1  

‘Make in India’ and its Economic Impact on the Indian Handloom Sector JEL classification: R28, R58, O13, O14

Shambhavi Sawhney

Faculty Sponsor: Jyoti Khanna Lampert Institute for Civic and Global Affairs

September 2016.

2  

Abstract

The Indian handloom industry is one of the oldest industries in the country, with its roots from

ancient India. Handloom weaving is one of the largest rural activities, second only to agriculture,

and provides employment to 43 lakh (4.3 million) workers. It contributes almost 15% to total cloth

production in the country. 95% of handlooms in the global market have been produced in India.

While the handloom industry is based largely in a domestic set up, it is dispersed, spread across a

large number of villages and towns within the country. The five year plans of the Indian

government have treated the handlooms sector as rural enterprise and have not offered any direct

solutions for the rival of the handlooms. Instead policies like the New Textile Policy of 1985 led to

the growth of powerlooms and had a de-skilling effect on the weavers. Apart from this the

handloom sector faces many other challenges like the lack of market demand for their products and

a large number of government interventions which have oversimplified the diversity of this sector

and have made the weavers dependent, killing any potential entrepreneurial spirit. The Make in

India initiative can be a potential uplifter of this sector by creating more, indiscriminate

opportunities in the economy. Spillover effects from supporting activities of the government,

namely ‘Skill India’, ‘Digital India’ and the ‘Brand India’ are already showing positive results

which could prove to be beneficial for the economy. This paper aims to understand the Make in

India initiative with respect to the handloom sector sin India and how it might play a positive role in

uplifting this sector.

3  

1. Introduction

The Indian Economy has been growing at an alarming fast rate, considering the apparent global

slowdown. The near double-digit growth rate has been a trademark of Indian GDP growth since the

early 2000’s and is currently at power with China. A majority of this high growth can be attributed

to the public spending of the government, which has so far followed the directives of the five-year

plans of the government. Much of India’s post-liberalization growth has been led by the service

sector which today contributes nearly 60 percent of GDP. In light of the global economic

slowdown, the sustainability of these methods has been questioned. It is imperative for the economy

to create new jobs for its population through increasing its manufacturing industry. The inherent

labor intensive nature of the industry has the capabilities of not only providing jobs in the short-run

but also bridging the gap between the service and industrial sector of the Indian economy. A push

for manufacturing also has the potential to support the rural and semi-urban industries and help

alleviate regional disparities across the country through providing unskilled labor employment.

This paper addresses this shift in the economy and addresses its impact on the handloom

industry in India. The paper first looks at the economic initiative, its need and its current impact on

the indian economy. Next the paper tries to understand structure of the handloom sector, within the

textile industry, and the past policies of the government which are telling of the current state of the

handlooms. The paper then looks at the challenges faced by the handloom industry and how the

“Make in India” initiative can overcome some of them.

2. Make in India

Amidst a global economic recovery in 2012, the Planning Commision of India set a growth

target for 8%. As the primary planner of economic activity in the country, the Planning Commission

called for more inclusive and sustainable growth in the Indian economy. The major focus of the

12th five year plan, the one currently underway, has been to support those sectors which generate

large scale employment, enhance technological capabilities, expand and upgrade the infrastructural

base. The most significant emphasis has been laid on improving manufacturing and productive

capabilities of the economy. The manufacturing sector has been identified as a priority sector which

could lead economic growth through the employment of large numbers of non-agricultural workers.

The emerging aim is to keep up employment by supporting small and medium enterprises, which

absorb a majority of the population’s workforce with low levels of skill. Supporting these smaller

units of the economy will also pave the way for inclusive development as most of these exist in

semi-urban and rural parts of the country (Planning Commission of India, 2012).

According to a release by A. T. Kearney, growth in the manufacturing sector is crucial for

India’s economic development. Manufacturing accounts for only 16% of GDP while representing

4  

only 2% of the world’s total manufacturing output. It explains that “to capitalize on the

demographic dividend, India must create nearly one million jobs per month over the next decade”

(A.T. Kearney). The report of the planning commission introducing the 12th five-year plan predicts

that almost one hundred and eighty-three million workers are expected to join the workforce over

the next 15 years. Manufacturing could create a large portion of these additional employment

opportunities as it is one of the few sectors which is able to transcend regional disparities within the

Indian sub-continent. The report of the Planning Commission acknowledges that India’s

performance in the manufacturing front has been less than satisfactory. It was not able to take full

advantage of the opportunities provided by the dramatic shift of manufacturing from developed to

developing countries over the last decade. The following table provides a basic comparison of the

BRIC countries, in terms of their GDP growth, growth of the manufacturing sector, and the share of

manufacturing in GDP from 1999 through 2009.

Table 1: Comparison of the BRIC countries

Country GDP growth Growth of Manufacturing sector Share of Manufacturing in GDP

Brazil 3.3% 2.7% 16%

China 9.9% 10.3% 30%

India 7% 6.8% 15%

Rusia 5.3% 6.6% 16%

(Source: Planning Commission of India, 2012)

The table suggests that China experienced the largest growth in manufacturing between 1999

and 2009, and also had the largest share of Manufacturing in GDP out of the four countries.

According to the same report, the shift of manufacturing capacities from developed nations to

developing nations is likely to continue. “It is estimated that by 2025 RDE (Rapidly Developing

Economies) production will account for over 55 per cent of global production compared to 36 per

cent presently” (Planning Commission, 2012). This is why it is imperative for India to catch up to

the global levels and standards of manufacturing and production in the coming years. Therefore an

initiative like the ‘Make in India’ initiative is a key to ensuring that the full productive capacity of

the economy is utilised.

The “Make in India” initiative and campaign was launched by the Indian government in

September 2014 to improve the manufacturing capacity and encourage productive activities in the

economy. Twenty-five sectors of production have been identified to lead this movement. These

include a host of diverse sectors, ranging from Defense, Construction, Railways, Tourism, Food

Processing and Textiles, with the permission of 100% Foreign Direct Investment in almost each of

5  

these twenty-five sectors. Despite its nascency, the campaign has had significant effects on the way

the world has perceived Indian business environment. It has put forth a positive and welcoming

invitation to investors. Various multi-national firms have shown interest and even taken concrete

steps to take advantage of the newly reformed investment policies. Reports of international

organisations also reflect this attitude. A report by the World Bank Group ranking the world

economies on the ease of doing business in the respective countries ranked India at the 130th

position. Although the report ranks India behind economies like Sri Lanka and Nepal, the current

ranking is four points higher than last years rank of 134. Much of this climb can be attributed to the

preparations for the initiative. These include reforms in the Foreign Direct Investment (FDI)

policies and tax deductions, and new and transparent regulations of licensing process. Over the last

year, the rank for starting a business has improved from 164th to 155th, while the rank for obtaining

electricity and power for the business has improved from 99th to 70th (Doing Business, 2016). This

shows that there have been reductions in barriers which previously hampered the ability of

entrepreneurs to start businesses.

2.1 Manufacturing in India

Prior to economic liberalization in India, the economy was plagued by severe licensing and

strict regulations. The reforms of the 1990s were considered to be relatively “pro-market” and led

to the opening up of the Indian economy. The reforms primarily abolished industrial licensing,

limiting the rise of public sector monopolies, liberalized inward foreign direct and portfolio

investment, removed non-tariff barriers and import licensing, removed capital controls and

liberalized the financial sector by providing free entry for domestic and foreign private banks and

opening up the insurance sector. Yet the labour market, small-scale reservations and agricultural

reforms remained more or less untouched by the reforms of 1991. Although the outcome of these

reforms have been slow to materialize, they can be held responsible for bringing out the shift in

sectoral contributions of GDP. The following table shows these sectoral changes. The agricultural

sector value added to GDP declined from 35 per cent in 1980 to 17 per cent in 2012. Over the 32

years the share of agriculture in has shrunk by 18 percentage points. In the same period the share of

industrial sector in GDP increased from 24 per cent to 26 per cent and that of manufacturing

declined from 16 per cent to 14 per cent. This indicates that both industrial and manufacturing

sector suffered stagnation. The only sector which grew at a faster rate was the services sector. In

1980 the share of services sector in GDP was 40 percent and in 2012 it increased to 57 per cent and

a net increase of 17 percentage points over the years. It could be understood that the fall in the share

of agriculture sector in GDP has been compensated by the service sector. This pattern of

6  

development, very typical to the Indian economy, raises questions on the growth path of the

economy and its future and sustainability (Bhat, 2014).

Table 2: Share of Value Added of Sectors in GDP in Selected Years (in percent)

Time Period Agriculture Industry Manufacturing Services

1980 35 25 16 40

1990 29 26 16 44

1995 26 27 17 46

2000 23 26 15 51

2006 18 29 16 53

2010 18 28 15 54

2012 17 26 14 57

(Source: Institute for Studies in Industrial Development)

Table 3: Sectoral growth rate of the respective sector during the last four five-year plans (in

percent)

Sector Eighth Plan

(1992-1996)

Ninth Plan

(1997-2001)

Tenth Plan

(2002-2006)

Eleventh Plan

(2007-2011)

Agriculture 4.72 2.44 2.30 4.00*

Industry 7.29 4.29 9.17 10.50*

Services 7.28 7.87 9.30 10*

Total growth

rate

6.54 5.52 7.74 9*

*expected growth for that particular plan

(From the Report of the Planning Commission of India (2007))

Table 3 shows the sectoral growth rate in four five years plans prior to the 12th five year plan.

This shows that the service sector, on average, grew more than the other sectors while agriculture

had the slowest rate of growth. This again puts industry (and manufacturing) in second place.

7  

The Make in India campaign in some ways calls for changes similar to the reforms of 1991.

There have been efforts by the government to introduce measures of delicensing and deregulation to

reduced complexities of starting businesses. Digitalization of business formalities has been

considered the most efficient and accessible method of bringing together entrepreneurs and

administrative agencies and is expected to significantly increased speed and transparency. Much of

the process of applying for permits and clearances has been converted to an online, 24x7 process

which makes it easier for business across the globe to participate. However according to a paper by

the PHD Chamber of Commerce and Industry (India), there are still many challenges ahead.

Administrative bottlenecks followed by Government regulations and delays in environmental

clearances are the top three problems plaguing the business environment of the country. Others

include infrastructural bottlenecks, corruption and high capital cost, while taxation, increasing

borrowing and labour costs, unskilled workforce and stringent custom and trade regulations remain

problems which should be solved in order for the success of a campaign like Make in India (PHD

Chamber, 2015). These will help domestic businesses which form an integral part of the campaign.

The initiative also hopes to bolster the confidence of domestic producers and the domestic market to

undertake production and consumption activities amidst a global economic slowdown. With one of

the largest populations of the world, this policy invariably invites the rest of the world to invest and

produce in a considerably untapped Indian market.

Recent evidence from the Chinese economy has shown that purely export-led growth is not a

viable option for sustained economic growth any further. The slowdown of the global economy and

trade in the past couple of years has affected the growth of many economies. Therefore, more needs

to be done to garner a stronghold during economic uncertainty. For India specifically, just being a

part of global value chains and supply chains is not enough. It is essential to move up the chain by

producing higher value commodities and contributing to the chain at a higher level. The

development of global commodity chains, both producer and buyer driven, can explain how local

clusters benefit not only through the creation of employment but through dispersal of technical

knowledge as a result of foreign investment. Automobile manufacturers like Mitsubishi and

Hyundai have created component clusters in the State of Haryana and Tamil Nadu in India. Hence,

because of this influx of capital and knowledge, made possible through a policy initiative like Make

in India, indigenous business will be able to contribute by improving and upgrading their own

activities by adopting international best practices and move up the value chain.

Although the make in India project is just two-years old, it has already gained a lot of

attention from well-reputed and powerful multinational corporations. Thyssenkrupp Aerospace,

Airbus, Boeing and Dassault Aviation have expressed their desire to partner with Indian firms like

Reliance and manufacture defence and technological equipment. American companies like Mars

8  

Incorporated, Pepsico and Kellogg’s Company have invested in the Indian market for their food

manufacturing and processing activities. Swiss Military and Ikea also plan to invest and open stores

in India (Make in India, 2016).

3. Indian Textile Industry

Indian Textile Industry consists of a diverse range of textile production activities, employing

an extremely labour intensive handloom sector and a highly capital intensive, machine-made cloth

sector. This industry is closely linked to the agricultural sector as it is dependent on it for raw

materials like cotton, jute and organic dyes. This industry directly employs forty-five million

workers and is one of the largest employers in the country. It contributes a whole 2% to the Indian

GDP, 10% to Indian manufacturing and 13% to India’s export earnings. The total textile and

clothing export for 2015-2016 is valued approximately $28.05 billion (Textile Ministry, 2015).

This has been achieved through the production of multiple textiles. Cotton cloth is the primary

export of Indian textiles and cotton remains one of the most important commercial crops for India.

India exports to the United States, Egypt and the EU and ranks first in the world with respect to

cotton acreage, producing over 3.8 million bales of 170 kgs each. India also remains the second

largest producer of silk in the world, primarily producing four different varieties of the material.

Jute production and handicrafts is an important occupation for eastern parts of the country where

jute is abundant, while woolen cloth remains a priority sector for northern Indian states. India

currently imports high quality wool from China, Mongolia and Russia to produce woolen apparels.

Indian pashmina shawls remain one of the top exports from the woolen sector (Textile Ministry,

2015).

Although the industry suffered greatly under the British rule, post independence the industry has

relied on a principle of self-sustenance and managed to provide cloth for domestic needs. The first

few years after Independence saw the import of more than one million bales of quality cotton

annually to meet the needs of the Indian textile industry. Efforts made by the State Governments,

like the All India Coordinated Cotton Improvement Project (AICCIP), facilitated research to

improve cotton productivity. The area under cotton steadily increased to about 7.8 million hectares

and the production increased to about 5.6 million bales by 1966-67. High productivity hybrid cotton

was also introduced and the private sector seed companies also made a significant contributions to

the development of several hybrid cottons which were grown throughout the country (Santhanam

and Sundaram, 1997). The Indian textile industry has grown from a publically managed institution

to a largely privatized one since liberal reforms of 1991.

The Make in India initiative holds a lot of scope for foreign investors with respect to the Textile

and Clothing Industry. International apparel manufacturers have already expressed their desire to

9  

invest in India. These include textile machinery manufacturers Rieter and Trutzschler, and

vertically integrated fashion brands like Zara and Mango (Spain), Promod (France), Benetton

(Italy), Esprit, Levi's and Forever 21 (USA) (Tewari, 2016). Not only will these firms utilise the

large workforce but also employ different raw materials and production techniques available in the

country.

4. Handlooms

The Handloom sector forms a significant part of the textile industry for two reasons. Firstly,

with such a widespread area of activity around the country, it employs weavers from extremely

diverse parts. It supports as many as 43 lakh (4.3 million) weavers in rural, semi-urban and urban

areas. Secondly, it contributes significantly to Indian textile exports and produces nearly 15% of all

cloth produced in the country (Textile Ministry, 2015). The Handloom Industry has sustained itself,

with difficulty indeed, despite the existence of textile giants in India. Handlooms in India and rest

of the world have faced tough competition from the powerloom and organised mill sector, due to

high costs of productions, slower production and a substantial decrease in market demand due to

change of preferences of the consumers. Yet, with government interventions since independence,

the handloom industry in India still is able to produce enough cloth to meet domestic and

international demand. Today India provides 95% of all handloom available in the world (Textile

Ministry, 2015-2016). The following table provides a summary of handloom cloth production. We

can observe a growing trend of cloth production

Table 4: Measures of cloth production between 2008 and 2016

Year Cloth Production

(in million sq.

meters)

Share of handloom

in total cloth

production

Ratio of handloom to

powerloom (in terms

of cloth)

Total cloth

production (in

million sq. meters)

2008-

2009

6677 15.9 1:5.04 42121

2009-

2010

6806 14.9 1:5.41 45819

2010-

2011

6949 14.6 1:5.59 47083

2011-

2012

6900 14.8 1:5.42 46600

10  

2012-

2013

6952 11.22 1:5.47 61949

2013-

2014

7104 15.30 1:5.18 46425

2014-

2015

7203 15.18 1:5.24 47438

2015-

2016

4904 15.51 1:5.13 31624

(Source: Ministry of Textiles, India)

According to the definition given by the government of India for policy purposes, handloom

constitutes of “any loom which is not a powerloom” (The Handlooms Act, 1985). According to the

2009-2010 Handloom Census of India, there are 2,377,331 handlooms and 41,331,876 weavers in

India. (Index, Table A)

4.1 History of Handloom sector

Policies towards the handloom sector have always received a mixed review from its critics.

Mostly for being too general in it’s approach without paying attention to the diversified nature of

the industry as a whole. A report by M. Lakshmi Narasaiah provides a comprehensive summary of

the policies of the government towards the handloom sector since independence. We find that

during every five-year plan, there have been efforts to revive the handlooms but there has been no

consistency in the approach towards them. Since each of the five-year plan focused on a different

aspect of the economy, like poverty alleviation or employment or industrial upgradation, their

efforts towards the looms was also inconsistent from one plan to the other.

Due to handlooms’ close linkage with agriculture, in terms of geographical locations, profile

of the workforce and inputs, the First five-year plan (1951-1956), treated the growth and

development of the handloom sector as simultaneous with the agriculture sector. While efforts were

being made to support the farmers and build a strong idea of self-sufficiency with respect to food

production. It was assumed that the handlooms would also benefit from the strengthening of the

rural industry. Therefore, this plan focused primarily on providing more labour absorption power to

the agricultural sector through employment and crop production benefits.

The Second five-year plan (1957-1961) aimed at rebuilding rural India and setting the path of

industrial progress. By promoting small scale industries the plan aimed at providing opportunities

11  

for unskilled and underprivileged sections of society to ensure a balanced development of all parts

of the country. Here again there were no direct policies dedicated to the development and

sustenance of the handloom sector. Schemes for the handlooms came under the Village and Small-

Scale Industries Committee which placed the handlooms as a small scale industry at power with

small furniture manufacturing and local food processing firms. One of the few schemes even aimed

at converting handlooms to powerlooms. This became a serious problem as the policy even

provided training and other subsidies to encourage the switch from handloom to powerloom. A

report on the Third five-year plan states that “about sixty industrial estates were set up for providing

factory accommodation and a number of common faculties for the promotion of small scale

industries. A scheme was also introduced to assist handloom weavers' cooperatives to change over

to powerlooms” (Planning Commission of India, 1961). Separate targets of production were set for

the small-scale and the large-scale sectors of certain industries, like sewing machines production

sub-sector.

Powerlooms deeply damaged the market share and economic viability of the handloom industry

by providing an alternate cloth for the people. Yet these powerlooms used the same raw materials,

like cotton yarn, and invariably need more of it due to their speed of production. This created

competition for the handlooms at the most basic level of raw material procurement. The

profitability of the powerloom garnered political and industrial support which even resulted in an

unauthorised and unmonitored increase in the number of powerlooms in the country.

This growth had a negative effect on the handlooms to such an extent that a report by the

Sivaraman Committee (1974), for the Fourth five-year plan (1969-1974), found that for every two

people a powerloom employed, it displaced twenty- four persons in the handloom sector (Jain,

1985). The Sivaraman report was the first of its kind to outline the problems faced by the handloom

industry as a separate economic sector in the country. While the Fifth and Sixth five-year plans

(1974-1985) concentrated in removing poverty and reducing income gaps in rural areas, they were

able to deliver better schemes for the handloom sector because of efforts of the Sivaraman report.

Yet, providing assistance in terms of subsidies, materials or monetary benefits would have been

insufficiently determined because they were channelled mostly through cooperative societies and

registered institutions. Unregistered weavers in remote and unconnected regions of the country

would have not had the knowledge or the exposure to join themselves to co-operatives or even be

aware of schemes and benefits as the first handloom census was conducted in 1987.

In 1985, the New Textile Policy was introduced to ensure an increase in the total production

of cloth in the economy. There had been a shortfall in the total cloth production, which raised the

price of cloth and adversely affected the weaker sections of society. Under the Janatha Cloth

Scheme, the subsidy for cloth had been increased from Rs. 2.75 per meter to Rs. 3.4 per meter, and

the price of cotton yarn was also reduced. The driving force behind this policy was the need to

12  

provide more cloth in the markets and better choices and qualities of cloth to consumers. The policy

aimed for the continued development of handlooms through co-operatives, greater emphasis on

modernization of looms, provision of better quality input to raise productivity and increasing

availability of yarn at subsidised rates to improve competitiveness. The Policy also reserved 22

articles which were only to be produced by handlooms. These included Sarees, Dhotis, towels,

specific kinds of bedsheets and bedcovers, and specific kinds of dress materials. Although this new

policy was thought to be the driving force behind any new schemes for the handloom in the Seventh

five-year plan, it instead had an adverse effect on the handlooms, and empowered the powerlooms

even further.

Firstly, the directive under the Janatha Cloth Scheme, to produce cloth material which was sold

at subsidized rates, led to a deskilling effect on the weavers. Although cloth production increased

from 397 million metres in 1985-1986 to 548 million metres in 1989-1990 and the scheme also

provided consistent wages to weavers, it put pressure on just a few particular kinds of weaves,

inhibiting the weavers from pursuing different designs or weaves. Secondly, cooperative coverage

was limited to only 30 percent of the total weaver. Thirdly, inadequate enforcement, due to

corruption and lack of awareness, and the challenging of the Handloom Reservation Act of 1985 in

several High Courts the power looms managed to get away with production of items still reserved

for handlooms only (Planning Commission of India, 1992). The Annual report of the Textile

Ministry states that in the past year 68 First Information Reports (FIR’s) have been lodged to the

authorities while 25 arrests have been made due to non-compliance of the act (Ministry of Textile,

2016).

The powerloom and mill sectors were further energized by removal of various previous

restrictions, financial subsidies and protection from competition of imports. The Textile Policy of

1985 provided an opportunity for the registration and regularization of power looms, which were

previously being operated under the radar, and installation of new power looms. This led to a

country wide increase in the number and density of powerlooms in the country creating a further

divide between the collective capabilities of the handlooms and powerlooms. The powerlooms

sector grew rapidly during the Seventh Plan period––from a level of 8.36 lakh in 1985 to 11 lakh in

1990. (Planning Commission of India, 1990). Following the Seventh five-year plan, the share of

handloom sector in cloth production declined to 19.05 percent in 1989- 90 from 24.98 percent in

1980-81 (NABARD, 49).

The era of liberalization in 1991 brought about changes in the industrial environment in the

country. These changes were primarily made in the regulatory framework of the country, making

the practice of business easier. A more liberal economic framework allowed foreign businesses to

enter the Indian market. Privatization of “Sick Mills” and other public sector units associated with

the production of cloth materials led to more efficient allocation of man-power and raw materials.

13  

Machine made cloth was preferred due to its higher productive efficiency and cheaper costs of

production. The opening up of the economy led to the exertion of the idea of export-led growth.

Especially in the textile industry, apparel and Ready-Made Garments (RMG) has the highest share

of exports. Exports amounted to $15264.15 million in 2014-2015 and $15446.97 million in 2015-

2016 (DGCIS, 2016). India’s ranking is second only to China in the production of both cotton yarn

and fabric and fifth in the production of synthetic fibers and yarns. The dismantling of the Multi-

Fibre Agreement (MFA), which imposed heavy duties and restrictions on textile and clothing

imports to the United States and the European Union countries, the handlooms saw a further

deterioration. Previously, cotton handloom products and made-ups were outside quota restrictions

in all the countries. Therefore handloom exports could meet the excess demand of fabrics and

made-ups. After 2005 most quotas were abolished and power looms were given a free hand at

exports (Anthony et al, 131). Hence since the landmark of globalization, the handlooms were

treated as an important reminder of India’s cultural and artistic heritage, which was to act like a

USP, but not of economic value like the powerloom sector.

4.2 Handlooms Today

For the purpose government policies and legislation, ‘handloom’ has been defined as “any

loom other than powerloom” under the Handlooms (Reservation of Articles for Production) Act,

1985. Therefore a handloom cloth is one which has been produced on such a loom. Different

varieties of cloth are produced on different kinds of hand-powered looms. The variation lies in the

material of the threads used (silk, cotton, wool, composite), the color of the threads, the kind of

dyes used (organic or chemically pigmented), and the pattern and design. Therefore for the purpose

of distribution of subsidised raw materials, technical help and governance, the handlooms all over

the country were broken up into different clusters. At first these clusters were large, and centered

around the more productive and popular areas but have been growing in number over the last ten

years. These clusters are composed on the basis of handlooms producing a similar kind of weave,

using similar raw materials, in a geographically close area. There are currently 493 clusters while

644 are still in the process of being sanctioned (as of May 2016). (Index, Table B)

These clusters currently come under the Comprehensive Handloom Cluster Development

Scheme which is a merger between already existing schemes of the government. Instead of several

different schemes with different counsellors and budgets, like the Integrated Handloom

Development Scheme (IHDS) which in involved with providing weavers with social assistance, the

Marketing and Export Promotion Scheme (MEPS) which is responsible for design creativity and

marketing activities, and Diversified Handloom Development Scheme (DHDS) which aims to

ensure the availability of raw materials and working capital for the weavers, the current scheme

14  

integrates all these functions into the objective of just one organisational body. Now there is one

body responsible for training, financing, creating new clusters and marketing.

The handloom workers in India are facing an existential crisis today as a part from suffering

from suffering from inadequate support from the government, they also face issues like poverty.

According to the Handloom Census conducted in 2009, weavers are living at an average annual

income of Rs. 36,498 for handloom worker households, Rs. 37,707 for weaver households and Rs.

29,300 for allied worker households. As a result 36.9% of weavers are under the poverty line. The

weavers are being forced to switch to different professions and completely give up their looms in

order to sustain themselves. This again pushes them towards low paying jobs as 29.4% of the

weavers have never attended school, while only 6% have a college degree. At such low levels of

education, they are skill categorized as un-skilled labor and cannot find meaningful jobs. The

folowing problems faced by the weavers exacerbate the above conditions as well.

4.3 Problems faced by the handloom industry

The current policies can be understood as an aggressive push to revive the handlooms but they

do not provide a clear indication of what this revival is for. One focus seems to be the continued

employment of active weaver households and allied workers but the future of the weaves in the

market remains uncertain. While this thrust has come in the form of large number of financial and

non-monetary aid, the future and sustainability of it is unclear. Due to the marginalising effect of

the past textile policies, the handlooms have been reduced to a rural industry and mere art form in

need of preservation.

4.3.1 Competition with the powerlooms

One of the biggest problems for the handlooms have been the preferential treatment of

powerlooms. The rise of the powerloom over the last few decades and the protectionist attitude

towards the handlooms has led to the deterioration of the competitive spirit of the handlooms. Value

of Indian exports for the year 2015-2016 for Ready Made Garments (RMG) was $15446.97 (in

millions of USD) while for handloom products was $337.27 (in millions of USD) (DGCIS, 2016).

The organised cotton mill and powerloom sector is definitely a much more attractive investment

opportunity for many foreign investors who will be looking towards India under the Make in India

Campaign. This is due to the inherent advantage of being a centralized industry as opposed to

handlooms which is a decentralized, cottage industry. The handlooms will not only loose out on

finance but also market share, as new machines and techniques will enable power-run machines to

replicate the handwoven patterns at much lower costs and in lesser time as well. They will also lose

15  

out on weavers. The handloom census of 2009 shows that the number of weavers in the country has

reduced from 65 lakhs (6.5 million) to 43.3 lakhs (4.33 million), or by approximately 33.3%, over a

period of fifteen years (Note on Handlooms).

Today there exists a large lobby for the powerloom and organised mill sector to amend the

Handlooms Act of 1985 which provides certain benefits to the handlooms. There has been a strong

push for the redefinition of ‘handloom’ in a way which renders semi-power looms as handlooms, in

order to divert subsidised raw materials and tax concessions. There has also been efforts to remove

items like saris from the group of items which are reserved for only handloom production. These

items are the most well-known and popular handloom products and any change in this list will

cause the weavers to not only lose their exclusivity but also on one of their largest markets. The

powerlooms will be able to replicate the traditional patterns on a large scale and sell the products

cheaper and also cause seize a lot of the raw material intended for the handlooms. but the

government has not shown any signs of doing so. A press release by the Ministry of Textiles in

2014 expressed that no change is contemplated by Ministry of Textiles, in the definition of a

handloom and by extension, a handloom produced cloth.

The 100% FDI in the textile industry might uneven the playing field even further for

handlooms if much of the investment is directed primarily towards setting up factories and ready-

made garments manufacturing firms. Unless there is an interest and a movement to directly invest

into the homes and looms of the handloom workers, the FDI can be further harmful to the weavers.

This interest is currently lacking due to an extremely small market for handloom products in India

itself. Handlooms cater to either the rural population, which does not have access to an alternate

source of clothing, or an extremely niche urban market that is able to understand afford the various

kinds of weaves.

4.3.2 Lack of stable and constant market demand

The Handloom industry suffers from low market demand for its products. Therefore despite

country wide efforts to revive the handloom sector through government interventions on the supply

side, the current condition of the sector is still week. At the grassroot level, the movement to revive

handloom is considered targeted to only certain geographical areas and underwhelming. Although

there are numerous Indian designers and fashion entrepreneurs who have shown much interest in

the handlooms and their desire to work with indigenously made cloth, the movement is less

widespread than it seems. The improvement in the market conditions for handlooms and the mild

success of government funding has been because of a current fashion trend which labels ‘ethnic’

designs and patterns as high Indian fashion. For example, the revival of the Sari, a traditional Indian

formal clothing, as daily Indian wear has taken place only because the prominent designers started

16  

experimenting with patterns and materials and were able to get popular Indian celebrities to dress in

them for events. Since the demand for these cloths depend on the pattern or yarn material needed,

only a particular kind of weave is wanted at a particular time. Therefore the revival which is spoken

off is not something experienced by weavers throughout the country.

Paromita Banerjee, an Indian fashion designer who sources her cloth materials only from

Indian weavers, expressed that in the last seven years she has observed “a rush of fashion

entrepreneurs who call themselves designers arrive at weaver clusters, assign a few months’ worth

of work, then disappear (Banerjee, 2015).” According to her such a sudden and unsustaining influx

of designers and entrepreneurs does not contribute to the economic or social welfare of the weavers,

as expected. It instead creates false hopes of continued opportunity to earn livelihood. She also feels

that there very little that government funding can do if it is not sustained for at least the next five to

seven years. According to her government projects work only to fulfill their own checklist of

initiatives. There is hardly any research or outreach efforts to find areas that funding or training is

most required.

Laila Tyabji, Founder of Dastkar, an NGO which works with rural artisans, believes that

although today there is a certain kind of energy with respect to the attitude towards handlooms, the

sector is often forgotten and overpowered by the needs of other, more modern sectors which are

more popular with the younger generations. In a recent article she says “the handloom sector is a

small embattled section of a Ministry where handlooms are totally overshadowed by the

overpowering presence of the Mill and Powerloom sector. Their aggressive, organised and well-

funded lobbies make sure that the voice and needs of the handloom weaver are completely

drowned” (Tyabji, 2016). She feels that handlooms is a complex and integrated economic sector

which has been simplified down to a simpler one where the state can influence demand and supply

by interventions. This has led to the emergence of a standardized view of all looms, which is a gross

oversimplification of the entire weaving process and the diversity of the range of handlooms.

4.3.3 Generalised and non-specific schemes and policies

Within their own individual units the handloom villages and clusters, which have organically

existed preceding any interventions by the state, have organized themselves with respect to the use

of factors of production. The social structures of many weaving communities are based on the

division of labour within the weaving process. The provision of government funds, the setting up of

handloom development schemes are over-simplifying the work that needs to be done within each

weaver community. This claim is supported by detailed studies of weaver communities, which

report a division of labour as determined by the workers’ caste, religion, gender and tribal

affiliations. Case studies of specific clusters have also shown that a single handloom product is not

17  

the produced within a single household unit but rather a multiple household units, which differ by

caste, gender and religion (Roy et al, 2016). The Handloom Census of 2009 also found that the

caste, religious and social compositions of the handloom worker household also differs in different

parts of the country. That is why combining weavers into generic cluster development schemes is

short-sighted and not always helpful to the weavers. Since different levels of aid is needed at the

various levels of the production process, state-sponsored help more often than not falls short of the

required amount as the money disbursed is of a standard amount and there is no kind of variation

depending on geographical location or number of family members.

4.3.4 Large number of interventions and sponsorship killing entrepreneurial spirit

There are an extremely large number of NGO’s and help groups, in addition to National and

State government schemes and policies, which have created a certain kind of dependence on

external leadership. The weavers definitely need the help but are very often overwhelmed with

external checks and controls which are responsible for killing autonomy and self-reliance. Tyabji

believes “they should be treated like other entrepreneurs––with easy access to resources and

investment” (Tyabji, 2016).

Inherently a home-grown cottage industry, one of the unique aspects of the handlooms is the

collective and social nature of its production process. Each kind of weave has its own specific

method and process, the knowledge of which is collectively owned by its native community. Yet

the closest thing to privatization the weavers have today is the sudden invasion of the Indian fashion

industry into the small handloom villages and clusters. The current fashion trends are greatly

responsible for supporting weavers and small craftsmen. Indian designers like Aneeth Arora, Sanjay

Garg, Paromita Banerjee and Sabhyasachi work, and have always worked, primarily with organic,

hand woven materials. They design contemporary, western clothing, keeping in mind Indian

patterns and colors.

These efforts have made them increasingly popular with the younger population, especially for

their ethnic designs and affordability. They can be considered the real heros of the Indian handloom

because of their persistent work and continued investment in the looms. They not only provide

desired designs but also help train the weavers in innovative techniques learnt in institutions like

National Institute of Fashion Technology (NIFT) and National Institute of Design (NID).

Manufacturer of Indian ethnic wear have also turned towards handlooms to give their products an

edge in the market. Brands like Diva’ni, Anokhi and Fabindia are involved in providing a platform

for weavers and artisans of the country. They work closely with weavers and craftsmen from the

remotest regions of the nation to conserve and promote their loom crafts. Efforts like this can be

praised for providing weavers guidance and market access but also allowing them to regain control

18  

of their economic future by constant work. This is where private investments can be helpful. By

providing capital and market support, they can provide the the weavers with autonomy and self-

confidence which has been lacking so far.

5. Spillovers from Make In India to the handlooms

A campaign as big and ambitious as Make in India needs support from other economic

institutions as well. The anticipated Foreign Direct Investment needs secure regulatory and banking

institutions, employment needs more productive skills and better labor laws, and any kind of

production requires sufficient raw materials. The Indian government has therefore introduced

initiatives which intend to support the Make in India campaign in the ways mentioned above. These

initiatives are not specific to any particular sector, but instead have a wider applicability. They have

the power to change the socio-economic structure of the Indian population. The sectors which lie

outside the twenty-five identified by the government are also guaranteed to reap the benefits of

these initiatives. The Handloom sector has also been affected by these policies. They are the

following:

5.1 Skill India

For the last two decades, unemployment in India has averaged at around 7.32% (Ministry of

Labor and Employment). Yet, unemployability is a far greater challenge for India than

unemployment. Despite being one of the fastest growing economies and being home to almost

twenty-five thousand colleges and higher educational institutions (MHRD, 2011), India faces an

extremely high rate of unemployability. Although the number of institutions and the enrollment

ratio has increased, the employability of the Indian youth has not. A report by the Aspiring Minds

Foundation states that “7% graduates not employable in any sector of the knowledge economy”

(Aspiring Minds Foundation, 2013). The report also explains that more than 50% of the graduates

lack basic computer and English Language skills. These students mostly belong to smaller towns

situated in rural areas. Therefore they lack other skills, besides those learnt as part of their college

curriculum, because of which they might be considered inferior to an employer.

For the last few years, efforts have been made to reform the educational system of India even at

the primary educational level. For example, the enforcement of the Right to Education Act (2011)

as part of the Sarva Shiksha Abhiyan (SSA), which ensures compulsory education for all children

up till the age of fourteen, has increased enrollment rates and reduced dropout rates, providing

basic, minimum level of education to all Indian students. At the higher educational level, many

educational institutes have been set up to cater to a growing demand for specialized higher

19  

education. Competitive and generous scholarships are also offered, along with reservations for

underrepresented minority, and financially disadvantaged groups. Yet, the quality of education

offered is not up to global standards. The numerous institutions cater to students pursuing

vocational training, humanities, social science and applied science studies but still are unable to

produce graduates who can qualify and meet the standards of work laid out by the employers. A

paper by International Journal of Management and Business Studies states that the state capital

Hyderabad is ranked the number one Indian ITES destination by NASSCOM, and the state of

Andhra Pradesh itself produces half a million graduates from its colleges and universities every

year. Yet, due to poor awareness of industrial skills, only 10% of general graduates and 25%

engineering graduates can be employed in various sectors of industry (Padmini, 2012).

With an ambitious project to make India the manufacturing hub of the world, it is important to

be able to provide the incoming producers with quality resources. While India boasts of a low cost,

efficient labor class, reports like the Global Competitiveness Report for the year 2015-2016,

published by the World Economic Forum, ranks India at 55, out of 144, behind Panama and the

Philippines. Although this ranking has improved by sixteen points from the previous year, key

indicators like ‘Labour Market Efficiency’ and ‘Higher Education and Training’ rank at 103 and 91

respectively (World Economic Forum, 2016). Raising productivity rates requires major thrusts in

the direction of skill development and policy changes in the workforce.

The Skill India Campaign, or the Pradhan Mantri Kaushal Vikas Yojana, initiated by the

Ministry of Skill Development and Entrepreneurship aims to train individuals at entry level jobs in

various skills spread across forty different sectors. “The Skill India ecosystem for training targets

around forty million workers in the unorganised sector both in industries and services.” (Rudy,

2016). This ministry itself is the newest ministry within the central government. The campaign has

approximately 3,222 training centers which provide subsidised, sector specific training to students

looking for vocational expertise relevant to their field of work. The training pertains to every level

of the production chain. Skills on each level of the production process have been identified and

standardized. For example, in the handloom sector, skills pertaining to the production of different

handlooms weaves, like thread-spinning, cutting, dyeing, designing, and other pre-loom processes

are taught in a formalised and academic way at institutes like Indian Institute of Handloom

Technology (IIHT). Such skills were earlier imparted from one generation to another through

practical, on-site training and were performed within families for generations. Traditional handloom

villages contained units of households specialising in a particular skill related to cloth production.

The introduction of training institutes have created a possibility for individuals belonging to

non-weaver families to take up the profession, while earning an academic degree for a particular

skill. Currently there are five central IIHT’s located at Varanasi (in the state of Uttar Pradesh),

Salem (Tamil Nadu), Jodhpur (Rajasthan), Guwahati (Assam), and Bargarh (Odisha). There are

20  

also four state-run IIHT’s in Venkatgiri (Andhra Pradesh), Gadag (Karnataka), Champa

(Chhattisgarh) and Kannur (Kerala). According to the Annual report of the Textile Ministry, the

capacity of each of these institutes is 285 students per year and they are admitted diploma and post-

diploma courses relating to textile and handloom technologies. The Skill India Ministry has issued

notices and tenders to invite trainers and external educational training institutes to outline a

standardised syllabi and prepare textbooks for the IIHT’s.

5.2 Digital India

The Digital India Campaign is an extension of an already existing program of e-Governance of

in the country. The current campaign aims to provide not only government services to all its citizens

digitally, but also greater access and connectivity through internet services. This program was

formally launched as an official effort of the present Indian government in July, 2015 and its vision

is to create inclusive growth opportunities, especially in rural and remote areas, through three key

areas of focus –– Digital Infrastructure, access to Governance & Services online, and Digital

Empowerment of Citizens. The website for the program clearly states the mission of Digital India-

“to transform India into a digitally empowered society and knowledge economy.”

The Census on availability of Amenities and Assets conducted in 2011 reports large

discrepancies between rural and urban populations who have access to basic amenities like

electricity and telephone services for communication. An article by Economic and Political Weekly

explains that although it took only five years for mobile phone services to reach a diffusion rate of

75%, the diffusion rate of broadband is less than 10% over a span of ten years (Mani and Sridhar,

2015). These figures show the challenge which hinder the successful development of a program like

Digital India as well and the immediate need for it. A report by Frank La Rue for the United Nation

declares access to internet services as basic human right. La Rue states that “given that the Internet

has become an indispensable tool for realizing a range of human rights, combating inequality, and

accelerating development and human progress, ensuring universal access to the Internet should be a

priority for all states” (La Rue, 2011). Yet, dispersal of such services in India reach a very low

percentage of the population. According to the All India Census on 2011, 32.8% of the Indian

Population lacked access to electricity, while 36.8% did not own a telephone in their own house.

Although basic and affordable access to the internet is now globally considered an important

necessity for the development of nations, with numbers like these the goal of building a Digital

India seems a very distant and over-ambitious. The table below shows the percentage of the Indian

population with access to the above amenities in the years 2001 and 2011.

21  

Rural Urban Total

2001 2011 2001 2011 2001 2011

Telephone 3.8 54.3 23 82 9.1 63.2

Television 18.9 33.4 64.3 76.7 31.6 47.2

Electricity 43.5 55.3 87.6 92.7 55.8 67.2

(Source: Government of India, Ministry of Home Affairs, Census of India 2011)

The Prime Minister’s visit to the Silicon Valley in 2015 has been crucial to garner international

support for such an ambitious campaign in a country like India. Tech Giants like Google plans to

enable Wi-Fi Internet in 500 railway stations, Microsoft proposed to not only help the government

take low-cost broadband to five lakh villages but also make India its hub for cloud services through

data centres located in the country. Chip-maker Qualcomm also announced a $150 million fund for

start-up companies in India and Facebook has started a project to enable Wi-Fi hotspots in rural

India (The Hindu, 2015). The invitation to the silicon valley to take part in India’s growth and to

treat the Indian market as a land of opportunity for even themselves has been the driving force of

the Digital India Campaign so far. There are a few changes which the government has made ahead

of this campaign. A few of the changes listed below have positively impacted the weavers.

1. Digitalization of information: A lot of information regarding government policies and raw

material supply schemes were previously imparted through government letters or public

notices in newspapers and radio channels, especially in rural areas. In this age of technology

much of this has been converted to digitalised, online information. Twenty-four hour

availability of information about yarn supply schedules, shipment details, in English, Hindi

and various regional languages, has made the process of obtaining supplies and licenses for

the weavers much simpler and easier. Information about loans and loan concessions are also

available online.

2. Online Services: The weavers have access to online portals, personal to each weaver and

linked to their own identity or adhaar cards, which provides them access to an online

banking facility. This account receives the all provisions and finances dispersed by the state

and local governments. These include compensations for weavers as part of the cluster,

block and group schemes. Health insurance and life insurance, provided to the weavers

under the Handloom Weavers’ Comprehensive Welfare Scheme, are also administered

online. The Health Insurance Scheme (HIS) provides benefits up to Rs. 30,000 for medical

treatment to the weaver and his family, whereas the Mahatma Gandhi Bunkar Bima Yojana

22  

(MGBBY) provides insurance cover to the handloom weavers in the case of natural as well

as accidental death, providing funds up to Rs. 1,50,000 for accidental deaths and total

disability. The salaries of the weavers, for government sponsored projects, are deposited to

these accounts. The availability of these funds in a more organised and predictable manner

has made it possible for weavers to take on work, procure yarn and other raw materials

required to keep their loom running. This has especially benefitted those weavers who are

not part of any co-operative due to geographical remoteness or even voluntarily. This has

made the process more transparent and potentially minimized problems of misreporting

actual amount of funds dispersed and corruption.

3. Introduction of handloom technologies: There are at least six basic processes which have to

be completed for most handloom articles. These include cleaning of the cotton, spinning the

raw cotton into yarn, spooling, dyeing of the threads, designing and preparing the loom

itself. These are referred to as pre-loom processes. There are also finishing processes and

quality checks before hand woven materials are sold in the market (Majumdar et al.). An

upgrading of the pre-loom technologies will increase the productivity of the weaver and

insure faster cloth production. Various publications of the government explain the

introduction of such technologies and their impact on the weavers. For example, the recent

introduction of Solar Charkhas (spinning wheels) to a weaver cluster in the state of Odisha

have made the spinning of hank yarn faster and cheaper. The solar charkhas can produce up

to 75-90 hanks of yarn in eight hours as compared to the 25-30 hanks made by the hand-

spun charkha (Fibre2Fashion, 2016). Non-availability of good quality yarn at reasonable

prices is a concern for the handloom sector. Historically, there has been a reported shortage

of yarn in India (Dastakar, 2001). The de-linking of yarn production from cloth production

has significantly affected the handloom industry in a negative way. This has historical roots

as well. During the British rule, India became an exporter of raw cotton and importer of

spun yarn. This change in source of yarn supply affected the organisation of the industry in

India and affected the textile industry as a whole. The yarn was now supplied at a much

higher price and regulated quantities. It also led to the creation of the role of a middle-man

which in post-independence years became the government or private mill owners who

would charge prices at their discretion. That is why a technology like the solar charkhas will

improve not only the quality of the yarn but also increase total output. This remains just one

example of improvement in techniques of production. Apart from the above, technological

support from the state has come through reforms at the structural side of the handloom

sector. These include setting up of Common Facility Centers’ (CFC’s), equipped with

internet and other loom facilities. Much funding is also provided by the central government

through suggestions and proposals of state and local governments.

23  

4. E-commerce website and online sources of supply and demand to eliminate co-operatives:

There has been an attempt to shift the market relationship between consumer and the

weavers. E-commerce platforms like Amazon India, Flipkart and Alibaba have committed to

selling handloom products on their websites. This has been a big achievement for the

handloom sector because it removes the need for co-operative stores and government funded

market spaces which have been accused of irregular stock and inventory checks,

inconsistent methods of quality control and corruptions. The e-commerce platform has given

the opportunity for weaver agencies and groups to directly reach the consumers on a large

scale. Consumers not only domestically but also internationally have access to handloom

products, whereas previously they had the limited choices available to them at government

emporiums and co-operative stores. This new platform provides an opportunity for

handlooms clothes to be sold on the same medium as their powerloom counterparts. They

also provide adequate market exposure and give the weavers a better idea as to which

patterns and products sell the most and are able to modify their production similarly.

5.3 Brand ‘India’

In addition to ‘Make in India’, the government of India has introduced a ‘Brand India’ to

market its products in the global market. The idea behind is to boost up the national brand value to

ensure enough marketability for its Make in India products. The brand value could provide a

measure of how a country is viewed by the rest of the world affects the value of its investment,

exports and tourism, giving an insight into the economic, social and political environment of a

nation. A recent report by Brand Finance, provides an annual ranking of all the nations with respect

to the value of their national brand. India ranks seventh, up one stop from the previous year. Much

of this can be attributed to the growing international confidence in the Indian business climate. The

India Brand Equity Foundation (IBEF) is a trust set up the Department of Commerce at the Ministry

of Commerce and Industry, India. It is responsible for the promotion and advertisements of Brand

India.

On 7th August 2015, the Indian Prime Minister, Narendra Modi, announced the day to be

celebrated as National Handloom Day and inaugurated the ‘India Handloom’ Brand. This is an

initiative of the Ministry of Textiles for adding a label to indigenous, high quality handloom

products. It aims to be not only an endorsement of the handloom products but also encourage

international and domestic buyers to purchase the ‘branded’ product. With very limited marketing

from the weavers itself, and the tag of culture and tradition proving to be insufficient at attracting a

modern and west-looking generation, the branding of the most basic Indian commodity of cloth

24  

could pull people towards handlooms. By acting as a mark of assurance, the brand will also be

useful in safeguarding genuine handloom products from machine-made ‘fakes’ in the domestic and

foreign market. The government has also invited a popular celebrity designer, Ritu Beri, to stand as

an ambassador and help with policy decisions towards the handlooms as the advisor to the Khadi

and Village Industries Commission (KVIC). Although these efforts have shown signs of success,

what needs to be insured is that the popularity and support for the handlooms does not die out with

the decline in their fashionability.

Many of these products are sold online, through e-commerce tie-ups of the government, and in

government emporiums. There has been a complete revamp of the co-operative stores called Co-

optex. These stores used to be one of the very few ways of procuring genuine handloom products

since the 80’s. After running losses of nearly $1.3 million, these have been given luxurious

makeovers to fit the image created to appeal to a larger group of consumers. These stores are trying

hard to break away from the narrative of handlooms being rural clothing and engaging only village

sensibilities. One such pilot store in Chennai, Tamil Nadu, has been praised for its efforts to help

the handloom weavers of the local areas. The studio and the range of materials and clothes were

designed by graduate students from the NID. This also led to the revival of a form of weaving,

deteriorating due to lack of adequate work and demand. The store is also working to educate

consumers on the different kind of weaves and the regions they belong to (Chandrashekhar, 2016).

This is again a good area for non-state investors to invest and work with the weavers closely. A

vested interest in the handlooms will ensure more sustainable ways of empowering the handlooms

and can attempt at branding and marketing activities for the handlooms.

5.4 Export Promotion

Trade, and the dispersal of produced goods to foreign markets, is an integral part of the push

for manufacturing. Instead of relying on the uncertainties of global trade, and primarily on the

service and IT sector, a focus on manufacturing enables the Indian economy to produce

standardized goods that are in demand in both domestic and international markets. Therefore, a

focus on manufacturing allows an expansion of the market itself (Majumdar, 2012).

To aid the process of profitable trade and take advantage of Make in India, the government of

India has considered some major changes in trade tariffs and excise duties. The Finance Minister’s

budget speech for the union budget for the financial year 2016-2017 contained “suitable changes in

customs and excise duty rates on certain inputs, raw materials, intermediaries and components and

other goods” and even rules for simplified procedures “to reduce costs and improve competitiveness

of domestic industry in sectors like information technology hardware, capital goods, defence

production, textiles, mineral fuels & mineral oils, chemicals & petrochemicals, paper, paperboard

25  

and newsprint, maintenance repair and overhauling of aircrafts and ship repair etc.” (Jaitley, 2016).

This also includes a few changes which are to positively affect the handlooms. Two major changes

are (i) Increase of excise duty of branded, readymade garments of a price of Rs. 1000 and above,

from ‘Nil’ without input tax credit or 6%/12.5% with input tax credit to 2% without input tax credit

or 12.5% with input tax credit, (ii) Reduction of basic customs duty of natural fibers and cotton yarn

from 5% to 2.5%, and removal of import duties on fabrics used for production for export (Jaitley,

2016). This will help increase the value-adding abilities of the weavers, and reduce costs and sale

prices of handloom cloths. This will also help even the playing field, to some extent, between the

handlooms and powerlooms.

6. Conclusion

Today, the interest in a handloom revival movement can be understood as a desperate measure

to keep the handlooms active. As mentioned earlier, there has been a great reduction in the number

of looms and weaver over the last two decades. This is due to poverty, low market demand for

handloom products and therefore the need to find alternative employment and destructive policies

of the government. As explained earlier, for many years after Indian independence, the handloom

weavers were not given an independent status or treated as a separate economic entity. The ability

of this sub-sector to provide employment to millions of unskilled workers was undermined and its

productive capacity was also not recognized. This is why there was an unbalanced growth of

powerlooms as compared to handlooms. Post-liberalization, the sector was heavily protected, along

with a few other sectors, which killed the competitive and entrepreneurial spirit of the weaving

communities.

As shown through the five year plans, the policies towards the handlooms have been extremely

scattered and non-uniform. The handlooms were not treated as an economic entity but rather as an

instrument to satisfy the goals of the government towards other priority sectors like agriculture, and

securing macroeconomic goals of employment. The disproportional development of the handloom

sector and the disparity in different states can also be attributed to appeasing and vote-grabbing

techniques of various state governments. The schemes and dispersal of funds in the past have been

sporadic and inconsistent. These instruments of government funding were not used in a sustaining

way and have affected only small pockets of the handloom population. Thus, the handlooms have

still not been able to become self-sufficient and independent of state aid. This can be due to the

highly dispersed nature of the handlooms itself but also to leakages in funds due to corruption and

low accountability in government administratio.

Although some spillover effects from the Make in India initiative have been observed

throughout the economy, these changes hold a significant place for small cottage industries like the

26  

handlooms. Policy changes that aim to improve business environments, labor laws, skill sets and

productivity in the economy will always have an all-round positive affect. Therefore now, with the

new policies already in place, the goal of the government should be to promote a sense of

entreprenuership among the weaving communities and find ways to bring the indigenously

produced cloth to the markets. This can also solve the problem of low marketability by encouraging

the production of high quality and defect-free handloom products with minimal carbon footprint, to

generate a special market niche for handloom products, and keep the looms active.

27  

INDEX

Table A: Number of Handlooms, Weavers and Yarn Depots in each state

State Number of

Handlooms

Number of

Handloom

Weavers

Number

of Yarn

Depots

1. Andhra

Pradesh

124,714 355,838 70

2. Arunachal

Pradesh

27,286 33,041 -

3. Assam 1,111,577 1,643,453 45

4. Bihar 14,973 37,725 5

5. Chhattisgarh 2,471 8,191 6

6. Delhi 2,560 2,738 1

7. Gujarat 3,900 9,496 6

8. Haryana 4,876 7,967 -

9. Himachal

Pradesh

5,578 13,458 8

10. Jammu and

Kashmir

7,301 20,749 4

11. Jharkhand 2,128 21,160 -

12. Kerala 13,097 14,679 -

13. Karnataka 40,488 89,256 21

14. Madhya

Pradesh

3,604 14,761 13

15. Maharashtra 4,511 3,418 4

28  

16. Manipur 190,634 218,753 -

17. Meghalaya 8,348 12,925 6

18. Mizoram 24,136 43,528 -

19. Nagaland 47,688 65,303 10

20. Odisha 43,652 114,106 -

21. Punjab 261 2636

22. Rajasthan 5,403 31,958 4

23. Sikkim 345 568 1

24. Tamil Nadu 154,509 352,321 190

25. Telengana 66,029 15,679 33

26. Tripura 139,011 137,177 14

27. Uttarakhand 3,766 15,468 5

28. Uttar Pradesh 80,295 257,783 5

29. West Bengal 307,829 779,103 59

(Source: Handloom Census of India 2009-2010)

29  

Table B: List of States and the clusterization approach to promoting handlooms

State Completed In-progress Total

1. Andhra Pradesh 33 45 78

2. Arunachal Pradesh 22 22 44

3. Assam 8 150 158

4. Bihar 1 16 17

5. Chhattisgarh 5 11 16

6. Delhi 0 1 1

7. Gujarat 9 0 9

8. Haryana 0 1 1

9. Himachal Pradesh 8 4 12

10. Jammu and Kashmir 11 4 15

11. Jharkhand 35 22 57

12. Kerala 16 13 29

13. Karnataka 8 18 26

14. Madhya Pradesh 18 5 23

15. Maharashtra 5 2 7

16. Manipur 67 61 128

17. Meghalaya 9 75 84

18. Mizoram 2 24 26

19. Nagaland 34 20 54

20. Orissa 6 55 61

21. Rajasthan 1 5 6

30  

22. Sikkim 0 4 4

23. Tripura 14 34 48

24. Telengana 22 5 27

25. Tamil Nadu 58 35 93

26. Uttarakhand 8 2 10

27. Uttar Pradesh 54 8 62

28. West Bengal 39 3 42

Total - 493 644 1137

(Source: Handloom Census of India 2009-2010)

31  

Bibliography

Narasaiah, M Lakshmi. Crisis in the Handloom Industry. New Delhi: Discovery Publishing House, 1999. Print. Jain, L.C. “1985 Textile Policy: End of Handloom Industry.” Economic and Political Weekly, Vol. 20, No. 27. 1121-1123. www.jstor.org/stable/4374560. World Bank. South Asia Regional Office. India cotton and textile industries: reforming to compete. Washington, DC : World Bank and Allied Publishers-New Delhi, 1999. Print.

Soundarapandian, M. Growth and Prospects of the Handloom Sector in India. Mumbai: National Bank for Agriculture and Rural Development, 2002. Print.

Santhanam V, Sundaram V. Agri-history of Cotton in India. Nagpur: Central Institute for Cotton Research (CICR), 1997. http://www.cicr.org.in/Research_Notes/cotton_history_india.pdf

Tewari, Bandana. “India, the Fashion World’s Next Powerhouse?” Business of Fashion. Business of Fashion, n.p. 22 February 2016. Web. 3 July 2016.

Majumdar et al. Process Control in Textile Manufacturing. New Delhi: Woodhead Publishing, 2012. Print.

“Solar Charkhas Set to Change Khadi Sector” Fibre2Fashion. Fibre2Fashion, n.p., 16 March 2016. Web. 30 May 2016.

“‘Digital India’, an enterprise to transform India: Modi.” The Hindu Business Line. The Hindu, n.p. 27 September 2015. Web. 20 June 2015.

Niranjana, Seemanthini and Soumya Vinayan. “Report on Growth and Prospects of Handloom Industry.” Dastkar Andhra. Planning Commission of India. n.p. n.d.Web. 3 July 2016. http://planningcommission.gov.in/reports/sereport/ser/stdy_hndloom.pdf

Anthony, Anoo Anna and Joseph, T. SMEs in Indian Textiles. London: Palgrave Macmillan, 2014. Print.

PHD Chamber of Commerce and Industry. Progress of Make in India. New Delhi: PHD Research Bureau, 2015. Pdf.

http://phdcci.in/file/thematic_pdf/Progress%20of%20Make%20in%20India.pdf

Bhat, T.P. India: Structural Changes in the Manufacturing Sector and Growth Prospect. New Delhi: Institute for Studies in Industrial Development, 2014. Pdf. isid.org.in/pdf/WP173.pdf

Planning Commission of India, “Eighth five year plan”, Vol 2. Government of India.

Ministry of Textiles, India. Annual Textile Report. New Delhi: Government of India, 2016. Pdf. texmin.nic.in/sites/default/files/ar_15_16_ENG.pdf

Directorate General of Commercial Intelligence and Statistics. India’s Import of Major Textile Items. Kolkata: Foreign Trade Statistics of India, 2016.

32  

Office of the Development Commissioner for Handlooms, Ministry of Textiles. Guidelines for the Implementation of Comprehensive Handloom Development Scheme (CHDS). New Delhi: Government of India, 2013. pdf. handlooms.nic.in/writereaddata/2408.pdf

Government of India. Print Release, January 9th, 2014. Pdf. pib.nic.in/newsite/PrintRelease.aspx?relid=102376

Dash, Satya Narayan. Handloom Industry in India. New Delhi: Mittal Publications, 1995. print.

Das, Chandan Roy, Mithu and Mondal, Prosenjit. “Handloom Cluster of India: A Case Study Santipur Handloom Cluster.” International Journal of Humanities and Social Science Invention, Vol 5, No. 1, 27-35. www.ijhssi.org/papers/v5(1)/D0501027035.pdf

Census of India. Pdf. censusindia.gov.in/2011census/hlo/hlo_highlights.html

Ministry of Textiles. Note on Handloom Sector. New Delhi: Ministry of Textiles, 2015. pdf. http://handlooms.nic.in/writereaddata/2486.pdf

Tyabji, Laila. “With a Change of Garb, Smriti Irani Could Transform Handlooms From Irrelevant to Dynamic”. The Wire, 13 July 2016. thewire.in/50963/smriti-irani-handloom-sector/

Banerjee, Paromita. “Handloom is not a trend”. Livemint, Last odified: 22nd April, 2016. www.livemint.com/Opinion/veUkId2X6pQ2b8COaIYkBM/Handloom-is-not-a-trend.html

Trading Economics. India Unemployment Rate. www.tradingeconomics.com/india/unemployment-rate. Accessed 20 June 2016.

“National Employability Report.” Aspiring Minds, 2013. Pdf.www.aspiringminds.in/docs/national_employability_report_graduates_2013.pdf. Accessed 18 June 2016.

Ministry of Human Resource Development (MHRD). Educational statistics at a Glance. New Delhi: Government of India, 2011. http://mhrd.gov.in/sites/upload_files/mhrd/files/statistics/EduStatGlance_2011.pdf

Padmini, I. “Education Vs Employability- the Need to Bridge the Skills Gap among the Engineering and Management Graduates in Andhra Pradesh.” Vignana Jyothi Institute of Management, Vol 2, No. 3, 90-94. www.ijmbs.com/23/ipadmini.pdf

The Global Competitiveness Report 2015-2016. World Economic Forum. reports.weforum.org/global-competitiveness-report-2015-2016/ Accessed 5 June 2016. Rudy, Rajeev Pratap. Personal Interview. 17 July 2016.

Digital India. Ministry of Electronics & Information Technology, Government of India. www.digitalindia.gov.in/ Accessed 9 June 2016.

Mani, Sunil V, Sridhar. “Trends, Determinants and Challenge: Diffusion of Broadband Internet in India.” Economic and Political Weekly. Vol 50 No. 51. 19 Dec. 2015. www.epw.in/journal/2015/51/special-articles/diffusion-broadband-internet-india.html. Accessed 22 June 2015.

Human Rights Council. Report of the Special Rapporteur on the promotion and protection of the right to freedom of opinion and expression, Frank La Rue. United Nations, General Assembly. 16

33  

May, 2011. www2.ohchr.org/english/bodies/hrcouncil/docs/17session/A.HRC.17.27_en.pdf. Accessed 23 June 2016.

Nation Brands 2015. Brand Finance. October 2015. brandfinance.com/images/upload/nation_brands_2015_for_print.pdf. Accessed 27 July 2016.

Chandrashekar, Vaishnavi. “Co-optex 2.0: From musty emporiums to glitzy stores.” The Economic Times. 5 July 2016. economictimes.indiatimes.com/industry/cons-products/garments-/-textiles/co-optex-2-0-from-musty-emporiums-to-glitzy-stores/articleshow/53056495.cms. Accessed 7 July 2016.

Make in India. Ministry of Commerce and Industry, Government of India. www.makeinindia.com. Accessed 8 July 2016.

Doing Business. World Bank Group. www.doingbusiness.org/rankings. Accessed 25 May 2016.

Majumdar, Sumit K. India’s late, late industrial revolution. New York: Cambridge University Press, 2012. Print.

Jaitley, Arun. Union Budget 2016-2017. Ministry of Finance, Government of India. 29 February 2016. http://indiabudget.nic.in/ub2016-17/bs/bs.pdf. Accessed 17 July 2016.

Shukla et al. Handloom Census of India 2009-2010. New Delhi: National Council of Applied Economic Research (NCAER), 2010. www.ncaer.org/publication_details.php?pID=187.

Planning Commission of India. Five Year Plans. www.planningcommission.gov.in