Business

The Threads of India’s Handloom Industry Are Being Gnawed Away at By GST

Many weavers and artisans are finding it difficult to migrate to the new GST system, or don’t have an income that would justify the effort it would take to comply with it.

A weaver arranges yarn in Phulia, about 80 km north of Kolkata, February 6, 2010. Credit: Reuters/Parth Sanyal

Mahalakshmi has been working in the handloom textile industry in India for close to two decades. A spry, wiry woman in her 40s, Mahalakshmi is a master weaver overseeing the process of cloth production at Charaka – a handloom weavers’ cooperative in Heggodu, a tiny hamlet tucked away in the Western Ghats in Karnataka.

On any given day, Mahalakshmi is responsible for sourcing hank yarn from the cotton mills, overseeing the dyeing of the hank yarn, allocating work to the weavers, monitoring the quality of the cloth produced and ensuring it is released on time to the tailoring unit.

Watching Mahalakshmi and those weavers around her go about their work is to realise the significant skill and, more importantly, the patience that handloom weaving demands of its practitioners. For a process as meticulous as handloom weaving, which requires constant care and long hours of work, the financial returns for this artisanal labour has remained low.

In addition to the pressures already faced by handloom sector, the goods and services tax (GST) regime has many weavers and handloom organisations worried. Traditionally, the handloom sector has largely been exempt from taxation in India, but that has changed since the GST came into effect last year.

“Earlier, the tax only applied to the finished cloth. The moment you applied a stitch, you had to pay a tax. Now, they are charging everything; the cloth, the thread, which is hurting us” Mahalakshmi says.

Under the new GST rules, all the input materials used in handloom production, in addition to the finished cloth, attract a tax of 5-18%, which is a significant burden on weavers.

Charaka directly employs weavers at its production unit in Heggodu, but a significant part of the work is done by weavers operating single looms in their own houses. Mostly, these weavers stay in the villages surrounding Heggodu or within Shimoga district, but a small and significant chunk of Charaka’s work is also outsourced to weavers in far-off places like Yadgir, Bagalkote, Vijayanagara and Gadag, districts that are part of the arid, economically backward regions of North Karnataka.

A part of Mahalakshmi’s work requires her to coordinate with these weavers. In the aftermath of the introduction of the GST over the past few months, she been constantly troubleshooting for the weavers and outlines some of the problems they face. “‘If we have to comply with the GST, it will cost us a lot, they [weavers] say. As an organisation, our [Charaka’s] aim is to promote the livelihood of  small weavers, so we can’t refuse to buy from him, even though it hurts us financially.”

Besides the obvious financial burden of GST, many weavers are running afoul of other provisions under the new tax law. The existing transport services are now demanding a GST number for transporting their cloth anywhere within the country; even if the weavers choose to transport the cloth themselves, they have to produce an ‘e-way’ bill, which is generated digitally. The individual weavers are also required to maintain regular accounts and file tax returns.

As Meeta Mastani points out in The Wire, one of the biggest challenge when it comes to GST implementation, especially when it comes to the handmade crafts sector, is the lack of information and technical know-how, which opens up avenues for middle-men to enter the picture and abuse the system. Ramesh, who oversees the finances at Charaka as its cecretary, says “A small weaver in a village, with little education, who has known nothing but weaving all his life, how is he supposed to get an e-way bill done? Does he have a computer or internet facility? How is he to keep regular accounts, file returns or get an auditor?”

As things stand, many weavers and artisans are finding it difficult to migrate to the new GST system, or don’t have an income that would justify the effort it would take to comply with it.


Also read: The GST Regime is Damaging, Not Helping, India’s Crafts Sector


§

Ever since GST was implemented last year, it has met with significant opposition by organisations and activists in the handloom sector. Prasanna Heggodu, the founder of Charaka and a well-known theatre director and social activist from Karnataka, has been prominent among the people who have been vocal in their criticism of the additional tax on handloom.

Beginning in September, Heggodu, along with the Gram Seva Sangh, a social organisation in Bengaluru, has held a ‘tax-denial satyagraha’ staging a play, a classical music concert, holding a padyatra (walking pilgrimage), hosting a national symposium on “The Handmade” and even holding a hunger strike, demanding the complete roll-back of the GST on all handmade products.

Speaking to The Hindu on the rationale behind the satyagraha, Heggodu said, ”Handcrafted products should be given a competitive edge under the GST regime that will incentivise the cooperative rural set-up. There has to be a price advantage over the corporates. This will help create independent rural entrepreneurs instead of artisans dependent on government largesse”

“Imposing GST on handloom products and raw materials has wiped out the age-old distinction of handlooms and powerlooms, a principle honoured and protected by the earlier governments for decades since Independence” says Uzramma, the founder of Malkha, a not-for-profit trust that has been instrumental in reviving handloom weaving that utilises indigenous cotton varieties in rural Telangana.

In January this year, Uzramma attended the National Symposium on The Handmade organised by the Gram Seva Sangh. Along with other eminent personalities like Bollywood actor Irrfan Khan, the film director M.S. Sathyu, and livestock activist and shepherd Neelkanth Mama, she demanded a complete removal of the GST from handmade products.

For Uzramma, the move by the government to impose GST on handloom products is a “violation of the socialist principles of the Indian constitution, especially the (sic) Article 38 on welfare, Article 39 on livelihoods, and Article 41 on the right to work”. While other people protesting the GST on handloom might not use her exact words, the decision to include weavers and the handloom sector under the new GST regime is seen by many as emblematic of the shifting priorities of the current government.

Gandhi reading next to his spinning wheel. Credit: eBay

Gandhi reading next to his spinning wheel. Credit: eBay

To truly understand the nature of India’s relationship with the handloom sector, one must go all the way back to Mahatma Gandhi and the Indian struggle for independence in the 19th and 20th century.

Mahatma Gandhi’s commitment to the welfare of handloom weavers stemmed from his belief that their plight was representative of India’s subjugation under British colonial rule; as such, he saw reviving the handloom industry as an effective way to oppose British colonial rule in India.

In the Gandhian iteration of Indian nationalism, the charkha used to spin cotton into khadi,  which became a widely adopted symbol of resistance against colonial rule, so much so that the design of the Indian national flag proposed by Gandhi and adopted by the Indian National Congress in 1921 had a charkha at the centre.

Something of this zeitgeist is captured in the beautiful, lyrical prose of the Indian-English writer Raja Rao in his 1938 novel Kanthapura. In the novel, a small town in the Western Ghats in India is swept up by the Gandhian struggle for independence. One memorable scene has Moorthy, the young Brahmin protagonist, going from house to house distributing charakas and exhorting everyone to spin their own cloth.

“’Sisters, from today onwards, I want your help. There is a huge Panchayat of all India called the Congress, and that Congress belongs to the Mahatma, and the Mahatma says every village in this country must have a Panchayat like that, and everybody who will become a member of that Panchayat will spin and practice ahimsa and speak the truth’ At this Rachanna’s wife says, ‘And what will it give us, learned one?’ and Moorthy says something about the government and the heavy taxations and the poverty of the peasants, and they all say, ‘Of course, of course,’ and then he says, ‘I ask you: will you spin a hundred yards of yarn per day?’”

These Gandhian symbols of Indian nationalism were largely abandoned after India’s independence; the charkha at the centre of the Indian national flag was replaced by the Ashoka chakra in 1947, the Buddhist symbol of dharma that adorned the pillars erected by the Indian emperor Ashoka during his reign.

The Gandhian ideals of political and economic empowerment of India’s villages were replaced by an enthusiasm of massive hydro-electric projects, planned cities, institutes of higher education and the technology-led ‘green revolution’ in agriculture, the modern markers of progress favoured by Jawaharlal Nehru, Gandhi’s protégé and the first prime minister of India.


Also read: ‘Formalising’ the Economy: What’s in It for Workers?


§

On the back of the steady industrialisation of the Indian economy, the textile industry in India has undergone something of a late blossoming. Textile manufacturing in India is mostly centred around cities and towns scattered through the length of the country. These ‘textile hubs’, with their factories and companies, not only account for most of the textile production in the country, but also specialise in certain kinds of textile production.

For instance, Ludhiana in Punjab is undoubtedly the centre of manufacturing woollen textiles; the tiny town of Balotra in Rajasthan manufactures and supplies most of the materials used to make night dresses; Tiruppur in Tamil Nadu is famous for hosiery, which nobody in the country wears and is manufactured almost exclusively for export; Coimbatore produces fine cotton textiles;  Surat, in Gujarat, is famous for its concentration of powerloom centres.

In 2015-2016, the Indian textile market was valued at $137 billion, with the value of textile and garment exports standing at $40 billion, accounting for 15% of total exports from the country. During the same period, the handloom sector exported goods valued at $235.92 million and accounted for 10% of all fabrics produced. Credit: Reuters

Dig a little deeper, however, and the narrative of the textile industry in India that emerges is still as much the story of the handlooms and the rural weaver, as it is of factories and machine-based production.

Here are some numbers: in 2015-2016, the Indian textile market was valued at $137 billion, with the value of textile and garment exports standing at $40 billion, accounting for 15% of total exports from the country. During the same period, the handloom sector exported goods valued at $235.92 million and accounted for 10% of all fabrics produced.

Despite the seemingly poor contribution it makes to the economy, the handloom sector in India employs nearly 4.3 million people, compared with 4.5 million people employed by the textile industry as a whole, making it the second largest employer after agriculture.

Handloom weaving in India is as diverse as it is vast, encompassing everything, from the Malkha fabric that Uzaramma is helping revive, fine silk weaves produced by age-old handloom centres in Benares and Kanchipuram, to the pashmina (a finer variety of cashmere wool) weavers of Kashmir and the indigenous tribal weavers from the northeast of India, and this is not to count the numerous styles of production when it comes to weaving cotton, silk and wool.

In legislating a tax for handloom, though, it seems like the government has ignored this rich heritage and specific contexts in which weavers earn their livelihood.

The repeated protests and constant effort by activists over the past few months has yielded some results. In Karnataka, which is currently ruled by the Congress but is heading for assembly elections in 2018,  chief minister Siddaramaiah wrote to the central government, asking for an exemption of taxes on handloom products. Additionally, he also announced a loan waiver of $8.1 million for weavers .

After the latest GST council meeting, which convened on January 18, 2018, there was still no clarity about the status of GST on handloom products.

This prompted Siddaramaiah, who has been under constant pressure due to the protests held in the state, to write to Union finance minister Arun Jaitley again, in a formal, oddly mollifying tone: “This would not only benefit  a large segment of our rural population, but would also give a boost to rural employment and sustainability … I therefore, urge you to take this issue on priority basis in the next GST council meeting and decide favourably benefiting a large segment of rural artisans,” he wrote.

In response to the intransigence of the central government, Heggodu and the Gram Seva Sangh continue with their tax-denial satyagraha, with the latest protest taking the form of a convention and a padyatra that saw the protestors travelling south from the Yadgir district on January 30, 2018

Even as the requests, protests, the demands and the discussions carry on, the livelihood of thousands of weavers working in the rural economy hangs in the balance.

Prajwal Suvarna works for Rang De, a not-for-profit based out of Bengaluru

Liked the story? We’re a non-profit. Make a donation and help pay for our journalism.