With declining handicraft exports, govt looks at domestic mkt to boost sector

Written by Neha Pal | Neha Pal | New Delhi | Updated: Sep 2 2012, 09:22am hrs
Hit hard by the slowdown that has crimped demand for handicrafts in global markets, Indian artisans may soon get some reprieve, as the textile ministry is preparing a raft of measures to improve their fortunes.

Worried about the 29% decline in export of handicrafts in the past five years, the ministry of textiles has shifted its focus to the domestic market to boost the sector. The ministry is now exhorting policy makers as well as corporate India to take measures to revive handicrafts.

The ministry is in talks with various companies to source their gifts and souvenirs within India from this sector, which will help artisans, weavers and producers in a big way. These companies include Reliance Industries, ITC, Moser Baer, Yes Bank, Bharti Realty, Mahindra & Mahindra, Wipro Group and IDBI Bank.

Apart from this, the Export Promotion Council for Handicrafts (EPCH) has asked the government to include the handicrafts sector under the Mahatma Gandhi National Rural Employment Guarantee Scheme (NREGS).

Talking about these measures, Union minister of commerce, industry and textiles Anand Sharma said, There are many production clusters in the country and corporate houses can consider adoption of one or more either on the basis of products or on the basis of their locations.

EPCH is also going to enhance focus on businesses through events like Asia Handicrafts and Gifts Fair, in which domestic investors were allowed to participate along with foreign companies for the first time last year.

Retailers like Future Group, Pantaloon Retail, Lifestyle, Rama Store, Fab India, Bharti Retail, Shoppers Stop and Delhi Duty Free Services had placed orders worth around R500 crore with handicraft units, which are expected to go up this year.

The ministry of textiles is also addressing the problem of export finance faced by handcraft units and is in talks with banks for restructuring of loans. The exporting community needs to work hard to double Indias share in the world market, which is merely 2% at present, said minister of state for textiles Panabaka Lakshmi.

Handicraft exports have witnessed a decline from $3,811.26 million in 2007-08 to $2,705.66 million in 2011-12. The handicraft and handloom sectors provide direct employment to more than 11 million artisans, weavers and craftsmen.

Extending Nregs to this sector will also reduce the production cost by 25-30% and boost demand of handicrafts. As Pinakiranjan Misra, partner and national leader, retail and consumer product practice, Ernst & Young, told FE, The biggest advantage of extending the NREGA scheme to handicrafts sector is that it will lead to lower prices of handicrafts and also better development. Also, it will develop an interest in this sector, which may start attracting private investment.

Indian handicrafts have a high demand in foreign markets, especially new markets like Latin America, central Asia, Africa and south-east Asia. There is a high demand for Indian handicrafts in foreign markets but it gets tough competition from Chinese handicrafts because their cost is much lower than Indian products. Since Chinese handicrafts are 90% machine-made and only 10% handmade, whereas it is just the opposite for Indian handicrafts, they are much cheaper, said Delhi-based handicraft exporter Prakash Sharma.

As per industry estimates, the potential market for handicrafts and handlooms is over R10,000 crore, but there is not enough supply as there is no organised trade. Kiran Dhingra, secretary, ministry of textiles, told FE, The ministry is working on organising handicrafts retail trade in India where companies can source directly from clusters.

As an initial start, the textile ministry has identified six major clusters to promote handicrafts, which include Moradabad, Saharanpur, Jaipur, Jodhpur, Bhadohi in Mirzapur (UP) and Narsapur in Andhra Pradesh.