Indian handloom industry: Misery spells ‘Opportunity’!

• In 2017-18, India was the second largest exporter of handloom products in the world. However, COVID-19 has dramatically altered the situation of the Indian handloom industry – gripping the sector in its firm clutches.
• This is due to several demand and supply side constraints such as cancellation of orders, paucity of working capital, limited raw material supplies and so forth.
• To overcome this challenge, the government and financial institutions needs to  ensure easy access to raw materials and credit.
• On the other hand, the pandemic could be positive for the sector, since it can ensure greater localisation. India can also use this opportunity to build a strong origin brand and migrate to a digital go-to-market model. 

Handlooms have been a hallmark of Indian civilization, with exquisite products delicately crafted by accomplished craftsmen across the country enthralling the world right since the days of ancient history. Even today, this rich heritage has stood the test of time and is one of the largest cottage industries in India, thereby preserving the vibrant Indian culture.

According to the 2019-20 National Census of Handloom Weavers, there are 3.14 million households engaged in weaving and allied activities in the country. Besides its role in job creation, exports were valued at US$ 353.9 million in 2017-18. This made India the second largest exporter of handloom products in the world, as per the Indian Handloom Industry: Potential and Prospects Working Paper by the Export-Import Bank of India (2018).

Entangled by the virus

COVID-19 has dramatically altered the situation in the Indian handloom industry – gripping the sector in its firm clutches. One of the reasons for this is that inventories of these domestic retailers and handloom exporters have piled up with goods due to cancellation of orders. Further, as the pandemic put curbs on national and international movements of people, it has impacted the sales of cotton handlooms during the summer season. The same holds true for large- scale exhibitions, which have been cancelled or deferred. This is a blow to the industry as exhibitions create excellent opportunities for craftsmen to showcase their talent & sell their products.

Lack of sales will consequently create a paucity of working capital for the handloom industry. “We have ongoing orders (received before the lockdown) but are not sure when the buyers will pick them up. Payments take 3-4 months after the orders are picked up. In this crisis, we need some working capital to support ourselves and our weavers,” says Akunuri Cheralu, a weaver and president of the Shatranji Nawar Cooperative Society in Warangal, Telangana.

The broken supply chain has given the industry a tough time. Very few weavers are able to keep their production activities going as they had limited raw materials at their disposal and were not able to procure any because of the lockdown. Further, given that this pandemic is still looming and consumers all over the world are seeing their incomes contract, most cooperatives and master weavers are unable to give production orders to other weavers. With no work, weavers will not be in a position to earn their weekly wages.

Another cause of this uncertainty in demand is that the pandemic is likely to change consumption patterns. For example, it will be a long time before the demand for designer gowns and elaborate Indian wedding dresses costing lakhs will revive. This will have a serious impact on the future sales of these goods.

Weaving threads of optimism:

While the pandemic has created a plethora of challenges for the country’s handloom industry, it has also led to India’s top competitor, China, recovering at a sluggish rate. This is an opportune moment for Indian handloom industry to seize the day by attempting to take over China’s place as the ‘Maker to the World’. This would require a carefully crafted approach on the part of the industry.

For this to happen, it must be ensured that weavers and artisans have access to raw materials. In case of textile weavers, for example, the National Handloom Development Corporation Limited could set up a network of regional yarn depots with support from private sector mills. Similar solutions can be crafted for other kinds of artisans in the sector.

Secondly, arrangements need to be made to enhance access of these craftsmen and entrepreneurs to working capital. Easy access to credit and awareness about the available schemes needs to be disseminated to make sure that those struggling for survival are included in the ambit of financial inclusion.

Thirdly, COVID-19-induced lockdown led to the reverse migration of labour to craft clusters. This is a brilliant occasion to create more opportunities and develop micro-entrepreneurs. Local governments can generate vistas for these craftsmen to sharpen their existing skills and acquire new ones such as getting digital exposure to be able to market their products to larger audiences.

Fourthly, market intelligence should be gathered to decipher and assess the product need and produce products accordingly. One trend that has caught the imagination of global luxury brands and consumers across the world is that of sustainable fashion, for example. As Dr. Dina Khalifa, Lecturer in GCU, London notes:

“I believe there will definitely be a shift in consumption values, a change that has already started before the pandemic and will now be accelerated; wherein consumers demand more transparency and expect the luxury brands they invest in to be sustainable”.

She also feels that with disruptions in global supply chains luxury players could return to the traditional strategy of localisation, which could work to the benefit of local craftsmen. In the Indian context, Jaya Jaitly, Founder and President of Dastakari Haat Samiti, opines:

“We cannot imitate the ‘container load’ approach of the Chinese who mechanized everything, pay low wages and did not bother much about quality. India’s approach should be accessing multiple markets across the world for customers of all levels and keeping batches of production manageable rather than in factory-line mode. High quality, well designed utilitarian handloom products right up to high fashion can all be different levels of markets.”

Fifthly, now that exhibitions and tourism led sales have gone for a toss, the handloom industry needs to enhance its digital footprint in order to connect with potential buyers across the world through virtual exhibitions. E-commerce platforms like Amazon and Flipkart increase the outreach to newer customers and markets. They should also provide support in areas such as finance, marketing and logistics to the artisans.

Thirdly, the industry needs to build a strong brand for ‘Handmade in India’. This could be done by promoting the Handloom Mark, an indicator of high-quality products. This will not only build the credibility of the sector in the national and overseas markets, but also in the long run help in realising premium prices for handloom products. Jaya Jaitly stresses on the need to promote Indian handlooms as representing ‘sustainable livelihoods and materials for a sustainable planet”. A strong competitive differentiator like this could be beneficial to Indian handicrafts in the current mileu, wherein the views towards sustainability and environment are expected to be more positive than even a few months ago before COVID-19 struck.