The Socio-economic, technical and marketability

conditions influencing the sustainable viability of the

handicraft sector: Study of a group of Artisans in Delhi

Region.

A Dissertation Submitted in Partial Fulfillment of the Requirements for

Completion of Masters in Social Innovations and Entrepreneurship

By: Brinda Khera

Under the supervision and guidance of

Mr. Bipin Das

Tata Institute of Social Sciences

Tuljapur 2014- 2016

INTRODUCTION

In the duration of this research project and the time I spent on it, there have been some ideas and threads that have
come more and more forward to my understanding and consciousness. One of the basic goals of picking this topic
for me was to look at the current economic situation and see if a re-alignment with a more ideological place that
performed well at a point could still assist in the sustainability of handicrafts.

The inspiration for my research topic is Ganga Ram, a Tomar Rajput and a resident of Delhi who still makes the
exquisite cane furniture. It is a beauty to watch him at work but he may as well be the craft’s last sentinel in the area.
He belongs to a family of renowned furniture makers but his two sons drive cars for Uber. The man says there is no
money left in the craft anymore; it is difficult to sustain a family.

Like Ganga Ram millions of artisans across the country face difficulty in practicing their art at every junction. From
procurement of raw materials to finding costumers, they face walls everywhere. For instance the 9.8 lakh (1981
census) potters are finding it increasingly difficult to procure clay. Sources of clay are usually present near water-
points and are being encroached upon everywhere for cultivation or housing.

Craft persons are also increasingly being alienated from their raw materials. Artisans are located in one region, while
the raw materials they use are in another. For instance, the teak wood used by Rajasthani wood artisans in Bikaner
get it from Maharashtra or Madhya Pradesh while the main market for their goods is in big cities like Bombay, Delhi
or Bangalore. The direct consequence of this is the proliferation of middlemen.

Across the globe millions of people work in the informal sector that requires knowledge of traditional skills and
knowledge, of which a big number have found employment for themselves by producing traditional handicrafts. The
crafts sector in India provides prospects of employment to more than 330 million people. The lack of knowledge and
the lack of access to means of enhancing quality and productivity are the major obstructions in the Handicrafts
sector in India. Areas such as safety, skill development, technical improvement, design and form and, market
development need attention to bring forth a change in the traditional handicrafts sector. The biggest evil seems to be
the lack of education and awareness among artisans as well as consumers of the craft. Efforts are being made by
researches and agencies to revive traditional crafts but getting to the root and initiating any innovative or creative
change in this environment would require methodological and conscious intervention. It would only be successful if
the artisans themselves are ready to accept a change of any sort, the want for which can only come from within.
Artisans cannot be forced to change their methods according to us without an acceptance of it from them.

Introduction to Handicrafts

Handicrafts can be described as unique expressions showcasing a culture or community. According to its buyers,
they are significant to the area in which they are produced because they represent the culture and tradition of that
particular area.

Even though the Handicrafts industry constitutes a very small portion of Indian exports, India still makes up to be
one of the important countries supplying handicrafts to the world market. This Industry still has a major role in
India’s economy and is a major form of employment for a sizeable portion of India’s population. This sector makes
up the largest decentralized and unorganized sector in India, only after agriculture. It is a highly labour intensive
cottage based industry and is spread all over the country. Artisans work full time as well as on a part-time basis
depending on the nature of their work. Currently the industry provides employment to over seven million artisans, of
which women and people belonging to the weaker sections of the society form a large part.

While Indian handicrafts are doing very well in the export market, the artisans are not the ones reveling in the
benefits. It is the middle men who absorb most, if not all, of the profit. The total export of handicrafts is
 expected to nearly double to US$ 2.7 billion in FY 2015-16 and further increase to US$ 3.8 billion by FY
2020-21 (ASSOCHAM, 2015).

Types of Handicrafts:

There are about 3600 handicraft items produced in the country. These use a diverse range of raw materials in
different parts of the country. These crafts can be divided into four groups based on their development potential,
which is as follows:

1. Crafts with high development potential

2. Development potential in declining trend

3. Languishing Craft

4. Newly emerged craft

Crafts with Development Languishing Craft Newly Emerged

Development potential in Crafts
Potential Declining Trend

1 Stone Craving 1 Wooden Painted 1 Horn Work 1 Coconut Shell

Toys

2 Brass and Bell 2 Artictic footwear 2 Lacquer work 2 Starw craft

Metal

3 Dhokra casting 3 Batik Printing 3 Solapith 3 Soft toys

4 Silver Filigree 4 Cloth Flower 4 Clay toys 4 Artificial bonsai

5 Cane and Bamboo 5 Durry Carpet 5 Theatrical dress 5 Carpet weaving

6 Applique and 6 Embroidery 6 Paddy craft

patchwork

7 Pottery and 7 Gopa Craft 7

Terracotta

8 Wood Carving 8 Metal Craft 8

9 Palm-leaf 9 Paper Mache 9

engraving

1 Art Textiles (Fie 1 Leather art

0 and Dye) 0

11 Tribal Jewellery 11

1 Fiber Craft 1
2 2
 1 Coir Craft 1
3 3

1 Costume Jewellery 1
4 4

1 Gem stone 1
5 Processing 5

1 Golden grass 1
6 6

1 Patta and Tasar

7 painting

1 Jute craft
8

Review of Literature:

Considering the importance of handicrafts in the Indian economy and society, various aspects of handicrafts, such
as, sociological, technical, economic, cultural and aesthetic have been studied by a number of academicians.
However, studies in the different aspects of handicrafts in the Delhi region were limited. In the present context, the
handicraft industry and its changing conditions call for a fresher look. Before my humble attempt at accomplishing
the same I have collated a review of the existing literature.

Handicrafts such as woven fabrics, pottery, stonework etc reached almost their perfection and glory during the
Mughal period. But during the British period, the growth of mass produced goods was given the utmost importance
which caused a decline of the Indian Handicrafts. Keeping in mind the economic, social, political and, cultural role
this sector plays, the importance of handicrafts was felt in the post-independence era and the industry started to
revive again.

Indian Handicrafts are admired all over the world for their incomparable and colorful handicrafts. Both men and
women contribute to the production of handicrafts and about 77 per cent of them are self-employed wage earners.

(Bhushan, 2014). The tough competition they get from machine made low cost substitutes, leading to a decrease in
demand since globalization. Even though handicrafts is an important contributor to foreign exchange earnings with
them hitting USD 400 million in 2015; artisans rarely have direct contact with the end market and often sell to
middle men at meager prices. Since it is a labour intensive sector, it reduces unemployment and the wages reaped in
this sector are much more than in agriculture and its allied sector. India’s share in the world Handicraft market is a
low 2 per cent, while China’s is 17 per cent. A recent EXIM study suggests that this sector should be given an
industry status so that a modern segment emerges to deal with global competition.

In his book “Marketing of Handicrafts” Rao, (1990) observes that Handicrafts offer a solution to India’s problems of
unemployment and foreign exchange crunch.
Arindam,(2010) talks about the importance of the handicrafts industry in India’s economic development. It plays a
major role in reinforcing cultural identity and preserving heritage while also contributing to the overall development
by creating jobs, promoting exports and creating a livelihood for artisans in the country.

A number of studies have been made in India and abroad to assess the impact of many of the incentive programs for
artisans where the role of several institutions has been assessed. In India, “There are literally millions of people
possessing traditional skills and knowledge of traditional techniques, more or less making a living producing
handcrafted goods”. (Liebl and Roy, 2000)

According to SS Solanki (2008) the R&D is conducted as per the convenience of the researchers and not as per the
needs of the artisans. Further to this are problems of inappropriate and unorganized markets, inelastic output, lack of
timely and qualitative input supplies, high input prices, inappropriate pricing, stiff competition from organized and
big industries, lack of innovation and poor trade practices. Coupled together all this has led to the disappearance of
traditional non-farm activities across many parts of India.

Generally craftspeople are divided into the following classifications: the fully self-employed artisan, the skilled
master craftsman, the wage-worker, and the part-time artisan. The distinctions between more and less-skilled
artisans are further noticeable in the rigid hierarchical division of labor. According to Jaya Jaitley’s book
Vishkarma’s children, 2001 37 per cent artisans are wage earners while a majority of them or 63 per cent are self-
employed. In this sector, traditionally the knowledge and skills are passed down from one generation to the other
which ensures the involvement of whole family and community in the production process. As many as 71 per cent
artisans work in family units and 76 per cent have the required skills due to family traditions.

An article by Preethi Chamikutty (2013) points at how the crafts value-chain is extremely fragmented. She points at
lack of an enabling environment , low productivity, information asymmetry and inadequate inputs being the main
reasons for the current disarray in the Indian handicrafts Industry.

According to a study conducted by NIDAN there is neglect and ignorance in using of Indian traditional products
such as weaving of sari or shawl or kullhar for drinking tea. The idea has been changed in living style of Western
countries. The study explores the vast potential this sector has to generate self-employment, which is not widely
known and quantified. The poor women, who remain at home and are unemployed, can be trained in this field, so
that their economic standard is strengthened. The artisan work can be encouraged among unemployed men and
women of urban area so that government and public institution take initiative to explore marketing in the state as
well outside.

Carolyn Jongeward (2013) in her study mentions that at present the world’s artisans are in vast numbers who have
been tragically left behind in the pursuit of global economic development. This sector requires the advocacy of the
government for flourishing and enhancing its product in the market. The artisan work should receive proper
recognition in the society. There are lots of institutions for promoting modern design and it has been the career and
profession for modern age of people. It is the time for the government to recognize and raise similar type of
technical training to encourage for self-employment of artisan who has been involved in their life to survive and
beatify the world through natural products.

METHODOLOGY
Area of study:
Delhi is a national capital of India is located at 28.61°N 77.23°E, and lies in Northern India. It
shares border with Haryana on three sides i.e. north, west and south, whereas it shares border
with Uttar Pradesh at east side. It has a total area of 1483 Sq. Km with a length of 51.9
kilometers and width of 48.48 Kilometers. In total, Delhi has eleven districts with the total
population 167.88 million, out of which 163.70 million is Urban Population and 4.18 million is
Rural Population, which ranks as second highest population in metropolitan cities (Census 2011).
Thus, 98 % of the population in Delhi lives in urban area and 2% of the population lives in rural
area. The process of rapid urbanization has been seen in Delhi with a growth of 20.44% from
2001 to 2011 and 0.81 lakh migrated people from neighbouring states like Uttar Pradesh,
Haryana, Punjab, Rajasthan etc. The density of population is 11320 per sq. km, which is highest
in the country. The sex ratio of the Capital is 868 and literacy rate is 86.2%. Majority of the
population speaks Hindi and Punjabi language. On the basis of NSSO, 61st Round (June 2004-
July 2005), the poverty line for rural and urban Delhi was estimated at rupees 410.38 and rupees
612.91 as against the national level of rupees 356.30 and rupees 538.60 for rural and urban India
respectively. About 16.96 lakhs people in Delhi falls under Below Poverty Line, which accounts
to be 9.91 percent of total population of the capital. The inward migration has increased the
population in the capital and thus, it capital’s development is suffering from various set-backs or
problems like shortage of dwelling units, mushrooming growth of Jhuggies, more encroachment
of public land, expansion of unauthorized colonies and creation of slums etc. This pace of
urbanization is creating a number of problems in the process of proper development of the city.
The hinterland rural area is shrinking and resulting in urbanization of rural villages. The number
of shelter-less persons also poses a problem to this Govt., resulting in encroachment of public
land and the sites earmarked for various developmental projects. The expansion of jhuggie and
unauthorized colonies are building pressure on civic services and creating major bottlenecks in
the proper development of this Mega City.
The research would be conducted on artisans living in Delhi NCR region.
Particularly in:

1. Bharat Nagar: A colony given by the government to the weavers

2. Panchkuian: A dying market of cane products

3. Chhattarpur: A newly migrated group of artisans specializing in Jodhpur

style furniture

1. Stratified random sampling-

60 samples had been taken randomly from the three crafts who were each a part of different
organizational structures (co=operatives, joint family business, partnerships, sole-
proprietorship etc)
2. Open-Ended Questionnaire-
Open ended questionnaire has been used for the artisans in order to understand the depth of
situation and lengthy responses where they can express and share their views freely.
3. Focus Group Discussion
Focus Group Discussion with the artisans was done based on similar area of work. The
objective of focus group discussion was to gain the better understanding about the issues like
employment, housing, food, health etc. and to know the aspirations as well as solution of the
problem according to them.
4. Case study
 Case studies of slum dwellers were done where they share their experience by providing
more realistic responses which makes a research more evident and rich in nature. Three case
studies based on different occupation and situation, have been written in this research work in
order to know the problem of people living in slum as well as how they deal with the
problems.

Objectives:

1. Explore the kind of initiatives, interventions, commercial linkages and trade networks
that can improve artisan livelihood and make it sustainable.

2. The relative magnitude of the problems/constrains that effect handicraft export oriented firms in
India

SWOT Analysis:

Strengths • India has an edge over other countries because of availability of cheap and
abundant labour and low capital investment

• The raw material base in India is strong for silk, jute and cotton

• Indian Handicrafts have an aesthetic and functional advantage over their

competitors.

• The growing middle class is a potential market for this sector

• The new CSR laws can be used to the advantage of the craft sector.

Weaknesses • The main challenges of this sector are low wages, poor working conditions, unsafe
work environments and poor infrastructure.

• The growth of the sector is blocked as it is highly unorganized and informal while
also being labour intensive with low mechanization

• The demand for handicraft products is mostly seasonal, for example it is high
during festive seasons

• Heavy dependence on traders and lack of direct communication with retailers and
wholesalers.

• Inability to meet strict international standards in terms of quality and design.

Opportunities • The domestic market due to the high GDP and per capita income growth

• Emerging markets in Latin America for exports

• Demand and effectiveness of work can be increased by using the latest

technologies to connect the customer and artisan. It will also make it easier to
 check prices and design of items.

• Increased tourism provides a market

• Increased spending by the Government

• Growing demand for Eco-friendly products

Threats • Competitors like China that have a more effective Value Chain. Sri Lanka and
Bangladesh are tough competitors as well.

• Slowing of the EU economy as it is one of the largest markets.

• Lack of infrastructure – transport facilities, shortage of power.

• Improper management of this sector and inflation which will lead to higher prices
of raw materials.

• Artisans find it challenging to meet the ever changing consumer demands.

• Due to these problems, artisans do not encourage their children to join this sector.

Chapter 1

Craft as an Industry: Substantive Study

25 years into globalization the attitudes concerning production of goods is changing. In the area of handicrafts and
textiles, while India is busy converting its weaknesses into strengths China is mechanizing itself to imitate Indian
handicraft to encroach upon India’s significant export market. The Handicraft sector consisting of producer, policy-
maker, wholesaler, technician and designer needs to prepare itself for the challenges that lie ahead and begin to look
at itself as a non-industrialized industry. The process of industrialization typically means dominance of machine over
man and of capital over labour, while handicraft is an industry where the machine cannot dominate and the
decentralized structure it disables capitalism in its sphere.

Handicrafts is an industry where people work with largely their hands, taking the help of tools and machines, to
produce goods to be sold for a profit and hence contributing to the national income. It can be further termed as a
decentralized creative industry where the human mind and hand has precedence over the machines they use. While
this makes this industry to a certain extent free of domination and exploitation, there is also a need for it to come out
of the low-end, disorganized and diminishing stupor it has been in. As Jaya Jaitly put it “ Whatever makes the wheels
of the economy turn merits serious attention and not condescending patronage, over-romanticized projection, or
apologetic ‘discount’ support.” (Jaitly, 2006)

The preservation of crafts and skill up gradation was initiated by the government in the 1970’s but the focus shifted
to exports in the later decades. It plays an important role in the country’s economy and gives employment to over 7
million people. Inferring from historical trends, this industry is expected to grow by 16 per cent during 2-13-17 and
by another 16 per cent from 2017-2022. It is expected to grow by 17.79 million by 2022.

Key Characteristics of Work Force:

Household Sector: The activities in this sector are chiefly managed in the organized household sector. It is
recognized as the second-largest sector of rural employment after agriculture.

Geographical Clusters: The main clusters of Handicrafts are located in Arunachal Pradesh, Assam, Mizoram,
Manipur, Delhi, Rajasthan, Meghalaya, Maharashtra, Uttar Pradesh, Gujarat, Madhya Pradesh, Orissa, Kerala, Tamil
Nadu, Bihar, Jharkhand, West Bengal, Jammu and Kashmir, Meghalaya and Tripura.

Composition of work Force: The Handicraft sector mostly comprises of women and artisans from weaker sections of
the society. Out of the total artisans, 47.4 per cent are women, 4.18 per cent from scheduled tribes, 24.16 per cent
from scheduled castes and 22.9 per cent belong to minority groups. Another major reason for low standard of living
and poor marketing skills is the significantly low levels of education among workers. The Handicraft sector is
dominated by women workers, out of which 71 per cent are illiterate.

Regional Imbalances: There are widespread disparities throughout the country with perceivable gaps in production
and sales. The imbalances are more evident from the fact that the north-eastern states are the main contributors to
export while the contribution of others is only marginal.

Programmatic Inefficiencies: Several Programmatic inefficiencies loom over this sector such as, financial aspects,
fund release patterns and eligibility criteria that need evaluating and reviewing at a policy level.

Limited Role of Private Enterprise: Private enterprises are barred to an extend due to limited linkages with the
markets and low capacity to support the project once funding has been stopped.

Value Chain of Handicrafts:

Being labour-intensive and decentralized, the handicraft sector businesses are often managed by families for
processing, casting, buffing, colouring etc. In larger businesses there are separate designing and production teams,
for example FabIndia and Rang Sutra. In some cases, artisans form groups to achieve optimum production levels
and make profit. Setting up of a factory with a master craftsman is another more of production wherein the master
craftsman delegates activities of procurement, enables marketing and distribution and, employs a design team.

Traditionally the raw materials used by artisans were easily available because of the close links between the locally
available material and the growth of craft. Additionally, the barter system adequately supported the supply of goods
and services. But with the increase in the use of man-made material such as plastic, the initial structures began to
break down. As a result the government intervened and started helping by providing raw materials through
Babasaheb Ambedkar Hastshilp Vikas Yojna (AHVY).

Conventionally handicrafts are usually sold at local melas/ haats. Additionally the state Handloom emporiums
provide opportunities of having a market. Trade fairs, exhibitions by Handloom and Handicraft exports corporation
Ltd. and tourism events like the ‘RannUtsav’ in Gujarat or the ‘Maha Kumbh’ in Madhya Pradesh play an important
role in promotion of handicrafts. Nowadays increasingly private businesses and exporters are helping in providing
impetus to this sector and helping in increasing the presence of Indian Handicrafts world-over. Private players now
tie up directly with craftsmen and work, often with mutual benefits.

Institutional Intervention:

Government Program:
Even though most government led programs are criticized we cannot overlook the fact that most of the craft
preservation in India is an effort of government initiatives. Post-independence, rural artisans were paid great
emphasis and the All India Handicrafts Board was set up in 1952 to study financial, organizational, technical and
marketing aspects of craft and take initiatives to develop and improve these crafts. Mahatma Gandhi’s Swadeshi
movement was a great push for the Indian government to make such efforts. But with Industrialization becoming a
main priority post the 1960’s, Handicrafts started being viewed as a “sunset industry’ by the Government and they
began to approach it only with welfare schemes to further preservation instead of treating it as an industry that was
capable of contributing to India’s economic growth.

Currently, crafts are bifurcated into Handlooms and Handicrafts, with two separate Development Commissioners in
charge of each, in addition to sixteen more ministries that give importance to crafts. These different bodies are often
pitted against each other on several issues such as interest of petty traders or greater control for home-based products
and power loom or handloom production; which leads to inefficiencies and policy problems.

Regardless of the challenges there was an investment of Rs. 752 crore into the crafts sector during the 11 th Five Year
Plan(2007-2011). Institutions such as NABARD (National Bank for Agriculture and Rural Development), SIDBI
(Small Industries Development Bank of India), CAPART (Council for the Advancement of People’s Action and
Rural Technology, KVIC (The Khadi and Village Industries Commission) and KBIB are involved in funding and
implementing development work for artisans through the different schemes. Most of the government funds have
been availed in the following areas, tp a great extend with the support of non-profit organizations working in the
same sector:

• Capacity Building: Recently, the government has shifted focus from welfare schemes to sustaible
development of crafts by encouraging artisan participation. They have made several efforts in the form of
Artisan Credit Card and the Baba Saheb Ambedkar Hastship Vikas Yojna led by the Development
Commissioner of Handicrafts. Initiatives encompass skill development, design and, marketing support,
reviving languishing crafts and technological intervention. One famous example is the use of clay pots for
serving water by the Railway Ministry for a while to promote pottery among other things. The
Development Commissioner also runs Weavers Centers in many parts of the country like Bharat Colony
which was one of my areas for study.

• Marketing Linkages: Dilli Haat, an open crafts bazaar in Delhi modeled on a conventional village market
where artisans can rent space and set up their products for upto two weeks at a time, is one of the most
lauded efforts of the Government in the crafts sector. Besides this the Crafts Museum in Delhi is another
great initiative to promote Handicrafts. These together, with many more such initiatives, provide artisans
the much needed market-linkage and access to consumers. In addition, the Development Commissioners
for Handicrafts and Handlooms run retail outlets or emporiums of various crafts all across the country.

• Welfare: Initiatives in the craft sector are often designed to also alleviate large-scale poverty. They provide
Social Security through schemes such as the Janshree Bima Yojana for Handicraft Artisans under which
they receive health and life insurance for themselves and three dependents.

• Awards: Each Year, the Ministry of Textiles gives out highly Coveted awards to several Master
Craftspeople whi enjoy an enhanced reputation post this award and also get aquality approval of sorts.

While all this provides a positive picture for the artisans, the implementation is faulty and does not always
reach the needy. For these programs to reach the desired impact the implementing programs of government
bodies need to be reformed and the policy making should encourage greater participation. Policies also
require greater specialization for various stakeholders to cater to their differing needs. The challenges with
these policies are discussed in later chapters.
Private Sector Initiatives:

95 per cent of crafts production currently takes place through some form of private enterprise. Broadly this
involvement of Private Enterprises can be segregated as follows:

• Design Entrepreneurs: This form of intervention that is now becoming mainstream includes high-end
fashion houses that include traditional crafts in their collections. Designers like Tarun Tahiliani and Ritu
Kumar work closely with master craftsmen to create products for high-end domestic and international
markets. However, their effect on crafts has mostly been indirect as they don’t put crafts at the center of
their enterprise, but rather as a mean to achieve their own goals. But Fashion Designers like Anita Dongre
have created a separate crafts-based collection example Grassroots, that markets the clothing in a way that
promotes the skills and knowledge of traditional artisans, and also make use of traditional raw materials
which are usually organic and eco-friendly.

• Traditional Intermediaries: Conventionally traders, exporters and master craftsmen have aggregated
production, offered financial mechanisms and provided linkages to the artisans. Artisans, who realize little
value of their product, have often been exploited in these relationships.

• Mainstream Retail: There are several successful examples of handicrafts-based businesses, which not only
contribute to improving the living standards of artisans but also have provided a path for future market-
based initiatives. BIBA, W are widely known examples and the e-commerce website “Craftsvilla’ provides
an innovative solution to connect artisans directly to the consumers.

• Social Business: A more recent wave of social enterprises, hybrid models where commercial and social
goals are combined, have come to the forefront. While examples like Industree and Good Earth are well
known, lesser known businesses like Sasha are also working on improving livelihoods.

Multi-lateral Agency and Foundation Support:

Support to the non-profits in the crafts sector has also been provided by the international development community
and private foundations. Agencies of the United Nations such as UNESCO and UNDO provide a platform for
research and documentation. These efforts mostly focus on designing projects that build a framework of a movement
that would strengthen the creative and cultural industries. Organizations like the World Bank provide funding to
different craft organizations. Private foundations like the Ford Foundation, Bill and Melinda Gates Foundation, Sir
Dorab Tata Trust and Aid to Artisans provide long term grants to non-profit organizations to scale their impact.
Friends of Women World Banking’s funding strategy is an innovative solution to provide credit to artisans through
non-profits. Collectively these efforts help create an impact on artisan livelihood by helping in sustaining their work
as well as strengthening non-profit models.

Current contribution of Handicrafts to the Indian Economy

India’s handicraft industry is considered an important cultural and economic asset and the tradition is one of the
most ancient and diverse. The export production of handicrafts is projected to double between 2012 and 2017,
according to the Twelfth Five Year Plan and continue growing at a compound annual interest of 18 per cent during
the same period. (Chamikutty, 2013). Consequently, up to that time, the handicrafts sector will be employing
additional 10 per cent more individuals every year. The UNESCO definition of crafts is “industries which produce
tangible or intangible artistic and creative outputs, and which have a potential for wealth creation and income
generation through the fostering of cultural assets and the production of knowledge-based goods and services.”

This sector comprises of a varying range of activities ranging from painting and zari work to woodwork and
leatherwork, with each group pf artisans have regional specificities and variations. Even now there are thousands of
crafts in India which are categorized into groups like jewellery and related products, silk and other handlooms,
leather work, musical instruments etc. Collectively Indian Handicrafts and Handlooms play a very important role in
the Indian economy. As per the Twelfth Fifth Year Plan these two sectors combined are an Rs. 24,300 crore
(USD4.48 billion) industry contributing Rs. 10,000 crore (USD1.85 billion) to India’s export earnings of Rs. 1.62
lakh crore (USD 300 billion). The problem lies in the fact that even after such major contributions the artisans are
languishing and are struggling to earn their daily bread.

Generally craftspeople are divided into the following classifications: the fully self-employed artisan, the skilled
master craftsman, the wage-worker, and the part-time artisan. The distinctions between more and less-skilled
artisans are further noticeable in the rigid hierarchical division of labor. According to Jaya Jaitley’s book
Vishkarma’s children, 2001 37 per cent artisans are wage earners while a majority of them or 63 per cent are self-
employed. In this sector, traditionally the knowledge and skills are passed down from one generation to the other
which ensures the involvement of whole family and community in the production process. As many as 71 per cent
artisans work in family units and 76 per cent have the required skills due to family traditions. 1

According to one study only 9 oer cent of artisans profited from working in formalized settings, while 42 per cent
work from homes. A majority of craftspeople work in informal work settings and most units tend to be micro
enterprises. It was seen that almost 39 per cent artisans incur production expenditures of less than Rs. 12,000 (USD
215) a year and about 19 per cent spend above Rs. 50,000(USD 900) per year. Usually their products are sold to a
range of markets that include the local markets, city markets, private agents, retail traders or wholesalers and,
exporters.

Indian Handicrafts are admired all over the world for their incomparable and colorful handicrafts. Both men and
women contribute to the production of handicrafts and about 77 per cent of them are self-employed wage earners.

(Bhushan, 2014). The tough competition they get from machine made low cost substitutes, leading to a decrease in
demand since globalization. Even though handicrafts is an important contributor to foreign exchange earnings with
them hitting USD 400 million in 2015; artisans rarely have direct contact with the end market and often sell to
middle men at meager prices. Since it is a labour intensive sector, it reduces unemployment and the wages reaped in
this sector are much more than in agriculture and its allied sector. India’s share in the world Handicraft market is a
low 2 per cent, while China’s is 17 per cent. A recent EXIM study suggests that this sector should be given an
industry status so that a modern segment emerges to deal with global competition.

Chapter 2

Data Analysis: Challenges

Despite the examples of well-known successful business houses of handmade products such as FabIndia and
Mother Earth, most of the Handicraft production remains unorganized and informal with its full market potential
untapped, specially by the craftsmen, who often have a daily struggle for sustenance. Due to a loss of markets to
machine made low cost products, declining skills as their children do not want to take up the trade and a difficulty in

1 It is important to note here that the official figures mostly account only for the head
of the production unit and wage earners in official reports. This leaves out the rest of the
family members who are usually dependent on the craft for livelihood as well and thus are
participants in the production process. Consequently, this gives us an incomplete
understanding of the sector’s size and importance.
understanding the new markets, a large number of artisans have moved to urban centers in search of low paying,
unskilled employment. A UN report suggests a 30 per cent decline in the number of Indian artisans, projecting a
need to re-invest in artisans to preserve the rich Indian history and culture they represent and, also save this
important source of livelihood.

Positive and negative compulsions; like immobility arising out of rigid caste structures disable the artisan from
knowing any other skill is further worsened by lack of other viable economic options. A frame of 62 artisans
including handicraft exporters, daily wage earners and those working for an organization, were interviewed in order
to find out the major problems they face in this industry. The following problems were highlighted and discussed
with the respondents:

• Low/ no demand

• High cost of raw materials

• Lack of access to raw materials

• Licensing problems

• High cost of credit

• Labour regulations

• Obsolete tools and equipment

• High excise

• Poor infrastructure

• Low subsidy

• Policy uncertainty

• Transportation

• Market awareness

• Illiteracy

Lack of market awareness and poor infrastructure were cited to be the prime reasons for India’s low share in the
International Handicraft Market. Buyers interest are also seen to shift to other exporting countries that have better
infrastructure than India this includes less/ no power failures, low cost of power, better transportation facilities,
better quality of roads, improper port facilities etc. Another problem is policy uncertainty and outdated tools and
equipment used by Indian craftsmen. This uncertainty in policy has become a big concern for buyers worldwide.
India’s competitors use updated technology for manufacturing which brings the costs associated with the product
down and thus are favored by buyers in terms of both money and time. Local Transportation becomes the next
problem needed to be looked at by the government to attract more international buyers. Other export related
problems are the high cost of credit, lack of access to raw materials, income tax, excise duty, labour regulations and
internet connectivity. Exports are also hindered due to low international market awareness, marketing inefficiencies,
weak infrastructure, poor information about upcoming trends in the international market and use of outdated
technology. The marketing functions of other Asian nations like Korea, China, Thailand etc are very strong and also
have a strong foothold in the European Union, USA, Australia etc. Additionally they have built warehouses in the
buyers markets to keep a ready stock for immediate market requirements and often flood the markets with their
products which gives them an upper hand.

The findings of the study are analyzed and illustrated below:

Age:

The age of an individual often determines their exposure, maturity and individuality. The following table reveals the
age of respondents where a large number of respondents (27 respondents or 45 per cent) are found to be in the age
group 41-50 years. Over 31.6 per cent are found to be in the age group of 31 – 40 years. While there were none
above the age of 60, there were 11.66 per cent in the age group of 21 – 30 and 51 – 60 respectively. A majority of all
crafts is found to be in the above age group.

Table 1: Age of Respondents

Age Range Weaving Woodwork Cane Total

21-30 Nil 3 4 7
31-40 6 8 5 19
41-50 9 8 10 27
51-60 5 1 1 7
Above 60 nil nil nil Nil
Total 20 20 20 60

Monthly Income:

The status and standard of living of a person is determined through their income. Table 2 shows the income of the
respondents. The monthly income of the respondents ranged from between Rs.4000 – Rs.15,000. Over 13
respondents or 21 per cent have monthly income between Rs.8000 – Rs.10,000. 10 respondents have their income
about Rs.12,000 while the rest are all below. Out of the 10, 8 belong to families with 6-8 dependents and where most
of the family members are part of the production process. Craft-wise, over 9 0 per cent of respondents (18
respondents) in weaving have less than Rs.10,000 while the opposite is true for woodwork (15 respondents over
Rs.8000).

Table 2: Annual Income of Respondents

Annual Income Weaving Woodwork Cane Total

6001 - Below 4 2 3 10
 6001 - 8000 6 3 5 14

8001 - 10000 4 3 6 13

100001 - 12000 4 7 3 13

12001 - above 2 5 3 10

Total 20 20 20 60

Number of Dependents:

Wives, sons, daughters, brothers, sisters, old persons and other relatives etc who do not have an independent source
of income are considered to be dependents. The financial burden on the artisan is determined by the number of
dependents in the family. Table 3 reveals that out of 60 respondents 28 or 46.6 per cent have 4 to 6 dependents. 43.3
percent or 26 respondents have three or less dependents. Only 10 per cent or 6 respondents have seven or more
dependents.

Table 3: Number of dependents on respondents

Number of
Dependents Weaving Woodwork Cane Total
3 and below 9 8 9 26
4–6 8 12 8 28
7 and above 4 1 1 6
Total 20 20 20 60

Hereditary Prospects:

Traditionally, the artistic skill required for Handicraft is passed from one generation to the other, from parents to
children or teacher to student. The respondent’s preference to keep their children in Handicrafts or the willingness of
their children to continue their art is presented in Table 5. Out Of the 60 respondents 49 or 76.6 per cent of
respondents do not want their children to continue with the art. Out of the 18.3 per cent of total respondents who
would like their children to pursue the art, 54.5 per cent belong to woodwork where the income level is
comparatively high. The 2 respondents or 18.2 per cent weavers who’d like their children to continue were master
craftsman and again had a steady income and a scope for increase with better education, the same is the case with
the three respondents from Cane work who preferred to keep their children in the craft. Conventionally, children of
artisans are exposed to the craft since their childhood, but in the case of the respondents who said no most had
ensured that their children do not enter the field at all which translated into the children not learning the skills and
techniques at all.

Table 4: Respondents Preferences to keep their children in Handicraft

Preference Weaving Woodwork Cane Total

Yes 2 6 3 11
No 18 14 17 49
 Total 20 20 20 60

1. Organization

To understand the problems faced by artisans, understanding the organizational structure they are a part of is very
important. Depending on the kind of organization, problems faced can be affected by master craftsman, dealer and
co-operative societies also, things like involvement of family members and hired workers, the number of hours the
artisan works in a day etc need to be dealt with accordingly. As a process, organization includes elements like
division of work, identifying different jobs or tasks necessary to achieve the goals of the organization etc. It
basically facilitates management and administration. Different types of enterprises carry out business activities in
India at present.

Types of Organization:

An attempt was made to understand the of organizations of different handicraft units under observation. Table 6
shows the different forms of organizations. Out of the total 60 respondents, majority of them (20 or 33.3per cent)
have sole proprietorship form of enterprise. 18 or 30 per cent are part of a factory setup. From the rest 16 percent or
10 respondents are part of a Joint Family form of organization and 18 respondents or 28.8 per cent are in a
partnership.

Craft-wise a majority (65 percent or 13 respondents) of weavers were part of a factory setup, while the rest are either
a part of a partnership or a sole proprietorship. On the other hand no cane craftsperson was part of a factory setup
and majority of them (45 per cent) had a sole proprietorship form of organization. Very few members seemed to be
working in a Joint Family Organization.

Table 5: Form of Organization

Form of
Organization Weaving Woodwork Cane Total
Sole Proprietorship 4 7 9 20
Joint Family Nil 3 7 10
Partnership 3 5 4 12
Factory Setup 13 5 Nil 18
Total 20 20 20 60

Dependence of Craftsmen on others:

Several times craftsmen depend on dealer, master craftsman or societies for raw material or market linkages. Table 7
shows that a majority of respondents (22 or 35.2 per cent) work for dealers, while 22.4 per cent or 14 respondents
work independently. Further, 20.8 per cent or 13 respondents depend on Master craftsman and 11 respondents or
17.6 per cent respondents work for co-operatives. Out of the 17.6 per cent working for co-operative societies, 100
per cent are weavers.

Table 6: Dependent of Craftsmen on others

Tota
Dependence Weaving Woodwork Cane l
Independent(Self) 1 2 11 14
 Working for Master
Craftsman 5 6 2 13
Working for Dealers 3 12 7 22
Working for Co-operatives 11 Nil Nil 11
Total 20 20 20 60

Problems with Master Craftsmen:

Artisans often depend on their organizations, master craftsmen, dealers and co-operative societies for raw material
and marketing, the few working independently overcome these problems themselves. But some of these problems
are identified in the following table. As we can see as many as 19 respondents out of the total 60 (30.4 per cent) face
the problem of irregular payments where the intermediaries, master craftsman or even the customer do not pay on
time. Since most of these craftsmen are living a hand-to-mouth existence, this is a cause of problem for them. 16
artisans complained of irregular orders while 13 or 20.8 per cent face rejection of orders which again creates a
deficit and a severe imbalance in their life due to the money already invested in the order.

Table 7: Problems faced by Artisans

Problems faced by Artisans Weaving Woodwork Cane Total

Irregular Orders Nil 7 9 16
Irregular Payments 9 8 2 19
Rejection of orders 5 6 2 13
`

2. Lack of access to Credit and Loan Facilities

Loans and Advances:

Just like other business organizations, handicraft industry needs short and long-term finances. Loans and advances
are often taken to fulfill these needs of purchase of machinery tools, lands and buildings and improvement of
existing capital assets. These loans and advances are taken from different sources based on need, convenience and
availability. The sources of loans and advances that seemed to be most common were identified to be the Master
Craftsman, moneylender, friends, relatives and, commercial banks and are given in table 9. As many as 52 (83.2 per
cent) respondents out of the 60 that were interviewed had taken an advance or a loan. As we can see from the table
below, 17 or 32 per cent have taken a loan from friends and relatives and only 12 or 23 per cent have taken a loan
from commercial banks While 11 or 21 per cent raise money from money lenders and the rest borrow from Money
lenders.

Table 8: Sources of Loan and advances

Source Weaving Woodwork Cane Total

Master Craftsman 6 5 Nil 11
Co-operative Society Nil Nil Nil 0
Commercial Banks 2 3 7 12
Money Lender 2 3 6 11
Friends/ relatives 5 6 6 17
 Total 16 17 19 52

Amount of Loans and Advances:

The income of a person decides their expenditure, the number of dependents and social factors further decrease the
personal expenditure capacity. For extravagant personal expenditures like marriages, education, social ceremonies
and celebrations, the respondents often have had to raise loans from different sources. The actual amount of loans
and advances taken by respondents actually varies between Rs. 5,000 to 55,000. But, for convenience sake, the class
intervals were fixed from less than 10,000 to more than 40,000. As shown in the table. About 9 (17.3 per cent)
respondents have borrowed below 10,000 and 13 respondents (25 per cent) have borrowed between 10,000 to
20,000. 8 respondents (15.2 per cent) have borrowed from between Rs. 20,000 to 30,000, 10 respondents or 19 per
cent have borrowed from between Rs. 30,000 to 40,000 and 22.8 per cent or 12 respondents have borrowed Rs.
40,000 or above.

Craft-wise it was seen that cane workers mostly took loans to purchase raw material and as many as 38.9 per cent or
7 respondents out of 18 had taken loans to purchase raw materials. These 7 also consist of the artisans who took the
smallest loan of Rs.5000 for the same reason. On the other hand, the same number of respondents from the weaving
community took loans for personal reasons like education of children or social ceremonies. The highest amount of
loan taken in one go was taken by a woodwork artisan who took a loan of Rs. 55,000 for his daughter’s marriage.

Table 9: Amount of Loans and Advances

Loan Amount Weaving Woodwork Cane Total

10,000 and below 2 Nil 7 9
10,001 - 20,000 3 6 4 13
20,001 - 30,000 4 2 2 8
30,001 – 40,000 2 5 3 10
40,001 and above 7 3 2 12
Total 18 16 18 52

Purpose of loans and advances:

Artisans need to raise a loan for various reasons like purchasing raw material, purchase of tools and equipment, for
craft development, children’s education, sudden expenses for health etc and other personal requirements. Table 10
talks about the reasons artisans require to raise loans. We can see from the table that none of the artisans take a loan
for quality and norm compliance which is due to several reasons. Firstly, most of them don’t know these rules exist
and secondly, the ones that do know do not feel the need to abide them. Majority of the loans (16 respondents or
30.4 per cent) are taken for personal reasons which include children’s education, marriage, social ceremony and
medical expenses. 12 respondents or 22.8 per cent utilize it for technological upgradation, while 11 or 20.9 per cent
use it to meet sudden large order which requires additional raw material and more people. 13 respondents or 24.7 per
cent require a loan to purchase raw material. The reason very few weavers require raw material is because very few
work independently and the master craftsman or the dealer they are working for ensure that they have sufficient raw
material.

Table 10: Purpose of Loans and Advances

 Purpose Weaving Woodwork Cane Total
Purchase of raw material 2 4 7 13
Technological upgradation 4 5 3 12
Quality and norm compliance Nil Nil Nil 0

Sudden demand for large orders/

sub-contracting compliances
3 3 5 11
Other (Specify) 7 5 4 16
Total 16 17 19 52

Problems of Craftsman in raising Loans:

Procurement of loans isn’t easy for artisans since most of them face problems providing security, following rigid
procedures or of getting an inadequate amount. They face various problems while raising these loans and thus, an
attempt was made to identify these problems. While 8 respondents out of the total 60 did not face any problem and
had an understanding with their master craftsman or friends/ relatives regarding monetary help when in need; the
rest of the respondents needed more help. Table 11 shows the problems artisans face to raise loans and advances. 21
artisans face an inability to provide security to keep against a monetary loan. The problems of rigid procedures and
formalities have been expressed by 18 respondents for formal loans from banks or co-operatives. 5 respondents also
complained of negligent attitude from bank employees making it even more difficult for them to fulfill the
requirements while 12 complained of inadequate loan amount. 15 complained of exploitation at the hands of money-
lenders, master craftsman, friends and, relatives and 11 complained of high interest rates specially while borrowing
from informal sources.

Table 11: Problems in Raising Loans and advances

Co-
Master operative Money
Problems Craftsman Dealer Society Lender Bank Total
Inability to Provide Security Nil Nil Nil Nil 21 21
High Interest Rates 3 3 Nil 5 3 11
Exploitation 2 8 Nil 5 Nil 15
Rigid Procedures and
Formalities Nil Nil Nil Nil 18 18
Inadequate Loan Amount Nil Nil Nil Nil 12 12
Negligent Attitude of Bank
Employees Nil Nil Nil Nil 5 5
Total 5 11 Nil 10 38 64

3. Fragmented Value Chain:

One of the biggest challenges of this industry is the fragmented Value Chain. An attempt was also made to study the
craft value chain and the challenges faced by craftspeople through all the stages. It was aimed to understand each
stage in the handicraft production from producers to markets and, inputs required at each stage. However, it is
important to keep in mind that each craft has a slightly different set of processes though it was also seen that several
problems were common to all, regardless of craft. Since it is still largely an unorganized sector, it faces problems
such as shortage of professional infrastructure such as storage space, packaging facilities, shipping, and
transportation and, work sheds.

a. Low Productivity: Handicraft sector has an informal structure and the low education of most artisans leads
to a low productivity. This has been further described below:

• Low Education: In several crafts the entire household participates in the production process in some
capacity. Often it is also an additional source of income for agricultural households. These two reasons lead
to children missing school leading to an overall low level education. The deficiency in education makes it
challenging to manage inventory, access government schemes, bargain with middlemen and, gain market
information. According to a World Bank Report titled “Handmade in India” published by EPW (Economic
and Political Weekly) 2003, 50 per cent of heads of households of handicraft producing families had no
education at all, and the rate of illiteracy was as high as 90 per cent among women. According to the
survey, as many as 43 respondents (68.8 per cent) had no education or less than 10 th grade. These craftsmen
face many problems due to their lack of education at every stage of the value chain.

• Outdated Production Methods: Often artisans lack the financial means to upgrade their tools or the
technology they use for production, or undergo necessary training to upgrade their skill on a regular basis.
These are things that would available to them in a formal work environment and these compromise the
quality of goods produced and additionally raises the cost of production. 30 or 50 percent respondents of
the total 60 felt a dearth of upgradation of technology and skill at the time of being interviewed and, would
have preferred to have better means to upgrade their tools.

b. Inadequate Inputs: There are three main reasons for this issue which are:

• Lack of Quality Raw Material: Traditionally, the raw materials that artisans used were widely available
because of the close linkages between the development of the crafts and locally accessible materials.
Moreover, the pre-existing jajmani system, which comprised of a mutual relationship between artisans and
the village community at large for the supply of goods and services, provided artisans with sufficient
material and resources for their craft. The collapse of these traditional structures along with increased
competition from organized industry made it progressively difficult for artisans to buy raw materials at
affordable prices. In industrialized cities the fight is worse as artisans have to fight with big companies for
raw materials through government sources. They are often forced to buy from local traders who provide
them the required raw materials against orders, at exorbitantly high prices, or this forces them to switch to
non-traditional materials. As can be seen from the below table as many as 29 artisans of the total 60 (46.4.4
per cent) find it difficult to procure raw material due to the above mentioned reasons. Craft wise cane
workers are the worst off as 45.8 per cent find it difficult to get access to raw materials, mostly because
cane is imported from different states.
• Lack of Funding: Artisans suffer majorly due to lack of working capital and access to credit loan facilities.
As explained in Section 2 “Lack of access to Credit and Loan Facilities”. Banks show poor recovery rates,
incorrect use of funds, dearth of marketing facilities for finished products and lack of education on part of
the borrower as reasons for low proportion of loans made to artisans. This often forces artisans to turn to
moneylenders, traders and master craftsmen who charge them high interest rates. An All India Debt and
Investment Survey (2002) showed that the proportion of money borrowed by rural households from money
lenders rose by over 10 per cent from 17.5 per cent in 1991 to 29.6 per cent in 2002.

• Design Inputs: In earlier societies design evolved from the interaction between artisans and consumers.
Moreover, the artisan was usually aware of the socio-cultural setting of the customer, and hence designed
products accordingly. Artisans now have a difficulty in understanding how to tailor their products due to the
break-down of this system where they more often than not do not interact with their consumer and hence,
are not up-to-date with contemporary wants and tastes. Progressive industrialization and urbanization
further adds to the problem of the artisan and find it increasingly difficult to interact with their consumers.
An example of SEWA’s craft cooperatives can be cited here where the women design block printed table
napkins and mats but have never used these products themselves. As the table below shows, 35 respondents
(54.4 per cent) feel the need to upgrade their knowledge and switch from traditional designs. Their products
are often rejected for not being up-to-date. Artisans who weave or do woodwork feel the need for design
less as they often produce only on orders, while in the craft of cane artisans sell ready-made goods.

Table 12: Fragmented Value Chain

Input Weaving Woodwork Cane Total

Education till 10th or less 17 12 14 43
Outdated tools 8 5 17 30
Lack of Raw Materials 8 6 15 29
Design Inputs 8 9 17 34

c. Information Asymmetry: Low education makes it difficult for artisans to identify potential new markets
for their products and also makes it challenging for them to understand and fulfill the requirements to
interact with these markets. This further hampers their understanding of the market prospect of their
products, The variance in prices of their products in different market and access to government schemes
and policies introduced for their welfare.

d. Linkages

• Lack of Market Linkages: The different types of markets for handicrafts are local, retail shops and high-
end or designer or mainstream, exports and exhibition. For most artisans even today local markets are most
 accessible. Domestic and international contemporary markets have increased the demand for ethnic
products but these markets are not directly accessible to the artisan. These chain efficiencies also mean that
the demand for such products is much higher than their supply. Moreover, lack of education, training and
means also creates a wall between them and e-commerce portals. Not being able to access the right kind of
market translates into low sales and low profits as well.

• Dominance of middle-men: Though intermediaries are essential to facilitate effective market linkages,
they often, if not always, exploit craftspeople by paying them only a small portion of their fair wages. This
may be due to ignorance on the part of middlemen about the actual manufacturing costs, or simply due to
their capability to coerce artisans, who don’t have much bargaining power.

• Lack of aggregation: Aggregation comprises of getting together products from decentralized production
units to assist economies of scale in transportation, storage and marketing. Due to the miserable state of
infrastructure and communication in India, aggregating merchandise is a challenge, and leads to many
blockages in the crafts supply chain today. Costumers and retailers, lack incentive to overcome supply-side
issues, which leads to loss of opportunities for artisans to reach markets. At present, the lack of organized
systems to efficiently acquire goods from small producers, and supply them to retailers or wholesalers in
urban areas is great. To make up for the absence of such a system, retailers directly buy from selected
producers which has resulted in a loss of a major percentage of the market for artisans.

e. Lack of enabling environment:

Neglect by central and state governments: This sector is viewed by the government as a sunset industry,
something that is not relevant anymore to India’s technology driven economic growth. Hence, the policies
and schemes for artisans are inclined to have low priority and aren’t executed and assessed properly. Within
the sector, the government’s priority leans towards exports with as much as 70% of the handicraft budget
being utilized to enable export. Additionally, having 17 different ministries from craft ranging from
Ministry of Textiles to Ministry of Women and Children, leads to further confusion and inaction.

Lack of Interest by second generation: Children of artisans are increasingly disinterested in continuing
the practice of their family’s craft for several reasons. Firstly, they have seen their parents struggle to make
ends meet with it and hence, tend to lean towards other trades. Secondly, current school systems do not
integrate any lessons related to crafts or their importance and instead push students towards white collar
office jobs, even if those are lower paying. Children are often embarrassed to pursue the craft or learn it.
Lastly, the family’s caste is strongly associated with the craft they do. This further dissuades youth from
joining the family trade as in many cases, like leatherwork, artisans are ostracized for being lower caste.
Chapter 3: Strategies

We can find instances of the Indian government, non-profit organizations and also the private sector involved in
some way with this industry, but their roles do little good, with low or no specialization and much duplication. On a
policy level a genuine effort is needed to overcome the problems faced by artisans through funding and programs.
Though the condition of most artisans is dismal, we cannot completely disregard the significant role played by the
private sector in uplifting artisans through various market-led initiatives done by high-end fashion designers, retail
chains and a more recent wave of social ventures. Also, non-profits have been working in this space since the 1990’s
and have strived to initiate numerous, some successful, models to support artisans in earning better livelihoods.
Mobilizing the potential in this sector would require creativity, innovations and investments that preserve the
traditional art yet improve this sector and increase the incomes of artisans. The four cornerstones of building artisan
sustainability would be:

a) Nurturing Artisan talent

b) Developing new business approaches

c) Building demand for crafts

d) Encouraging institutional participation

The economic, environmental and societal opportunities that the craft sector provides to India can thus be realized.
This consists of opportunities like, employment and income generation to diverse communities and to people with
different education levels; stop rural to urban migration, can boost economic growth – globally the handicrafts
market it USD400 billion and India’s share is below 2 per cent which shows the potential of a tremendous
opportunity for growth and for a competitive advantage.

Growth of the crafts sector has many advantages some of which are:

• Production Process: Production of handicrafts has a low carbon footprint and it promotes use of locally
available material, natural and organic wherever possible.

• Women Empowerment: The craft sector provides an opportunity of employment and earning for low-
skilled, home-based women who would otherwise not find employment.

• Mobility and Social Harmony: This sector is seen as a prospect for utilizing artisan skill and moving them
away from wag-earning and towards entrepreneurship.

• Opportunity for Self-expression: It can mitigate societal tension by giving an opportunity to marginalized
groups.

• Return to future generations: Improvement of this sector will have a trickle-down effect and benefit future
generations in terms of livelihood, employment, health etc.

Recommending Strategies:
After studying the problems in the value chain of the Indian Handicraft Industry through survey and in-depth
literature review an attempt was made to make recommendations and suggest strategies that could improve the
present condition of artisans.

Indian Government:

Marketing Campaigns, promotions and positioning in Target Markets:

A well—developed and structured marketing campaign for this sector could be an effective method to make give
impetus to the Indian Handicrafts in the target markets. A collabouration of EPCH (Export Promotion Council for
Handicrafts) with ITPO (Indian Trade Promotion Organisation) along with the producers and exporters should plan
the campaign. It should further ideally be supported by the ministry of tourism, banking institutions, shipping
agencies in the exporting countries and, hotel and restaurant associations. Promotional activities should be
scrutinized and carefully selected for target market before implementation. For often Trade Fairs are a common
practice to promote handicrafts but they tend to attract only small-scale retailers who mostly buy from local
wholesalers. The target of these campaigns should be foreign importers, merchandising groups and buying agents
also, specialized people like interior designers or decorators, museum shop managers etc.

Buyer-seller meetings in the buyer country can be more effective but also costly. Several European Import
Promotion offices occasionally sponsor, support or finance events to interact with leading traders and buyers.
Positioning the product in the marketplace is an important element of successful marketing. Exporter, intermediaries
and trade officials should try to promote the better quality products to the higher end of the market. However, it is
important to understand that some products will primarily be sold in retail establishments at lower prices, such as
supermarkets or chain stores, where the primary selling point is price of the product.

Indian Handicrafts are kept in high value due to the ethnicity and Indian heritage associated with it. Handicrafts are
also highly valued due to the labour, creative thought and originality that are put in it. Initiatives like The Craftmark
initiative is an effort of the All India Artisans and Craft Workers Welfare Association (AIACA) to help develop
norms for labeling a product as a craft, increase consumer awareness of craft traditions, ensure sector-wide standards
and quality control. AIACA, under this initiative, endeavors to license a logo for all Crafts-based businesses, NGOs
and co-operatives which helps in marketing of the product in the international market. Similar initiatives that could
provide some kind of insurance, certification and/ or license to the establishment or product promoted by state run
agencies would be highly beneficial.

Inform Foreign Buyers:

A major attraction for foreign buyers is easily available, relevant information about the export offers of the various
handicraft suppliers. The EPCH and ITPO both, for this reason, prepare background papers containing all basic,
economic and commercial data relevant to the Indian Handicrafts sector. The different production centers of various
handicrafts to be exported should be described along with number of producing exporters and factories in each
category. The past successful export sales should be recorded along with latest trends in the market which will also
additionally help Indian crafters to update themselves to produce competitive products.

Collaboration for technical, marketing and financial strength

Promotion of collaboration of companies or exporters in the same product line, by the government, will synergize
their labours and help them benefit mutually. The Indian Handicrafts as a brand will also market better this way.

Adequate Infrastructure:

Indian infrastructure for handicrafts at present is hopelessly inadequate as compared to other exporting nations and
is one of the main reasons for low market share of this sector. Power is one of the main reasons Indian Handicrafts
are highly priced especially when compared to that of China’s; the insufficient supply and high price causing the
problem. India’s power source is high cost thermal power which increases overhead costs of exporters. Switching
power sources to more cost-effective ones like nuclear power or providing electricity at subsidized rates could be the
answer.

Sufficient Raw Materials at reasonable prices:

The Handicraft Value Chain is fragmented at the very beginning as many artisans find the procurement of raw
material difficult. Even though the government has taken several steps to ensure a sufficient supply of raw materials
for production of industrial goods, the same hasn’t been done for handicrafts. Another serious concern is the rising
costs of raw materials which is hazardous to overall sales of handicrafts.

Developing and maintaining of sufficient raw material supplies at a stable price for handicrafts can be done on a
national scale through policies and regulations or at a more local level through cooperatives or formation of buying
groups. Solving the problem locally would be more preferable as then those solutions can be tailored to a
community’s specific needs.

Ensuring Adequate Financing

Unavailability of capital and financial credits is a major constraint in India and expanding handicraft
exports. Exporters, especially emerging exporters often face this problem because they do not know how
to prepare and present a loan application and rarely have collateral acceptable to banks as security against
a loan. Furthermore individual exporters are usually too far removed from the foreign buyers in the
marketing chain to receive a letter of credit enabling them to approach a bank for financing to meet an
export order. Even with support from a financial institution their frequent lack of skills in costing and
pricing can result in a net loss in their operations. They rarely have time to spend on managerial, no
production tasks such as overseeing the financial side of their business. Trade promotion organizations
and other support institutions can take measures to help overcome such problems.

Updated technology

One important reason due to which Indian handicraft exports is low in the international market is that
Indian crafters are not able to match their competitors in terms of tools, techniques and technology. The
Indian craftsmen are using decades’ old technologies in manufacturing the crafts which take much longer
time (as compared to China) and are also not finished in similar terms. The government should bring in
new technology for the craft manufacturers and provide them training to handle the updated tools.
Training Centers and Programs for Artisans

Our findings shows that the shortage of skilled craftsmen highly effect the export order, so in order to
tackle this problem the government should arrange specialized training programs to the manufacturing
artisans. There are either no or very few professional training institutes to the crafts people due to which
there is shortage of skilled persons. The mode of training among the artisans is either the hereditary one
or through unprofessional personal means. Professional training institutes should be developed at each
major cluster of the handicrafts so that skilled artisans should be produced on regular basis.

Formation of Special Economic Zones Special Economic Zones (SEZ)

should be opened in every major production cluster of the handicrafts as special privilege is to be
provided to all the handicraft exporters as is provided in case of other export sectors.

Improved Duty Drawback Scheme

Duty drawback scheme to be made more attractive by the government as it becomes very difficult to
compete with China’s exporters as they have good support from their state in case of low margin high
volume buyers.

Improved Export Guarantee Corporation

The exporter should be provided shield in case of fraud while doing business with a new buyer. The
Indian government has a scheme in form of Export Credit Guarantee Corporation (ECGC) but is not
popular among the handicraft exporters. The government should try to promote its ECGC schemes in a
more better way so that all the exporters are aware of the scheme and feel more secure in case of
insecurity.

Revival of dying Arts and Artisans for the growth of the industry

Formerly the middlemen exploited the artisans leaving them underpaid. In some sectors, the Government
intervened to give the artisans their due and to activate certain dying arts and crafts. However, it is
believed that the artisan is still an exploited lot, earlier it was the middlemen now it is the Government
who takes away the cream. If artisans are given monetary incentives and the price of their ‘art’, they will
be motivated to produce better quality and more innovative goods.

Support during the economic slowdown/recession

The Indian handicraft was highly affected during the economic slowdown/recession due to which there
was an decrease of 22% handicraft trade with the US alone while the overall Indian handicraft trade
contracted by 10% with rest of the world. The negative impact was felt by almost every exporter but the
maximum impact was observed by the small and emerging exporters, leading on the verge of closure of
several small sized exporters and diversification in areas like real estate, equity trading and other new
sources of investment.

As the recession affected each and every exporting nation, the performance of Indian handicraft
competitors like China was not highly affected as the Chinese handicraft exporters were supported by the
government to continue exports. The Chinese government assistance in the areas of subsidy, incentives
and the raw material rates propelled the exporters and ultimately motivating buyers and the ultimate
customers. As the similar recession is once again knocking the door in the western economies once again,
this time encompassing the European Union also, the Indian government should devise schemes in order
to support the Indian handicraft exporters.

2. Strategies to the handicraft Sellers:

Customer Specific Products

The enterprise should keep the customer preference on top priority before manufacturing a product.
Today, the market is driven by customer's choice rather than the seller's. The customer is very clear about
the requirements and indulges into a purchase very consciously and wants the product to be dual purpose,
thus it becomes imperative for the export organization to focus on the customer's need and choices before
manufacturing the product. The world is going to witness an economic slowdown soon as most of the
advanced countries are highly affected due to economic problems, ultimately leading to decrease in the
consumer spending. The exporters should focus on dual purpose handicrafts having utility value so that
the customer is benefited by purchasing a product serving two purposes.

Global Style Products

More products that embrace the global style should be designed to gain access to the growing demand for
contemporary design rather than traditional and have an upper hand. Opportunities for authentic
indigenous handicrafts is presently high and should be taken advantage of.

Engagement of services of professionals

The exporters should hire the services of the professionals in the areas like product design &
development, packaging, merchandising, electroplating instead of available and low priced manpower so
as to meet the expectations of the target customers. Tastes and fashions change at such a rapid pace that it
becomes difficult to keep pace with it. So, in order to offer the customer something unique, various
professionals should be engaged by the exporters in order to get benefited by their skills and at the same
time reap the benefits of attracting customer's attention.

Use of ICT in the supply chain

As witnessed by the profitability in the working of other sectors by the application of Information and
Communication Technology (ICT), similar initiatives should be taken by the handicraft exporters to
implement the ICT in the process of handicraft exports. As the ecommerce is on the increasing trend and
the heavy reliance of the importers on the ICT in the supply chain, the situation demands the adoption of
the technology into the working of the exporters.

ICT can act as a replacement tool for the traditional sampling process of Indian exporters. Presently the
handicraft exporters develop a number of new products as samples which require investment and are also
not certain of getting the order, thereby a loss on the part of exporter. With the help of ICT, an exporter
can produce as many designs which can be customized as per the buyers’ requirements, thereby getting an
order without any initial investment, a method presently adopted by the Chinese in the handicraft
business. Also information related to the sample like sample designs, revised sample designs, etc can be
abruptly exchanged through the technology.

Specialization in the lead product

There is a need for the handicraft exporters to specialize in the one/few lead products so that they can
achieve competence in a particular product category and get benefited in return. Specialization in a single
field gives core competence to the manufacturer, thereby attracting large number of global buyers as
witnessed by few specialized exporters surveyed.

Packaging

Packaging is one of the most important P's of the marketing mix. Packaging should be as per the buyers’
requirements meeting all criteria required for shipment export like transit, climatic conditions, etc. Thus,
the exporters should lay emphasis on choosing a suitable package for the product so that the last elements
of the supply chain are not affected by improper and inconvenient packaging.

Quality and Quality certification

The products manufactured should be of good quality and should be compliant with the various quality
certifications. Constantly upgrade skills and techniques, including detailed handiwork, quality (especially
finishes), product development and customer service to remain competitive, difficult to imitate and
appealing to work with. Investments to reliably deliver modest quantities of unique, high quality goods
destined for higher-end retail stores are advised over those intended to improve the ability to compete
with low-cost, high capacity producers where there is an intense competition from East Asian nations.

Active participation in International fairs

It is necessary for any exporter to participate in International fairs and keep him updated on the
happenings abroad so that he can sense the tastes and requirements of people abroad. International fair
participation is a source of international business development and a source of new buyers, mainly for the
handicraft exporters involved into direct exports.
Explore small and midsized new markets

Instead of focusing on the heavily affected advanced countries only, the Indian exporters should also
explore the top and medium developing countries which are not highly affected by developing the product
marketing mix according to the requirements there.

Branding of handicrafts

It is necessary in today's competitive world to create an image of the product in the minds of the customer
which requires that what you are offering should be different from your competitor's offering which can
be done by branding the product. Indian handicrafts need to be branded at least country wise as Indian
crafts have ethnic and traditional value and true hand based crafts in nature as compared to other machine
made East Asian crafts. The western customers give value to the hand made products and the Indian crafts
can be branded in this way.

Employing the Indian Student Community Abroad for Business Development

India has a large number of students taking higher education from the major handicraft importing
countries like the USA, UK, Germany, France, the Netherlands, Australia, etc. This can be availed as an
opportunity for the small and medium sized handicraft exporters who cannot afford to visit these
countries on a frequent and regular basis. They can liaise with the trying-to-be-self-dependent Indian
students abroad by offering them work in form of business development in their host country, and helping
the students monetarily to meet out their tuition and living expenses. The exporters can target the
students, especially the business management students who are good in communication and presentation
skills and can nominate them as their business executives to the importers/buyers and pay them
accordingly. This can act as a part of social responsibility on the behalf of Indian handicraft exporters for
the student community living abroad, while at the same time, the students can bring in the business for the
handicraft exporters from that particular country. The well performing students can be future
entrepreneurs in the handicraft industry seeing the potential of the foreign market or they can be the
prospective full time employees of the exporter(s).

Conclusion:

Across the globe millions of people work in the informal sector that requires knowledge of traditional skills and
knowledge, of which a big number have found employment for themselves by producing traditional handicrafts. The
crafts sector in India provides prospects of employment to more than 330 million people. The lack of knowledge and
the lack of access to means of enhancing quality and productivity are the major obstructions in the Handicrafts
sector in India. Areas such as safety, skill development, technical improvement, design and form and, market
development need attention to bring forth a change in the traditional handicrafts sector. The biggest evil seems to be
the lack of education and awareness among artisans as well as consumers of the craft. Efforts are being made by
researches and agencies to revive traditional crafts but getting to the root and initiating any innovative or creative
change in this environment would require methodological and conscious intervention. It would only be successful if
the artisans themselves are ready to accept a change of any sort, the want for which can only come from within.
Artisans cannot be forced to change their methods according to us without an acceptance of it from them.

Lack of market awareness and poor infrastructure were cited to be the prime reasons for India’s low share in the
International Handicraft Market. Buyers interest are also seen to shift to other exporting countries that have better
infrastructure than India this includes less/ no power failures, low cost of power, better transportation facilities,
better quality of roads, improper port facilities etc. Another problem is policy uncertainty and outdated tools and
equipment used by Indian craftsmen. This uncertainty in policy has become a big concern for buyers worldwide.
India’s competitors use updated technology for manufacturing which brings the costs associated with the product
down and thus are favored by buyers in terms of both money and time. Local Transportation becomes the next
problem needed to be looked at by the government to attract more international buyers. Other export related
problems are the high cost of credit, lack of access to raw materials, income tax, excise duty, labour regulations and
internet connectivity. Exports are also hindered due to low international market awareness, marketing inefficiencies,
weak infrastructure, poor information about upcoming trends in the international market and use of outdated
technology. The marketing functions of other Asian nations like Korea, China, Thailand etc are very strong and also
have a strong foothold in the European Union, USA, Australia etc. Additionally they have built warehouses in the
buyers markets to keep a ready stock for immediate market requirements and often flood the markets with their
products which gives them an upper hand.

There are several Government Initiatives and schemes that pre-exist to uplift this sector, but only superficially so.
This sector is often seen as a sunset industry, and only patronized by the Government. The implementation and
assessment of these are often tardy as industrialized sectors are given more importance. The lack of effective
policies has resulted in a fragmented value chain, where every step has become a challenge for most artisans.
Rampant illiteracy and lack of education has further added to the deteriorated condition of this sector. Additionally
exploitation of artisans by middlemen, master craftsman and money lenders weakens them financially and makes it
difficult for them to rise. Traditionally crafts is an art passed on from generation to generation but now it provides no
incentive to the present and future generations. The children of the artisans witness the hardships and often do not
want to pursue the craft but want to go for white collar government jobs even if they pay lesser as they offer
stability.

The export side of the sector, though shows us a positive picture. Indian Handicrafts are admired all over the world
for their incomparable and colorful handicrafts. Both men and women contribute to the production of handicrafts
and about 77 per cent of them are self-employed wage earners. (Bhushan, 2014). The tough competition they get

from machine made low cost substitutes, leading to a decrease in demand since globalization. Even though
handicrafts is an important contributor to foreign exchange earnings with them hitting USD 400 million in 2015;
artisans rarely have direct contact with the end market and often sell to middle men at meager prices. Since it is a
labour intensive sector, it reduces unemployment and the wages reaped in this sector are much more than in
agriculture and its allied sector. India’s share in the world Handicraft market is a low 2 per cent, while China’s is 17
per cent. A recent EXIM study suggests that this sector should be given an industry status so that a modern segment
emerges to deal with global competition. The expected increase in the export production of handicrafts gives hope.
Since the craft sector is highly labour intensive, which also means that an increase in production would increase the
number of people employed.

If the Value Chain is focused on and strengthened, through government initiatives and sellers, the Handicraft
Industry will be a major part of India’s export earnings and a good source of livelihood. Even now it is the largest
non-farm sector of India’s rural economy and employs over seven million people who largely consist of women and
people belonging to the weaker sections of the society. Besides government interventions, innovations are necessary
in this field. There are already some good models as mentioned above but they are not enough. The Handicrafts
sector provides emmense potential to strengthen the Indian economy and increase employment.