Crisis looming in handloom sector

Handlooms in India have a rich cultural heritage and are renowned the world over for their craftsmanship since ancient times. While the cultural significance of handlooms has been on the wane in recent times, they have not yet lost their special charm in the textile market, much like how a good painting can be a show-stopper in the era of digital photography. However, this charm does not translate into an improvement in the socio-economic status of the weavers.

This is evident when the production of handloom cloth is compared with the income of weavers. According to the latest Handloom Census 2019-20, the overall number of weavers decreased by 19 per cent from 43.31 lakh in 2009-10 to 35.25 lakh in 2019-20. During the same period, the production of cloth in the handloom sector increased quite significantly (Figure 1), which implies an increase in the yield.

However, this increase did not result in any significant improvement for the weavers as 67 per cent of the weavers in the sector earned less than even unskilled labour.

The other worrying symptom for the handloom sector is in the export market, which is concentrated only around products like carpets, rugs and other furnishings; other handloom products, which have the same richness in quality and heritage, are not exported much.

In addition, the the export market across most of these product categories has been stagnant over the last few years.

While these are just the symptoms that are apparent in the handloom sector, understanding the underlying problems will help achieve sustainable growth. The major problems can be categorised as shown in Figure 2.

Low income : As per the minimum wage rule, a handloom worker should be able to earn a minimum amount of ₹6,275 per month. But there are still 27,48,445 weavers (67 per cent of handloom workers) earning less than ₹5,000 per month. Weaving is simply not a sustainable economic activity.

Reach of credit facilities: In rural areas, where around 87 per cent of the weavers are present, the banking penetration amongst weavers is just 20 per cent. At an aggregate level, the banking penetration is 23.3 per cent, which indicates that around 76 per cent of the weavers do not have access to banking facilities, let alone being able to get credit facilities from banks.

Due to this limitation, weaver households depend on other sources of credit, which have higher rates of interest. Out of the 31 lakh weaver households in India, only 39,438 households (1.3 per cent) avail themselves of credit from any source, which is a significantly low number.

Attracting new weavers: As an age-old tradition, the art of handloom is passed on from generation to the next by the weavers. However, in the current scenario, weavers are hesitant to encourage the next generations to take up weaving. This is evident from the fall in number of weavers less than 35 years of age from 26.13 lakh in 2009-10 to 16.07 lakh in 2019-20.

Raw material : As per the 2019-20 Census, 76.6 per cent of yarn is purchased by weavers as raw material in the open market and the rest from co-operative societies and government. Since most of the yarn is purchased in the open market as weavers cannot afford to stock raw material, they end up with low margins and are unable to earn higher profits.

Marketing : In India, most of the handlooms enjoy prominence only in their locality and people elsewhere are unaware of the existence of many other varieties. Poor marketing and the industry’s inability to adopt newer marketing techniques are the main reasons for this. As much as 64 per cent of the open market sales happens in the local markets. Also, the handloom sector has been unable to utilise e-commerce as an effective channel since digital literacy amongst weavers is low.

The ‘Indian handlooms’ website is promoting e-commerce sales via platforms such as Weavesmart, GoCoop, Amazon, Flipkart, etc. Most of the e-commerce channels promoted in the Indian Handlooms website are either generic marketplaces, which deal with a large variety of products, or websites exclusive to handlooms but confined to products of a specific region. Each of these channels have their own set of problems which makes development of an authentic e-commerce source for purchase of handloom products necessary for the improvement of the handloom industry.

Branding: This has a huge impact on the purchase behaviour of consumers. Lately, many private brands like ‘FabIndia’ and ‘Raymond Khadi’ are selling handloom products. Branding has resulted in the prices of the products going up. However, this does not benefit the weaver due to the presence of middlemen.

Moreover, the creation of individual brands by external players camouflages the weavers’ identity and place of origin of various handloom cloths. For example, when customers purchase a khadi shirt, they do not know where it originated from.

Purchase behaviour of consumers: This is changing, with many now preferring to shop online than offline. Since weavers cannot reach the online consumers directly, many of them do not know the exact demand for their products and also are unable to get good margins.

Recommendations

The problems faced by the weavers can be addressed by leveraging e-commerce, which, in turn, can bridge the gap between the consumers and weavers. The e-commerce platform can also help in increasing the foreign sales of Indian handloom products.

An exclusive e-commerce website, with relevant logistics support, needs to be created to sell authentic Indian handloom products. This should ultimately provide a sales avenue for weavers, while increasing the visibility and reach of Indian handlooms to the consumers.

Handlooms are exported generally in the form of traditional Indian attires. To increase the demand abroad, handloom products should be tailored as per the needs of the foreign markets. A group of designers can be hired to understand the fashion trends of the West and guide the weaver community.

With the change in consumer preferences towards comfort and sustainability, handlooms are regaining prominence gradually around the world. However, Covid-19 has hit handloom other sectors badly. If the industry had a good digital presence, revival would have been easier for the industry. It is time that the handloom industry leveraged technology and digital platforms to become sustainable.

Vaidehi is an e-PGP student, and Abhiman Das is Professor of Economics, IIMA.

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