Knowledge Room

a. Industry Policy
There are no restrictions regarding location for establishing manufacturing units. All the producers of handicrafts are exempted from obtaining Industrial License to manufacture. The delicenced undertakings, however, are required to file an Industrial Entrepreneur Memoranda (IEM) in Part 'A' with the Secretariat of Industrial Assistance (SIA), and obtain an acknowledgment. No further approval is required.

Trade Policy

• Handicraft products fall under the ITC (HS) code 97.
• Paintings, drawings and paintings, domestic articles of wood etc. which come under 9701
• Original engravings falling under 9702
• Original sculptures categorized under 9703
• Products under the code 9704 are freely importable.
• Imports of items in 9705 are restricted.

Characteristics of Indian Handicrafts for exports; as defined by Govt. of India are:

• They are quota free and neutral to fiber content or composition, barring 100% silk.
• They include Garments, Made-up and clothing accessories.
• Are produced in cottage industries.
• Should not have zippers.
• Must be ornamented using any one or more of the following Indian folk styles.
• Hand Painting, Hand Printing, Batik, Tie and Dye, Kalamkari.
• Hand embroidery, Crocheting.
• Appliqué work of sequins, wooden or glass beads, shells, mirror, ornamental motifs of textiles materials.
• Extra wrap of welt ornamentation of silk, art silk or zari threads.
• Should conform to shape and styles of each item as defined in the agreed list of different countries.
• Should satisfy the dimensional aspects.

Tariff-non-tariff Policy:
Except for 9704, all the items under 97 attract a total import duty of 35.2 per cent. This includes a basic duty of 35 per cent and a special additional duty of four per cent. Items under 9704 do not attract any import duty.

In India, handicrafts are distributed through following major Distribution Channels:
» Retailers/Direct Sales:
This is the most common distribution channel for selling handicrafts in India. In India there are large numbers of retailers who provide wide range of handicrafts products.

» Wholesalers/Distributors:
Apart from retail and direct sales channels, wholesalers and distributors also provide large range of handicraft products. Wholesalers can keep product stock in bulk and can sell direct to final consumer or retailer.

» E-Commerce:
Internet has emerged as a one of the promising distribution channel for selling the handicraft products. It is estimated that internet will be one of the major channels for the distribution of handicrafts products through E-Commerce.

b. Statistics

Indian Handicraft Industry contributes a very important role in the Indian economy. For the proper functioning and operation of industry, it is very essential to have some policies and regulation in place. In India, the Ministry Of Textile is responsible for the formulation of policy, planning, development, export promotion and regulation of the Handicraft Industry. There are several other bodies and organizations which help to formulate and execute these policies. All policies should be implemented for the greater development of the whole industry so that it can help to strengthen the economy.


c. Key facts and classifications

• India’s rich cultural diversity and heritage provides a unique and huge resource for developing craft products. The Indian Handicraft Industry is showing continuous growth rate of 20% every year.
• Handicrafts industry is one of the important segments of decentralized sector in India.
• Major parts of industry operates in rural and semi urban areas throughout the country and has potential Indian and International market with around 67000 exporters to tap the market.
• According to the national census of handicrafts, undertaken by the National Council for Applied Economic Research, the value of handicrafts produced last year were of Rs.26,213 Crore.
• This Industry provides huge employment opportunities to artisans that include women and people belonging to backward and weaker society. This is one of the major sources of income there.
• The Indian Handicraft Industry is a $100 billion industry worldwide.
• India’s contribution in world market is 1.2%
• The total exports of crafts items: - Rs. 13412.92 Crore.
• Industry’s share in India's exports:- 1.51 %
• Inspite of having diversified products, some part of Indian market are still untapped and market is price sensitive.
• Products are high priced in big and metro cities, which are beyond, reach of people belonging middle and lower middle class.
• Craft producers have to compete on price, quality and delivery for different segments.
• There is poor promotion for craft products in national market.
• There is lack of awareness about new traditions and among craftsmen and there is need for technological support and training.