A recent survey report brought out by All India Artisans and Craftworkers Welfare Association (AIACA) has detailed cash flow crunches, wage losses, cancellation/withholding of orders, supply disruptions in the raw material value chain and uncertainties regarding shipment (both domestic and export) to be some of the key challenges highlighted by craft enterprises after the COVID-19 lockdown.
Broad recommendations emerging from the survey include expectations of a stimulus from the government for craft based enterprises, including measures like reduction/deferral in GST across categories, soft loans and interest free working capital loans to aid production and the easing of access to raw material supplies.
In an interview, Sreya Mozumdar, ED, AIACA gave some insights into India's $583-billlion handicrafts market, how the pandemic has impacted this largely-unorganised sector and what the survey recommends to aid the crafts sector of India. Excerpts:
Q: Please tell us about AIACA and what it aims to achieve.
A: AIACA is an apex body that has been working on a range of issues, since 2004, to promote market-led growth for the crafts sector; and increased incomes and improved living standards of crafts producers. Over the past decade, AIACA has conducted policy research and advocacy on a range of issues including access to credit for crafts producers and environmental and health and safety standards for the sector; developed a crafts-certification system called the Craftmark; assisted sales and outreach of member producer groups and enterprises through commercial trade catalogues, trade fairs and order fulfillment; and assisted in developing and strengthening back-end production systems through a range of product design and business development services. We have worked with more than 150,000 artisans across 23 states in India.
Q: How, in your personal experience, did the craft sector fare during the lockdown?
A: Even in the face of a health emergency, livelihood and financial issues were the most pressing ones. Rising costs of vegetables, groceries and other essentials were found to be a major concern during the initial phase of lockdown. AIACA itself, with the Akshaya Patra Foundation, had raised a resource amount of Rs 30 lakhs for rations for 3000 artisan families across the country. Widespread cancellation of orders, pending payments, a mounting product inventory, shipments on hold or stuck in transit and a generalized sense of confusion about area-specific government relief activities and measures, were some of the difficulties faced by both artisans and craft enterprises during phases 1 and 2 of the countrywide lockdown. Production for business came to a complete standstill. As regards big craft enterprises, a specific observation was that many were anticipating the shutdown of a few centres. In many cases, the staff salaries had been unpaid. Others were found revisiting production planning, conducting exploratory work, preparing back-up plans, new designs and a strategy for online presence.
Q: The recent survey undertaken by AIACA particularly highlights the financial aftermath faced by the craft sector during these times. What are your thoughts on the findings?
A: Data in the survey revealed that while there has been a unanimous demand for financial support, it is the individual artisans who are in greater distress due to almost complete absence of working capital. 25 per cent enterprises, on the other hand, still had working capital. It was also discovered that individual artisans required more short-term support, while enterprises stressed on the need for support in the long-run (beyond 6 months). Similarly, a big gap was visible in terms of raw material availability to artisans (40 per cent) and enterprises (64 per cent). Here too, a lack of working capital can be blamed. In fact, it seemed that the artisans had exhausted their financial resources in production, as the percentage of dead stock for enterprises and artisans was relatively similar. As artisanal work is comparatively more informal and unstructured, it is possible that there was limited or no financial planning for contingency. It was clear that the pandemic delivered a more severe blow to the business of smaller, individual artisans, who are struggling to cope with drastic changes in the economic environment. As per an initial estimate by the Export Promotion Council for Handicrafts (EPCH), the handicrafts sector could suffer a loss of Rs 80-100 billion post pandemic.
Q: Can you sum up the recommendations the report makes for this sector?
A: Infusion of capital, particularly to cater to the financial needs of individual artisans, through tax relief, subsidized raw materials and easy access to soft loans at minimal interest rates. AIACA has released a White Paper on fiscal recommendations particularly for craft enterprises, in this tenuous environment, keeping in mind the MSME outlays already announced.
Provision for capacity building training, need-based handholding and equipment to empower individual artisans, collectives and enterprises, for smooth transition to e-commerce. AIACA, with extensive experience in outreach, community mobilisation and skill development training, could play an important role as an implementing partner.
Strengthening mechanisms to encourage greater institutional procurement of handmade products, to deal with the problem of a mounting inventory. This would naturally increase cash flow in the sector, helping it kick-start production activity, to bounce back.
Strategize to repurpose products for the changed environment. While tapping into the ready national and international markets for products specific to the pandemic is critical at this point, individuals and enterprises must also re-think their long-term planning. Since the market for luxury goods has collapsed and continues to remain an uncertain investment option, there is a pressing need to develop products on lowered price-points. For smaller artisans and groups, the pivoting to produce essential items during the pandemic (example, face masks, PPEs) has been a challenge, also keeping in mind questions of scale and quality.
Greater exposure for artisans and enterprises to venture into government procurement. For this, they need orientation and handholding to walk through the complex and tiresome processes for tender applications. Such support must also take into account the need for reskilling artisans for quality control and up scaling to meet strict procurement standards.
As the new definition for micro, medium and small enterprises (MSMEs) stands reviewed, it must be noted that the raising of the upper limit of investments has almost completely thrown the handloom and handicrafts community out of this categorisation. If at all, they merely qualify as micro units. Besides, this has allowed the entry of bigger players, increasing competition. Therefore, the government must think of creating a special outlay category exclusive for the crafts sector, to address their needs in a focused manner.
Q: How can the common person contribute towards the post-COVID recovery of crafts?
A: Participate in awareness generation campaigns on the value of Handmade. Support smaller artisans and craft enterprises through purchasing of handmade products. Contribute skills and experience in building an active volunteer base to support artisans' training on e-commerce, photography, catalogue-making, social media management, among others.
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