Rise and Fall of Handloom and Handicraft Business in India



Hand weaving is a traditional craft form in India. It has an ancient history and symbolises the nation’s rich heritage. The handloom industry has always been at the centre of Indian life, with its artisans employing millions nationwide. The handlooms have played an important role in shaping culture and traditions.

The handloom industry was once one of the most important sectors in India’s economy, accounting for a large share of exports from India and contributing significantly to gross domestic product (GDP). However, this sector has declined due to competition from other industries and imports. The modern trend is toward mechanisation and automation, which has led to job losses for many workers engaged in this traditional craft form. In this article, you will know the rise and fall of the handloom and handicraft business model.

What is the Handloom and Handicraft Business Model?

The handloom and handicraft business model is a famous one in India. The handloom and handicraft business model is a famous one in India. The government of India established it to promote rural industries and to create employment opportunities for the local people. The handloom and handicraft business model is carried out by various organisations incorporated under the Companies Act of 1956. These companies aim to develop the handloom and handicraft industry to provide employment opportunities for rural women.

Handlooms are a traditional method of manufacturing textiles from natural fibres such as cotton, wool, and jute, which are woven using yarns spun on a loom and dyed using natural vegetable dyes. The handlooms were once used by millions of Indians who lived in villages, towns, and cities. They were used for various purposes, such as clothing, bedding, floor coverings, etc. Today, however, handlooms have become part of our heritage, and we can still see them used by some people in rural areas who are passionate about this ancient craft!

The handloom and handicraft business model is a long-term sustainable business model used by many small-scale producers. They sell their products directly to the final consumer without intermediaries such as retailers or wholesalers.

This model aims to ensure that the producer has control over the production process and can maintain high-quality standards. This business model has been successful in India because it provides low-risk and high-return opportunities for investors willing to support local entrepreneurs with capital.

Benefits of Indian Economy through Handloom Business Model

The handloom and handicraft business model is a way of marketing traditional handicrafts, where the main objective of producing the goods is to sell them. The main advantage of this model lies in the fact that it provides the opportunity for new entrepreneurs to start their businesses without having to invest much capital.

Handicrafts are products made using traditional techniques, passed down from generation to generation. The artisans who produce these goods belong to various communities, mostly women. They use different materials like cotton, wool, silk, and leather, depending on what type of handicraft they intend to make.

The Handloom sector in India is one of the country’s oldest and most popular industries. The handlooms have been around for centuries, and they continue to evolve with time. India’s long tradition of handloom weaving contributes to developing the Indian economy and culture.

The Handloom business model has many benefits for the Indian economy and people. People who are interested in starting their own handloom business can benefit from this model by following these advantages:

  • Growth In Indian GDP

The handloom sector contributes to India’s GDP growth by creating jobs for thousands of people across the country. In addition, it also helps reduce the unemployment rate, which is currently at 8%. This means that handloom businesses are creating more opportunities for people to find jobs and earn money through this industry. In India, the handloom industry has been in existence for centuries. Handloom and Handicraft is one of the oldest industries in the country, and if we look at its contribution to the economy, it can be said that it has played an important role. The handlooms are woven using traditional methods and have been known for their quality products. With time, these products have become more popular and have gained more acceptance from not only Indians but also foreigners.

  • Grow the In Indian Culture

The handlooms have their unique culture closely associated with India’s history, religion, mythology, and traditions. It also represents an important part of our lives from childhood till adulthood when we start working on them or buy textiles made by others. Indian GDP growth is a major factor attributed to the handloom industry. It is one of the biggest contributors to this country’s GDP growth and is very important in contributing to it. The handloom industry has always been a major contributor to India’s economy. These years, it can be seen that many factors have contributed to this field with time.

  • Less Capital Requirement 

The handloom business model also helps keep your expenses low as there is no need for any capital investment. You can use handlooms and then sell them at your own will without extra expenses. This saves a lot of money and time too.

  • Use of Minimal Power 

Another benefit of the handloom business model is that it uses minimum power requirements to run the entire production line. In most cases, machines produce these products, which require a heavy electricity power supply. Still, these machines consume more electricity than it produces, thus causing an increase in electricity bill every month or year (depending on the type of machine used). But with handloom production, there is no need for such machines because they require a minimal power supply, so they can work efficiently without consuming.

  • Eco-friendly Quality

Handloom fabrics are more ecological than any other type of fabric as they are made by hand without using any machine or power. They are also more durable and last longer than any other type of fabric. Handloom woven fabrics have several benefits to offer. They are eco-friendly, cost-effective, and of good quality. These fabrics can be made with less capital than many other traditional textiles.

  • The Flexibility of Small Production 

Handloom weaving also offers flexibility to small producers, who can quickly adapt their designs to meet customer requirements without changing their entire production line. This makes handloom easy for small producers to scale up their operations and make them more competitive in a global market than large textile manufacturers with their factories and machinery at their disposal.

Reason for Fall of Handloom and Handicraft Business Model

Here are some reasons for falling into the Handloom and Handicraft Business Model:

  • Western Influence in India

The Westernization of India is another reason for the fall of handloom and handicraft businesses. Skilled labour, modern machines, and raw materials are abundant in developed countries like America and Europe. The cost of production has also gone down because of high-speed machines that manufacture products faster than craftspeople can make them by hand.

The fall of the handloom and handicraft business was primarily due to the influence of western countries. Westerners have been able to export their products much cheaper than in India. This has led to a fall in demand for Indian products in the west, affecting their demand in India. The technology developed by western countries has made it easy for them to produce goods at a much lower cost than that of India.

  • Skilled Labor

The skilled labour required for handloom and handicraft business models is lacking in India. Skilled labour is required for making handicraft products such as clothes, bedsheets, etc. However, no trained workers in India can make these products. This has resulted in a decline in the demand for these products by Indian customers. The demand for such products was high during British rule because they needed them to be used in their colonies, but now they are not in demand.

  • Lack of Raw Material

The raw material required for making handicraft products like clothes and bedsheets is also unavailable in India. Thus, running a business like this one in India has become very difficult. Moreover, there are no other countries where these raw materials can be purchased or produced, which has led to the closure of such businesses in India. Handloom and handicraft products are often made from natural resources such as cotton or silk threads, wool, silk waste, etc. These raw materials are scarce and expensive, which makes them difficult to produce at low prices. In addition, these products are also often handcrafted by artisans who may not have enough available supplies at their disposal. This means that even if demand increases due to increasing population or rising living standards, handloom products cannot be produced at affordable prices due to a lack of raw material availability and high cost of production.

  • Inferiority Complex

The inferiority complex among weavers and artisans also contributed to their downfall. They believed they were less skilled than those working in industries like automobile manufacturing or pharmaceuticals because they could not access expensive equipment or machinery like machines used in factories. They also felt they were not as efficient as those working in factories because they lacked sophisticated tools and methods used by industrialists.

  • Lack of Global Demand

The major reason is that there is less global demand for them. The world has gone through a phase of globalisation, and as a result, people started buying things from other countries. This also increased prices, which made it difficult for handlooms to compete with machines. Another reason for the fall was that because of the same reason, people started buying cloth from other places like China. Many people have shifted their focus towards electronics rather than traditional crafts, affecting their sales significantly.

Rise and Fall of Handloom and Handicraft Model

India’s handloom and handicraft industry are one of the oldest industries. It has experienced great changes during the last few decades with the advent of new technologies and changing consumer preferences. The industry has been steadily declining since the 1960s, accounting for about 50% of all exports. The industry has now virtually disappeared from Indian exports, which account for only 4% of total exports (Gujarat 2002).

The handloom and handicraft industry was once a major source of livelihood for millions of Indian women. It was their main source of income, and they were engaged in it from early childhood. In the pre-independence era, the handloom industry employed about six crore people, who produced about 55 lakh metric tonnes of cloths valued at Rs 120 crores annually.

The industry suffered a serious setback in 1973 when the government stopped providing the sector subsidy for yarn and fuel. The government also imposed a heavy duty on the import of yarns from overseas. These two factors resulted in the closure of many mills owned by large merchants and financiers, which led to mass unemployment among weavers and the loss of jobs for artisans.

In response to this situation, the government introduced a new policy that assisted in the revival of old weaving centres by providing loans free of interest on easy terms with repayment periods reduced from 10 years to five years. Under this scheme, an amount equal to one year’s average annual growth rate (AAGR) was made available to establish or expand existing units and as working capital for new units or modernisation efforts to improve productivity levels.

The handloom and handicraft business in India is a long-established institution. It has been one of the most important sources of livelihood for millions of families, especially those in rural areas. The handloom industry has had a tremendous impact on the country’s economic development, not only because it helped make millions of people self-reliant but also because it was a major source of employment for much-skilled labour.

The handloom industry has declined over the years due to high labour costs and competition from other sectors. The traditional weaving process used by weavers involves a lot of manual labour, and as such, it lacks mechanisation, which can be utilised effectively in other industries like textiles. The handloom industry is also facing huge competition from countries like China, where huge investments in research & development (R&D) create mass-market products at low prices.


The rise and fall of the handloom and handicraft business in India is a story of extreme highs and lows. In the past, Indian weavers have been called the craftspeople of the world. But today, India’s handloom industry is in crisis. India’s Handloom and handicraft industry is one of the oldest industries in the world. The industry has a long history and has been one of the most important industries for the country to grow. 

However, as time passed, this industry started facing problems like competition from other countries due to its cheap labour, lack of innovation and modernisation, etc. In addition, there are questions about whether these jobs were created due to a lack of proper education for many of these displaced workers due to mechanisation. This is Part one of the Handloom and Handicraft Business model.

In the next topic, we’ll know the Solution to save Indian Handloom and Handicraft Business. Also, we’ll see the best business models in this industry and try to take some lessons from that.


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