Export Promotion Policy, 2020 - Security Printing & Minting Corporation of India Limited - Department of Economic Affairs
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Export Promotion Policy,
2020
Security Printing & Minting Corporation of India Limited
20th August, 2020
Page 1 of 26
In brief
Why this policy?
SPMCIL is interested to seek new avenues for growth in foreign markets both to expand its
business and to optimally utilize the capacity of its units. A policy is required to orient and
structure this international outreach.
Goals of the policy
Identify targets for export, both country-wise and product-wise
Enhance institutional and organizational efficiency of SPMCIL‟s international
activities
Suggest mechanisms to be followed in SPMCIL to operate at international level
Learn from best-practices to systemize export activities of SPMCIL
Streamline the process of approvals for export proposals
Page 2 of 26
Contents
1. Introduction: Background of the policy ......................................................... 4
1.1. Global context of increased focus on exports..................................................... 4
1.2. Why should SPMCIL promote exports? ........................................................... 10
1.3 SPMCIL‟s export potential ................................................................................ 11
1.4 SPMCIL‟s current export performances ........................................................... 12
1.5 Global Competition........................................................................................... 12
2. Strategy to boost SPMCIL’s exports ............................................................ 14
2.1. Policy Vision ..................................................................................................... 14
2.2. Policy Objectives .............................................................................................. 14
2.3. Scope of SPMCIL‟s exports ............................................................................. 14
2.4. Strategy to access international demand ......................................................... 16
2.5. Partnership strategy ......................................................................................... 17
2.6. Marketing strategy............................................................................................ 19
2.7. Services that SPMCIL could offer at the global stage ...................................... 20
3. SPMCIL’s institutional set up for export activities ...................................... 21
4. Proposed process for approvals from the Ministry of Finance ................. 23
4.1. For Circulation coins, Banknotes and Security Items (including Security inks) 23
4.2. For Commemorative coins/ stamps.................................................................. 24
4.3 Regulatory Aspects……………………………………………………………...26
Page 3 of 26
1. Introduction: Background of the policy
1.1. Global context of increased focus on exports
All over the world, mints, banknote and security printing presses are moving towards
expansion to foreign markets. The Royal Canadian Mint, for instance, used to export 20% of
the circulation coins it produced in 2011. In 2018, this ratio had increased to 50%.
100%
80%
60%
40%
20%
0%
2011 2012 2013 2014 2015 2016 2017 2018
Domestic Foreign
The Canadian Mint - Revenue share between domestic and foreign circulation coins (2011-2018)
Concomitant factors explain this trend towards the increase of exports for global mints and
presses:
a. The rise of cashless payments
Either under the influence of government policies or due to the rapid development of
digital technologies, the relevance of physical mediums of payment such as coins
and banknotes is jeopardized. In the last five years, the share of transactions carried
out in cash has dropped from 89 to 77 percent across the world.1
1
https://www.mckinsey.com/~/media/McKinsey/Industries/Financial%20Services/Our%20Insights/Global%20p
ayments%20Expansive%20growth%20targeted%20opportunities/Global-payments-map-2018.ashx
Page 4 of 26This phenomenon is particularly intense in advanced economies such as Sweden,
where the number of banknotes and coins in circulation has steadily decreased
respectively by 23 and 34 percent between 2014 and 20172, or the United Kingdom,
where the total share of payments in cash has fallen from 62 to 15 percent between
2006 and 20153.
In fact, economies of various degrees of maturity, advanced or emerging alike, are
witnessing the growth of cashless transactions, as evidenced by the growing
percentage of credit card payments across the world illustrated by the graph below
Value of credit card payments (% of GDP)
80
70
60
50
40
30
20
10
0
2000 2016
In some countries, this trend has led to a contraction of the domestic demand for
cash, and particularly for circulation coins. In this context, the Royal Mint of Belgium
has decided to stop producing coins in 20174 and the Korean Mint plans to do so by
20205
The situation is slightly different in India. On one hand, the use of digital mediums of
payments had increased post demonetization. Likewise, between November 2016
and September 2017 only, the number of credit cards in India increased by 20% and
the number of point of sales terminals which could read such cards almost doubled
(from 1.5 to 2.9 million)6. On the other hand, India still lags behind in terms of
cashless transactions. In 2017, only 22% of Indian adults had ever made a digital
payment, against 49% for Chinese and 92% for Americans.
2
https://www.riksbank.se/en-gb/statistics/payments-notes-and-coins/notes-and-coins/
3
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/689234/
Cash_and_digital_payments_in_the_new_economy.pdf
4
https://www.thebulletin.be/belgian-mint-stop-making-coins-november
5
https://www.imf.org/external/pubs/ft/fandd/2017/06/wheatley.htm
6
https://www.nytimes.com/interactive/2017/11/14/business/dealbook/cashless-economy.html
Page 5 of 26In reality, the 26% decline of the production of circulation coins by Indian mints
between 2017 and 2018 was more due to systemic logistic issues (particularly the
lack of storage space) rather than the result of the digitalization of the economy. That
being said, the rise of cashless payments in India is slow but genuine and is definitely
going to affect the demand for coins and banknotes in the coming years.
What it means for SPMCIL- Across the world some mints and presses relying solely
on their local demand are getting underutilized due to lower indents received from
their Central banks. This is particularly true in developed economies. This represents
opportunities to produce coins/banknotes for other markets where the demand is still
high, especially in emerging nations.
b. The continuous growth of the demand for circulation coins and banknotes
Paradoxically, while cashless transactions play an increasingly important role in the
global economy, cash is not disappearing. It is actually growing.
The two trends are not incompatible. Cashless mediums of payment might be
becoming relatively more and more prevalent, but economic growth in many parts of
the world is still fueling the absolute demand for cash. True enough, the circulation of
cash might be growing at an increasingly slower pace across the world – yet, it is still
growing nonetheless.
Countries with a very low share of cash transactions – like South Korea (14%) and
Sweden (20%) – still remain exceptions, not the norm. Cash will therefore remain a
very important mean of payment for years to come.
In fact, since the year 2000 the value of cash in circulation has increased from 7% to
9.6% of the world GDP – this indicator constitutes a solid proxy to illustrate the global
growth of demand for cash7. Interestingly, this trend has been observed in both
emerging and advanced countries (two countries constitute notable exceptions:
China and Russia, where the value of cash payments in the GDP has actually
decreased since 2000).
7
https://www.bis.org/publ/qtrpdf/r_qt1803g.pdf
Page 6 of 26Value of cash payments (% of GDP)
25
20
15
10
5
0
2000 2016
Source: https://www.bis.org/publ/qtrpdf/r_qt1803g.pdf
Nevertheless, it should be highlighted that while the value of cash payments did
increase, it did so at a much slower pace than the value cashless transactions. For
instance, between years 2000 and 2016, the value of cash payments in the GDP of
emerging countries increased by 11%, while the value of payment through card rose
by 62%.8 This confirms that, in the future, cashless mediums of payment will
increasingly gain ground as compared to circulation coins and banknotes.
The following factors explain the continued prevalence of cash despite the solid
growth of cashless payment mediums:
- Firstly, the 2008 global economic crisis seems to have temporarily increased
the trust of citizens on cash rather than on digital transactions9.
- Secondly, cash-oriented infrastructure has largely improved: the number and
sophistication of ATM terminals has increased tremendously in emerging
economies (while it remained stable in advanced economies), which largely
facilitated cash payments in these regions. It should be underlined that the
demand for cash is not homogeneous at the global scale and appears mainly
driven by emerging economies.
- Thirdly, cash remains much more flexible than digital/cashless technologies in
certain contexts where electricity and literacy are largely missing.
- Finally, cash holds an emotional value – whether in terms of satisfaction or
sense of security – which can hardly be replaced by intangible money.
For all these reasons, while citizens across the world are increasingly using cashless
mediums of payment, the demand for cash remains consistently growing, although at
an increasingly slower pace10.
8
https://www.bis.org/publ/qtrpdf/r_qt1803g.pdf
9
https://www.bis.org/publ/qtrpdf/r_qt1803g.pdf
Page 7 of 26What it means for SPMCIL: The demand for cash is still growing in many parts of the
world, particularly in emerging economies of Africa and Asia. Many countries are still
obliged to outsource the manufacturing of coins and banknotes due to limited
resources, lack of technical capabilities and higher in-house cost of production. For
example, it is estimated that 11% of the world‟s newly printed banknotes are
produced on behalf of other countries11. This represents huge opportunities for
export.
c. Diversification of the offer
Mints, currency presses and security printing presses are progressively drifting away
from the sole traditional trade of circulation coins and banknotes. Medals &
medallions, numismatic coins, bullions, secured printed documents, security paper
and security inks now occupy an increasingly important role in mints and presses‟
portfolios.
In 2017-18, for instance, circulating coins represented only 21.9% of the total profit of
the British Royal Mint, which generated more than three times more profit with
numismatic coins, such as commemorative coins and medals (68.8%of the total
profit). In fact, the share of numismatics in the profit of the British Royal Mint
increased significantly from the previous year (2016-2017), jumping from 40.4% to
68.8%.
Royal Mint UK
Share in the total profit 2017- 2016-
(%) 2018 2017
Circulating coin 21.9 44.9
Numismatics 68.8 40.4
Bullion 9.2 14.7
Total 100.0 100.0
10
https://www.bis.org/publ/qtrpdf/r_qt1803g.pdf
11
https://www.bbc.com/news/business-45272704
Page 8 of 26In 2017-2018, the Royal Canadian Mint Canadian Royal Mint
generated largely more revenue from
bullions and other services (70.1%) than Share in the total profit 2017-
from circulation coins (11.5%). (%) 2018
Circulating coin 11.5
Interestingly, the revenues that the Royal
Canadian Mint generated from circulation Numismatics 9.3
coins were well-balanced between the
domestic demand (55%) and exports to Bullion 79.2
foreign countries (45%). Total 100.0
Diversifying activities allows manufacturing companies to dilute risks related to
unpredictable factors, such as fluctuations of metal prices, market crunches,
demonetization drives, etc. The diversification of the offer also stimulates export as
companies often need to access new markets to sell their new products.
What this means for SPMCIL: Several mints and presses, include State-owned
organizations, managed to access foreign markets by developing new products. The
global competition is not restricted to circulation coins and banknotes – it is much
more diverse.
d. Development of new technologies
Online platforms now allow manufacturers to connect directly with customers –
including international customers - and therefore explore new channels for trade.
This is particularly the case with independent buyers interested in collection coins
and bullions.
What this means for SPMCIL: Using internet-based new technologies can help mints
and presses to boost their export
Page 9 of 261.2. Why should SPMCIL promote exports?
Developing international activities could bring several benefits to SPMCIL and to
India in general:
a. Counter uncertainty of the domestic demand for coins, banknotes and security
documents. As of FY18, 79% of SPMCIL‟s sales were directly derived from RBI‟s
indents for coins and banknotes12. This situation of dependency is problematical as it
confronts SPMCIL to risks of unpredicted reduction of activities. For instance, in
FY18, the production of circulation coins decreased significantly following a reduction
of RBI‟s indent in July 2017. As a result, revenues related to the sales of coins
dropped by 89.9% (from INR 2,707.25 crores in FY17 to 1,426.43 crore in FY18),
although it had increased by 8.5% the previous year13.
State-induced demand remains unstable even for non-circulation products. In FY18,
SPMCIL printed 34.2% less passports than the preceding year due to a decreased
indent from the Ministry of External Affairs14. The revenue from sale of postal items
reduced by more than 35% over the past 5 years (from INR 37.21 crores in FY 14 to
INR 23.75 crores in FY 18). As SPMCIL has absolutely no control on government
indents, dealing with more clients from abroad could help SPMCIL in reducing its
dependency on Indian government clients and consequently in mitigating the
uncertainty of domestic demand.
b. Optimize the productivity of manufacturing units to ensure that they are being
utilized at full capacity. This is particularly true for circulation coins. As of today, the
potential of SPMCIL‟s mints is not fully utilized. For FY19, RBI gave an indent of 6.1
billion pieces of coins – which was far less when compared to the four mints‟ annual
capacity of 9.7 billion pieces. In FY19 alone, the spare capacity of 3.6 billion coins
could be leveraged for export orders.
12
https://www.spmcil.com/UploadDocument/2017-18-English.pdf
13
https://www.spmcil.com/UploadDocument/2017-18-English.pdf
14
https://www.spmcil.com/UploadDocument/2017-18-English.pdf
Page 10 of 26Accessing foreign markets would help guarantee employments in SPMCIL‟s various
production sites, and would facilitate optimizing material and human resources. It
may be noted that this argument is valid for coins and security documents, but not
necessarily for banknotes which SPMCIL is currently printing at near full-capacity.
However, as the demand for banknote export order tends to be in the range of 200-
300 million pieces, the same may be met by adjusting the production planning at
currency presses.
c. Build up the prestige of SPMCIL and India - Manufacturing physical currency for
other countries is a matter of national pride. It indicates that foreign nations are ready
to trust India for a highly sovereign matter. It also demonstrates India‟s technological
advancement and reliability. Therefore, developing SPMCIL‟s international outreach
would not just serve the purpose of finding new business opportunities, it would also
help putting SPMCIL‟s name on the world map and fulfilling India‟s diplomatic
ambitions.
d. Earning foreign exchange - Dealing with foreign clients would not only open new
channels of revenue for SPMCIL, but it would also participate in diversifying the
foreign exchange earnings of India, which is a fundamental need for a healthy
economy. Boosting foreign exchange reserves would in turn lead to improving the
positioning of SPMCIL in the global markets.
e. Exposure to global R&D and Technology – Collaborating with international
competitors will help in improving SPMCIL‟s technical and professional standards,
and could potentially help in introducing new skills, techniques or technologies into
SPMCIL‟s workshops – especially in the case of partnerships with
companies/organizations featuring strong R&D departments.
1.3 SPMCIL’s export potential
SPMCIL features several comparative advantages which could be leveraged to access
foreign markets:
a. Strong production capacity: When compared to the average capacity of other
mints/presses, SPMCIL‟s manufacturing units have large capacities for minting coins
(9,720 million pieces a year15), for producing banknote paper (12,000 MT a year16),
and for printing banknotes (~10 billion pieces a year).
b. Operational flexibility and market outreach: SPMCIL‟s production units are
geographically close to high growth and developing markets of South East Asia, Asia
pacific, Africa and Arab countries – which constitutes a true advantage upon
European competitors. Additionally, India has good trade relationships – and
15
KPMG, Report on SPMCIL Unit Visits
16
https://www.spmcil.com/UploadDocument/2017-18-English.pdf
Page 11 of 26sometimes even favorable trade relations - with most of the countries from these
regions. By leveraging India‟s locational advantage and conducive trade relationships
with other mints and security presses, SPMCIL can improve their operational
flexibility, reduce their logistics and target new high growth markets. In this context,
collaboration with foreign public/private mints and presses would constitute win-win
partnerships.
c. Cost Optimization: Engaging with SPMCIL‟s mints and presses may bring along
better cost competitiveness to international competitors, particularly in terms of
economies of scale.
d. Trusted supplier: SPMCIL prints and mints currency for the Government of India,
under secure, state-of-the-art production facility. Operating in the security printing
and minting industry for almost 100 years, SPMCIL is a trusted supplier of currency,
ensuring delivery of high quality products. This constitutes an advantage over private
manufacturers. Additionally, the production is done under high level security (with
support of CISF), thus preventing leakages.
1.4 SPMCIL’s current export performances
Historically, SPMCIL has exported circulation coins, banknotes and Postage Stamps to the
following countries:
Products Countries
Banknotes Nepal, Bangladesh, Sri Lanka, Myanmar, Bhutan
Thailand, Dominican Republic, Bangladesh, Sri Lanka, Nepal,
Circulation Coins
Bhutan
Postage Stamps
(through Department Papua New Guinea (Commemorative Stamps), South African Post
of Posts)
However, in recent years there hasn‟t been significant focus on exports owing to the high
domestic demand for these products.
1.5 Global Competition
The global market for circulation coins and banknotes is already dominated by the well-
established players, both public and private. This intense competition in currency/security
printing & coin minting has contributed to the constant technical upgradation of products. As
well-established players are increasingly seeking ways to maximize their operational
efficiency and reduce their overhead costs, partnerships with SPMCIL could help them gain
in competitiveness because of cost benefits of some of SPMCIL‟s products such as security
inks etc.
a. Major competitors for circulation coins
Export orders for circulating coins are catered to by select 15 mints globally. Most of
these mints are State-owned.
List of the 15 major exporting mints: the Royal Mint of UK, the Royal Canadian Mint,
the Royal Dutch Mint (private), Casa da Moeda do Brasil, Mint of Finland, Korea
Minting and Security Printing Corporation, the Japan Mint, the Royal Australian Mint,
Page 12 of 26Monnaie de Paris, China Banknote Printing and Minting Corporation, the South
African Mint, Czech Mint, SMBW Germany, Santiago Mint and Austrian Mint.
b. Major competitors for banknotes
There are about 9 companies printing banknotes for global clients. Among them, 5
companies are State-owned printing works. In total, 17 billion banknotes are
outsourced on a yearly basis.
List of the 9 major exporting presses: De La Rue (private, UK, world leader),
Oberthur Fiduciaire (private, France), Goznak (State, Russia), Peruri (State,
Indonesia), Note Printing Australia (State), Giesecke & Devrient (private, Germany),
Banque de France (State), Crane Currency (private, US), Bank Note Company
Canada (State).
c. Major competitors for other security products
Global security printing market is moderately consolidated with few players
accounting for major share. Some of the major players have presence across value
chain and provide customized products and solutions for the customers.
Key players in Security Printing market are 3M, Giesecke & Devrient GmbH, De La
Rue, Thomas Greg & Sons, Leibinger Group, Gietz, Pozzoni S.p.A., ROTATEK,
Goebel GmbH, Security Brands Solutions S.r.l, VINSAK, KOMSCO, Cadena and
SPGPrints.
Page 13 of 262. Strategy to boost SPMCIL’s exports
2.1. Policy Vision
To excel in positioning coin, banknote and security product exports from SPMCIL as
products of choice in global markets
2.2. Policy Objectives
a. To strive for increasing revenue share of exports in SPMCIL‟s portfolio to 15% by
2024
b. To identify targets for export, both country-wise and product-wise
c. To enhance organizational efficiency for streamlining export activities
d. To simplify process of approvals for export proposals
e. To adopt global best-practices for systemizing export activities
f. To establish mutually beneficial techno-commercial partnerships with global mints,
security/currency printers.
2.3. Scope of SPMCIL’s exports
2.3.1. Priority targeted products
Circulation coins and banknotes have high sale potential in terms of volumes of international
demand.
However, SPMCIL aims to target a more diverse portfolio and also promote export for coin
blanks, numismatic/commemorative coins, bullions, medals, passports, security inks, and
other secured documents. This would help in generating substantial revenues and would
also reduce dependency on circulation coins and banknotes. The current distribution of sales
is mentioned in the chart below.
Others
13%
NJSP
5%
Coins
32%
Passports & allied
8%
Banknotes
42%
SPMCIL - Distribution of sales per product (FY 2018-2019)
Source: Data from SPMCIL Corporate office
Page 14 of 26List of products for
Sno. Details
Exports
Printing banknotes for global clients would not be only
a matter of business and operational streamlining; it
would also bring significant strategic benefits and
Banknotes and prestige to SPMCIL and India
1 Commemorative Globally ~17 billion banknotes are commercially
Banknotes printed (outsourced)
There is an existing export market for
commemorative bank notes which can be tapped into
by SPMCIL
Significant spare capacity in Mints which could be
leveraged for getting new export orders.
2 Circulation Coins
Global demand for ~6 billion pieces per annum for
circulation coin outsourcing
Mints such as the UK Royal Mint and the French Mint
have developed in-house capabilities for blanking,
and sell both FSS & Precious metal blanks to various
FSS and Precious metal
3 other mints.
blanks
Similarly, Indian Government Mints may also
enhance their blanking capacity, thereby creating a
new export vertical.
High demand of legal tender commemorative coins in
International Market.
Global Mints have put in significant focus on this
vertical.
Commemorative Coins Pure Gold and Pure Silver commemorative coins may
4
be explored for international market
Coins on popular themes may be launched – Sports,
National movements, Inventions, mythical stories,
Languages, Cinema, Monuments, other licensed
themes etc.
Similar to commemorative coins, medals on popular
5 Medals/Medallions
themes may be introduced for international markets
Global market for gold bullion (bars and coins) was
valued at 41 billion USD (for 2018).
Launch of Indian bullion coin series may be
envisaged
6 Bullion Products
Leverage large Indian diaspora globally for sale of
bullion products
Launch Joint bullion products such as gold bars in
collaboration with global mints
Worldwide market for Security Ink is expected to grow
at a CAGR of roughly 4.4% over the next five years
and will reach 800 million USD in 2024, from 620
7 Security Inks
million USD in 201917
Spare capacity of Ink Factory Dewas may be utilized
for servicing export orders
SPMCIL has wide portfolio of Weights and Measures
8 Weights and Measures products which can be targeted for international
market
17
Global Info Research Study
Page 15 of 26List of products for
Sno. Details
Exports
India Government Mint, Mumbai manufactures
reference, secondary and working measures for mass
and length, & secondary and working measures for
capacity.
Global passport market is valued at 3.8 billion USD in
Passports (including
FY 19 and expected to grow at 8% CAGR
9 Visa Stickers) and
National Identity Cards Global identity card market is valued at 1.7 billion
USD in FY 19 and expected to grow at 5% CAGR
10 Tax Stamps The global market for brand protection is forecast to
grow at 16% a year, rising to 4.2 billion USD in 2020.
SPMCIL has printed commemorative stamps for
Commemorative Papua New Guinea and South African post in the
11
Stamps past through Department of Post
Similar engagements may be taken up in future
2.4. Strategy to access international demand
2.4.1. List of actions to be taken to facilitate the identification of potential markets
a. Establishment of a team of Export officers within SPMCIL headed by Chief Export
Officer. The team should focus on establishing line of communication with global
organizations (mints/presses), central banks and foreign embassies.
b. Establishment of onsite presence in countries which outsource currency, coins and
security printing in order to access regular market intelligence (Tenders, EoIs) and
build relationships with key stakeholders in foreign governments (central banks etc.).
Existing infrastructure of other Indian Public Sector Undertaking (PSUs) may be
utilized for this purpose.
c. Sourcing business intelligence from Indian High Commissions and Embassies, and
also come up with a phase-wise rollout strategy, in close consultations with the
Indian Mission abroad.
d. Attendance of international currency fairs/events to get a fair idea of the international
market and build potential synergies with other agencies.
e. Holding extensive inter-ministerial consultations involving the line ministries including
the MEA, for devising effective export promotion campaign in the targeted countries.
f. Examine the export strategies of various countries in light of the changes in the post-
Covid scenario, which is likely to witness a further shift towards digital payments.
2.4.2. Priority markets to be targeted
Countries to be targeted in priority should feature the following criteria:
a. Have good political and/or trade relations with India (inputs from the concerned
Ministry shall be provided to SPMCIL on the matter)
b. Be already outsourcing
c. Not have the advanced technology to manufacture
d. Not be in the capacity to make economies of scale
e. Have good regulatory environment (Ease of doing business)
f. Have high growth of narrow money (category of money supply that includes all
physical money such as coins and currency, demand deposits and other liquid assets
held by central banks)
Page 16 of 26Regarding the eligibility of foreign clients to consider, only diplomatically friendly and
politically stable countries should be taken in consideration. The list of eligible countries
should be shared with the Department of Economic Affairs (C&C), Ministry of Finance,
Government of India (GoI) for their concurrence.
A black list of countries could also be potentially determined/updated in collaboration with
the Ministry of External Affairs (MEA) and Ministry of Home Affairs (MHA), Government of
India. In case if an Non-Disclosure Agreement (NDA) is to be signed with a Third Party prior
to knowing the identity of the foreign client, the NDA should include SPMCIL‟s right to
decline the offer if it eventually concerns a nation which does not fit GoI‟s eligibility criteria.
2.4.3. Nature of targeted clients
SPMCIL will consider a wide range of possible buyers and partners, including:
a. Sovereign nations
b. State-owned mints, banknote & security presses
c. Private mints, banknote & security presses
d. Wholesalers/ coin dealing companies
A conscious decision may be taken whether private firms (mints, banknote & security
presses) should be security cleared by Ministry of Home Affairs (MHA), Government of India,
so as to avoid delays as time is of the essence in these cases.
2.5. Partnership strategy
2.5.1 Why should SPMCIL seek partnerships for its export activities?
The global market of coins, banknotes and security products is already largely dominated by
the – existing players, which already have a strong grasp on potential clients.
Typically, 80% the commercial banknote printing market is currently controlled by private
companies, as summarized in the graph below.
Page 17 of 26Market share - Banknotes (2017)
Other
19%
De la Rue
Goznak 27%
7%
Crane
7%
G&D
Oberthur
17% 23%
Large private companies, which make huge investments on R&D, have a solid advantage to
win bids as they feature technical specificities which other State-owned mints and presses
cannot match.
It therefore appears preferable to seek partnerships with existing competitors rather than
going for stand-alone deals. To start with, except in very specific cases, the option of stand-
alone deals may not be reasonable in terms of market entry cost, market visibility and
competitiveness
To grow at an international scale especially in the domain of circulation coins, banknotes and
security printing, SPMCIL may therefore strive to collaborate with well-established foreign
players. Foreign private and State-owned mints & presses could have a strong interest in
collaborating with SPMCIL, as it could allow them to significantly optimize their costs and
service bulk orders by utilizing large capacity of SPMCIL units.
2.5.2 What types of partnerships should be sought after in priority?
For Circulation coins/ blanks, Banknotes and Security Products
a. Government to Government (G2G): Although this option would be ideal in terms of
simplicity, the saturation of the international market makes it challenging given the
difficulty to compete with existing players. It is also observed that most tenders furnished
by Central Banks are limited in nature and are only open to selected empanelled bidders.
In order to participate, the first requirement is to get empaneled with a Central Bank
which may be time consuming and will entail meeting enormous documentary
requirements on a case-to-case basis.
b. Subcontracting: This contractual arrangement would allow SPMCIL to enter in the
international market with more simplicity, without going through bidding processes;
c. Consortium: This contractual set-up would have the advantage to give SPMCIL more
visibility and therefore prestige; however, it is observed that some of the central banks do
not entertain consortiums in currency printing/ minting tender processes.
Page 18 of 26For Commemorative Coins, Medals/Medallions Commemorative Stamps, Bullion
d. Partnerships with renowned foreign manufacturers (mints, presses) to develop joint
branding products. This will help SPMCIL gain visibility by leveraging reputation of the
foreign partner.
e. Licensing partnerships – For development of products based on licensed themes
acquired by international coin/banknote wholesale companies.
f. Distribution Partnerships - With global wholesalers to market and distribute Indian
commemorative coins, medals, stamps and bullion products based on popular
internationally recognized themes in foreign markets. SPMCIL may tie up with different
wholesalers for high growth markets.
2.6. Marketing strategy
The following steps could be taken to build SPMCIL‟s reputation globally:
a. Obtaining membership of international forums such International Currency Association,
International Association of Currency Affairs, Mint Directors Conference etc.
b. Establishing B2B partnerships with international distributors and big retailers. This would
help in acquiring market intelligence regarding demand of products in a target country,
and give easy access to the market for sale of SPMCIL products
c. Establishing long term partnerships with foreign currency printers/mints for regular
technological exchange and for exploring joint business opportunities through inter-
government collaborations.
d. Ensure long term profitable growth in Numismatics by increasing the sophistication of
marketing tools to attract and develop profitable relationships. Establishing a list of
marketing tools required for SPMCIL‟s outreach activities - high quality brochures,
promotion videos, enhancement of the website, digital marketing etc.
e. Continuous innovation in bringing out new products themes & designs - especially in the
numismatic and bullion segment, and showcasing them to global audience by
participating & exhibiting at top global currency forums.
f. Acquire globally recognized certifications such as LBMA (for bullion business), Six Sigma
etc.
Page 19 of 262.7. Services that SPMCIL could offer at the global stage
SPMCIL strives to play a role much wider than just a supplier of security products. The
corporation could intervene at different stages of the value chain by offering following array
of services:
a. End-to-End Solutions for coins, banknotes and security products – Concept,
Designing & Production
b. Consultancy services – On how to start or expand a mint/press (machine
procurement, material sourcing, human resources planning etc.)
c. Facility management expertise to co-ordinate and oversee the safe, secure and
environmentally sound operations and maintenance of overseas Mints/ presses in a
cost-effective manner
d. Anti-counterfeiting campaign supervision
Page 20 of 263. SPMCIL’s institutional set up for export activities
3.1. SPMCIL had been set up by the Government mainly to serve the mandate of the
Government for supplying banknotes and coins to the Central Government. The
need for exports of coins and banknotes, but especially of coins and related
products arose in recent years since 2017-18 owing to fall in indent of coins by the
RBI. As per the data available in the Table below compiled from RBI, during 2012-
13, there was a significant hike in indent of coins by RBI and SPMCIL could supply
only 6,878 mpcs of the 9,554 mpcs, and in 2017-18, there was a sharp fall in indent
of coins from RBI to 7,712 mpcs from 15,000 mpcs in 2016-17. The installed
capacity of coins since 2010-11 is also shown in the Table18.
in mpcs
Year Installed Capacity
Indent Supply/Lifting
of SPMCIL
2001-02 6500 5432
2003-04 3460 2828
2004-05 2500 896
2005-06 0 41.4
2006-07 700 742
2007-08 3485 3156
2008-09 5900 4295
2009-10 6100 6285
2010-11 6670 6140 5954
2011-12 6370 6094 5954
2012-13 9554 6878 5954
2013-14 12033 7677 7400
2014-15 13840 7912 7400
2015-16 14240 9258 7400
2016-17 15000 9691 7750
2017-18 7712 5852 7750
2018-19 6132 6132 7750
2019-20 3400 7750
3.2. To meet the indent of coins from RBI, the minting capacity of SPMCIL was
enhanced to 7750 mpcs in 2016-17 from 5954 mpcs in 2010-11. However, in recent
18
Source: Annual report of RBI and SPMCIL
Page 21 of 26years, there has been a glut of coins since 2016-17 and RBI could not lift the coins
as per the indents given by it.
3.3. As export was never a strategy of SPMCIL, it has little experience on export of coins,
banknotes and postage stamps. The Export Promotion Policy, 2019 is expected to
help SPMCIL in diversifying its businesses across the globe.
3.4. Modification of Institutional set up for exports
Modification of current institutional setup for exports within SPMCIL will be paramount once
SPMCIL gathers enough momentum in export related activities and anticipates a significant
increase in the range and volume of international orders.
In that scenario, various decisions will be required to be taken to prospect, identify global
clients, negotiate contracts and partnerships, and ensure the prompt delivery of orders.
Institutional responsiveness and flexibility will be key factors for success of SPMCIL‟s
international outreach.
3.5. Creating a position of ‘Chief Export Officer (CExO)’
SPMCIL may consider creating a new position within its organizational structure to foster
export-oriented activities at a later stage once the quantum of such activities increases. It
will help strengthen the coordination between SPMCIL‟s different departments for the
specific purpose of exports.
Each interaction with a potential global client will represent a stand-alone project requiring
pro-active initiatives and follow-up efforts. A fragmented decision-making process would not
fit this approach as it would affect the capacity of SPMCIL to act promptly.
SPMCIL may, at a later stage, consider
creating an Export Promotion Cell
headed by a Chief Export Officer,
whose role would be to act as the
driving force of export projects. His/ her
three main tasks would be to:
a) Supervise a dedicated team of
export officers for daily tasks
such as: Identification of
clients/markets, formal
correspondence, business trips,
collection of business-related
data, analysis, reporting etc.
b) Promptly answer any queries
raised internally by the senior
management as well as by the Ministry of Finance. This coordination role would
drastically facilitate and accelerate the decision-making process.
c) The creation of this position would also be beneficial from a marketing perspective,
as it would represent a more obvious, visible interlocutor for potential foreign clients.
Page 22 of 264. Proposed process for approvals from the Ministry of Finance
4.1. For Circulation coins, Banknotes and Security Items (including Security inks)
a. ‘Annual Export Proposal’ from SPMCIL to the Ministry of Finance, Govt. of
India
At the beginning of each year, SPMCIL will prepare a detailed „Export Proposal‟. This
document will include two sections: (i) information justifying the exports for the
coming year and (ii) list of priority countries and partners.
Section 1: Information to be submitted by SPMCIL to justify Export Plan
i. Quantum of work done by SPMCIL for other countries in the context of
printing of banknotes/ coins and security printing
ii. Annual domestic indents for banknotes, coins and key security products
iii. Additional capacity expected to be generated after meeting indented domestic
requirements
iv. Detailed production plan for the year and basis of taking over the exports
proposal
v. Security arrangements to be taken up for preventing any security breach
during inspections by private foreign counterparts
Section 2: List of Priority countries and Currency printing & minting
organizations
vi. List of priority countries and central banks to be targeted for export activities
vii. Details of currency to be exported in priority countries
viii. List of private banknote printers/ security printers and state-owned/ private
mints shortlisted for export collaboration
ix. Details of currency printing organizations and mints
a. Overview - Organizational structure, Board of Directors, Products,
Customers
b. Current capacity of the organization
c. Financials - Revenue and profitability for last 5 years
d. Any other information required by the Ministry of Home Affairs for
security clearances
b. Approval and No objection from the Ministry of Finance
The „Export Proposal‟ will be submitted to the Ministry of Finance for granting
approval and no objection to SPMCIL for the export activities so that SPMCIL could
start planning production accordingly. If need arises, SPMCIL will have the flexibility
add a new country or a currency/ security printer or mint as an addendum to the
„Export Proposal‟ at a later stage.
Post receiving “Export Proposal” from SPMCIL, MoF will process and approve it in
coordination with other concerned Ministries. SPMCIL will respond to queries posted
by MoF from time to time.
Page 23 of 26c. Export Proposal for banknotes to be considered on case-to-case basis on
merits
There are various issues associated with printing of banknotes for exports. One such
is the requirement of security clearance, which is a long-drawn process. Another
important issue is any incident of fake banknotes may adversely affect the diplomatic
relations. Further, the demand for banknotes is determined by various factors and on
occasions, presses are required to work overtime to meet the domestic demand.
Therefore, in case of any unanticipated situation, it may not be possible to give any
long–term export commitment for exports of banknotes without affecting the domestic
requirement for banknotes. Therefore, it may be noted that the ‘Export Proposal’
for printing of banknotes will be considered for approval by MoF on case to
case basis on merits.
d. Final Approval from MoF
The approval and no objection from the MoF will give SPMCIL the autonomy to:
i. Participate in international tenders for circulation coins, blanks, banknotes
and other security items (security inks, passports, Tax stamps) floated by
foreign central banks and other government entities.
ii. Undertake international travels for conducting activities related to business
development (meeting, site visits, contract negotiations etc.) with respective
countries, central banks, currency/ security printing organizations and mints.
The closure of final contracts/agreements with foreign central banks or security/
currency printing agencies or mints would be done by SPMCIL based on the final
approval by MoF.
4.2. For Commemorative coins/ stamps
a. Establishment of a Committee for Commemorative Products (CCP)
The choice of themes and designs of commemorative products (such as coins,
stamps) is a matter of national prestige.
It is therefore proposed that SPMCIL, in a similar arrangement made by the Royal
Mint UK, will establish a Committee for Commemorative Products (CCP). This expert
committee, with independent members from the civil society, will help guarantee that
the designs and themes chosen by SPMCIL match India‟s esthetic standards and
reflect national values properly.
Page 24 of 26Additionally, the recommendations of this committee shall support the Ministry of
Finance (MoF) in swift decision making regarding SPMCIL‟s commemorative product
proposals, given the credibility and legitimacy that the CCP will bring along.
i. The CCP role will be to give an opinion on the themes and design of
commemorative products to be manufactured by SPMCIL.
ii. The members of the CCP will have recognized artistic, technical or academic
background.
iii. The CCP will comprise of 8 members, including 2 representatives from SPMCIL,
1 representative from the Ministry of Finance (MoF) and 5 eminent members of
the civil society from areas of numismatics, history, calligraphy, literature, graphic
design and illustration.
iv. Names of members will be suggested by SPMCIL and duly approved by MoF.
v. CCP membership will be for a duration of 5 years.
b. Selection of themes and approval from MoF
i. At the beginning of each year, SPMCIL will prepare a detailed proposal indicating
the number of themes to be developed in the coming 12 months, the nature of
themes, a justification, and a tentative schedule.
ii. This proposal will be prepared with assistance from international dealers and with
inputs from the Director (Technical) and Chief Export officer, in order to take into
consideration demand from foreign markets.
iii. SPMCIL will request the CCP‟s opinion on the proposal. The CCP may reject
certain themes and suggest others instead.
iv. SPMCIL will submit the proposal to MoF, along with the recommendations from
the CCP.
v. MoF will issue an approval for SPMCIL to develop the themes recommended by
CCP in the coming 12 months.
vi. The approval will include a provision of giving SPMCIL the scope to develop
additional themes in case unpredictable events are to be commemorated, upon
subsequent amendment of the approval already given.
c. Selection of designs and final approval from MoF
i. SPMCIL will prepare design and specifications for the agreed themes.
ii. SPMCIL will put up the paper design proposal to the CCP for its opinion.
iii. For the sake of efficiency, each submission to the CCP should include a
minimum of 3 designs, in order to limit the number of CCP meetings. The CCP
may request SPMCIL to modify design/specifications of designs considered as
unfit.
iv. SPMCIL will submit designs/specifications to MoF, along with recommendation
from CCP for final approval and issuance of Gazette Notification.
Page 25 of 264.3 Regulatory aspects: Any export transaction by SPMCIL will comply by the following
regulations
Foreign Exchange Management (Manner of Receipt and Payment) Regulations,
2016 notified vide Notification No. FEMA 14(R)/2016-RB dated May 2, 2016
Foreign Exchange Management (Export of Goods & Services) Regulations, 2015
notified vide Notification No. FEMA 23(R)/2015-RB dated January 12, 2016
Foreign Exchange Management (Export and import of currency) Regulations,
2015 notified vide Notification No. FEMA 6 (R)/RB-2015 dated December 29,
2015
Export credit instructions as contained in Master Circular on Rupee/ Foreign
Currency Export Credit and Customer Service to Exporters issued vide
DBR.No.DIR.BC.14/2015-16 dated July 01, 2015.
Page 26 of 26You can also read
