The Govt’s Policies for Handicraft Sector Are at Odds With What It Endorses

With taxes on raw material and finished goods, artisans are hit with the double whammy. Moreover, the added burden of GST compliance is only deteriorating their financial condition.

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Indian handicrafts and handlooms occupy a prestigious place in the heritage of India. For instance, khadi has occupied a special place as it combines the economics of self-reliance and the politics of freedom.

As per the Ministry of Textiles, the handicrafts sector alone employs nearly 70 lakh people. However, artisans and weavers are the third largest segment among the poor. Their financial position was weak even before the COVID-19 pandemic – demonetisation and GST had affected the rural economy, leading to soaring production costs. Since the input cost of the products increased, middlemen or companies compensated their investment costs by decreasing the wages of the artisans.

The pandemic has further widened the gap. Since the pandemic, many people have lost their jobs due to the slump in sales as orders were either cancelled or could not be processed. Supply chains were disrupted because people started returning to their villages from cities due to unemployment.

As per a research paper, artisans do not wish their children to continue the trade because of unfavourable living conditions. Therefore, many heritage crafts are on the verge of dying. Their vulnerable situation is compelling them to leave their heritage and shift their occupation.

Also read: Here’s Why the Plan to Process Pashmina Wool in up Worries Kashmiris

Another 2020 report by the All India Artisans and Craftworkers Welfare Association presents a compelling and grim picture. During the pandemic, there was wide cancellation of orders, some orders were put on hold, or they were stuck in transit. Big corporate players switched to salary cuts of their employees and started working on production planning, backup plans, new designs and strategy for online presence.

As per their survey, which was conducted to study the impact of the lockdown on India’s crafts sector, especially individual artisans, 30% of artisans needed monetary support beyond six months and 40% needed support for three months. For 70% of artisans surveyed, sales decreased by 75%. Eight out of every ten artisans had their orders cancelled or put on hold or both.

As a result of unplanned lockdowns, work was stuck in the middle, causing wastage of the dyes and raw materials. According to this study, it was observed that working capital remained a core issue for the artisans.

Moreover, the government had decided to increase GST on textiles from 5% to 12%, despite adverse conditions in the handicraft sector. But after many states opposed this move, the government deferred the implementation of the tax hike on textiles.

This increase in tax, as per the government, would have aided the government’s income shortage. However, since a majority of the fabric is produced by the unorganised sector in the country, this decision would have affected both power loom as well as handloom weavers. Additionally, due to the increased rates of raw materials like yarn, packaging and freight charges, an exponential rise in the prices of the final products would have also been very likely.

A weaver arranges yarn in Phulia, near Kolkata. Photo: Reuters/Parth Sanyal

Meanwhile, the handicrafts sector is already struggling with the consumers’ preference for cheaper fabric alternatives available at low prices. These low-priced garments also come at a cost, which is borne by the makers of the garments who often work at meagre wages, which is not sufficient to put food on the plates of their entire family.

Also read: Makers of Azamgarh’s Famous Black Clayware Are Having to Let Go of Their Craft

It’s also important to note that there is a tax on raw materials and on finished goods as well. Therefore, artisans are paying taxes at two places. This is a double whammy for those who are struggling to make ends meet.

Further, most of the artisans lack formal literacy. As such, they cannot do the paperwork required for the GST like applying for it online, booking invoices etc. Artisans need GST registration for inter-state supply, irrespective of the size of their business or their turnover. Unavailability of resources and lack of awareness is adding the burden of compliance.

Since Independence, these goods have not been taxed because their production employs millions of Indians living on slender margins. So with the introduction of GST, are we claiming that this already fragile, fragmented sector is now capable of filing these kinds of complicated taxes?

Earlier, artisans were dependent on middlemen for their products to reach the market as they did not get a fair price by directly selling it to the end-user. However, now they will also have to go to E-Mitra (similar to a common service centre) as an added step. The crafts sector is one of the most sustainable and green parts of the economy. It uses virtually no fossil fuels. Artisans working in the sector have little access to infrastructure compared to urban India, but they manage to support themselves. However, their options are getting more constrained.

The government’s doublespeak is for all of us to see. On days like Handloom Day, Gandhi Jayanti etc., governments endorse the use of handloom fabrics. However, on the other fronts, such as sustainability and economic viability, their policies are at odds with what they endorse.

To improve the current situation, there is an urgent need to plan a better craft policy which should be formed taking inputs from the craftspeople of various regions. The government should plan projects for the digitalisation of the craft produce, and it should be done free of cost, or selling of craft produce should be without any complicated terms and conditions through its portals. Since small artisans are illiterate, it would be difficult for them to work on complex procedures and paperwork. If we are actually serious about our handicraft heritage, we must really start caring about the rural artisans.

Aruna Roy is a socio-political activist with the Mazdoor Kisan Shakti Sangathan. Nosheen holds a Master’s degree from NIFT Jodhpur and is currently working as a consultant with the Tilonia Bazaar.