Indian Handicrafts Exports may cross Rs 24K Cr by 2020

Country's handicrafts exports are likely to cross Rs 17,000 crore mark by the end of current fiscal year of 2015-16 and is further expected to cross Rs 24,000 crore mark by FY 2020-21, according to a recently concluded sector-specific ASSOCHAM study.

"Clocking a compounded annual growth rate (CAGR) of about 5.3 percent during the 11 years period between 2001-02 and 2011-12 India's handicrafts exports had crossed Rs 12,900 crore mark in FY 2011-12," noted a study titled 'Infusing vibrancy into Indian handicrafts sector,' conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

The ASSOCHAM Economic Research Bureau (AERB) has arrived at the aforesaid projection on the basis of average of CAGR of India's handicrafts exports (5.3 percent) and world merchandise exports that have grown at CAGR of about nine percent during 2001-02 and 2011-12.

However, the share of handicrafts exports in India's total exports has significantly declined over the years i.e. from a level of about four percent in 2001-02 it had fallen to just below one percent in 2011-12.

"Handicrafts industry is highly fragmented in India and the sector has been facing significant challenges owing to lack of design, innovation and technology up-gradation together with insufficient market information on export trends, opportunities and prices, scarcity of raw materials, lack of adequate finance and growing competition from mill and factory made products," said D.S. Rawat, secretary general of ASSOCHAM while releasing the findings of the chamber's study.

"However, increasing inflow of tourists along with lower costs of labour, development of real estate, retail business, increased use of internet and e-commerce augur well for handicrafts sector," said Rawat.

In its study, ASSOCHAM has suggested that the exporting community should invest in research and development and keep on upgrading their capabilities to provide a variety of products.

Exporting community should adopt a long-term horizon in terms of building relationship with buyers i.e. instead of a transaction-oriented approach they should forge a relationship-based approach to engage in long term business development as it would also help them in making judicious decisions in terms of pricing policies, product packaging and choice of distribution channels.

Promotion methods like building brand image, conducting road shows and craft festivals in target countries and also point of sale publicity through attractive display and banners together with marketing tools like innovative and appealing packaging need to be extensively used by the Government and Export Promotion Councils, further suggested the ASSOCHAM study.

Embroidered and crocheted goods alone account for over 1/4th of India's total handicrafts exports however their share has declined from about 36 percent in 2008-09 to 26 percent in 2012-13 mainly due to stagnant performance in major export markets of Germany, USA, UK and UAE, noted the study.

Art metal wares (18.5 percent), wood wares (15.3 percent), hand-printed textiles and scarves (12.4 percent), imitation jewellery (5.7 percent) are other key categories with high share in handicrafts exports from India.

Uttar Pradesh (UP) has maximum number of 325 handicrafts clusters of the total 2,864 such clusters spread across India. Odisha (268), West Bengal (257), Maharashtra (208) and Gujarat (198) are other top states in this regard.
Besides, considering that employment generation by handicrafts sector has been growing at about 6-7 percent each year and has increased from less than 60 lakh in 2008-09 to over 70 lakh in 2011-12, it calls for developing a mechanism to enable rural and semi-urban entrepreneurs to take advantage of emerging market opportunities.

"The Government in partnership with private sector needs to encourage integrated enterprise development by providing supporting services such as local centres for skill training, product adaptation, vocational training and entrepreneurship development," suggested the ASSOCHAM study.

India needs to increase its market development efforts with suitable strategies to tap the market segment for handicrafts, achieve significant market share and compete globally, it added.

Considering that demand pattern in international markets revolves around quality goods and high quantities, slow response from the supply side could be a limiting factor for Indian industry.

The Government should offer small, disadvantaged artisans and craft producers an access to global markets with complete support right from product development and manufacturing to export marketing, recommended the ASSOCHAM study.

USA tops with a share of about 28 percent in India's total handicrafts exports followed by UAE (11 percent), Germany (five percent), UK (five percent) and Latin American Countries (five percent).