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1. Introduction
In 2024, India boasts of one of the youngest populations in the world. With an economy
surpassing $3 trillion in size and a GDP growth of 7.3%, as one of the fastest growing
economies India is well on its way to achieving its target of being a $5 trillion economy by
2028. But this vision of Amrit Kaal (Annexure 4) has a fundamental structural flaw - its
workforce majorly comprises unskilled labor primarily employed in the informal sector.
Of a total workforce comprising 56.5 crore people only 20% are employed in the formal sector and over 80% are unskilled. The picture remains equally bleak in the younger demography of the workforce; with 27% of the population under 15 years and 52% under 30 years (as per the National Family Health Survey-5, 2019-21), India is approaching a critical juncture in its demographic transition. This window of opportunity, “demographic dividend,” must be effectively harnessed to achieve India’s broader economic and social objectives. As was noted by IMF in a report titled Advancing India’s Structural Transformation and Catch-up to the Technology Frontier, India needs to create between 143-324 million jobs by 2050 to enable its workers to shift towards more dynamic sectors and thus boost its economic growth. To leverage its demographic dividend, the country must quickly transition its workforce into formal sectors and create employment opportunities for youth beyond unskilled manual labor. Although initiatives like the Production-Linked Incentive (PLI) scheme, Gati Shakti, Make in India, etc. are creating new job opportunities in the manufacturing sector, they often fail to address the unique needs of India’s rural and marginalized populations, who make up a large chunk of the unskilled workforce. These groups often face barriers to entry such as an inability to migrate to urban areas, a need for flexible working hours, and a lack of formal skills.
Traditionally such a workforce has been employed in the creative industries—particularly the handicraft sector—which offers them a more suitable, decentralized work structure that meets their specific needs and allows them to use skills inherited from generations.
Despite being identified early on as a crucial sector for India’s employment needs and despite various governmental efforts the sector has consistently lagged behind and been unable to reach its potential. This whitepaper advocates for a renewed focus on the creative industries through targeted case study interventions rather than a broad approach, allowing for better resource utilization and greater impact. It highlights specific case studies for each stakeholder in the creative industry value chain, showcasing effective interventions. This stakeholder-driven strategy can help leverage India’s inherent advantages and facilitate the workforce's transition to a formal economy—hitting two targets with one stone.
2. What are Creative Industries and Why We Need Them
Creative industries are defined by UNCTAD as those industries which produce tangible or
intangible artistic and creative output, and which have a potential for income generation
through the exploitation of cultural assets and the production of knowledge-based goods and services (both traditional and contemporary). Comprising 13 sub-sectors, the variety and an ideal solution for providing employment opportunities to unskilled and semi-skilled laborers.
India's creative economy, also known as the Orange Economy, is a significant contributor to the Indian economy, while simultaneously
being a hallmark of its cultural values. It has an overall market size of $36.2 billion and contributes to 2.5% of India’s GDP. It is also a major employer, accounting for about
8% of total employment and contributes nearly a third of the total output generated by India's manufacturing sector comes from the creative occupations in the economy.
The creative industries effect of India can be seen from the diversity of its impact. It
encompasses within its diverse fold a 2500 years old Harappan terracotta art to a 21st century movies like Brahamastra, Robot 2.0 etc. The creative industries are an integral part of India’s cultural, social and economic landscape. They have a unique archipelago structure relying on a traditional cottage industry structure. Allowing practitioners to follow a hybrid and flexible work structure . Thereby making creative industries complementary to Indian needs. A SWOT analysis of the same sheds light on the
sector’s indisputable advantage for India’s inclusive development needs. These advantages are especially highlighted in the Handicraft sector which forms a major chunk of the creative industry and a focus of this whitepaper.
3. The Current Problems Faced by the Handicraft Sector
Not only in the 21st century, but since the time of the Bombay Plan of the 1940's cottage industries have been identified as a crucial sector for India’s development needs. And yet 75 years post independence the industries still face fundamental and structural issues. The global handicraft industry is set to be worth US$ 387.07 billion in 2024 but India’s export comprises only 0.8% (excluding carpets). Majority of workers in the handicraft industry view it as a supplementary source of income to complement lean earnings from farming, rather than a profitable venture in itself. The government and the private sector view the handicraft sector as primarily a rural concern, majorly due to its low valuation in comparison to its potential. While being a major employer the sector’s valuation is significantly lower in comparison. On the basis of the Ecosystem and the craft industries value chain shown in the figure below, the following major problems have been identified.
At every stage of the value chain, there are challenges for this sector. Some challenges are
attempted to be resolved rapidly, some have the solutions but no policy willingness, while
some more are yet to be fully unpacked.
1. Genericide and Quality Issues:
The demand for indigenous art, craft, and handloom products has declined due to the growing popularity of machine-made products available through online
retail. Lack of monitoring for product quality has led to genericide, harming
traditional handicraft businesses.
Consumers hesitate to trust products due to inconsistent quality, affecting overall
demand.
2. Competitiveness Factors:
India’s sub-optimal performance in areas like basic infrastructure, intellectual
property rights, education, and broadband adoption impacts revenues for
indigenous artists and craftspeople.
China dominates global handicraft exports (30% vs. India’s 2%), highlighting the
need for strategic improvements.
3. Economic Challenges:
The arts and crafts sector has faced declining demand, hyper-competition, and
scarcity of market opportunities even before the pandemic
Independent funding for contemporary art remains limited, hindering sustainable
growth
4. Budget Constraints:
The allocation for arts and culture in India has decreased, affecting institutions
and initiatives
Budget cuts impact the sector’s ability to thrive and innovate.
5. Digital Divide and Market Access:
While digital platforms enable wider reach, challenges related to economic
sustainability persist.
Bridging the digital divide and ensuring equitable access to markets are crucial
6. Preservation and Recognition:
Many artisans work anonymously without recognition. Preserving dying art and
craft practices is essential.
Recognition and support can boost the sector’s resilience.
7. Technological issues
Outdated design and manufacturing techniques.
No marketing channels.
Lack of a formal mechanism to facilitate skill acquisition and upgrading.
8. Systematic issues
Lack of supportive policy frameworks
Lack of reliable and comprehensive data
Uneven Funding
Each of these challenges boils down to the meager wages of the Indian artisan.
Addressing them requires collaborative efforts, policy reforms, and investment in India’s
rich artistic heritage. An attempt to look at a few of these challenges has been made in
this paper hence improving on the living conditions and pay of the artisans.
4. Possible Solutions
On the basis of the in-depth analysis of problems being faced by the industry and its inherent advantages various solutions can be approached. Below we have picked approaches/ models for each stakeholder of the handicraft industry. While various solutions are being explored by various agencies at different levels, in the current whitepaper effort has been made to provide solutions which can provide maximum gains in a shorter time period for all the artisans. Furthermore emphasis has been placed to look for solutions on the basis that recommendations can be made which are beneficial for stakeholders for their widespread implementation.
A. Leveraging Governmental Initiatives
A case study of the Smart City Mission and Skill India in Agra
The UP government introduced the ODOP(One District One Product) scheme in 2018 to better the exports potential of the state while providing a region's specific focus. In Agra this was taken a step further with the involvement of governmental authorities and local NGOs. The ODOP scheme was integrated with the Micro Skill initiative and Smart City Mission. The aim was to provide region specific skilling and upgradation in minimum time period and training in entrepreneurial abilities allowing for better integration and more significant increase in income. Four micro skill development centers (Annexure 2) were identified to impart training in 7 traditional (Zardozi Work, Marbley Inlay Work, Stitching and Carpet Making) and modern crafts (Brush-Making, Flower Art and Stitching). These skills were shortlisted on the basis of criteria such as traditional knowledge, family of participants, learning curve, initial investment required, consumer demand trends. Benefits to the city and the artisans
Key findings -
Post completion of skill training it was observed that there is a distinct
improvement in the income of 70% of the beneficiaries (Annexure 2). Overall, a 10%
increase in the wages was reported as a positive outcome of the training. As a result, there
was improvement in the household income which has brought about a positive change in the living standards of the {families. Women are satisfied by their contribution to the
household income (Annexure 2).
Although clear benefits were identified, certain problems still persisted- social and
cultural issues in mobilization of women, skill gap, cost constraints, etc.
B. The “New Formal” Approach
Formalization of the economy has long been advocated as an important step in a country’s
shift towards inclusive development and growth. The International Labor Organisation lists it as a core criteria to achieve equity in a society and decent work conditions for labor.
The Indian government has also pushed for the same especially post the 1991 economic
reforms. But the results have been mixed to a limited.
The Indian Handicrafts sector is already seeing a change in the positive direction moving to the “New Formal”, a hybrid business approach that combines the best characteristics of
being formal and informal. The need to move to a New Formal is to bridge the gap created
by the sector being informal whilst preserving the good practices that are typically adopted in an informal business. The Indian Handicrafts Sector being part of the informal sector has
certain inherent problems, such as
● Minimum interaction with other organizations or groups- the small business owners
have gotten used to working in silos and often dislike the idea of interacting with other
villages’ entrepreneurs or other businesses that could form part of the value chain. This
leads to inadequate marketing, limited supply of raw material, monopoly, and greater
dependency basis familiarity,
● Quality checks and monitoring- there are no defined metrics to authenticate different
products to make them acceptable to be sold across borders,
● Fear of losing the skills passed down generations if technological innovation is
allowed in any part of the handicraft making,
● Fear of losing the intellectual property if the manufacturing process is documented
and standardized,
● No formal regulation or protection of employees’ working conditions and wages, no
social protection backed by the government.
But the downsides to fully converting to a formal business also exist for businesses in the
creative sector. The authenticity, genuinity, and the fact that Indian handicrafts lasted over
generations is testament to the informalness of the sector.
Businesses in the informal sector are built on Trust; among co-workers and across the entire supply chain. Small businesses forming part of the informal sector are guided by socio-cultural relations among a close-knit family or community or village. There is a sense of trust while transacting among well-known and familiar people, as opposed to pure-play business transactions. Most of the materials used in the informal businesses that are not into mass production are locally sourced from the same village or neighboring villages. The wood, metal, dyes, fabrics, and tools used are usually indigenous to those villages. Craftsmanship, skills, and innovation are passed down from generations. However, certain tweaks are made through local innovation. The handicrafts sector across the globe cannot have fully formal businesses having a strict profit-making motive, and lines of command and authority set in stone. The handicrafts are not meant to be mass-produced and the socio-cultural aspect of the products that entail generational skill, rare raw materials, and meaning, should translate to the buyer. Bringing the right balance between these two ways of business-functioning to ensure that all stakeholders are rightfully compensated is challenging. There needs to be formal regulation, quality checks, social protection of rights of employees and inclusion in the economy so they are safeguarded better. A strong business sense of decentralized decision making that foregoes biases arising from familiarity by virtue of employees being family, from the same village or caste, needs to be strictly maintained to avoid conflict and promote smooth functioning of the business.
Transforming artisans into shareholders : A Case Study of rangSutra
Started in 2016 by Sumita Ghosh, rangSutra is a community owned business in which 2000
artisans are now shareholders. Rather than a centralized factory, the company employs a
hybrid approach to better suit its employee’s needs.
- Formal model = Registered company, labor compliance and licensing, Bank account of
each employee, health insurance, central worker center
- Informal model = Home based rural artisans, Common workspaces, Work from home,
Financing from artisans.
- New Formal model = Quality Facilitators, Designers collaborating directly with artisans,
Craft Managers per 20 workers Benefits of the approach have been accrued not only to the employer but employees as
well, thereby following the stakeholder approach to business
1. setting-up of bank accounts for artisans hence allowing them to procure personal loans
and home loans
2. granting artisans the flexibility to work from home, especially for women and during the
covid lockdown
3. provision of health insurance by rangSutra for all the workers
4. skills training to 3,000 artisans, impacting 20,000 lives
5. The financial impact includes
- 5x rise in incomes
- ₹5,000 a month average wage compared to ₹1,000 for irregular work
- 92.5% of artisans have bank accounts
C. Catalytic Capital
Although the handmade crafts industry is celebrated for its creativity and potential, and
entrepreneurship is recognized as a vital path to development, these sectors often struggle
with systemic cultural, social, and investment-related biases. These challenges impede their
ability to secure funding, expand their operations, and achieve substantial growth.
Traditional investment options are not meeting the sector’s needs
1. Traditional finance requires assets as collateral but this sector often does not have
access to personal assets.
2. The Indian Handicrafts sector delivers unquantifiable social and environmental returns
besides financial returns. Traditional finance looks only for financial returns which may
not be up to the mark during the start-up phase.
3. Traditional finance is either debt (fixed payments on a regular basis) for companies with
regular and steady cash flow, or equity (dilution of stake in high-growth firms). These
micro organizations don’t fit in either of these molds.
4. The ticket sizes for transactions are too big for microfinance and too small for bank
loans, impact and commercial investors.
The addressable credit gap for
MSMEs in India alone is ₹31.76 lakh
crores ($397 billion) with micro and
small enterprises together making
up almost 95% of the overall
demand for credit.
84% of the MSMEs in India rely on
informal financing which is
unregulated.
From an investor's perspective, risk
appetites differ widely across various
sectors and types of investors.
Philanthropic funders, angel investors, banks, government agencies, private equity and
venture capitalists, and impact investors each have unique motivations and bring different
strengths and investment sizes to the table.
The best solution so far for the Handicrafts Sector is accessing the right financing on
reasonable terms with the right partners. This is found in Catalytic Capital- debt, equity,
guarantees, and other investments that accept disproportionate risk and/or concessionary
returns relative to a conventional investment in order to generate positive impact and enable third-party investment that otherwise would not be possible. The primary aim is to back enterprises that not only have the potential to create new markets but also to drive significant social change.
The following case study provides a better understanding of the Catalytic Capital
Going Beyond Conventional Financing : A Case Study Kadam Haat X Hearth Ventures
Kadam Haat is a sustainable, handmade basketry brand from rural India marketing their
products around the world. It is a “New Formal” or Hybrid enterprise which is a nonprofit to create livelihoods in rural India by empowering women and youth in rural India, training them in crafts using local, natural materials. (Annexure 3)
Kadam Haat wanted to expand their footprint to further scale their impact but needed growth capital for procuring inventory, brand building, customer acquisition, hiring professionals andcreating an enabling infrastructure that would support their ambitious sales projections. The traditional financial models were not fitting their needs as they needed an involved and patient investor that could support in creating growth plans based on the enterprise's current metrics to futuristic growth based on their existing trained artisanal base. The right fit was founded in the form of Hearth Ventures, India’s first mentor fund for craft and circular economy. The team at Hearth Ventures after extensive research realized that for these clusters to truly flourish, they needed to strengthen their sales platform, Kadam Haat. Hearth Ventures saw Kadam Haat’s needs not merely as a capital challenge but as an opportunity for a strategic partnership. They invested ₹2.7 crores ($337,500) in Kadam Haat through Compulsorily Convertible Preference Shares, providing not just financial support but also vital business and intellectual resources. This investment was aimed at enhancing Kadam Haat’s retail operations by hiring skilled professionals and investing in marketing to drive growth.
In addition to the capital infusion, Hearth Ventures is actively involved in building a strong
sales team, generating product demand, ensuring artisans can consistently source
quality raw materials, and securing fair pricing for their work. This comprehensive support
is designed to create a sustainable growth cycle for Kadam Haat and the artisans it supports.
D. Evolution of the Artist
Integrating Traditional Handicrafts with Innovation : A Case Study of Game of Thrones India Connect
Game of Thrones series earned HBO a whopping $3.1 Billion through subscriptions alone
and the finale was watched by 44 Million viewers across all platforms. Interestingly, this global phenomenon has an interesting Indian connect — the costumes, props and medieval armor had a “Made in India’ tag.
While the supply chain of the
handicraft industry has various
aforesaid roadblocks, the industry also
has an image (and consequently a
demand problem). The artisans are
seen as rural and the designs as outdated. The consumer complains of a lack of new design and concept ideas. It also needs to be highlighted that artisans need to find new market segments for growth and
move away from the jajmani system and middle man model. In this, Lord of Battles and
Windlass and Sons (leading manufacturers/exporters of historical replicas) have succeeded in finding new avenues of growth while utilizing traditional practices, case in point the aforesaid GoT connect.
Background - Lord of Battles was set up in 2004 by Saurabh Mahajan after retirement from the army. He combined his fascination with the traditional army uniforms with an
entrepreneurial streak giving rise to Lord of Battles. He started with just three craftsmen making chainmail in a small workshop. Now the facility is employing over 135 craftsmen, supplying — armor such as helmets, chain mail, breastplates, steel gorgets, aluminum coifs, leather belts tankards and more, to countries all over the world including Australia, USA, Russia, Europe, Japan, New Zealand, South Africa, etc. Mahajan attributes the reason for the success in his company's focus on quality and authenticity while being cheaper than his competitors. “Manufacturing in India is 30 to 40 percent cheaper than making it in Europe. Plus, all the products are handmade. The finish of a machine-made product can never match that of a handmade product, especially when it comes to medieval armor ”.
The 100% export oriented business is constantly exploring new avenues of growth from
emptying an inhouse design team to providing pros to tourist sites to live role playing games. Talking about the research process, Mahajan says, “Our sampling unit at Dehradun functions as my research and development center. We are constantly designing new products. We often use the leftovers of leather and steel waste to make miniature gift items like mini helmets, which are very popular as memorabilia and gifts. We have made neckties, liquor bottle covers, and teddy bears, which are being sold in gift shops in Europe. Research is an ongoing process. It keeps us ever alert to new ideas and innovations.”
To create authentic props, Mahajan is working with some of the best artisans who have
specialized into this craft. The company has master craftsmen and artisans with tons of
experience for the special designs and for specific orders of their buyers. He says, “We have
craftsmen from Kanpur, Calcutta, Assam and Jaipur. We also have craftsmen for special
metal polishing who have been working with us for the last two years.” He advises young entrepreneurs to give it their
best and take some calculated risks." In
international business, if you are honest, deliver on time and maintain quality, you will multiply". But the also highlights some issues faced by the business --- finding karigars and maintaining discipline. “Finding karigars is an uphill task,
though. I still remember getting a small leather product. I went to the interiors of Kanpur and the mosquito-infested Nagina.” He constantly faces issues with the karigars understanding the value of discipline, punctuality and integrity.
The titanium chainmail shirt and collar and helmets sported in Assassin's Creed were
produced by Lord of Battles.
5. Conclusion
India’s handicraft sector represents a powerful opportunity to address unemployment and
improve livelihoods within the informal economy, but realizing its full potential requires strategic focus and comprehensive support. As the country pushes toward a $5 trillion economy by 2028, prioritizing this sector could create meaningful, sustainable jobs while preserving India’s rich cultural heritage.
Case studies mentioned in the white paper have shown a clear path forward involving an
industry wide, targeted and strategic interventions with inputs from all stakeholders. Along with with scaling up initiatives like ODOP, which have already shown promising results, and expanding artisan clusters to boost productivity and quality control, new methodologies also need to be explored. This is not restricted to the exploring new methods of financing (Hearth venture Case study) but also an entirely new approach to economic models (the New Formal) Additionally, modernizing the sector through skill development, digital platforms, and stronger intellectual property protection is essential to increase competitiveness in the global market. The integration of public-private partnerships, alongside innovative financing models, will further enhance growth, helping artisans transition from informal to formal employment and fostering social inclusion. Thus the way forward involves a multifaceted approach relying on improvements in various
parts of the value chain and in nurturing of entrepreneurial spirit in the craftsmen themselves. However to truly revitalize the land famous for its calico export and to bolster India’s position in the global handicraft market, the sector is in need of new ideas and an image makeover. Some of which have been illustrated below.
Trading Platform Zerodha’s CEO and retail stockbroker Nithin Kamat in his popular podcast is always found to be promoting Indian-owned and Indian-grown brands like Ather and Rare Rabbit which have found their place in the global market.
Nappa Dori is a home-grown premium leather accessories brand that has been loved all over the world. This is the store front in London, UK, putting Indian leather prominently on the global map.
Popular Bollywood Actor, Kareena Kapoor Khan wears custom Amit Aggarwal which is a pre- owned vintage vintage Banarasi saree that was restored through meticulous
pleating and innovative restoration techniques, preserving the original textile without cutting it. Reimagines as a contemporary saree drape, it remains the integrity and
essence of the traditional fabric while crafting it with modern design elements.
3 Idiots, a popular Bollywood Film partly shot at Pangong lake has become a tourist spot and traditional local handicrafts and souvenirs could be sold at such tourist attractions. A lot of modern houses in India and abroad are making use of vintage Indian art and decor.
This house has used the Rajasthani Jharokas as wall art. The Bharata Mandapam, New Delhi, unveiled at the G20 Summit in 2023 shows to the world how modern structures and traditional art are cohesive. This is a convention center tha thoused the G20 Summit. There was extensive discussion on the Creative Industries. The Nataraja Statue is a symbolic Indian Mythological character that is often used as an art piece.
Meet The Thought Leader
Akshar is a mentor at GGI. Studied at IIT Delhi and worked at EY parthenon to later pursue his passion for combat sports and entrepreneurship.
Meet The Authors (GGI Fellows)
Shruti is a graduate in Information Technology who went on to pursue her MBA from IIM Kozhikode. She has worked in Sales and Marketing, and is currently associated with non-profits, specially in children’s education.
Gabriella is a post graduate from National Law University, Jodhpur specializing in corporate law . An interest in public policy and service led to an illuminating stint at the Civil Services examination. Currently, she is channeling her passion for education and innovation through an edtech enterprise focused on changing study techniques used by students, optimizing for giving competitive exams.
A lifelong learner and avid reader, Gabriella is deeply interested in governance, urban planning, and sustainability. She loves exploring bookshops, is a novice coffee snob and contributes actively to Google maps.
If you are interested in applying to GGI's Impact Fellowship program, you can access our application link here.
6. Sources
budget 2023-24 presents vision for amrit kaal- blue print for an empowered and inclusive economy
India — towards becoming the third largest economy in the world | EY
Creative Industries and Micro & Small Scale Enterprise Development
Creative Industries | International Finance Corporation (IFC)
https://www.adb.org/sites/default/files/publication/851446/adbi-wp1352-0.pdf
A Case Study on Sustainable Business of Indian Art and Craft Industry
Handicraft Market Size, Share, Trends & Forecast by 2034 | FMI
The Troubled Ethics of India’s Contemporary Art Scene - ArtReview
Choose a new palette for India’s creative economy - The Hindu
One District One Product (ODOP) Scheme: Uttar Pradesh Transforming at the Grassroots
Creative Industries and Micro & Small Scale Enterprise Development
75+ Case Studies of Innovative Projects of Smart Cities Mission
Transition to formal economy | International Labour Organization
Krishnamoorthy, P., Kapur, A. & Subramanyam, A. (2021). Business of Handmade: The Role of Craft-based Enterprises in (Formalising) India’s Artisan Economy. British Council: Mumbai
IFC-Intellecap Report, 2018
Report of businessofhandmade2.com
Catalytic Capital- Unlocking More Investment and Impact, 2019, A Tideline Publication
How Much Money Has HBO Made from Game of Thrones? - Finance Monthly
How ‘House of the Dragon’ Could Beat ‘Game of Thrones’ in Ratings (at First)
An Analysis on Problems and Prospects of Indian Handicraft Sector
7. Annexures
Annexure 1
Annexure 2- Micro Skill Development Centers in Uttar Pradesh
Annexure 3- Kadam - Snapshot
Annexure 4- Saptarishi- Seven Priorities of Budget 2023-24 towards Amrit Kaal
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