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«Published Annually Vol. 6, No. 1 ISBN 978-0-979-7593-3-8 CONFERENCE PROCEEDINGS Sawyer School of Business, Suffolk University, Boston, Massachusetts ...»

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Zaheer, S., & Zaheer, A., “Market microstructure in a global B2B network”, Strategic Management Journal, 22(9) ( 2001): 859INTRODUCTION The craft sector includes wide variety of economic and cultural activities, deep embedded in design and making of functional or decorative products. There are clear indications that there is a growing demand for products made by craftspeople and significant economic value is generated.

The contemporary craft sector produces artistic products in variety of materials. There is a significant demand for such goods in both domestic and international market.

The objectives of this paper are to review the current state of knowledge of craft sector in India. Further, to briefly summarize information currently available on the sector; to elaborate issues concerning the craft sector and finally to provide guidance on how artisans /craftsmen might work more effectively, together and in partnership with government and NGO’s to develop the sector in domestic and international market.


The craft sector is composed of small and micro-business, in which work is often conducted in studios and workshops. There are number of micro clusters and groups working in this sector probably having the richest diversity in terms of composition, capacity, product, livelihood, ethos and culture.

The “economies of scale” that drive international competition in many markets are rarely a factor in the crafts sector, though there are crafts communities and collectives that work together for sales and marketing purposes. This low profile of the sector obscures the substantial economic and cultural growth of artisans and craft market.

The diversity of media in the crafts sector also makes it more difficult to create and sustain industry associations in the sector.

The crafts community is diffused and loosely organized, partly because it is not possible for an individual to design and make products without the support of other organizations.

Crafts is the second largest industry that gives employment to rural India after agriculture. Despite of the fact, craftsmen who are the facilitators of this sector are slowly moving out in search for more profitable and viable options. It was reported in one of the DELPHE conferences that in 2003, India had 21 million craftsmen and 2010 reports show only 7 million artisans working in craft sector. This fall in number is of great concern.

India is one of the important suppliers of handicrafts to the world market but India's share in world imports is very small. Despite the large number of craftsmen, India has not been able to encash existing opportunities. There appear to be no dominant individuals or companies that provide financial support in marketing efforts. Full-time paid employment is relatively rare compared to other occupations, and average income of crafts people are at the lower end of the income spectrum. On the issue of availability of finance from banks and other financial institutions, Shambhu Kumar, a maker of Madhubani paintings from Bihar said, "We have a very limited resources in terms of cash. Due to lack of money we can't procure raw materials too. There are times we have to sit idle because we don't have raw material to start our work. The people from whom we buy these raw materials don't give credit”. When asked about profit margins, Muthulingam, who makes items from terracotta clay said, "It is not that there is no demand for this art...there is. But since the artisans are poor they are compelled to sell their products very cheap to the local agents. Authorities need to facilitate us in finding our customers directly, something like this Dilli Haat concept.

Conference papers © Knowledge Globalization Institute, Pune, India, 2012 However this is not enough. There are millions of artisans and just couple of these haats, which will not solve the problem. There should be some direct marketing technique like Internet. But I have no idea how it works. Authorities need to help us in this.” On the other hand, Indian handicrafts, typically considered a cottage industry has shown an increase of Rs. 2761.29 crore from Rs. 14526.85 to Rs. 17,288.14 crore, an increase of 19.01% in rupees. The impact is due to the changing consumer taste and trends. In the view of this, it is high time for Indian handicraft industry to go into the details of challenges faced by craftspeople in terms of changing designs, patterns and product development, financial support to achieve a leadership position in the fast growing competitiveness with other countries. (Original article is written by Mr. Saurabh Gupta, cited from: www.craftrevival.org)

Craft and Design

“Craft is Design” Senior Head Designer, FabIndia, Ms.Sumita mentioned during a conversation. She also said”Indian craft lack balance between design and technology.” Craft is a highly sensitive sector and there is a large scope of improvement. The sector shows a large need to work closely with textile, fashion and product designers. Indian craftsmen have a deep knowledge of skills but lack knowledge of design. Both the aspects need to go hand in hand to achieve balance and grow crafts to international standards. Unfortunately, designers are not willing to work in this sector and the craftsmen alone are not able to hit timing and work on the design. At times, when craftsmen tend to work in isolation, product looks too clumsy and there is deviation in form and finishing.

Crafts’ Impact on Design

Designers think that craftsmen have a very protected background and it is very difficult to change the beliefs and design ethics of craftsmen. It is observed that a particular craft is done in a particular way and is followed in the same way by several generations. The attitude of the craftsmen needs to be changed in order to take the craft sector at a different level. Companies like FabIndia, Anokhi, Cottage Industries have tried to bring some professionalism among craftsmen through various trainings and workshops.

Analysis of value chain of products produced by artisans The issues in the value chain affecting the product and market has been analyzed from two perspectives –

i) Issues that acts as entry barriers for new artisans and enterprises ii) Factors that restricts the growth of the existing units.

These need to be looked upon very closely in order to manage the craft sector effectively.

i) Issues related to entry of artisans and enterprise

Skill required Craft needs three kinds of skills:

To convert themes into designs Selection of appropriate motifs and stitches Color combinations Most colors and designs used by artisans give products a very traditional look. These need to be adapted as per the contemporary look for the market. These skills are highly specialized and hence restricted to only few well-trained and experienced craftsmen or are passed on from one generation to another.

Conference papers © Knowledge Globalization Institute, Pune, India, 2012

Lack of adequate finances and poor wages Master craftsmen have the potential to upgrade themselves into the next level of value chain i.e. as an entrepreneur. However, one of the constraints primary artisans face is that of inadequate availability of finances both as fixed and working capital. Most of the work in the value chain is job-works and there is no change of hands till the product is finished. They get the payments only after the completion of job. Wages paid to artisans vary from Rs. 60-200 depending on their experience. Myself visited the village near Lucknow in April’11 where women artisans for chikankari were even paid Rs.10 per day. Since poor artisans do not have any alternatives, so they choose to continue working at such rates.

Centralized production centre’s not upto mark Most of the production centres are located in small towns, and are mostly managed and run by master craftsmen. The job work is paid only when the finished product is accepted for its quality. In case the quality is not good, the artisan has to take back the work to do it again. There are no quality checkers available at the production centre’s that can regulate quality at the time of manufacturing only to avoid such efforts by artisans. The Craft quality varies from good to very good. It requires design and quality inputs to be able to demand the right price for the intensive work that goes in.

Dependency on master craftsmen for markets Major limitation is that poor artisans have very limited knowledge of markets and are dependent on master craftsmen/traders. This restricts them from the first hand knowledge of demand and supply of market. They get restricted profits as the margins get distributed among master craftsmen/traders. Generally, master craftsmen add 50-100% of profit margins to products depending on buyers.

Limited availability of designers The design template is either provided by the buyer or the master craftsmen, which is then needed to be transferred on the fabric. The number of good qualified designers is not enough to cater to the artisan population. The need of the market is changing which necessitate regular up-gradation of designs and hence the need for reskilling of the artisans. With modification in design and quality, the product can command a good price in the market. Range of products need to be developed for varied customers- high end as well as regular buyers.

ii) Issues that restrict the growth of existing units

The culture of stipend Various training programmes are promoted and supported by government agencies. These had very right intentions to create and develop skills to help artisans augment their household incomes. For e.g. NCDPD (National Centre for Design and Product Development) has trained over 3000 women artisans about design, embroidery and market. They are paid Rs.500 per day to encourage participation. It is observed that most of these trainees attend trainings for stipend thus making it a supply driven training rather than need based.

Poor productivity One of the major challenges craft products face is production efficiency. The entrepreneurs give the job works to the artisans. It is generally not time bound and depends largely on the skills and time spent by the artisan. There are inadequate infrastructure facilities like work-sheds where artisans can sit together and work to facilitate time discipline and hence production efficiencies.

No standardization There is rarely any standard system for pricing and quality of products. The master craftsmen base these factors purely on discretion and calculations.

Lack of Business orientation There is a very limited management system controlling the inventory, sales and other related costs. Craftsmen who run these production centers’ out of self-interest or influenced by any government support, lack professional business orientation and has been one of the constraints for optimizing the potentials of skills.

Limited access and knowledge of market Most craft products are decorative and have limited use. Artisans need to look at functional aspect, price, color, design and finishing to be able to cater bigger market.

Due to competition among various craft groups, the market links, designs and quality of the product are closely guarded. The

markets for craft products can be categorized as:

Local markets –With little or no access to bigger markets, most of the individual artisans are supplying to local customers.

Sometimes artisans who have good knowledge of the craft get renowned in the area and entertain enquiries and orders. To meet the demand, they set up small workshops and centres where they teach the craft to new artisans, providing the raw material and manage the inventory. Each artisan is paid a stipend during training and later on a piece-rate basis. However, the Conference papers © Knowledge Globalization Institute, Pune, India, 2012 production is still very small and limited.

Institutional markets: The Central and state government has initiated training workshops cum production centre’s in various villages where 8-12 month trainings are held. Along with providing the raw material, a stipend is paid and later is paid per piece.

The finished goods are sold at their outlets, catering to local demand and the higher quality ones are sent to state emporiums.

DCC (Delhi Craft Council) started such training cum production centre in 2002.

Exhibitions & fairs-The most common marketing forum for all the groups is exhibitions organized by state and central government. Some of the prominent craftspeople participate in these exhibitions in metropolitan cities where they can sell directly to the users.

Order based buyers-The real artisans are normally unable to get direct linkages with international buyers and the middlemen reap the benefit.

Intervention Strategies by Government and NGO’s to upgrade clusters The following strategies were intervened by various agencies both governmental and non-governmental to upgrade artisans and clusters to overcome the problems faced by them.

Strategy 1: Scale up existing entrepreneurs The skilled artisans are linked to the entrepreneurs and are then able to develop high end product lines within the cluster. The artisans are not in a position to create such products until they have acquired sufficient work experience and skills through trainings.

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