Role of handicraft in economy and challenges faced

Handicrafts are still today a vibrant aspect of Indian culture and society. Handicraft is rightly described as craft of the  people  and  in  India  it  is  not  just  an industry   as   the   word   is   commonly understood but is the aesthetic expression of the artisans which not only fulfils the  daily  needs  of  the  people  but also satisfies their aesthetic desire. Crafts have been interwoven with the culture of the people in India from the beginning of human history. Crafts have been an integral part of daily life in villages, towns, courts and religious establishments. There     are     approximately     70     lakh handicraft artisans in the country, which includes  20  lakh  artisans  related  to  the carpet  sector,  practicing  more  than  500 types of crafts.

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Role of Handicrafts in Indian Economy:

• The Handicrafts Sector plays a significant & important role in the country’s economy.
• Textiles and handicrafts have been a key source of employment.
• As per the latest available Annual Survey of Industries  data,  number  of  persons employed  in  the  organized  Textile  and Wearing    Apparel    Sector    is    around 26,48,238  in  2015-16  and  26,91,280  in 2016-17.
• Further the   handloom   sector   provides direct  and  indirect  employment  to  43 lakh  weavers  and  allied    There are 68.86 lakh handicraft artisans.
• The handloom   and   handicrafts   sector together     provide     about     111     lakh employment both in the organized and unorganized sector.
• Textile and apparel exports have been reported at around USD 39 -40 bn in the last four years.
• As per  trade  data,  exports  have  been reported at USD 26.63 bn during April to December  2018  which  is  an  increase  of 2.5     per     cent     over     the     previous corresponding period.

Challenges faced by Handicrafts industry:

• Low productivity: The sector’s informal nature and the low education of most artisans create issues such as:
  • Unorganized production: As a largely unorganized sector, handicrafts faces problems such as a paucity of professional infrastructure such as work sheds, storage space, shipping and packing facilities.
  • Low education: Many crafts require the entire household to participate in production in some capacity. In many cases, crafts also serve as a seasonal source of income for agricultural households.
  • Outdated production methods: Artisans may also lack the financial capability to upgrade technology in production, or undergo necessary training on a regular basis, as would be available to them in a formal work setting. This compromises the quality of their products and raises the cost of production.
• Inadequate inputs: There are three main issues:
  • Lack of quality raw materials: Rural artisans often lack access to quality raw materials. Due to the low volumes required, they have low bargaining power and are forced to buy sub-standard materials at a higher price.
  • Lack of funding: Craft producers suffer greatly from lack of working capital and access to credit and loan facilities. Banks cite poor recovery rates, wrong utilization of funds, lack of marketing facilities for finished products and lack of education on part of the borrowers as reasons for the low proportion of loans made to artisans.
  • Design inputs: Due to the breakdown of the historic artisan-consumer relationship, and the increasing urbanization and globalization of markets for crafts, artisans have difficulty understanding how to tailor their products to changing demands.
• Information asymmetry: Due to their low education, artisans often cannot identify potential new markets for their products, nor do they understand the requirements for interacting with these markets.
• Fragmented value chain:
  • Lack of market linkages: While consumers of crafts products are increasingly becoming urbanized, crafts continue to be sold through local markets; artisans have few opportunities to reach new consumers through relevant retail platforms such as department stores and shopping malls.
  • Dominance of middlemen: Although middlemen are necessary to enable effective market linkages, they often, if not always, exploit artisans by paying them a fraction of their fair wages.
  • Lack of aggregation: Crafts production typically takes places in scattered clusters in rural areas, while markets are usually in urban centers. Currently, there is a lack of organized systems to efficiently aggregate goods from small producers, carry out quality checks, store approved goods in warehouses, and supply them to wholesalers and retailers in urban areas.

Way forward:

• All industrial policy aimed at promoting particular sectors aren’t without risks. But the externality-generating attributes —employment, exports, social transformation —of the apparel sector, India’s potential comparative advantage in it, and the narrow window of opportunity, make the risk worth taking.
• skill upgradation  and  development in   handicraft   sector   is   an   excellent approach   for   development   of   artisans, poverty  reduction  and  providing  income generation   which   would   also   help   in achievement  of  sustainable  development goals.
• Access to economic independence through the    handicraft    sector    can address the livelihood issues and would lead to income generation in rural areas.
• In order to meet these challenges, a package   for   garments   and made-ups sectors can be provided.
• GI tags, Handloom India tags etc. can add credibility and protect the artisans from fake product manufacturers.\

By: Arpit Gupta