Local initiatives create new opportunities for international investors
Official figures put the number of artisans in India at 7 million. Unofficially, 200 million people directly or indirectly depend on craft for a livelihood. When we discuss the artisan economy, there is a huge perception gap. Much like the parable of the blind men and the elephant, each one of us is likely to claim an absolute truth based on our limited, subjective experience. In the process, the realities and experiences of others, which could very well be true or relevant within a context, often get sidelined. The artisan economy is one such elephant.
93% of India’s workforce is in the informal sector
We are discussing the world’s largest democracy (1.3 billion people), home to a fifth of its global youth population. Despite its massive demographic dividend, 93% of India’s overall workforce operates in the informal economy. Plus, 68% of India’s total population continues to live and work in rural areas. India’s artisan economy falls squarely within the “informal” or “unorganised” economy, one usually perceived as working outside the formal frameworks of labour laws, taxation, and finance. But the informal nature of India’s artisan sector is not one of its own doing or choosing.
Tariq Mir, a differently-abled artisan and his family have been dependent on craft for livelihood for 40 years. Courtesy of CtoK.
“A key reason for this sector to not reach an industry standard is due to informality, information barriers, exploitative middlemen, and limited market access for rural communities in remote corners of India.”
— Yash Ranga, Director, Strategy & Innovation, PYXERA Global
India is, no doubt, a land of microenterprises, about 84% of them are run by households in informal, non-agricultural, and mostly rural settings, without hired workers. Of the 5600+ micro, small, and medium enterprise (MSME) clusters operating in the country, over 3000 of them are craft-based (Mahajan, 2020). One can argue that workers and enterprises that operate informally do so to skirt formal institutional frameworks — to skip the many compliance hoops that the formal world demands they jump through or to stay under the tax radar to avoid unnecessary costs they can ill afford. But that is not entirely true in the case of India’s informal artisan economy.
For one, the perception bias against handmade inhibits accurate and context-specific data collection of the diverse communities that operate in the artisan economy. This also means solutions designed for the sector remain ineffective; they rarely address micro-level challenges to formalisation faced by artisans and entrepreneurs. These include seasonal craft-production cycles, dispersed rural networks that lack easy access to supply chains, juggling agricultural and craft-based work, among others.
Lastly, in India, informality and exclusion cannot be understood without delving into issues of caste, religion, community, or gender.
Shabbir Lone discontinued craft as a business post the 2016 Kashmir unrest. Courtesy of CtoK.
Why India’s Artisan Economy Has Remained Informal
Artisan-producers are the original gig workers; they are often self-employed or home-workers who do not work or play in cubicles from 9 am to 5 pm. The motivation and benefits for operating within the informal sector are many.
“Since we were kids, we have seen our parents working in the handloom sector; they wanted us to become a doctor or an engineer. And that is the path we chose. We planned to make the most of our 9-to-5 jobs, wear first-class clothes, sit in an air-conditioned office all day, come back by car — live the corporate dream. But, we decided to do the 1-year course at WomenWeave and realised that this is our craft and if we don’t own it, it will become extinct.”
— Aasif, Co-Founder, Fab Creation
Artisans are much like people who work at a restaurant during the day, are actors in the evening, and Uber drivers at night. Flexibility of work is one of the primary motivators to pursue craft. The dispersed nature of rural communities also makes centralised operations challenging. However, informal craft-based work lends itself very well to micro-entrepreneurship where centralised operations are challenging. Craft-led enterprises recognise this and sustain informality by organising artisans in small producer groups and offering common spaces for work. Such approaches also enable women from these communities to, “…get away from the confines of their home to a place where they learn new skills and take ownership for their work. It increases their confidence, participation, and incomes.” says Sumita Ghose of rangSutra. For many women who take to craft-based work, craft is that special gift that a mother gives her daughter as dowry, a welcome alternative to back-breaking work on the farm, and a safe space for community.
Artisan Skills as a Safety Net
Generational craft skills often become the default source of livelihood in rural communities that invariably lack access to formal facilities. These are amplified due to lack of context-specific education, lack of organisational capabilities, even the lack of familiarity and exposure to inclusive formal structures.
“Artisans have survived because they are still in the informal economy. They have survived under the radar, with minimal initial investments, and it’s just been a fallback method for the poorest of the poor.”
— Neelam Chhiber, Co-Founder and Managing Trustee, Industree
Information & Trust Deficits
The informal to formal transition is key to bringing India’s population within a taxable economy, and also ensure wider social protections. However, due to massive information gaps (language, literacy) and bureaucracy, very few artisans are aware of what schemes, social protections, or information is available and how to access it. In cases where there is interest, there is a lack of trust in mainstream formal approaches. The absence of an enabling tax and fiscal environment remains a significant inhibitor to formalisation. Case in point, demonetisation and GST.
Mainstream formal jobs and structures haven’t penetrated remote geographies. In certain cases this is the direct result of political turmoil disrupting linkages to formal institutions and facilities. For instance, in the Kashmir Valley, strife and unrest have historically discouraged private sector investment and led to unemployment.
“The turmoil, the political situation, the violence in Kashmir supports this informal sector. It’s because there is no other source of employment in the valley. You can either go into tourism or you can go into craft. There is nothing else, which is why the informal sector is very, very important in the local economy of Kashmir.“
— Laila Tyabji, Founder -Trustee, Commitment to Kashmir
Social Capital as Proxy for Regulation
Trust and familiarity are cornerstones of local economies. Given that most craft-led enterprises are family-run, and ‘micro’, familial, social and caste-based norms — often at odds with industrialised frameworks and approaches — influence labour relationships, security, and working conditions.
“Will a tribal terracotta tile maker in Madhya Pradesh make a roof for his neighbouring farmer who gives him grain and then charge tax?”
— Jaya Jaitley, founder of Dastkari Haat Samiti
Successful, formal integration in India’s artisan sector is not possible unless it addresses systemic challenges faced by marginalised communities, especially women. We need a context-specific understanding of who they are, where they work, how they operate, and what motivates them to stay informal without any social protections. All in all, unless on-ground, basic issues are addressed, it will be hard to prepare informal artisan communities to transition to tax-paying producers and consumers of the future. This demands active engagement by institutional actors in critical areas such as infrastructure, credit, education, and market access.
The article includes excerpts from Business of Handmade, a new immersive, multimedia research project carried out by 200 Million Artisans exploring The Role of Craft-Based Enterprises in ‘Formalising’ India’s Artisan Economy, authored by Priya Krishnamoorthy, Anandana Kapur and Aparna Subramanyam.
Regina "Gina" Kline
Founder & Managing Partner, Enable Ventures
October 27 - 12:00 PM EST
Founder & CEO, Acumen
November 3 - 12:00 PM EST
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