

(SIEX, for its acronym in Spanish). In order to request this registration, the investor shall

make declarations regarding the nature of its investment.

There are some private and government agencies promoting investment in the country:

the National Council for the Promotion of Investments (CONAPRI, from its Spanish

64

acronym), the Social and Economic Development Bank of Venezuela (BANDES, from

its Spanish acronym), some trade and industry associations, Venezuelan Embassies

and Consulates around the world.

Usually, all foreign investments are deemed approved and they are only subject to

registration with the appropriate agency, provided that they do not contravene any

provision of general applicability under Venezuelan legislation.

However, foreign investors should register their investment with the Foreign Investment

Superintendence (SIEX, from its Spanish acronym). This register is a compulsory

requirement for eventual repatriation of capital and dividend remittance abroad possible.

When the investor is directly dealing with the government, it is important to have in mind

that negotiations can be difficult. Sometimes, the government representatives are not

sufficiently prepared for the technical level of negotiations. In other cases, the

government representatives in charge of a certain negotiation might be substituted by

others, which might slow down the whole process.

It is also important to notice that execution of agreements by the government and even

payments can take more time than the international standards.

GRANTS, SUBSIDIES AND FUNDS

Special grants and subsides offered to foreign investors are in general under the scope

of a Bilateral Agreement between Venezuela and another country. These grants are

usually restricted to certain activities.

The process and time estimate for approval will depend on the rules established in each

Bilateral Agreement or Treaty.

The investor could also receive loans from government agencies, depending on the

grant or subside and on the agency or entity granting it and as long as the conditions

imposed by the agency are fulfilled.

65

CUSTOMS REGULATIONS

The Venezuelan Customs Department (SENIAT) is in charge of the valuation of goods

according to the Customs Valuation Agreement (GATT). The object of this agreement is

to establish an equitable, harmonized and neutral customs valuation system.

Goods entering or exiting the country must be cleared through customs. Goods must be

declared and authorized by customs authorities. For imports and exports, the

documents required to this declaration are the following:

i. Declaration of customs,

ii. Commercial invoice,

iii. Original bill of lading,

iv. Payment of taxes (when applicable)

Two business days after declaration of goods, a physical recognition act is conducted

by the customs authorities. Once the authorities confirm the goods existence and

integrity, the liquidation services prepare the necessary forms (when applicable).

According to Presidential Decree Nº 3.769 (May 30, 2005), which contains Venezuela’s

custom Tariffs, there are four levels of tariffs applicable for imported goods. The highest

range is up to 20%, the middle 15% and 10%, and the lowest is 5%. Vehicles are an

exceptional case with tariffs up to 35%. Venezuela adopted the Harmonized Code on

Nomenclature of Merchandise, which was incorporated into the customs tariff list. The

Venezuelan Tariff contains all specific legal data applied to every item imported into the

country, including non-tariff barriers.

Customs service’s tariffs are due when the documentation corresponding to the entry or

exit of the product is registered by the Customs Office. This tariff must be paid together

with the Customs Tariffs. The Customs Service Tariffs are the following:

Five percent (5%) ad-valorem, for goods entering by sea, air or land.

Two percent (2%) ad-valorem, when goods enter the territory by mail services.

66

All goods destined to duty-free zones, free ports, customs warehouses or other similar

destinations will only pay for the customs service’s tariffs.

IMPORTS

No license or governmental permit is required for importing goods. However, there are

goods subject to restrictions and previous licenses.

Venezuelan tariffs are usually set on an ad-valorem basis. However, sometimes, import

duties are calculated on a specific or mixed basis. According to Rule 989, which

contains Venezuela’s custom Tariffs, there are four levels of tariffs applicable for

imported goods. The highest range is up to 20%, the middle 15% and 10%, and the

lowest is 5%. Vehicles are an exceptional case with tariffs up to 35%. Customs services

tax is 1% of the value of the merchandise imported into the country.

Some products might be subject to import quotas in determined periods of time. Quotas

were imposed a few years ago on the import of cars from Colombia.

There are Non-tariff barriers ("NTB") properly listed and differing depending on the

nature of the restriction imposed. Basically, restrictions are imposed based on public

health and security reasons.

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CHAPTER – 3

TEXTILE & COTTON

68

INTRODUCTION

The Indian Textiles Industry has an overwhelming presence in the economic life of the

country. Apart from providing one of the basic necessities of life, the textiles industry

also plays a pivotal role through its contribution to industrial output, employment

generation, and the export earnings of the country. It is considered to largest producer

of employment after agriculture sector. Thus, the growth and all round development of

this industry has a direct impact on the improvement of the nation’s economy.

Textile Industry

Organized /Centralized Sector Unorganized /Centralized Sector

A) Spinning Mills 1) Hand Looms

B) Composite Mills 2) Power Looms

(Spinning & Weaving) 3) Processing units

4) Hosiery & Khaddi units

These mills can be again classified as

i) Course and Medium Composite mills

ii) Fine and superfine composite mills

The major sectors of the textiles industry include the:

Man-made Fiber / Filament Yarn Industry

Decentralized Power-looms Sector

Woollen Textiles Industry

Silk Industry

Handlooms Industry

Handicraft Industry

Jute Industry

69

The Textile Manufacturing Process

ROLE OF INDUSTRY IN VENEZUELA

One of the largest textile firm SILKA ran out of business and after that Industry experts

argued that Venezuelan demand for textiles and apparel is being "artificially and

temporarily" boosted by the government. Moreover failure of state to modernize the

textile industry again lead to local manufacturers to turn themselves to importers.

“There is a high demand for apparel but there has been no new investment and jobs too

are not created since a long time,” according to Mariela Osorio, executive director for

Venezuelan apparel chamber Camara Venezolana del Vestido (Cavediv). According to

him, it is cheaper to have clothes and textiles imported than to buy them locally.

Textiles industry seen doomed Carlos Lira, general manager of Caracas-based

apparel firm Ideas Textiles Karli, gave her view on Textile industry that it will soon

disappear because of the Asian import blitz, which is prompting manufacturers to

restructure or become importers

70

COMPARATIVE POSITION OF INDUSTRY

World Textile scenario

There is a High production of wool, cotton and silk over the world which has

boosted the industry in recent years. Though the industry was started in UK, still in 19th

century the textile production passed to Europe and North America after mechanization

process in those areas. From time to time Japan, china and India took part in

industrializing their economies and concentrated more in that sector.

Japan, India, Hong Kong and China became leading producers due to their

cheap labour supply, which is an important factor for the industry

World cotton scenario

Cotton is considered to be a important natural fibre of the 20th century. Major growth of

cotton production was observed since the end of the Second World War (WWII). Cotton

was grown in 90 countries during the year 2007. During 2006/07, four major cotton

producing countries were China, India, the USA and Pakistan, which accounted for

approximately three-quarters of world's cotton production.

World Cotton Area and Yield

The area under cotton production in the world are estimated at around 30-31 million

hectares. The major cultivators of cotton in the world are America, India, China, Egypt,

Pakistan, and Eastern Europe. India has the largest area under cotton production.

China is the largest producer of cotton in the world, whereas India is the second largest.

Interestingly, China with almost half the area under cotton production compared to

India, but produces more than 2½ times yield (kg per hectare) of cotton as compared to

India.

71

World Cotton Production (Millions of 480-lb. bales)

(Source: Monthly Economic Letter: U.S. & Global Market Fundamental)

Global Textiles and Clothing Industry

It’s a $480 billion market which is expected to grow to about $700 billion by the year

2012, considering world trade of textiles and apparels after the expiry of MFA. It is also

expected that post-MFA most tariff distortions are likely to gradually disappear and firms

with efficient capabilities will gain in the global trade of textile and apparels. For Buyers,

Quotas on Textiles as well as on apparels meant multi country and multi vendor

sourcing. Buyers now have an option to source from the most efficient and cost effective

vendors and countries due to abolishment of Quotas.

INDIA'S POSITION IN GLOBAL TEXTILES AND CLOTHING INDUSTRY

India's position in the World Textiles Economy

Stands second largest producer of raw cotton.

Stands second largest producer of cotton yarn.

72

Second largest producer of cellulosic fibre/yarn.

Cotton Exports Of World Major Countries

Countries 2003-04 2004-05 2005-06 2006-07 2007-08

United States 13.75 14.43 18.03 15.70 15.70

Uzbekistan 3.10 3.95 4.80 4.60 4.50

Australia 2.15 2.00 2.88 2.12 1.30

Greece 1.22 1.17 1.35 1.25 1.15

Brazil 0.96 1.55 1.97 1.30 2.40

Burkina 0.95 0.97 1.40 1.35 0.85

India 0.70 0.66 3.45 5.30 5.70

Other 8.12 8.29 8.61 6.56 6.18

Total 33.22 34.99 44.96 37.80 40.05

Ending Stock Of World Major Countries

Countries 2003-04 2004-05 2005-06 2006-07 2007-08

China 14.95 15.06 20.31 18.71 17.13

Brazil 4.57 5.03 3.81 5.68 6.48

India 4.18 8.76 8.26 6.56 7.51

United States 3.45 5.49 6.05 7.10 8.20

Pakistan 3.13 4.69 4.41 4.32 3.95

Turkey 1.47 1.79 1.71 2.25 1.80

Other 11.59 15.04 14.14 12.11 11.04

Total 44.30 57.18 59.96 60.32 57.33

73

PRESENT POSITION AND TREND OF BUSINESS WITH INDIA/GUJARAT

Performance of the Textile Industry:

The Indian textile industry is in a stronger position than it was in the last six decades. The

industry has now accelerated to annual growth rate of 9-10 percent but various factors

have effecting annual growth rate of Textile Industry, Global recession is also considered

to be one of them. While cost of raw materials and inputs remain in competitive in

comparison with competing countries like china, the output and profitability of the industry

have taken a nose dive in very recent months. Index of industrial production (IIP) data has

been released by the central statistical organization (CSO) shows a picture of textile

production as can be seen

Textile Export Statistics

Products 2005-06 2006-07 2007-08 2008-09 2009-10

1. Cotton Textiles 8.5 14.8 4.3 -1.9 5.5

2. Wool, Silk & MMF Textiles 0.0 7.8 4.8 0.0 8.2

3. Textile Products 16.3 11.5 3.7 5.8 8.5

(Including Garment)

4. Vegetable Fiber Textiles 0.5 -15.8 33.1 -10.0 -24.4

(Expect Cotten)

Total Textile Section 6.7 7.0 7.5 0.2 3.7

(1 + 2 + 3 + 4)

Financial Year 2005-06 2006-07 2007-08 2008-09 2009-10

Textile Export US$

Millions 17520.07 19146.04 19558.53 18519.96

22418

Total Export US$

Millions 103090.53 126262.68 143567.86 153018.22

178751.43

Percentage of 16.99 15.16 13.62 12.10

12.54

(Textile Exports)

74

Cotton and Man Made fiber mills and closure position (Non SS1)

Year No. of Mills

Spinning Composite Total

31/03/02 1579 281 1860 (84.89) (15.11) (100.00) 31/03/03 1599 276 1875

(85.28) (14.72) (100.00) 31/03/04 1564 223 1787

(85.28) (12.48) (100.00) 31/03/05 1564 223 1789

(87.52) (12.47) (100.00) 31/03/06 1566 210 1780

(87.53) (11.80) (100.00) 31/03/07 1570 200 1808

(88.20) (11.06) (100.00) 31/03/08 1608 176 177

(88.94) (9.93) (100.00) 31/03/09 1597 177 1830

(90.07) (9.67) (100.00) 31/03/10 1653 180 1853

(90.33) (9.71) (100.00) 31/11/10 1673 184 1947

()90.29 (9.45) (100.00)

State-Wise Cotton Consumption By The Textile Mills (Cr Rs)

States/Union Territories

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

Andhra Pradesh 124155 132035 143196 160189 167613 174245

Gujarat 198638 236196 244931 256017 204494 180483

Haryana 93727 95289 137386 116909 125704 112916

Himachal Pradesh

69322 72730 84880 117146 131532 129457

Karnataka 70318 82498 86579 87273 85918 67473

Kerala 30621 32882 37783 38306 34137 28873

Madhya Pradesh 145819 148296 158809 176171 182813 202771

Punjab 265171 293549 350948 417345 468881 520173

75

Export Trend of Cotton (in Cr Rs)

Price of Textile products

The Indian textiles industry is extremely varied, with the hand-spun and hand-woven

sector at one end of the spectrum, and also capital intensive,

sophisticated mill sector at the other. The decentralized

powerlooms/ hosiery and knitting sectors form the largest section of the TextilesSector.

The close linkage of the Industry to agriculture and the ancient culture, and traditions of

the country make the Indian textiles sector unique in comparison with the textiles

industry of other countries.

Sr No. Items Unit Avj Jan ( 2012)

1 Raw Cotton Rs/kg Wt. Avg 97.81

6 Yarn(Hanks) Rs/kg Wt. Avg. 183.69

7 Yarn(Cones) Rs/kg Wt. Avg. 165.91

8 Texturised Yarn Rs/kg Avg. 112.00

76

International cost comparisons

Source : International Production cost Comparison '2006, International Textile Manufacturers Federation

(ITMF)

POLICIES AND NORMS FOR EXPORT TO VENEZUELA

The Government has been continually supporting the textiles exports sector through

various provisions of the Foreign Trade Policy and the other policy initiatives to enable

the sector to increase market share in the global textiles markets.

77

EXPORT PROMOTION COUNCILS

There are eleven textiles Exports Promotion Councils representing all segments of the

Textiles & Clothing sector, viz. readymade garments, cotton, silk, jute, wool, powerloom,

handloom, handicrafts, carpets. These Councils work in close cooperation with the

Ministry of Textiles and other Ministries to promote the growth of their respective sector

in the global export markets. The Councils participate in textiles and clothing fairs and

exhibitions in India and abroad as well as mount stand alone shows in India and abroad

to enhance the markets of their respective sectors.

Export Promotion Activities of EPCs

During the year 2010-11, the EPCs continued export promotion activities of textiles

exports. These included participation in overseas exhibitions/fairs, organisation of

Buyer-seller-Meets (BSMs) abroad and, sponsoring trade delegations for consolidating

the existing markets and exploring new markets. Major textiles fairs like India

International Garment Fair and Indian Handicrafts & Gifts Fair were held in New Delhi,

which attracted large number of buyers from all over the world.

Required Specifications - Random Statistical Inspection

It is the responsibility of both textile supplier and garment manufacturer to inspect all

textiles to ensure their compliance with GAP Inc’s quality standards

Textiles which are being exported to another country for assembly of a finished

product are required to be inspected by Gap Inc’s prior to shipment

Textile millis to notify Inspection Service of Textiles to be inspected within 30 days of

shipment from the mill

All textile inspections are conducted for Gap Inc. using the Four Point System,This

numeric grading system is endorsed by the American Society for Testing and

materials (ASTM), The American Apparel Manufacturers Association (AAMA), and

European Clothing Manufacturing Association(ECMA)

Penalty point evaluation

1 point Defect up to 3”

78

2 Points Defect > 3” <= 6”

3 Points Defect > 6” <= 9”

4 Points Defect > 9”

All textile inspections will be conducted in accordance with the Four Point System.

The Four Point System derives its name from the following basic grading rules.

1. No more than four penalty points may be assigned for any single defect; and

2. No more than four penalty points may be assigned to one linear yard/meter,

regardless of the number of defects within that one yard/meter.

Individual rolls are rejected on 23 points per 100 square yards. Entire lots are rejected on

a basis of 17 points per 100 square yards.

POTENTIAL FOR EXPORT IN INDIA/GUJARAT MARKET

Cotton growers, ginners and exporters, who were troubled by the variability in cotton

prices in recent months. The government recently withdrew the ban on exports of cotton

for the remaining part of the current cotton season and put it under Open General

License (OGL). The Indian cotton season runs from October to September. The

Government took this decision, middest of high seasonal cotton inventory and crash in

cotton prices by as much as 50 percent.

This was announced by the Commerce Secretary – Rahullar, that cotton exporters will

henceforth have to only register with Directorate General of Foreign Trade (DGFT). The

decision was taken at a meeting of secretaries of the commerce, Textiles and

Agriculture ministries held.

The Indian Government has fixed the textiles export target for fiscal year 2012-13 at

US$ 33 billion, up from current fiscal’s target of US$ 28 billion, in spite of terming the

current global economic uncertainty as a matter of “serious concern”.

The textiles sector has suffered a slump owing to several factors including the adverse

global economic conditions, Union Textiles Minister Anand Sharma informed the Lok

Sabha, and added the Government has already introduced steps to safeguard the

industry. He informed that the Government has formed six high-level inter-ministerial

committees having various ministerial and departmental representatives as well as

79

representatives from the Planning Commission as its members. These committees, he

said, are meant to review and assess the performance of the textiles industry.

Cotton Yield and Area Usage Statistics - Gujarat

Area usage statistics Yield Statistics

Area in lakh hectares Yield kgs per hectare

Looking at the bar charts of Area usage and yield statistics, it seems Gujarat has a

potential to grow cotton and therefore process it through various process house of

textile industries available, and finally can export the finished material i.e processed

cloth outside the country.

Global exports of Ready Made Garments (RMG)

Global exports of RMG during 2008-09 were of the order of US$ 10.38 billion, which

recorded a marginal decreased to US$ 10.06billion during 2009-10. However, exports of

RMG grew by 5.60% to US$ 10.63 Billion in 2010-11. As per latest available statistics,

exports of RMG during April- December, 2011 was of the order of USD 9346.18 million

as against USD 7269.29 million during the same period last year, indicating an increase

of over 28.57% in US$ terms this year.EU was the biggest destination for RMG exports,

with over US$ 5.3 billion worth of exports during the year ending March, 2011, recording

a growth of over 1% compared to exports in 2009-10.

80

Business Opportunities In Future

Venezuela owes 80 million dollars to the textile and apparel companies in Colombia;

this was revealed by Carlos de Hart, the Vice Minister of Business Development in

Columbia.The Textile and clothing sector in Venezuela is one of the sectors, which is

Currently facing the problems in the debt payment.

Following the inauguration of the Colombiatex textile fair, the Minister revealed that

Venezuela is trying to pay the debts that it owes to the Colombian manufacturers but it

is giving preference to those sectors where the billing procedure is easy to identify.

There are several such sectors where the invoices are complicated and also those to

which payments have not been made so far. The textile and clothing industry falls in this

category.

The Government of Colombia will continue the process of identifying the details of those

Venezuelan companies which are in a position to repay the debts. The deferral of debt

payments to the Colombian manufacturers is one of the reasons that led to the

deterioration of the relations between both the countries recently.

Recent Imports of Venezuela

Looking at the pie structure of Imports of Venezuela, and integrating it with the recent

news of Columbia – Venezuela relation around 29.23% of total imports is seen to be

covered by Columbia, and so a large portion of Venezuela imports gets opened for India

and China, which are the other two major exporters to it.

11.89

21.45

13.16

4.08

7.56

5.345.08

0.01

0.60

1.60

29.23

% Imports ColumbiaChinaIndiaEstados UnidosIndonesiaPeruPanamaBrasilChileMexicoOthers

81

Though China continues to be the world leader with 4.2-crore bales (1 bale is 170 kg)

against India's cotton production of three crore bales, Indian mills can flex their low-cost

production muscle in the world market. As per the International Textile Manufacturers

Federation (ITMF) data, India's cotton yarn production cost is estimated at $2.13 per kg,

much lower than China's $2.89 per kg and the US's $2.81.

SWOT ANALYSIS

Strength

The country is one of the largest producers of natural and man-made fibers and

produces almost 23% of the world production of raw cotton

Skilled labor is available in plenty

Manufacturing capacity present across the entire range and across entire value

chain yarn, fabric, process house and garments

India's cotton yarn production cost is estimated at $2.13 per kg, much lower than

China's $2.89 per kg and the US's $2.81

Weakness

Labour force giving low productivity as compared to other competing countries like

China

Indian garment units find it difficult to meet the capacity requirements .

As global players are prefering to source their entire requirement from two or three

vendors.

Threats

Standards such as SA-8000 or WARP will result in increased pressure on

companies

Other threat would be China which stands ahead of India in Exporting Cotton to

Venezuela

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CHAPTER – 4

CONSTRUCTION MATERIAL

83

INTRODUCTION OF THE INDUSTRY

The present scenario of Construction Industry has been totally different compared to the

industry a few decades ago. Manufacturing of building materials is an prominent and

well-established industry in most of the countries.

The construction materials like cement, glass, steel, iron, asphalt, bitumen etc are used

to construct a strong edifice and better infrastructure such as transport, bridges, flyovers

etc. There is a huge demand for these construction materials in under-invested

countries in the field of infrastructure and Venezuela is one among them. Two decades

back, readymade construction materials have been introduced which are earthquake

resistant.

Contents of Construction Materials:

1 Fabric

2 Mud and Clay

3 Wood

4 Rock

5 Thatch

6 Brush

7 Ice

8 Sand

9 Concrete

10 Metal

11 Glass

12 Plastic

13 Foam

14 Cement Composites

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Cement Steel Glass

Out of the above, here we will mainly consider the business opportunities and

conditions in Venezuela regarding major contents i.e. STEEL, CEMENT AND GLASS.

For successful execution of projects, One must consider the environmental impact, the

successful scheduling, budgeting, construction site safety, availability of good quality of

construction materials, logistics, procurement, inconvenience to the public caused by

construction delays etc.

Types of construction projects:

Building Constructions

Industrial Construction

Construction Industry in Venezuela

After witnessing a negative trend of few years, the latest data indicate that the

construction sector witnessed a surge in activity through the second half of the year,

with real growth of 10.9% and 12.5% in Q311 and Q411 respectively and will still grow

in upcoming years.

And as a result, there is a huge demand of construction materials in Venezuela.

Cement, Sand, Steel, Bricks, Glass etc are having huge potential for business.Plans to

build thousands of new houses and A number of large rail projects are driving

infrastructure construction.

COMPARATIVE POSITION OF CONSTRUCTION MATERIAL INDUSTRY IN INDIA

Construction activity is an integral part of a country’s infrastructure and industrial

development. The government of India has encouraged this field in recent years and

good qualities of construction materials have been produced. Well known cement, steel,

85

glass, wood companies are dealing in this segment. Apart from that, SMEs have also

been encouraged throughout India to produce such materials for exports.

The share of construction sector in Gross Domestic Product (GDP) was 5.4 per cent in

1970-71 and it came down to 4.4 per cent in 1990-91. Subsequently it picked up and

stood at 5.1 per cent in 1999-2000.

Investment in construction accounts for nearly 11 per cent of India’s Gross Domestic

Product (GDP). Even the government is encouraging its production by setting them into

SEZs so that it can be exported at a low cost and generate competitive advantage. The

Indian real estate industry is likely to grow from €7 billion in 2005 to €58 billion in by

2015. Therefore, the production of construction materials is increasing to fulfil domestic

demand as well as gives a scope for exporting to other countries.

Thus, there is a huge scope of exporting construction materials to Venezuela.

CONSTRUCTION SECTOR IN GUJARAT

In the past decade, Rs 99,805 crore has been invested in infrastructure in Gujarat, and

the investment planned for the next decade is Rs 1,180,912 and total proposed

investment by SEZ developers will amount to approximately Rs 2,67,373 crore which

has even boosted the production of raw materials for construction with an export motive.

During the Vibrant Gujarat Global Investors Summit (VGGIS) in January 2011,

memorandums of understanding (MoUs) worth $450 billion were signed.

The state government is very supportive in terms of investment in the construction

sector; as a result, Gujarat has the second largest number of projects in the country.

Apart from increasing demand for construction materials and machinery, the emphasis

is on sophisticated modern equipment. The state accounts for 22 per cent of the

country’s total investment.

Lower land costs and the single window clearance policy of the government are

attracting domestic consumers as well as importers from all over the world.

86

INDIA-VENEZUELA RELATIONS

Bilateral trade (In Million USD):

Sector Wise Indian Exports (as on Year 2009):

Thus India exports 9% of construction materials and equipments to the world but has a

marginal share of exports to Venezuela. Therefore, due to low costs we can exports

construction materials to Venezuela.

87

Details of Construction Materials (Imports/Exports)

CEMENT

During 2008, the global production capacity of cement stood at around 2,872 million

tonnes with China accounting for approximately 1,400 million tones and India a distant

second with total production of 183 million tonnes.

India is having quite high level of production and having considerably a large

contribution to the world level production apart from the very large Domestic

Consumption.

So we have the opportunity to get the excess surplus to export in Venezuela.

Indian Exports of Cement to Venezuela:

88

STEEL

Although, India imports steel from rest of the world it still has a competitive advantage of

exporting its steel produced in India for export purposes especially related with the

construction material field as steel is of different quality, tensile strength, ductile etc.

India generally exports steel to Venezuela since a long time. The figures show that in 2007 and

2008 the exports of steel were marginal but due to increase in steel prices globally in the year

2009-2010 it had drastically increased (almost quadrupled) due to Venezuela’s increased

demand and concentration on infrastructure projects. As the chart shows, global steel producers

saw gains of more than 100% in 2009 and 2010, followed by a near 34% pullback in 2011.

Top 10 Steel Producers in the World

89

GLASS

Glass is basically used in Venezuela in the construction of building, interiors i.e. doors,

windows etc. There has been a huge spurge in the imports of glass in the recent years

but India hasn’t benefitted much from it in spite have glass industries in India. Although

the business of glass is there between these two countries but it is very nominal in spite

of glass available with India at a competitive price. The main rivals in business are U.S.,

China and Brazil.

Indian exports to Venezuela in the glass segment have decreased continuously in the

recent years. India has an opportunity to increase its exports in glass by maintaining its

bilateral relations with Venezuela. In the past, Venezuela 50% trading partner was U.S.

Why shall we launch this combo?

India is the second largest producer of cement in the world thus it has surplus

cement available for exports.

India is fourth largest producer of steel in the world. Although, it imports steel due to

its domestic demand it is increasing its production with every passing year. Even, it

has gone for international acquisitions such as Tata Steel acquiring Corus and still

many others are under pipeline. Moreover, India has steel available for the

construction purposes which can be exported to Venezuela.

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Glass is produced in many parts of India which is used for construction purposes.

Apart from that, it has very less contribution in exports especially to Venezuela.

Thus, the surplus production is a good choice to be exported to Venezuela.

Hence, the combo of these three materials will be beneficial for India as well as

Venezuela because it will give them an opportunity to get all three products in a combo

which will save their shipping costs and other expenses as they don’t have to buy it from

three separate countries.

Indian Exports of Construction Combo 1 :

BUSINESS PLAN FOR VENEZUELA

Situation analysis:

Data and statistics point out Venezuela as an under-invested country in the

infrastructure and construction sector. They even had a poor contribution in the Foreign

Investments due to the scar of socialist country. But recently due to globalization, it took

initial steps to follow the open door policy. It has started looking towards other countries

apart from USA. Construction materials are one of its chief imports from rest of the

world. Among them, the prominent materials it imported in huge quantity are cement,

steel and glass.

91

Business Proposal:

Keeping in view, the above situation we are offering a Construction Materials Combo

which consists of Cement, Steel and Glass. India is the second leading producer in

cement and has renowned companies in the state of Gujarat such as Gujarat Ambuja

Cement, Siddhi Cement, Hathi Cement etc.

Even though due to its heavy demand India imports steel, it can still export it to

Venezuela as we have a good stock of steel for construction exports according to

industry experts.

There are lot of glass factories especially in Rajasthan and Gujarat. Thus, glass is also

available for exports at a competitive rate. Mostly, the SME (Small and Medium

Enterprises) are involved in this business.

SWOT ANALYSIS (In context of Venezuela and India for construction materials)

Strength:

Venezuela has huge revenues from its oil exports

India is very well established in the construction materials industry

India is second largest producer of cement and fourth largest producer of steel

India’s increasing output in production of construction materials

In India, the natural resources utilised for construction materials in abundance

Venezuela has revenues while India has products

Weakness:

Venezuela is poor in production of construction materials

Oil revenues used for imports such as construction materials, construction, food

India’s weakness is its spur in the domestic consumption

Huge turnover of labour in India

92

Opportunities:

In Venezuela, large projects operating in the construction sector.

India’s surplus stock in the construction materials

Indian government encourages companies by granting vivid types of concessions

Venezuela also allows concessions and tax reliefs for construction materials

Indian products are available at a competitive price due to its low labour costs

Threats:

Venezuela is risky due to its anti-market decisions and poor economic policies

India’s stricter environment regulations

In case of India, Depreciation of foreign currency

Venezuela’s depreciating Bolivar will make imports costly and discourage it

Drop in international oil prices & vulnerable to international events

PESTEL ANALYSIS (In context of Venezuela and India for construction materials)

Political Factors

Venezuela is like a socialist country and government has control on markets

Venezuela has few import restrictions and different slabs

Indian Government is supportive in exports of construction materials by relaxations

and concessions in taxes and other related duties

India’s economic growth is positive & has stable policies

Economic Factors

In Venezuela, fluctuation in prices of oil has direct impact on imports

Changes in demand due to trends in Venezuela

Depreciating Bolivar makes imports dearer

Indian banks provide loans to industries for producing construction materials

Concessions to construction material industries located in industrial corridor

India’s rising inflation due to huge demand & higher national income

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Social Factors

Credibility of Venezuela due to socialist scar

Venezuela’s huge projects for social welfare (Railway, flyovers, low cost homes)

India’s changes in social trends

Low costs for producing construction materials an added advantage for exports

Technological Factors

Venezuela’s innovation and new processes of production are under progress

India’s upper edge in technological segment of construction materials processing

Low costs and sophisticated technology in India

Venezuela’s good supply chain management system thwarted due to inefficiency

Venezuela lacks in technological upgradation

New processes used in producing the materials in India

Indian companies integrate entire production and achieves economies of scale

India’s production designing and cycle time for process

New products of good quality are launched in a short span of time in India

Innovative processes introduced by research in Indian laboratories & R & D

Environmental factors:

Water Pollution Act

Air Pollution Act

Preservation of Natural Resources

Legal factors:

Different laws and procedures includes policies, licenses, exchange controls, custom

regulations, import tariffs, anti-trust laws, alien business laws, government approvals

for exports/imports, insurance, license, permits, taxes etc.

Policies and Norms regarding Permissions, Licensing, Taxation, etc:

Necessary to obtain an Import/Export license to trade in construction materials

Exchange control law followed in case of business in construction materials

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Venezuela’s custom Tariffs for construction materials:

The middle range of 10%-15% (Construction materials fall in this slab)

Construction materials come provided relaxation in import duties

TAXES

Venezuelan income tax system at a progressive rate from 15% to 34%

Construction material falls in 15% range

Value Added tax applicable at a 12% rate for construction materials.

Other local or municipal taxes apply which is less than 1%

India’s duty free entitlement is 10% of the average foreign exchange earned in the

preceding three licensing years

FINDINGS:

Favourable position of Venezuela due to its reduced reliance with US

Huge demand for construction materials and investments

Indian construction materials having an competitive edge over other countries

Venezuela has trade surplus of $10.95 billion in 2009

New trade policy of Venezuela aligned with goal of integration of Latin America

Diversified import and export structure

Huge construction projects in pipeline

Suggestions regarding Construction Materials Industry (For Venezuela):

Upgrading of technology is required in the manufacturing of construction material

Unorganized sector needs effective monitoring and regulation for production

Quality construction tools with better technology required

Need to expand the training and skill certification

Involve Industrial Training Institutes (ITIs) to bridge the demand-supply gap

High costs of operation should be reduced

95

CHAPTER – 5

VACCINE

96

EXPORT POTENTIALS OF VACCINES IN VENEZUELA

INTRODUCTION OF THE VACCINE INDUSTRY AND ITS ROLE IN THE ECONOMY

OF VENEZUELA

Vaccines in Venezuela are an important aspect of the health care in Venezuela.

Numerous health care organizations, working towards the materialization of a disease

free country, have taken up the responsibility of propagating the importance of healthy

measures that could help in avoiding various contagious diseases like malaria, dengue,

yellow fever and cholera. Vaccines in Venezuela are available for diseases like malaria,

dengue & yellow fever. The vaccination for yellow fever is available for children with a

minimum age of one year. The health care organizations in Venezuela have

systematized medication for diseases like Hepatitis A and Hepatitis B. Vaccines in

Venezuela also include booster shots for diphtheria, tetanus and poliomyelitis.

The vaccines in Venezuela also include immunization against typhoid fever, which is

available for children above two years. The rabies immunization is advised to be given

to toddlers. Other such vaccinations in Venezuela include immunizations against

tuberculosis, which could be obtained for children who have reached the age of one

month. Immunization for mumps, measles and rubella can be given to children having

reached the age of nine months. These booster doses are available in any of the private

or government hospitals of Venezuela. Venezuela has increased in health spending

from the year 2010 and expands its immunization program. Venezuelan president Hugo

Chavez revealed government plans to amplify Venezuela’s immunization program and

provide additional funding to improve hospital infrastructure.

Around $20 million has been approved for the fight against dengue, malaria, and

chagas, while another US$200 million has been allocated to other hospital

improvements throughout the country. The government has recommended several

vaccines for Venezuelan people & foreign residents living Venezuela like Measles

vaccine, Hepatitis B, Typhoid vaccine, Yellow fever vaccine, Rubella vaccine, Rabies

vaccine, Cholera vaccine, Polio vaccine, etc.

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STRUCTURE, FUNCTIONS AND BUSINESS ACTIVITIES OF VACCINE INDUSTRY

In all countries, the basic package of vaccines comprises of at least the six vaccines

which are included in the original WHO Expanded Programme on Immunization (EPI):

BCG (against tuberculosis), polio, measles, diphtheria, tetanus & pertussis (the last

three make up the DTP combination).

The Global vaccine market is forecasted to scale up to $23.8 Billion by the end of year

2012 & to reach $40 billion by the end of year 2015. A sharp increase in sales is

expected in the areas of Influenza and Hepatitis vaccines. The vaccines for cancer are

also expected to have a phenomenal growth due to increased diseases in the areas of

cervical, prostrate & lung cancer.

98

Developments in Vaccine Technology

Types of Vaccines: There are mainly 2 types of vaccines: Live vaccines and Non living

vaccines. An attenuated or live vaccine is a vaccine created by reducing the virulence of

a pathogen but still keeps it viable (or "live"). Attenuation takes an infectious agent &

alters it so it becomes harmless or less virulent. These vaccines contrast to those

produced by "killing" the virus (inactivated vaccine).

An inactivated or non living vaccine (or killed vaccine) consists of virus particles which

are grown in culture & then killed using a method such as heat or formaldehyde.

NEW

DEVELOPENTS

IN

VACCINE

TECHNOLOGY

Recombinant Protien

Live

Recombin

ants

Recombinant Vectors

Alpha Virus Replicons

Replication Defective Particles

“Naked” Dna Plasmids

Prime Boost Using Dna And/or Vectors

Reverse

Genetics

Synthetic Capsular Polysaccharide

s

Synthetic

Peptides

Microarrays For Expression Of Virulence Genes

Reverse Vaccinolog

y

99

Cost: Vaccines of different types can have dramatically different costs of production.

Production technology also determines batch size which is itself an important

determinant of cost, since some expenses are incurred on a per batch basis. The cost

of producing technologically sophisticated vaccines can be expected to decrease over

time as firms gain experience & as more efficient production technologies are

developed. But the nature of some vaccines makes them intrinsically more costly to

manufacture than others.

Presentation: The form in which vaccines are package and the number of doses per

unit can also contribute significantly to cost like pre-filled syringes are more expensive

than single dose vials (and less suitable for developing countries); 10-dose vials are

cheaper per dose than one dose vials.

Scale of Operations and Capacity Utilization: Fixed costs are very important &

because of that a plant producing 100 million doses in a year will in general have lower

costs per dose than a plant producing 50 million doses in a year. Per dose costs will be

higher to the extent that capacity is underutilized.

Location of Operation: Lower costs of brick & mortar construction generally makes

vaccine plant cheaper to build in developing countries even if most of the equipment

has to be imported. The labor costs for operating a plant are also significantly lower in

India or China than in Europe or the U.S.

Business Activities: Several of the private firms, particularly in India, have expanded

rapidly & now supply a significant proportion of basic vaccines purchased by UNICEF.

Some of the public manufacturers in developing countries have also started to export

their products & consider sales to other developing countries & public sector buyers

such as PAHO and UNICEF. Among the more important and growing public sector firms

are Brazil’s BioManguinhos & Butantan, China’s Chengdu, & Indonesia’s Biofarma;

private firms with WHO-prequalified vaccines include India’s Serum Institute, Panacea,

Shanta, and Biological E.

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COMPARATIVE POSITION OF VACCINE INDUSTRY IN INDIA AND GUJARAT

India is the major supplier of Vaccines to UNICEF & UNICEF supplies 40% of the total

vaccine demand for childhood vaccination in more than hundred countries. The once

neglected vaccine market is now considered as a source of steady income.

The last few years witnessed a remarkable growth in the vaccine market due to the

avian influenza, Bioterrorism organisms & infections like SARS. Key drivers for the

vaccine market are:

1. Relatively lower cost of manufacturing

2. Reasonable R&D expenditure

3. Leading edge technology or Combination Vaccines

4. Low cost of Clinical trials

5. Abundant Skilled Manpower & Scientists

6. Huge demand in the local market

7. Blockbuster potential of new vaccines

INDIA RECOGNIZED AS THE “VACCINE CAPITAL”OF THE WORLD

India had revenue of USD 665 million in this space which was expected to reach USD

800 million soon. India is one of the largest vaccine producers in the world, with many

new vaccines set to be launched in the next five years. The vaccines segment was

approximately US$780 million in March 2008, growing at a compounded annual growth

rate (CAGR) of 15%. India currently exports vaccines to about 150 countries. According

to UNICEF, India supplies more than 60 % of the world’s requirement of basic vaccines.

At present India is one of the largest producers of traditional vaccines in the world

comprising mainly of the pediatric vaccines such as Anti Rabies Vaccine, Oral Polio

Vaccine, Hepatitis B Vaccine and Hib. The Serum Institute of India, founded in 1966, is

a leading player which produces & supplies low-cost, lifesaving vaccines for children

and adults. The Institute is also the world’s largest producer of measles & DPT

vaccines.

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Scenario of Gujarat: Presently there are more than 116 companies are active in the

field of biotechnology, out of which around 53 companies are in Pharmaceuticals and

Healthcare biotechnology. The landscape of Gujarat biotech industry consists of more

than 80 biotechnology companies, 70 support organizations & around 14 research

centers. As per 2007 estimates, annual turnover in the field of biotechnology in Gujarat

has been around $150 to $175 million.

Some of prominent domestic biotech companies include Zydus Cadila, Concord

biotech, Cadila pharmaceuticals, Maps India & Intas Biopharma.

PRESENT POSITION AND TREND OF BUSINESS (EXPORT) WITH INDIA /

GUJARAT DURING LAST 3 TO 5 YEARS

India’s trade with Latin America has increased to US $ 23 billion in 2010 from US $ 2.6

billion in 2001.Indian exports to the Latin America increased from 1.5 billion dollars in

2001 to 9 billion in 2010.In the year 2011 these exports went up by 28 % reaching 11.6

billion from 9 billion in 2010.The vaccines segment was around US$780 million in March

2008, growing at a compounded annual growth rate (CAGR) of 15%.According to

UNICEF, India supplies more than 60% of the world’s requirement of basic vaccines.

Pediatric vaccines for example DTP, MCV, polio, MMR etc. consist of a major part of

the Indian vaccine market. India possesses the ability to produce large volumes of

traditional vaccines at low cost. Several vaccines are being procured from India in very

large volumes by multinational organizations such as GAVI, UNICEF & PAHO etc.

Turn-Over & Export of Vaccine

YEAR

TOTAL EXPORT

(figures in crores)

TOT AL TURNOVER

(figures in crores)

2008-2009 1601.52 2235.4

2008-2007 1513.4 1971.26

2007-2006 1393.47 1785.51

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POLICIES AND NORMS OF VENEZUELA FOR IMPORT INCLUDING LICENSING /

PERMISSION, TAXATION ETC

Clearance Process: Standard customs clearance processing takes approximately 5 to

8 working days. By the law all goods presented at the port of arrival for customs

clearance must be processed completely including payment of all assessed duties,

taxes & related fees within 5 days of arrival.

Document Requirements: Below mentioned documents are required for all import

shipment regardless value which is Commercial Invoice, Packing List, Certificate of

Origin (commodity based but may be required by importer for all the goods, Air waybill

or bill of lading which means the declared value for customs must match the value listed

on a commercial invoice.

Labeling and Marking Requirements: The stickers must comply with all commodity

specific requirements and must identify the local importer. Operating instructions or

owner’s manuals must be in Spanish.

There are six types of duties and taxes: Value Added Tax (VAT), Custom's Fee,

Custom's Stamp Fee, Import duties (standard Ad valorem duty based on tariff

classification), Variable duties (applied only to food products with an international price

variation) and Excise taxes (applied to imports of alcoholic beverages and tobacco)

Import Duties: The import duties are calculated by using the WTO or GATT HS Tariff

classification system on the CIF (COST, INSURANCE and FREIGHT) value of the

shipment & are assessed, due & payable at the time of arrival into the commerce of

Venezuela.

Value Added Tax (Vat): Venezuela applies a flat 14 %Value Added Tax on a total

customs value of all import shipments based on the this formula: IMPORT DUTY + CIF

VALUE + CUSTOMS FEE + CUSTOMS STAMP FEE. An exception to normal VAT is in

103

place for the goods consigned to Margarita Island which is subject to an 8 percent VAT

rate.

Antidumping: N/A, Excise Duties: N/A, Additional Duties: N/A, Import Taxes: N/A

Customs Fees: Both the Customs Fee and Customs Stamp Fee are calculated on the

basis of CIF value.

Consular Fees: There is a charge of $70 USD by the Venezuela Consulate for all the

paperwork and/or document legalization.

Inspection: All imports are subject to inspection by the Customs Authorities (SENIAT),

the National Guard (Guardia Nacional), and the Anti-Drug Organization (Comado

Antidroga).

All imports are assessed a 1 percent customs handling charge.

104

POLICIES AND NORMS OF INDIA FOR EXPORT TO THE VENEZUELA INCLUDING

LICENSING / PERMISSION, TAXATION ETC

Export License Procedures have to be followed by (A) ‘Person-In-Charge of

Conveyance’ and (B) The Exporter.

Loading with Permission: Export goods can be loaded only after Shipping Bill/Bill of

Export, duly passed by Customs Officer is handed over by Exporter to the person-in-

charge of conveyance. Export Manifest: As per the section 41, an Export

Manifest/Export Report in prescribed form should be submitted before departure. [The

report is popularly called as ‘Export General Manifest’ - EGM]. Export procedures have

been given in Chapter-3, Part-2 of CBE&C’s Customs Manual, 2001. Obtain BIN

(Business Identification Number) from DGFT.

Shipping bill to be submitted by Exporter: (a) Shipping Bill for export of goods under

claim for duty drawback: It should be in Green colour. (b) Shipping Bill for export of

dutiable goods: It should be in yellow colour. (c) Shipping bill for export of duty free

goods: This should be in white colour. (d) Shipping bill for the export of duty free goods

ex-bond: i.e. from bonded store room: This should be pink colour. (e) Shipping Bill for

export under DEPB scheme: This should be in blue colour.

The shipping bill form requires details like name of the exporter, consignee, Invoice

Number, details of packing, description about goods, quantity, FOB Value etc.

Other Documents Required For Export

Four copies of Commercial Invoice

Four copies of Packing List

Certificate of Origin or pre-shipment inspection where required

Insurance policy.

Letter of Credit

Declaration of Value

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Excise ARE-1/ARE-2 form as applicable

GR / SDF form prescribed by RBI in duplicate

Letter showing BIN Number, RCMC certificate from Export Promotion Council

For exporting the goods, the non-SEZ firm has to acquire the export licence from the

central government. While the SEZ firm have to file an application to the state

government which the state government passes to the central government & the latter

will pass the application only after ensuring a thorough scrutinization. The central govt.

sends its inspection team who ensures, whether the firm can be able to maintain the

standard & norms of SEZ act or not and takes action accordingly.

Storage of Vaccines: All the non-durable Viles (vaccines) are being manufactured as

per the pre-decided yearly order schedule and thus being manufactured accordingly to

reduce the storage cost. The company manufactures the viles and packs it in such a

way that it sustains the required temperature needed to the vaccine. And for that a

computerized data metre is been kept in the packaged box carrying viles, which

regulates & maintains the relevant temperature of the viles in the storage. The export of

these highly volatile goods is being carried out by Air Cargo in an air tight container and

the storage cost is being borne by the two parties (buyer & seller) mutually.

POTENTIAL FOR EXPORT IN INDIA / GUJARAT MARKET

Both research and manufacturing of vaccines can be done in India at a fraction of the

cost than in the west. Since all the private sector Indian vaccine manufacturers supply

products to UN agencies and charitable foundations for global immunization

programmes, they possess world class manufacturing facilities which are complex to

build and maintain. Exports presently account for around 65% of the country’s vaccine

market & with growing investment by both domestic & international players; India is

expected to fulfill the vaccine demand of both developing & developed countries alike.

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Benefits of Special Economic Zones (Sezs)

VAT Exemption.

Service Tax on 80% of things exempted.

Manufacturing or service activities allowed.

Full freedom for subcontracting.

No routine examination by customs authorities of export/import cargo.

Exemption of Income Tax upto 5 years and many more.

List of operational Sezs in India in the sector of Biotechnological &

Pharmaceutical:

APIIC Ltd, Jedcharla: Pollepally Village, Jedcharla Mandal-Andhra Pradesh-Pharma

Ramky Pharma Cit Pvt. Ltd.: Mandal, Visakhapatnam-Andhra Pradesh-

Pharmaceuticals

Divi’s Laboratories Limited: Chippada Village,Visakhapatnam,-Andhra Pradesh-

Pharmaceuticals

Vivo Bio Tech Ltd. Medak Dist: Medak District-Andhra Pradesh-Bio-technology

Hetero Infrastructure Private Limited: Nakkapalli-Andhra Pradesh-Pharma

Zydus Infrastructure Pvt. Ltd.: Sanand, Ahmedabad-Gujarat-Pharmaceutical

Biocon Limited.: Anekal Taluk, Banglore-Karnataka-Biotechnology

Serum Bio-pharma Park-Pune-Maharashtra-Pharmaceuticals & Biotechnology.

Pharmez: sarkhej-bavla national highway, Ahmedabad-Gujarat- Pharmaceutical

BUSINESS OPPORTUNITIES IN FUTURE

Globally, the vaccines sector is growing rapidly; there are now 245 pure vaccines & 11

combination vaccines in clinical development, and some industry experts estimate that

the market could be of worth as much as US$42 billion by 2015.Many Global vaccine

companies have acquired Indian companies in the past which make this industry very

attractive. There is a global shift in attitudes in the Pharma industry toward disease

prevention, rather than treatment. This will enable the industry to enter the realm of

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health management with wellness programs that supplement what governments and

employers already provide. It will also boost demand for vaccines. This could ultimately

generate new business opportunities for Pharma companies. Global companies have

recognized the Indian expertise and engage the service of Indian companies as pre-

qualified vaccine manufacturers.

Cutting-edge research is being carried out by Indian companies in close association

with leading research institutions and companies around the world. For example,

Bharath Biotech has made partnership with US-based Novavax to develop an Avian

Influenza Vaccine & also tied up with Acambis to develop a vaccine for Japanese

Encephalitis. Serum Institute is collaborating with ICMR and John Hopkins University for

development of the Hib vaccine. Shantha Biotech is currently developing a cholera &

typhoid vaccine in collaboration with the International Vaccine Institute of Korea.

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CHAPTER – 6

AUTOMOBILE & AUTOCOMPONENET

109

MANUFACTURING INDUSTRY IN VENEZUELA

Venezuelan Government-implemented industrialization policies in the late 1950s

boosted the manufacturing sector. Four broad functional categories made up the

manufacturing sector are given as traditional or basic industries, intermediate, capital

goods and metals, and other. Here Basic industries included most traditional

manufacturing, which include food processing, beverages, leather, footwear, and wood

products. Traditional manufacturing constituted 54 percent of all firms; about three-

quarters of these were considered small businesses. Intermediate products, such as

paper, petrochemicals, rubber, plastics, and industrial minerals, represented 18 percent

of the sector, but their share was growing. The share of the capital goods and basic

metals subsector was 19 percent by 1988. These thriving heavier industries included

iron, steel, aluminum, transport equipment, and machinery. Other miscellaneous

manufacturing accounted for 9 percent of the sector's output. Manufacturing contributed

an estimated 15.4% of GDP in real terms in 2009, according to the Central Bank of

Venezuela.

AUTOMOBILE INDUSTRY IN VENEZUELA

The automobile industry was one of Venezuela's largest manufacturing activities outside

of petroleum refining and mineral processing. The industry consisted of Venezuelan

subsidiaries of various foreign-owned companies. At the outset, the Venezuelan

automobile industry was almost completely an assembly operation, importing most

parts. Eventually, local factories supplied a greater percentage of parts to the assembly

line, particularly tires, metal products, and motors. Venezuelan factories manufactured a

wide range of new products during the 1980s: specialized rubber goods, new paper

products, ships, and aluminum, among others. A growing trend among producers of

both new and traditional manufactured goods was overseas marketing.

MAIN IMPORT OF VENEZUELA

agricultural products

raw materials

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machinery and equipment

transport equipment

construction materials

MAIN INDUSTRIES IN VENEZUELA

petroleum

construction materials

food processing

textiles

iron ore mining, steel, aluminum

motor vehicle assembly

In 2009 there were approximately 5.6 million vehicles in Venezuela. From 2005 to 2007

new car sales were 1.15 million units with a further 350,000 being sold in 2008/2009.

Thus, the number of vehicles on Venezuela’s roads increased at least by 30% in five

years, even allowing for cars being put out of service. This is the reason for heavy traffic

congestion in the cities and not necessarily due to cheap gasoline.

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STUCTURE OF AUTOMOBILE AND AUTOCOMPONENT INDUSTRY

Source: ImaginMor, Inderscience Enterprises Ltd and United Nations Industrial

Development Organization

POSITION OF AUTOMOBILE & AUTO COMPONENT INDUSTRY IN INDIA

The Indian automobile and auto components industry in the last few years was on a

growth trajectory aided by robust economic activity, and infrastructure development;

growing middle-class population with disposable income; and availability of consumer

finance facilities. The Indian automobile and auto components industry produces a wide

range of models and products. The industry has witnessed high growth in the last few

years, and its turnover and exports have surged over the years. The industry has also

started establishing manufacturing and marketing bases abroad. However, the

recessionary trends in world market and financial sector meltdown have affected the

growth trend of the industry during 2008-09.

Indian automobile industry manufactures almost all major transport vehicles such as

cars, multi-utility vehicles, light commercial vehicles, buses, trucks, tractors,

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motorcycles, scooters, mopeds, and three-wheelers. At present, India is the largest

manufacturer of tractors, second largest manufacturer of two wheelers, fifth largest

manufacturer of commercial vehicles, in the world; and fourth largest passenger car

market in Asia. World’s largest manufacturer of two wheelers is located in India.

RATE OF INCREASE FOR EXPORT FROM INDIA DURING 2004 TO 2011 IN

PASSENGER VEHICLE: 172%.

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RATE OF INCREASE FOR EXPORT FROM INDIA DURING 2004 TO 2011 IN

COMMERCIAL VEHICLE: 154%.

RATE OF INCREASE FOR EXPORT FROM INDIA DURING 2004 TO 2011 IN

THREE WHEELER: 304%.

RATE OF INCREASE FOR EXPORT FROM INDIA DURING 2004 TO 2011 IN

TWO WHEELER: 320%.

AUTO COMPONENTS

114

Above all three figures gives us idea that there is a continuous increase in

investment, turnover and export from 1998 to 2008, which shows that auto

component industry is one of the growing industry in India.

From above figure we can see that after 2001 India’s growth rate in automobile industry

is continuously above the world’s automobile industry growth rate. Here due to auto

policy implemented by Indian government in 2002 there is a drastic increase in growth

from 9.8 to 29.8 during 2002 to 2003.

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PRESENT TREND OF AUTO INDUSTRY WITH VENEZUELA

The Latin American market has been changing and is becoming more and more

attractive to Indian business, despite the prevailing geographical distance and

communication challenges. The Governments of Latin American countries have, over

the years, liberalized their markets and reduced import tariffs. They are also privatizing

the state enterprises, and have prioritized modernization and improvement of existing

infrastructure and creation of new infrastructure.

Vehicles other than railways of tramways rolling stocks & parts and accessories are the

specific focus products identified by Indian government for export to Venezuela.

Transport equipment stands at 3rd position in the list of items which are exported to

Latin American countries. In 2009-10 it was 509.13 USD million and in 2010-11 it was

1029.95 USD million, so we can say that growth is 102.3%.

THE LATIN AMERICAN MARKET FOR SELECT AUTOMOBILE

SEGMENT MAJOR MARKETS FOR INDIA IN LATIN AMERICA

Tractors Venezuela, Argentina, Colombia, Chile, Mexico

Public transport type

passenger vehicles

Venezuela, Cuba, Brazil, Chile, Mexico

Motor car and other motor

vehicles

Venezuela, Argentina, Colombia, Chile, Mexico

Motor vehicles for transport

of goods

Venezuela, Argentina, Brazil, Chile, Mexico,

Special purpose motor

vehicles

Venezuela, Argentina, Brazil, Chile, Mexico

Motorcycles including

mopeds

Venezuela, Argentina, Colombia, Brazil, Mexico

Source: UN Comtrade; EXIM Research

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LIST OF INDIAN AUTO COMPANIES IN VENEZUELA

(1) MAHINDRA

(2) TATA MOTORS

(3) ASHOK LAYLEND

POLICIES AND NORMS FOR IMPORT IN VENEZUELA

New automobiles are dutiable and must be imported the same year the automobile

was manufactured. The auto odometer must not read more than 100 miles. Owners of

new automobiles must be returning Venezuela citizens or hold a visa to reside in

Venezuela. The importer must be at least 18 years of age.

Used automobiles are prohibited unless the following criterion has been met:

Only Venezuelans or returning residents import used automobiles. TR3 or TR5 Visa

bearers are not considered residents and cannot import vehicles

Importer must have stayed abroad for at least 1-year prior to import Automobile must

have been owned and used by the importer for a minimum of 11 months in the country

of origin

Automobile must be personal property of the owner and registered in his name by the

authorities in the country of origin. One automobile per importer and valued under

$20,000 USD. Used automobiles must be produced or assembled in Venezuela.

Automobile Parts

Used automobile parts and components are acceptable for import. There are no special

licenses or permits required but rebuilt parts must adhere to quality standards imposed

by the VENEZUELA Standards Institute.

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POTENTIAL FROM GUJARAT FOR MANUFACTURING AND EXPORT

In Gujarat auto industry is in development stage. Gujarat has potential for the

development of auto industry because Rajkot, Ahmadabad and Vadodara are local auto

clusters for auto component industry. In recent years many of auto makers had shown

interest for to set up the manufacturing plant in Gujarat. Also Gujarat government has

provided basic infrastructure and other related facilities to those companies so that

development geared up.

Current automakers in Gujarat.

(1) Apollo Tyres

(2) General Motors

(3) Asia Motor Works

(4) Tata Motors

(5) Bombardier

(6) Maruti Suzuki

(7) Hyundai

(8) Ceat Tyres

(9) Ford India

(10) Peugeot

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POTENTIAL OF INDIA FOR MANUFACTURING AND EXPORT

The below figure shows that India made auto policy implemented by Indian government

in 2002 which has main four components.

The figure below shows the factors which make India as auto hub.

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120

BUSINESS OPPORTUNITIES IN FUTURE

Motor vehicle assembly is one of the main businesses of Venezuela, while transport

equipment is the main import of Venezuela so we can say that there is a potential for

automobile and auto component industry to grow.

Further as per the UN COM TRADE EXIM research there is a potential for the need

in each segment of automobile. As per the LAC program there is a potential for the

export of automobile from India to Latin American countries in which Venezuela is

potential market for export in each segment.

As per the data that is the export of India to Latin American Countries, the transport

equipment is on 3rd position in year 2010-11, and there is a 102.3% growth compare

to year 2009-10.

Under the LAC Program there is a list of products which are mainly under focus for

export from India in which transport equipment other than railways and tramways is

on 2nd most position for export.

Indian automobile manufacturer like Mahindra, Tata and Ashok Leyland has also

setup their manufacturing plants in Venezuela.

If we take a look of export of India in automobile field than also there is a positive

sign in each sector in last 8 years. Rate of increase from 2004 to 2011 in passenger

vehicle is172%, in commercial vehicle 154%, in three wheeler 304% and in two

wheeler 320%.

Trend in export of auto components is around 996% from 1998 to 2008. Growth of

auto mobile industry is always higher compare to the world after the year 2000.

From above mentioned points, increasing export data in automobile and auto

component industry, high potential and government policies in support to develop

auto sector and initiative taken by Indian government to develop relations with Latin

American countries we can say that there is a lot of business opportunities for India

in automobile and auto component industry to grow in Venezuela.

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CHAPTER – 7

AGRICULTURE

122

INTRODUCTION

FAO estimates that there are roughly 400,000 farmers in Venezuela, but that the huge

majority of productive land is dedicated to cattle pasture. The total area dedicated to

major crops in Venezuela (including all of the major food crops) amounts to less than

one million hectares. This represents only five percent of the total land dedicated to

agriculture, while grazing land and cattle ranching occupies the remainder. Main crops

grown in descending order of amount produced are

sugarcane

corn,

Rice

Bananas

Sorghum

Plantains

Cassava

Potatoes

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Agriculture Economy of Venezuela is

Agriculture in total GDP: 3.8

Value of agricultural exports (USD million): 112

Share of agricultural exports (in total exports): a

value of agricultural imports (million USD): 7 573

Percentage of agricultural imports (in total imports): 15.3

Land use

Area (thousand hectares): 88 205

agricultural area (thousand hectares): 2 700

permanent crops (thousand hectares): 650

Range (thousand hectares): 18 000

Irrigated land (thousands of hectares): 580

Percent of total water use

agriculture: 47.4%

industry: 7%

domestic: 45.5%

Forest area (thousand hectares): 46 275

Grain Production

Venezuela lies between one to twelve degrees north of the equator and has a tropical

climate with highly changeable rainfall. The monsoon occurs between May and

November, with the primary growing season coincide with that in North America.

Rainfall vary from slightly less than 500 millimeters (20 inches) in the coastal northwest

to nearly 5000 millimeters (200 inches) in the southern tropical forested areas of the

country. Most of the nation’s agricultural land receives between one thousand to twenty

five thousands millimeters (40-100 inches) of rainfall, and experiences regular episodes

of drought and flooding. The primary grain crops produced are corn, rice, and sorghum

Total area dedicated to grains (corn, rice, and sorghum) in 2005/06 is estimated at

705,000 hectares, up four percent from last year, but well below the record of 1.2 million

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set in 1987. Slight rice in corn and sorghum area are expected to lead to a slight

increase in overall grain area and production. Over the past 18 years total grain area

has fallen by Fourteen One percent, while grain production has been more changeable

averaging close to Two million tons. Grain consumption and imports have also been

more changeable since 1987, a function of both changing economic conditions inside

Venezuela and periodic weather-related crop harms. Grain consumption has average a

little over 4.0 million tons annually, while imports have averaged a little over 2.0 million.

Indian Agriculture Sector:

The single biggest export is milled rice, accounting for 16 % of the value of exports in 2003-

2005. Two other commodities, cotton and wheat, are also within the top 10 exports. Soybean

meal, an intermediate product, is the second most important export with 9% of sales. However 6

out of the top 10 are final products, including cashew nuts, beef, coffee and tea which together

represent around 14% of the value of exports.

In the nineties the value of exports fluctuated considerably (graph 6). This reflects big

swings both in the price and the volume of rice exports, the latter depending on the

balance between production and consumption. Despite those fluctuations, since 1999

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India’s exports have grown steadily. In addition to rice, beef (buffalo meat) and soybean

meal exports are also expanding.

Indian Top 10 Agriculture export average in 2003-05

Indian Top 10 Agriculture Import average in 2003-05

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VENEZUELA AGRICULTURE SECTOR

In 2001, agriculture counted for five of the GDP, engaging 8.8% of the financially live

population. Venezuela continues to rely a lot on food and agricultural imports. Despite

abundant resources favorable to agricultural production, 70% of cereals and 98% of

oilseeds consumed in Venezuela are imported.

Venezuela does not have the good soil of many other south American countries. In

1998, 3,490,000 hectares (8,624,000 acres), or four % of the total land area, were used

for temporary or permanent crops. The high growth agricultural region is the basin of

Lake Valencia, west of Caracas and inland from Puerto Cabello. The main crop of this

area is coffee. Before oil came to control the economy, coffee accounted for 40–60% of

all income from exports.

The major field crops are sugarcane, rice, corn, and sorghum, and the chief fruits are

bananas, plantains, oranges, coconuts, and mangoes. The most significant agricultural

items for industrial use are cotton, tobacco, and sisal. Two type of tobacco grow in

Venezuela, black and Virginia blond; the latter is used for the most part to make certain

popular brands of US cigarettes under license

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VENEZUELA IMPORT

128

VENEZUELA EXPORT

129

Present Position and Trend of Business with India

Indian Agriculture Export to Venezuela

Indian Agriculture Import from Venezuela

POTENTIAL FOR EXPORT FROM INDIA MARKET

Venezuala total import of guargum is 1230 T in 2010 so we have opportunity to capture

that market and increase our share , now our share is 6% only so we can increase our

share. Other country that export guargum is Italy, USA ,MORROCO , MAXICO,

PAKISTAN etc.

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Study of industry using guargum in venezuela

Guar gum is extracted from guar bean also identified as Cyamopsis Tetragonoloba. The

guar beans are mainly grown in India and Pakistan where Indian contribution 80% of

global trade in guar products (Reuters report). Areas of North western and western India

are best matched for Guar farming. Jodhpur, Rajasthan in the north western part of

India being the most important target for guar gum processing. Jodhpur alone Account

for 40% of world’s guar gum supply. Our Jodhpur processing unit is famous for its guar

gum production with best quality and timely supply.

Guar gum supply from india in 2010 is 74 T and that is 23% higher than previous year

and generate 0.12million USD

Guar gum is used as emulsifier, thickener and stabilizer and in Venezuela it is use in

wide range of industrial applications especially in food, cosmetics and pharmaceuticals.

Guar gum is very economical in comparison to other thickening agents. It shows almost

8 times the water thickening properties than starch.

In 2010 ,74% of guar gum that is export from India is utilize by pharmaceutical company

only and it’s 12% higher than previous year

India is third largest exporter for guar gum after USA(472T) and Denmark(92T)

Previously India is on Fourth rank after Pakistan in 2009

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CHAPTER – 8

PETROLIUM

132

PETROLEUM INDUSTRY WITH RESPECT TO PDVSA

PDVSA (PETRÓLEOS DE VENEZUELA)

Petróleos de Venezuela S.A., the state-owned corporation of the Bolivarian Republic of

Venezuela, is responsible for the efficient, profitable, and dependable exploration,

production, refining, transport and commerce of hydrocarbons. PDVSA is Latin

America's third-largest company, according to the ranking of the region's top 500

companies from Latin Business Chronicle.

The Venezuelan State is PDVSA’s sole stockholder under the provisions of the

Constitution of the Bolivarian Republic of Venezuela and represents the economic and

political sovereignty exerted by the Venezuelan people over oil, their major energy

resource.

Its E&P activities take place in Venezuela, but the company also has refining and

marketing operations in the Caribbean, Europe, and the US. PDVSA operates in the

US, Gulf of Mexico and the Caribbean through its Citgo marketing and refining arm. The

oil producer has some of the world's largest petroleum reserves. Created in 1976, the

company is headquartered in Caracas, Venezuela.

PDVSA carries out its operations through its subsidiaries, and its interest in associations

with local and foreign companies. The latter are subject to different laws and

regulations. These operations include the following:

Exploration, production and upgrading of crude oil and natural gas.

Exploration and production of natural gas from offshore resources, including the

export of natural gas liquids.

Refining, marketing, transportation of crude oil and refined products, and processing,

marketing and transportation of natural gas.

Oil and natural gas reserves of Venezuela as well as exploration, production and

upgrading operations are located solely in Venezuela whereas refining, production and

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transportation operations are located in Venezuela, the Caribbean, North America,

South America, Europe and Asia.

VENEZULIAN CONTRIBUTION IN INDIAN MARKET

2001-

02

2002-

03

2003-

04

2004-

05

2005-

06

2006-

07

2007-

08

2008-

09

2009-

10

2010-

11

Venezuela 71 35 17 0 6 47 23 152 147 207

In 1000 barrels per day

CURRENT TRADE WITH INDIA

Venezuela Opened a "New Dimension" in its Relationship with India

During the four-day visit of Venezuela’s President Hugo Chávez to India on 5th March

2005, Hugo Chávez and Prime Minister Manmohan Singh signed six energy and

cooperation agreements. According to which, India's largest energy company, Oil and

Natural Gas Corporation(ONGC) and GAIL Ltd., will take a 49 percent stake in the

Venezuelan oil field of San Cristobal and PDVSA, Venezuela's state-run oil company,

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will invest in India's Mangalore Refinery. In a joint statement, which classified the move

to more closely cooperate as a "new dimension" in Venezuela-India relations, it was

announced that a joint commission for hydrocarbons will be established, and the two

nations will closely cooperate in various fields, including biotechnology, rail industry,

space science etc.

On his arrival to India, Chávez addressed a Indian business leaders forum, declaring

that, "We want to supply petroleum in a permanent way, the same as we do with the

US," and added, "We want to have a long-term agreement for crude oil with India."

This was the first time in over last three decades that Venezuela and India have

committed themselves to a significant level of cooperation. The strengthening of

bilateral agreements came with an opportune moments for both nations.

Venezuela, the world's fifth largest oil exporter, is currently executing a two-fold

petroleum strategy. As per PDVSA president Rafael Ramirez, within next few years

Venezuela plans to increase production from its current level of 3.1 million barrels per

day to 5 million barrels per day. In the meantime, it is seeking to diversify its markets to

reduce its dependence on the United States, which currently buys more than 60% of

Venezuelan oil. The oil-rich nation has recently generated cooperation and signed

number of agreements in the petroleum sector with Russia, Brazil, China, and

Argentina. It also supplies oil to a several Latin American countries, including Cuba and

Argentina, at reduced rates in the exchange of technology, food, and medicines.

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Referring to India's Oil and Natural Gas Corporation's new stake in the San Cristobal oil

field, having production capacity of 100,000 barrels/ day, the Petroleum Minister of

India, Mr. Mani Shankar Aiyar, noted, “For us to receive 49 percent plus the operation

right is a huge advance and with that I am now truly well positioned to commercialize

exploration work.” The Petroleum Minister also added that the State-run Mangalore

Refinery, in which Venezuela has taken stake, includes a 9.69 million-metric-ton refinery

in southern Indian, is capable of processing Venezuelan crude.

A visit between various commissions including Infosys and PDVSA in Caracas were

scheduled for three months from 5th March 2005, in order to solidify the implementation

of the agreements and to sign a long-term work agreement that will include

technological assistance and training of personal of PDVSA.

As part of its market diversification policy, as contemplated in the 2005-2030 sowing the

Oil Plan, Petróleos de Venezuela sentits first 2 million barrel shipment to India, with the

aim of expanding its reach in the Asian continent. PDVSA used for this purpose the

Very Large Crude Carrier (VLCC) “VenusGlory, loaded with 1.1 million barrels of 16ºAPI

Merey crude and 900,000barrels of 30º API Mesa crude. Theshipment was unloaded at

the Indian port of Sikka.

The diversification strategy is aimedat capturing new markets in countriessuch as

China, India and Japan,taking advantage of the growing worlddemand, without

curtailing Venezuela’spresence in traditional markets.

Exploration in India

Oil India had entered into an agreement with PDVSA for the exploitation of proved in-

place Heavy Oil Resource of 25 million tonnes and Bitumen Reserves of 53 million

tonnes.

Oil India Ltd in association with PDVSA Company has undertaken trial production of

Heavy Oil in Baghewala area and has produced about 64 metric tonne of heavy oil till

November, 2009.

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As Rajasthan has immense investment opportunities in Upstream & Downstream

hydrocarbon sector. Presently, maximum on land area of the State covering 60,000 sq.

km in 21 Blocks, is under exploration for Oil, Gas & CBM under Upstream Sector.

INTEVEP’s support

The project covered both the design of the surface equipment and subsoil used to

operate the block, and the definitive production plan. Towards this end, a team of

PDVSA INTEVEP specialists evaluated the production system, reviewed the geological

and engineering models, designed a plan for the development of the area.

In addition, PDVSA INTEVEP carried out the drilling engineering and contributed its

knowledge in the areas of cementation, fluids and mechanical design for the

construction of the oil well. The reservoir’s infrastructure was left in charge of the Oil

India technicians, while the PDVSA INTEVEP advisors were responsible for the

conceptual aspects. It is estimated that the reservoir in question holds some 300 million

barrels of heavy crude, which is a significant volume for India, which must import 70% of

the oil it consumes.

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ONGC Videsh Ltd.’s Projects with PDVSA

San Cristobal Project

OVL and CorporaciónVenezolana del Petróleo S.A. (CVP) signed an agreement on

8th April, 2008 and acquired 40% Participating Interest (PI) in San Cristobal Project,

Venezuela. San Cristobal project covers area of 160.18 Sq. km in the Zuata

Subdivision of proliferous Orinoco Heavy Oil belt in Venezuela. This project is

operated jointly by OVL and PDVSA. The JV Company has been named

“PetroleraIndoVenezolana SA” (PIVSA). CVP, a subsidiary of PDVSA holds 60%

equity in this JV where OVL holds 40% equity through ONGC Nile Ganga (San

Cristobal) BV, a wholly owned subsidiary of ONGC Nile Ganga B.V. OVL’s share in

the oil production was 0.757 MMT in 2010-11 as compared to 0.704 MMT during

2009-10. The Company has invested USD 191 million approx. till 31st March, 2011

in the project

Carabobo-1 Project

OVL, Indian Oil Corporation Limited (IOC), Oil India Limited (OIL), Repsol YPF

(Repsol) and Petroliam NasionalBerhad (PETRONAS) (collectively, the

“Consortium”), was awarded by the Government of the Bolivarian Republic of

Venezuela 40% ownership interest in an “EmpresaMixta” (or “Mixed Company"),

this company will develop the Carabobo 1 North (203 sq.km.) and Carabobo 1

Central (180 sq.km.) blocks located in the Orinoco Heavy Oil Belt of eastern

Venezuela. OVL holds 11% in Carabobo-I project through its subsidiary Carabobo

One AB. Repsol and Petronas holds 11% PI each where IOC and Oil India Limited

holds 3.5% PI each in the project. The CorporaciónVenezolana del Petróleo (CVP),

a subsidiary of Petróleos de Venezuela S.A. (PDVSA), holds the remaining 60%

equity interest. The Signing Ceremony of Incorporation Agreement was held on 12th

May 2010 at Caracas; the company was incorporated on 25th June, 2010 and the

Mixed Company was christened as Petro Carabobo S.A. The Transfer Decree

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allowing Petro Carabobo S.A to carry out primary activities in designated areas was

published in the Venezuelan Government Official Gazette on 29th July, 2010. The

project having estimated Oil in Place of about 27 Billion barrels. The Mixed

Company would build upgrading facilities, heavy oil production facilities, and

associated infrastructure for producing extra-heavy crude oil. The upstream

production facilities expected to produce about 400,000 barrels per day in which

approximately 200,000 barrels/day will be upgraded into light crude oil in a plant to

be located in the Soledad area, Anzoátegui State. The license term would be for 25

years having potential for a further 15 year extension for a total of 40 years. A

Service Company for executing the Jobs under Development plan has been

incorporated on 21st January 2011. Presently, Conceptual Engineering & Tendering

Processes for different activities related to Development of the Field are under

progress.

INCENTIVES FOR TRADE

Incentives for India

India, Asia's third largest oil consumer, imports over 70% of its oil. The rapid

economic and population growth rapidly increasing India's oil consumption.

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The vast majority of its imported oil comes from the Middle East (as shown in the

chart above), but in recognition of the rising political instability in the region, India

has to sought out alternative sources of oil.

Though, as recently as 1991, during the first Persian Gulf War, India only imported

30 percent of its crude oil, today it imports approximately 70 percent so India is

vulnerable to both political instability and rising oil prices in Middle East.

The Reserve Bank of India estimates that every $1 increase in a barrel of crude oil

adds $600 million to India's oil import bill.

According to the Hindu newspaper, oil and industry experts announced in July 2004

at a CII meeting that at current production rates, India will exhaust its own crude oil

reserves in less than 20 years and its natural gas supply in 28 years.

As shown in figure Venezuela have highest amount of Crude Oil Reserves in the

world, which gives surety of Oil supply.

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The figure of India’s exports to Venezuela in 2002 was about $ 33 million. India`s

annual import is about $ 150 million. This includes import of oil products as well as

non-oil imports. The non-oil imports are very small of about $ 4-5 million, So, India

has high opportunity to increase exports by bilateral trade agreements.

Under the programs like PDVSA INTEVEP, Indian companies can share technical

knowledge & technology from PDVSAfor domestic exploration.

PDVSA had offered two exploration blocks and three development blocks to OVL, a

subsidiary of ONGC for joint investment in oil and gas projects.

The given blocks are between the Athabasca sands and Venezuelan Orinoco basin,

which have more recoverable oil (with current technology) than all of the Middle

East.

India, which imports 70 percent of its crude oil requirement, is expected to seek

investment opportunities in foreign oil and gas projects to enhance oil security in the

energy-deficient country.

In 2003, the India's firm for exploration administered by the State, said that PDVSA

would help them to exploit its reservations of crude oil in the State of Rajasthan, in

the northeast of the country. The company discovered crude oil in 1991, but it did

not have the technology to extract the viscous liquid.

Incentives for Venezuela

India's exports to Venezuela dropped to $26 million in 2003 from $49 million in 2001.

India's non-petrol imports from Venezuela in 2003 remained close to the $4 million

figure recorded in 2001. The lack of growth in bilateral trade predictably resulted

from the political crisis here. So, the Petroleum trade can regenerate the commerce

again.

Venezuela has high political conflicts with US, which is the major importer of oil, after

the 2002 coup against leftist president Chavez.

US action in Iraq& Afghanistan has threatened Venezuela, which affected the trade.

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“The [U.S.] relations with Venezuela are frozen,” said Foreign Affairs Minister

NicolásMaduro during a television interview with Venezuelan journalist José Vicente

Rangel.

So, Venezuela has to find other importers like India & China, to diversify the export.

The largest single Indian investment in Latin America, the $50 million project was the

result of aMoU signed between OVL and PDVSA in Caracas, Means It generates

more Foreign Investment for Venezuela.

Generate more Employment as PDVSA is the largest employer of Venezuela.

Other Trades such as Pharmaceuticals can increased after the trade of Oil.

From the all Incentives given in this report, We can conclude that India have a huge

demand of Crude Oil, Which only can be solved by trade with PDVSA & PDVSA

have a huge potential for business with India.

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CHAPTER – 9

SECURITY SURVELLIANCE

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INTRODUCTION OF THE IT SURVEILLANCE SYTSTEM AND ITS ROLE IN THE

ECONOMY OF VENEZUELA

EVOLUTION OF SURVEILLANCE

Video surveillance is a means of security and has been in use for more than 40 years

now. A video surveillance system primarily comprises cameras fitted at strategic points

in order to monitor the activities in and around a certain place. The video surveillance

system has evolved considerably over the period of time.

ROADMAP OF VIDEO SURVEILLANCE

The figure above shows the different stages involved in the evolution of video

surveillance. Video surveillance system was commercialized in the year 1965. Video

surveillance was used to monitor the activities going in and around public places. The

cameras used earlier were CCTV (Closed Circuit television) and thus needed to be

watched continuously, since there were no means to store the recordings. The

introduction of video cassettes in 1970s made it possible to store the surveillance

footage on the VCR tapes. This increased the popularity. Another important

development was the CCD (Charged Coupled Device) cameras, which are able to ‘see’

in low-light conditions. The 90s witnessed the emergence of DVR (Digital Video

Recorders). With the introduction of DVR, the surveillance footage started being

converted into digital format. There was a remarkable shift in 2001 when the video

surveillance system was completely digitized. This new type of system was constructed

by combining network devices.

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SECURITY CONCERN

Increasing security concerns and the recent terrorist activities have forced governments

around the world to invest in video surveillance technologies for home security. This has

significantly boosted the growth of the global video surveillance market. Video

surveillance is now migrating towards computer networks, transmitting video by IP in an

Intranet or the Internet. High costs, computer and network configurations required it

currently prevent it from being adopted by smaller users. Other applications include the

domains of commercial, institutional, infrastructure, industrial and residential. Although

still limited to institutional sectors, IP video surveillance has surfaced as an irreversible

trend for the future. Video surveillance market has been experiencing significant growth

across the globe for the past some years due to rising concerns for security and safety.

This has resulted into an increased demand for technically advanced surveillance

systems. As per the estimation, carried out in our latest report, the market for the global

CCTV will reach around US$ 23.5 Billion by the end of 2014, expanding at a CAGR of

about 20.5% since 2012.

CURRENT VIDEO SURVEILLANCE MARKET

The video surveillance market is expecting growth in the coming years; especially due

to increased instances of crimes as also the transition of video surveillance system to

IP. Government, retail, banking, education and transportation are the major sectors

where video surveillance systems are deployed for security. Transportation sector

follows the education sector and is one of the leading applications owing to the

increased security measures in public transport especially by the Asian countries like

China and India with a view to fight against the bomb blasts and terrorist attacks.

Banking sector shows moderate growth. The government sector has always been

generating high revenues since it deploys the best quality video surveillance systems to

secure the entire nation and does not compromise on the cost front but this sector is

mature and is expected to show a sluggish growth.

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ANALYSIS OF THE VIDEO SURVEILLANCE MARKET

SURVEILLANCE SYSTEMS ROLE IN THE ECONOMY OF VENEZUELA

Venezuela is one of the most import destinations for UK made products in the Latin

American Region. The country has suffered a very significant deterioration in terms of

personal and property security in the last years. Venezuela’s security industry is

experiencing a steady growth and the forecast suggests that it will grow even bigger.

Security companies are permanently looking for new products and technologies. The

expenditure in security keeps growing as criminals develop new tactics and refine their

skills.

SECURITY OPPORTUNITIES IN VENEZUELA

Venezuela offers a wide range of opportunities For UK’s security sector in the public

and private sector as well as detailed below:

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GENERAL OVERVIEW

Venezuela has suffered a significant deterioration in terms of personal and property

security in the last years. The country is considered one of the most seriously affected

by criminality in the Latin American region. There exists a general consensus that the

way crime is fought is antiquate and probably inadequate. Now it is becoming more

popular the use of modern technologies. Private companies are looking for innovative

technologies related to personal and property security. Companies in general are

devoting significant amounts of financial resources to enhance current levels of security.

The same applies for the public sector.

COMMERCIAL SECURITY

The Venezuelan security market is generally considered insufficient in terms of quality

and quantity to counteract increasing and more imaginative/violent forms of crime. Local

manufacturing of security products is almost non-existent. In general terms the sector is

considered underdeveloped and mostly based on imported products from US,

Germany, China, etc. Security- related expenses are increasingly reflected in

companies’ budget. The following is a list of areas most targeted by criminal activity in

Venezuela:

Residential, Supermarkets, Grocery Stores and Shops, Shopping Malls and Department

Stores, Banking and financial institutions, Industrial and Manufacturing Sector, Car

stealing/ car theft, Kidnapping (express kidnapping), Extortion

PUBLIC SECURITY

The public security sector also offers a wide range of areas for the UK security industry.

Currently, the Venezuelan authorities are reshaping the structure of the Venezuelan

police forces. The country counts with a scientific police department in charge of

forensic and criminal investigation across the country.

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COMPARATIVE POSITION OF IT SECURITY AND SURVEILLANCE SYSTEM WITH

INDIA AND GUJARAT

INFORMATION TECHNOLOGY POLICY IN GUJARAT

Gujarat is fast emerging as ideal destination for IT, ITES business to scale new heights.

Drives include a business friendly environment, relatively lower real estate and

manpower costs. Human resources advantages stem from high education standards,

better productivity up time. The key points for being the right destination for IT products

are as follows.

Investor friendly IT Policy

Fastest growing hub for peripheral Industries of IT

Robust physical, social and industrial infrastructure

Pro active governance

Lowest cost of living, real estate & lower cost of human resources

24X7 uninterrupted power supply

10 IT/ITES SEZs and growing

As per NASSCOM Ahmedabad, Vadodara, Suarat have a cost advantage of 32%, 38%

and 39% respectively, in comparisons to the average cost of operations across all the

leader locations like Bangalore, Hyderabad, Chennai, Mumbai etc.

SIZE AND GROWTH OF EPS (ELECTRONIC PHYSICAL SECURITY) IN INDIA

Annual GDP growth in India has exceeded 9 percent for several years, making the

country an important trading partner and

investment destination for the United

States. Bilateral trade between the U.S.

and India surpassed $40 billion in 2007 and

India’s foreign exchange reserves are now

greater than $200 billion. India is driving its

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economic expansion and emergence into the First World by developing high-tech

service industries such as IT, financial and business management. By embracing high-

level, leading-edge technologies, India have expanded business opportunities for the

electronic security industry.

The size of the Indian electronic physical security (EPS) market was $256 million in

2007. This market is expected to increase an average of 31 percent a year from 2008

to2012.

SURVEILLANCE TECHNOLOGIES

Surveillance is the monitoring of the behavior, activities, or other changing information,

usually of people for the purpose of influencing, managing, directing, or protecting. The

word surveillance may be applied to observation from a distance by means of electronic

equipment (such as CCTV cameras), or interception of electronically transmitted

information (such as Internet traffic or phone calls).

New security technologies are constantly emerging that push the edge between privacy

and a reasonable level of security. Society's tolerance level is constantly being tested by

governments who use surveillance and monitoring technologies to protect the nation.

TYPES OF SURVEILLANCE

CLOSED-CIRCUIT TELEVISION IS CALLED AS CCTV.

CCTV is the use of video cameras to send out a

signal to a specific, small set of monitors. Many stores

use CCTV as a theft prevention deterrent. CCTV is

used in a wide range of areas where large amounts of

people gather. CCTV is also used in areas where

security is very important.

CCTV is different from broadcast television due to the fact that the signal is not openly

transmitted. Banks, casinos, restaurant, airports and military installations often use

CCTV in addition to security patrols. CCTV allows these areas to employ less security

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officers and still have a high security level. Many, if not all, CCTV systems allow images

to be recorded. These recordings can be used in case of any theft, security breaches or

other incident.

FIRE ALARM SYSTEM

A Fire Alarm System is an active fire protection system that detects fire or the effects of

fire, and as a result provides one or more of the following: Notifies the occupants,

notifies persons in the surrounding area, summons the fire service and controls all the

fire alarm components in a building. Fire alarm systems can include alarm initiating

devices, alarm notification appliances, control units, fire safety control devices, power

supplies and wiring.

POLICIES AND NORMS OF VENEZUELA FOR IT INDUSTRY FOR

IMPORT/EXPORT INCLUDING LICENSING / PERMISSION, TAXATION ETC

FOREIGN INVESTMENTS

FOREIGN INVESTMENT POLICIES

The Constitution guarantees the right to engage in any lucrative or commercial activity.

This right, however, is subject to the limitations stipulated in the Constitution and to

those established by law with respect to security, health or other matters of national

interest. Besides, the State may reserve for itself the right to exploit certain industries or

public services, such as, the Oil and Gas industry. In order to classify the company as

foreign, mixed or national, the appropriate agency considers both the percentage of

equity held by the foreign investor and the degree of control that the foreign investor is

entitled to exercise over the technical, financial, administrative and commercial

management of the company:

Foreign (more than 49% foreign equity);

Mixed (49% or less but more than 19.9% foreign equity); and

National (less than 20% foreign equity).

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Shares owned by foreign investors with no decision power in the technical, commercial,

administrative and financial management of the company, are not computed for the

purpose of classifying the company as foreign, mixed or national. Companies operating

in all other sectors other than the ones mentioned may be formed with up to 100% of

foreign ownership and may remain as foreign-owned companies indefinitely.

EXPORT INCENTIVES OR GUARANTEES

Exporters have the right to recover value added tax supported from the acquisition and

reception of services or goods, in the scope of their export activities. This tax credit

recovery is subject to the Value Added Tax (VAT) law and its regulations, in which the

proceeding and requirements for this recovery are established.

Some of the available forms of financing are: Business loans, loan and commercial

guaranties, lines of credit, financing. Export financing is available both from government

as from private sources and international organization which establish special financing

mechanisms for exports.

NATIONAL TAX INCENTIVES FOR FOREIGN INVESTORS

The government offers incentives on a sector-by-sector basis through Presidential

decrees, available to both foreign and domestic companies, including:

Tax exemptions for establishing manufacturing facilities in certain under-developed regions.

Preferential treatment in the grant of government contracts for small and medium - sized enterprises.

An example of these incentives is the income tax reduction. The applicable law

establishes a reduction of the income tax due to investments in new assets (excluding

land) made by companies developing industrial, agro-industrial, construction,

telecommunications activities and those related to science, technology and in general

any industrial activity that represent and investment in advance or cutting edge

technology. This reduction will be of the order of 10% of the amount of the new

investments.

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EXPORTS

Venezuela has developed a policy of expansion and incentive for the exportation of

nontraditional products, (i.e. products other than oil, gas, iron and aluminum).

Nevertheless, some products might be subject to an export restriction. These

restrictions can be total or limit the exports to a determined amount. Depending on the

destination or the nature of the product, an exporter may be requested to fulfill specific

prerequisites such as export licenses, sanitary certificates, or certificates of origin.

Usually there are no export duties.

IMPORTS

No license or governmental permit is required for importing goods. However, there are

goods subject to restrictions and previous licenses. The highest range is up to 20%, the

middle 15% and 10%, and the lowest is 5%. Vehicles are an exceptional case with

tariffs up to 35%. Customs services tax is 1% of the value of the merchandise imported

into the country. Some products might be subject to import quotas in determined

periods of time. Quotas were imposed a few years ago on the import of cars from

Colombia. There is Non-tariff barriers ("NTB") properly listed and differing depending on

the nature of the restriction imposed.

BUSINESS OPPORTUNITIES IN FUTURE

The widespread use of surveillance systems has impacted in a society and people are

increasing the sensation of being spied on. However this has helped reduce the crime

rate in some areas, especially in supermarkets, which were very prone to theft crimes.

The evidence provided by surveillance systems and has become acceptable in the

courts and has resulted in convictions increased without further evidence. Video

surveillance is now migrating towards computer networks, transmitting video by IP

protocol, in an Intranet or the Internet. High costs, computer and network configurations

required for it currently prevent it from being adopted by smaller users. Although still

primarily limited to institutional sectors (governments, controlling forces, transportation

systems and educational institutions), IP video surveillance has surfaced as an

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irreversible trend for the future. Increasing security concerns and the recent spate in

terrorist activities have forced governments around the world to invest in video

surveillance technologies for homeland security. This has significantly boosted the

growth of the global video surveillance market.

The widespread use of surveillance systems has impacted in a society and people are

increasing the sensation of being spied on. However this has helped reduce the crime

rate in some areas, especially in supermarkets, which were very prone to theft crimes.

The evidence provided by surveillance systems and has become acceptable in the

courts and has resulted in convictions increased without further evidence.

Unlike systems with alarms, the monitoring by cameras are virtually impossible to

disarm.

The cameras also prevent unwanted events, serve as a deterrent. Helping to identify

those responsible, because the images are recorded. For example, to place a

unwanted entry, the alarms sound. Monitored security systems with cameras,

alerting the undesirable event occurs, in addition to being preventive, do suggest

that the area is really protected.

Surveillance systems cameras provide images for both internal networks and the

Internet. From anywhere in the world that has Internet access can access. For

example: Control and maintain by monitoring your home or business 24 hours, 7

days a week, making it a controlled area. Protection in its environment is assured

and even observed before and after entering or leaving him.

Modern digital video recorders are the soul of a video surveillance system and allow

both to record what happens at a certain point and view in real time. Internet can be

controlled from the various cameras, viewing angles, regular clarity, darkness, focus,

rotate images, control fire alarm, etc. Surveillance cameras, professional or economic,

that can satisfy any need in outdoor or indoor facilities. With fixed optics,

interchangeable, varifocal, zoom, macro, wide angle, etc. Wireless and IP video for

remote control via the Internet, Smart cameras, moving, remote controllable with alarm

outputs, etc.

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Using highly sophisticated systems, the camera penetrates more and more in our

social practices. And it records and stores so they can use later. The subtlety of the

mechanism is such that we contribute to this by our use of the same technology, then

record, take photos and record continuously. But at the same time, another look at it

can reveal that these systems may well respond to a structure aimed at the possibility of

establishing a mechanism for control of its inhabitants.

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CHAPTER – 10

FOOD (CUMIN)

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INTRODUCTION

History of Spices

Spices have been curiously sought and highly valued since ancient times. The desire

for spices has been one of the driving forces in human development and has changed

the route of history and geography. Spices have played an important part in the

civilization of China and India along with Babylon, Greece, Rome and Egypt. Spices

having the greatest international importance originated in the Asiatic tropics and was

among the first stuff of commerce between the East and the West countries. The Arabs

were the first traders of spices, bringing their products from southern India and their

Islands by caravan to Arabia and from Arabia to Europe. This trade later spread to other

countries as well.

Spices have been used in many ways such as to season insipid foods and give zest to

monotonous diet as well to serve as preservatives. Their aromatic qualities of spices are

useful in overcoming unpleasant odors of spoiled food. The spies were used in

beverages, medicine and even in the place of currency. But then its use somewhat

diminished in modern times, especially as means of the food preservation were

deployed. Still the practice of importing the different aromatic materials in a crude state

and then converting them into powered or ground form is followed. Spices are not

usually classified as foods for they contain minute nutritive value. However they do give

a pleasant flavor and aroma to food and greatly boost the pleasure of eating. They

arouse the appetite and increase the flow of gastric juices. Therefore spices are often

called food accessories or adjuncts. Their value is owing to the presence of the

essential oils and rarely to other aromatic entities.

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Spice Market

The spice market is still large and potentially profitable. For many of the spice varieties,

the number of countries engaged in producing is relatively small. Over the last 30 years,

spices have again generated good with production soaring by 177% or we can say

about 3.5% per annum on average and trade by 424% or say 5.7% per annum. The

reason behind the profitability are more sophisticated consumers, health conscious

eating habits, rise in the amount of processed foods that use herbs and spices as

inputs, rising income, increased world trade and globalization. Most of the spices are

produced and exported from developing world – as the developed world income

continues to rise and spice consumer spending on exotic foods, readymade meals and

cuisine from foreign cultures increase. The opportunities for developing countries to

export huge quantities of spices seem particularly shows potential. Herbs and spices

are supreme commodities for international trade.

They are normally exported in a raw or dehydrated form and are usually easy to hoard

and transport. So they do not need expensive infrastructure such as cold chain

management or highly developed storage facilities and they are not particularly time

receptive. Even they are recognized as high value products which can be produced

comparatively easily on small farms and do not require investments in advanced

technology and machinery.

The Value Chain for Spice Production and Distribution

The process starts with the growers, including commercial farms & plantations. Small

growers sell directly to local traders or coops, which distribute to processing

organizations or process the herbs and spices themselves. Local traders, as

middlemen, sell the product to the processors. Production begins with washing,

threshing and sifting of the plants, followed by the drying process, then cleaning /storing

and grading. These processes vary according to the particular spice and the preferred

technique. Techniques often depend on where the spice is produced existing

climates/conditions, the machinery available, whether the plants have been grown in

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greenhouses or in the open space. Techniques vary between developed and

developing countries and can result in different end products, which make the next step

in the process, quality assurance testing, particularly important, Health departments and

other agricultural departments/institutions. This process is critical because of the market

access barriers that developed nation markets impose.

The methods used for cutting or grinding of the product, include formulating mixtures

and combinations, as well as sterilization and packaging, have a major impact on the

exporting process. Export potential decreases if these steps are not performed

according to international standards. Quality assurance testing is conducted according

to country or industry standards by standards bodies of industry associations. While

many spices can be exported whole, most are processed, usually by grinding them into

powders. Often spices imported by developed nations from developing countries are re-

exported after significant value has been added in the form of packaging and blending.

World Production of Spices

Total global production of spices has rapidly increased since the 1960s, from 1.7-million

metric tons in 1965 to 6.6-million metric tons in 2005. India leads the world in spice

production, with some 3.1 million metric tons in 2004, or just under half of world

production. China is the second largest producer, with 692,000 metric tons in 2004, or

10.5% of total world production, followed by Indonesia’s 448,000 metric tons or 6.8%.

Leading importers/exporters by country

The world’s leading importer of spices in 2005 was the US, with more than $500m worth

of spice, Japan (with $216m worth of spice) was second and Germany (with $200m)

was third largest importers. All three countries together account for roughly a quarter of

all spice imports in the world. But despite their large market size, the US, Japan and

Germany have all been increasing their imports. The majority of the world’s top

importers are situated in Europe and North America. Their imports for 2005 stood at

$129.5m, an amount which has shown rapid growth of over 23% per annum over the

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past five years. The leading African importer of spices was South Africa, which imported

roughly $20m worth of spices in 2005.The leading importers of various spice

commodities and shows the largest markets by commodity. The US is the leading

importer of five spice categories – pepper, capsicum, vanilla, spices from seeds of

anise, cumin, caraway, fennel and juniper berries.

China was the leading exporter of spices, mainly due to its production & exports of

ginger to Japan. Besides that total Chinese exports of spices have been growing at

14.5% per annum from 2000 to 2005. Second on the top exporters list in 2005 was

India, which exported $316m worth of spices. India’s exports are spread over a range of

different spices. India exported pepper to the value of $57m, turmeric ($36m), cumin

seeds ($19m), coriander seeds ($17m), curry ($14m), ginger ($14m), cardamom ($10m)

and other spices ($52m). The majority of the country’s exports are destined for the US

($55m). Indonesia is the third largest exporting country which includes cloves as main.

Vietnam, the fourth largest exporter, trades mainly in pepper, where it is the world

leader. Brazil is also a major exporter of emerging as a large exporter of other types of

spices.

India’s share in the world trade of spices of 2010

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CUMIN

Cumin, which was called as “Sugandhan” means good smell. In ancient times its

popularity spread from Africa to Latin & all over Asia. They have a very distinctive bitter,

warm flavor yet aromatic smell and limpid and pale yellow in color. It is one of the

broadly used spices in our Day-to-day consumption life. They have worldwide

applications in sectors other than food like beverages, liquors, medicines, toiletries as

well perfumery. Indian cumin has good demand in international market and it is

exported both forms seed as well as powder. Cumin is grown as a Rabi reap in the

country. It is planted during October to mid-December and it is harvested during

February and March.

In India, Cumin is also known as “Jeera”. The two major types of cumin seeds found in

the Indian market. They are white cumin seeds and the black cumin seeds. The white

cumin seeds are the most generally found seeds that are used in cuisines. yet, the

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black cumin seeds are smaller in shape than the white seed and also have a sweet

aroma. Cumin seeds are 4-5 mm long.

If we talk about its plant description, Cumin herb 35-40 cm tall on the long, thin, small

leaves such as branching. For the plantation purpose climatic conditions play an

important role. It is a tropical plant and grown in cooler regions which is best suited for

suited for sandy soil. It requires a lesser amount of water and more cold for its better

growth which ideal temperature of 25 to 30 degree. It has high humidity during flowering

and fruit set, cause fungal disease in this crop.

DEMAND OF CUMIN IN VENEZUELA

One of the main ingredients used in Venezuela food is cumin. The foods of Venezuela

are to some extent inspired by settlers from Spain. Venezuelan dishes are often

flavoured with citrus juice, oregano and cumin. Venezuelan dishes typically include

huge segment of meat and seafood. One of the popular Venezuelan dish is “paella”, a

combination of rice and various shellfish and meats, where cumin is used. A common

supplement for Venezuelan meals is "arepas," which means grilled or fried cornmeal

patties. Other than that cumin is used in Caraotas Negras- Venezuelan black beans,

Tasty, economical and nutritious, black beans are as symbolic of Venezuela.

Venezuela is one of the Major Trading Partners of India. India’s Major Trading with

Venezuela in Latin American & Caribbean Region (LAC) is given below as per 2010-11:

(In million US $)

Exports Imports Total Trade

169.88 5209.91 5379.79

(Source: DGCIS, Kolkata)

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India’s Exports of Spices to LAC countries (2010-11)

(Value – USD million)

April 09- March 2010 April 10-March 2011 % Growth

56.60 72.22 27.61

(Source: DGCIS, Kolkata)

Cumin’s Export from India to Venezuela

2007-08 2008-09 2009-10 2010-11

Qty Value Qty Value Qty Value Qty Value

(MT) (IN LAKHS)

(MT) (IN LAKHS)

(MT) (IN LAKHS) (MT) (IN LAKHS)

67 74.51 276 302.28 375 405.04 362 437.73

(Source: Spices Board India)

INDIAN SCENARIO

India is the largest producer and consumer of Cumin seed contributing 73% to the

global production. India is likely to produce 35 lakh bags (each of 60 kg) during the year

2011-2012. Major exporters of cumin are Syria and Turkey but their production comes

late in June-July. Considering overall prospects of cumin sowing in the state, expected

production, traders’ opinions and government policies, it has export potential in

countries like Venezuela. In India, large scale production facilities exist in Rajasthan and

Gujarat, contributing approximately 90% to country’s total production.

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STATE WISE SCENARIO

State 2004-05 2005-06 2006-07

Area (In '000' HA)

Production (In Lakh Tons)

Area (In '000' HA)

Production (In Lakh Tons)

Area (In '000' HA)

Production (In Lakh Tons)

Rajasthan 159.54 0.69 135.11 0.52 149.82 0.24

Gujarat 208.14 1.07 267.92 1.48 259.22 1.53

Total 367.68 1.76 403.03 2.00 409.03 1.77

(Source: Spice Board)

Cumin seed is produced in Gujarat and Rajasthan only. Gujarat is the biggest producer

of Cumin seed in India, with 86.5% market share as per Spice Board of India’s data of

2006-07.

Market & Growth Drivers

Raw spices, ground spices & blended spices are the part of the FMCG products. The

trade statistics of sauces, dressing and condiments which includes raw spices, ground

spices & blended spices are part of condiment reached INR 20.75 Billions in the year

2009 from INR 13.92 Billion in 2003. Processed spices demand is directly associated

with its consumption in food processing industry and this is set to grow in Venezuela

with growth of population and fast changing food habits and increase in spending power

of middle and upper class in India as well.

In India, Gujarat is the second largest producer of Cumin and there are 10 districts in

Gujarat producing cumin. The Production of spice is likely to increase in the coming

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years with irrigation facilities made accessible through Narmada Canal System, in

spices rising area of Central and North Gujarat.

As there are several spices processing units already operating, Gujarat is having ready

accessibility of technical and commercial manpower. Entrepreneurs in Gujarat are

readily adopting newer technologies and processes, used in food process industry in

general and spices processing in particular as a part of their constant efforts to make

bigger their business in domestic as well international export markets.

Raw materials

Gujarat is one of the foremost states in spices production and processing in India.

Spices Area and production trend in Gujarat is summarized in following table:

Area and Production – Cumin

Particulars Year Area(’00

Hectares)

Production (’00

MT)

1 2000-01 1074 436

2 2001-02 1757.90 859.62

3 2002-03 2000.49 642.75

4 2003-04 2030.11 819.99

5 2004-05 2081.41 1069.75

6 2005-06 2679.20 1476.15

(Source: Department of Agriculture Statistics, Gandhinagar, Government of Gujarat)

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Unjha Market of Cumin

Unjha Market Yard is one of the biggest synchronized market. It is well known

commercial centre in all over India for its trade of Cumin, fennel, and Mustard Seeds.

The crops of Cumin, fennel, and Mustard are only possible in Gujarat, Rajasthan and in

some flatten area. The crop of Cumin mostly of North Gujarat is better-quality and

hence there is great demand from all over India and foreign countries.

Cumin is natural assembling and exporting centre for Agricultural supplies of North

Gujarat. There are around 800 large business firms in this town which exports cumin,

fennel, Oil Seeds, pulses to almost 1500 centers of India & foreign countries every year.

This market is also significant for crushing and grinding of oilseeds, pulses, mustard,

coriander seeds and kalingada-bij etc. There are 6 oil mills, 5 Pulse mills, 4 mustard

factories, 27 cleaning factories for cumin & fennel and other spices, 6 Kalingada-bij

factories & 5 Coriander seeds factories in Unjha. Thus Unjha is natural assembling and

exporting centre of Agricultural Commodities, Other than Unjha, Patan, Modasa &

Visnagar are the producer of cumin.

General Food Import Laws of Venezuela

The Bolivarian Republic of Venezuela’s (BRV) legislation governs domestically

produced and imported processed food products, beverages, additives, and coloring

agents for foods destined for consumption. These laws related to food that contained in

the “General Food Norm.” This general food safety law describes all requirements like

labeling requirements, which processed food products must fulfill in order to be offered

to consumers. The norm also requires registration for locally produced and imported

processed food products. The Ministry of Health (MH), through its Health Food

Comptroller and Food Hygiene Division, is responsible for implementation of the Norm.

The Ministry of Food is responsible for issuing import permits and licenses. The Ministry

of Agriculture and Lands, through its National Institute of Integral Agricultural Health

issues sanitary health import permits for imported products and supervises almost every

aspect related to distribution and storage of food for human consumption. The Ministry

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of Commerce (MC) also supervises advertisements dealing with food, food quality,

labels and health-related issues through the Autonomous National Service for

Standardization, Quality, Metrology and Technical Regulations.

In general, food registration through The Ministry of Health takes 30 to 60 working days.

However, it may take longer because of the high number of applications. It is a guideline

of the step by step process which starts with filling out an application for Health

Registration for Food.

The following are the documents that must accompany the application, all documents

issued by foreign authorities must be presented for legalization at a Venezuelan

consulate in the country of origin and translated into Spanish.

A certificate of free sale and consumption issued by competent authorities in the

country of origin. The certificate must state that the food is for human consumption,

or for processing, or for use as an input in food for human consumption in the

country of origin, with a period of validity of 12 months from the date of application.

Certificate of chemical, physical and microbiological test conducted by an accredited

lab in the country of origin

A letter from the foreign manufacturer, or a power of attorney, authorizing the

Venezuelan representative to apply for health registration of the product in

Venezuela

A letter of authorization from the Venezuelan representative, if a third party is

requesting the health registration on his/her behalf.

One sample of the food product

Three copies of the original labels and packages used to market the product in the

country of origin

Three copies of the draft label that will be used in Venezuela, in Spanish

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In the case of food products that require special storage conditions, these should be

clearly indicated.

Any other requirement listed by COVENIN standards, the General food Norms, or

specifications of MH.

List of ingredients, including additives, colors and preservatives.

Indian Seed Export Laws

Spices Board India is the flagship organization for the development and worldwide

promotion of Indian spices under the control of Ministry of Commerce. This board is an

international link between the Indian exporters and importers aboard. The board has

been organized activities for excellence of Indian spices, involves every segment of the

industry. The board has made quality & hygiene foundation for its development and

promotional strategies.

Spices Board was constituted on 26th February 1986 under the Spices Board Act 1986

with the merger of the erstwhile Cardamom Board in 1968 and Spices Export Promotion

Council in1960. It is an autonomous body which is responsible for the export promotion

of the scheduled spices and production development of scheduled spices and

production development. Out of 109 spices listed by ISO India produce 75 in its various

agro climatic regions. Spice production In India is undertaken in millions of tiny holdings

& determine the livelihood of large no. of rural population as much of the agriculture in

India.

Registration & Licensing

To start with any export, one requires to obtain Import-Export code Number issued by

the office of Director General of Foreign Trade. For all foreign trade & foreign exchange

documentation one have to mention IE code number. In case of export-import of spices

or spice products, certification of registration as Exporter of spices issued by the Board

is also required in addition to IE code number. Spices Board issues certificate of

registration as exporter of spice under section 11 of the Spices Board Act.

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The documents to be furnished or formalities to be fulfilled for obtaining the certificate of

registration as exporter of spices are as follows.

Application in the prescribed form

Self attested copy of IE code certificate

Registration fee of INR 5000 in the form of crossed Demand Draft favoring “Spices

Board”. The DD should be drawn on any scheduled bank payable at “Ernakulam”

Confidential Bank certificate in the prescribed format in the sealed cover from your

banker in support of your account/ financial status

Self certified/ attested copy of the partnership deed/ Memorandum & Articles of

Association as the case may be. It is not application to proprietorship firm.

Self certified / attested copies of Sales Tax registration (CST/VST/VAT) certificate

Self attested copy of SSI certificate or the certificate issued by the Directorate of

Industries in case of Manufacturer-exporter of spices

Self certificate copy of PAN card

Passport size photo preferably with white background of the CEO, the designated

officer of your firm duly mentioning the name of the person and the company

represented for issue of ID card

TREND IN INDIA’S SPICE EXPORTS

Board has formulated & implemented a three tier quality certification program

conforming to Hazard Analysis critical control point. Award of Spice House certificate for

good manufacturing practices as well award of logo for quality of the product and

accreditation under ISO 9000 for international acceptance are three certification system

adopted by the Board. Another area of activity centered upon by the board is value

addition. India can boast as the monopoly supplier of spice oils the world over. In case

of curry powders, spice powder, spice mixtures & spices in consumer packs. The

consistent effort of the board during the last decade has improved the share of the value

added products in the export basket to more than 55%.

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CONCLUSION

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MEDICAL TOURISM INDUSTRY

Our research & overall study on the medical tourism of India brings us with following

highlights of conclusion:

India is very well known and amongst the top rankers in the field of medical tourism

around the world.

Venezuela is developed to some extent in medical tourism services.

Venezuela is very well known for its cosmetic treatments & also has few other

medical treatments at a lower rate.

But for the rest of the treatments, Venezuelan people usually travel to other parts of

the world.

Though they find medical treatments US, Singapore & certain other parts of the

world feasible, but when the services of such country hospitals, their costs, their

doctors are compared to that of India, Indian medical services are found much far

ahead of those of US & other countries of the world in all aspects.

Especially when Venezuelan people opt to come for combination of medical

treatments in place of one then it is very much beneficial to them

We plan to develop a medical tourism desk at Venezuelan hospitals & bring to the

knowledge of the people there the benefits they may be unaware of.

This way initiating with the least possible cost, we aim to spread our foot prints in

Venezuela & bring the people of the country to India & feel the difference in the

medical services.

Initially we being not much known don’t initiate with our own hospitals & opt for tie-

ups with renowned hospitals.

Later having developed in 3 to 5 years, we plan to go ahead venturing newer

horizons.

We expect more of aged people & females to take the advantage of our best

medical services especially in the field of organ replacements, cardiac treatments &

various surgeries.

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NETWORK SECURITY SERVICES INDUSTRY

Strength

Venezuela’s economy is growing

Huge development potential and

promising future.

Increasing no. Of internet users.

Weakness

85% of Venezuelans live in poverty.

Technological backwardness

Threats

Laws and regulations in developing

new technology.

Inflation.

Competition from foreign

companies based in Venezuela that

have advanced technology.

Opportunity

Government encouraging the IT

literacy programme

Govt. Support through technical

assistance, legal, education and

training, grants and subsidies.

TEXTILE AND COTTON INDUSTRY

The Indian Textile Industry is also globally well placed, in teams of installed capacity of

spinning machinery, if ranks second after china, while weaving it ranks first in plain

handlooms and fourth in the shuttle looms.

The Government has taken several positive steps of the textile economy in Indian as

like Integrated Textile Parks Shames, Tufs, Technology mission on cotton, fiscal

rationalization etc.

In Suggestions, India and especially Gujarat has a potential for Textile processing units,

mills, process houses and so instead of exporting raw cotton to Venezuela, we can offer

to supply a finished material of cotton cloth to Venezuela. Also, looking at textile sector

in Venezuela, it is observed that since recent year’s textile sector is not running well and

has very few units available. One more major cause of concern may be the

environmental laws.

Because, environmental laws of India are more liberal compared to foreign countries so

it is more cost beneficial for foreign countries to have their requirements processed in

India.

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CONSTRUCTION MATERIAL INDUSTRY

Favourable position of Venezuela due to its reduced reliance with US

Huge demand for construction materials and investments

Indian construction materials having an competitive edge over other countries

Venezuela has trade surplus of $10.95 billion in 2009

New trade policy of Venezuela aligned with goal of integration of Latin America

Diversified import and export structure

Huge construction projects in pipeline

Upgrading of technology is required in the manufacturing of construction material

Unorganized sector needs effective monitoring and regulation for production

Quality construction tools with better technology required

Need to expand the training and skill certification

Involve Industrial Training Institutes (ITIs) to bridge the demand-supply gap

High costs of operation should be reduced

We should develop lending norms and special funding instruments to increase the

flow of credit to the construction materials sector

Formulation of a business-friendly policy, develop insurance instruments to mitigate

business risks to increase project exports.

VACCINE INDUSTRY

Pharmaceutical products are one of the major parts of Venezuela’s imports & we also

show above that the government of Venezuela carries on immunization program on a

large scale. The Venezuelan government recommends its people to take proper

immunization for a better health. The government of Venezuela recently announced that

all Venezuelan nationals & foreign residents living in Venezuela, over the age of 6

months, who leave Venezuela & travel outside the America through international

airports & ports, must be in the possession of a certificate of vaccination documenting

that they have they have been vaccinated against measles & rubella. Persons without a

certificate will be vaccinated on site.

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As, we show above that India is emerging as a vaccine hub producing around 40-70%

world vaccines, we can say that the future of vaccine industry in India is profitable. At

present India is one of the largest producers of traditional vaccines in the world

comprising mainly of pediatric vaccines such as Anti Rabies Vaccine, Oral Polio

Vaccine, Hepatitis B Vaccine and Hib.

The Indian government is providing supports for the growth of this industry. There are

enough no of special economic zones are operational at present in this field in the

country & some are on the way. Even in Gujarat there are some SEZS in the area of

pharmaceutical & biotechnology which are operational at present. These SEZs provide

many benefits which we show above. The government of Gujarat is also establishing

more SEZS & biotech parks in the state which will make the tremendous growth of this

industry.

AUTOMOBILE AND AUTOCOMPONENT INDUSTRY

As the America and Europe has their own established auto makers that market is not

suitable for India to export so African and south American market is the potential

market.

India has made the auto policies in 2002 for the development in auto industry and as a

result Chennai, Pune and Noida are become the auto hub. As mention above chapter

largest auto maker of world has set their plants in these cities and also export to the

other countries. Government provides proper infrastructure facilities, technological

facilities, and Export facilities for the same industry.

In Gujarat auto industry is in development stage. Gujarat has potential for the

development of auto industry because Rajkot, Ahmadabad and Vadodara are local auto

clusters for auto component industry. In recent years many of auto makers had shown

interest for to set up the manufacturing plant in Gujarat. Also Gujarat government has

provided basic infrastructure and other related facilities to those companies so that

development geared up.

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Also Gujarat has 1600 km. long sea cost which is very useful for the development of

export facilities. Government has also taken steps to eliminate the future labour problem

(skilled and semi skilled) by increasing no. of ITI’s and automobile engineering (degree

and diploma) seats.

Indian government is interested to develop business with Latin American region via LAC

Program. Mahindra, Tata and Ashok lay land has also setup their plants in Venezuela.

The transport equipment stands on 3rd position in total exports to Latin America in year

2010-11. Overall growth of the transport equipment is 102.3% compare to year 2009-

10, at the same time each auto components too experienced very high growth in

exports. So, the trend is encouraging for expanding exports from India to Venezuela,

and the future potentials need to be tapped.

AGRICULTURE INDUSTRY

The economy of Venezuela is dependent on the oil sector and manufacturing. Income

from fuel exports accounts for about 18% of the country's GDP and approximately

ninety five percent of total exports. Venezuela is the fifth major member of OPEC on the

basis of oil production.

Agriculture in Venezuela accounts for Three % of GDP, Ten % of the labor force, and at

least a quarter of Venezuela's land area. Venezuela exports rice, corn, fish, tropical fruit,

coffee, beef, and pork. The country is not independent in most areas of agriculture.

Venezuela imports about two-thirds of its food needs. In 2002, U.S. firms exported $347

million worth of agricultural products, including wheat, corn, soybeans, soybean

meal, cotton, animal fats, vegetable oils, and other items to make Venezuela one of the

top two U.S. markets in South America. United States supply above than one-third of

Venezuela's food imports.

India is self adequate in most agriculture products. India also exports many agriculture

products and incessantly achieves high growth in agriculture production and agriculture

export. We have high opportunity to trade agriculture products with Venezuela.

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In 2010, 74% of guar gum that is export from India is utilize by pharmaceutical company

only and it’s 12% high than previous year. Venezuela total import of guargum is 1230 T

in 2010 so we have opportunity to capture that market and increase our share, now our

share is 6% only so we can increase our share.

PETROLIUM INDUSTRY

From the project we can conclude that the main activities of PDVSA are governed by

the Organic Hydrocarbons Law, and gas activities are regulated by the Organic Law of

Gas Hydrocarbons of September 1999 and its Regulation dated June 2000.

All hydrocarbon reserves in Venezuela are owned by Venezuela and not by PDVSA.

Under the Organic Hydrocarbons Law of 2001, as amended, all activities relating to the

exploration and exploitation of hydrocarbons and their derivatives are reserved for the

government of Venezuela, which may undertake such activities directly or through

entities controlled by Venezuela through an equity participation of more than 50%.

The construction of this mega-structure on the Venezuelan land proves the capacity of

workers of the PDVSA Socialist Company that day after day make their best effort to

achieve the technological independence of the country

PDVSA carries out its operations through its subsidiaries, and its interest in associations

with local and foreign companies.

Under the guidelines of the Ministry of Popular Power for Energy and Petroleum, the

general strategy of the company is based on seeking maximum valuation of

nonrenewable natural resources by obtaining fair and reasonable prices in benefit of the

sovereign people, with a fair, efficient and balanced distribution of oil wealth to aid in

eradicating poverty and social exclusion.

From the all Incentives given in this report, We can conclude that India have a huge

demand of Crude Oil, Which only can be solved by trade with PDVSA & PDVSA have a

huge potential for business with India.

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SECURITY SURVELLIANCE INDUSTRY

Security concerns have increased around the world, and this has happened due to

more of terrorist activities and thus different countries have started investing in many

security systems. But it is not the same case with Venezuela, as this country is suffering

from large number of crimes and terrorist activities. Venezuela has suffered a significant

deterioration in terms of personal and property security since many years. The country

is considered one of the most seriously affected by criminality in the Latin American

region. There exists a general consensus that the way crime is fought is antiquate and

probably inadequate. Now it is becoming more popular the use of modern technologies

(e.g. GPS to track people and vehicles). Private companies are looking for innovative

technologies related to personal and property security. Companies in general are

devoting significant amounts of financial resources to enhance current levels of security.

The same applies for the public sector.

The Venezuelan security market is generally considered insufficient in terms of quality

and quantity to counteract increasing and more imaginative/violent forms of crime.

Additionally, local manufacturing of security products is almost non-existent. In general

terms the sector is considered underdeveloped and mostly based on imported products

from US, Germany, Israel, China, etc. Security- related expenses (equipment and

services) are increasingly reflected in companies’ budget. Thus due to all above

reasons we can conclude that, as security is major concern in Venezuela starting with

export business of different security systems to this country would be beneficial to us as

well as people living in Venezuela. Exporting security systems from India to Venezuela

would be considered as very much beneficial as no company in Venezuela is producing

security systems, and our company will high growth potential.

FOOD (CUMIN) INDUSTRY

Demand

CUMIN is one of the main ingredients used in Venezuela food. Most of their

traditional dishes flavored with cumin as well high demand in restaurants.

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Supply

India is leading producer of Cumin. And in India, Gujarat is one of the top leading

producers of cumin as this state has irrigation facilities made available through

Narmada Canal System, availability of technical & commercial manpower, spice

operating Units as well standardized exporter.

Competition

Major exporters of cumin are Syria and Turkey but their production comes late in

June-July and the aroma and taste find in Gujarat’s Cumin is unique.

Growth

The data shows increasing market value of this product (cumin) in Venezuela. Due

to growth of population and fast changing food habits in the coming period.

Import-Export policy

Import and export laws of both countries are reasonable for this product. So by all

above points and from the data available in this literature like production of cumin,

trader’s opinions, government policies we can conclude that with high demand of

CUMIN in Venezuela and India (Gujarat)’s capability of fulfilling that demand by

supplying, this product (cumin) can be exported to gain market share in Venezuela’s

Food Industry.