Crafting a Livelihood in India

building sustainability for indian artisans CRAFTINGALIVELIHOOD/ JANUARY2013 Tableof Contents Foreword Executive Summary 1 2 I. Craftspeople – The Backbone of India's Non-Farm Rural Economy Sector Overview, profile of indian artisans, crafts value chain and key challenges 4 In Sanskrit, Dasra means Enlightened Giving. Dasra is India’s leading strategic philanthropy foundation. Dasra works with philanthropists and successful social entrepreneurs to bring together knowledge, funding and people as a catalyst for social change.We ensure that strategic funding and capacity building skills reach non profit organizations and social businesses to have the greatest impact on the lives of people living in poverty. www. dasra. org II. Government, Private Sector and Non Profit Initiatives Role of key stakeholders in enhancing artisans’ sustainability 15 III. Harnessing the Potential of India's Crafts Sector Four cornerstones of artisans’ sustainability and recommended interventions for philanthropic support 26 IV. Mapping Non Profits and High Impact Interventions AIACA Avani 43 45 46 47 48 49 50 51 52 53 54 55The Edmond de Rothschild Foundations continue developing a modern view of philanthropy through which they defend the dignity and empowerment of each individual. The Foundations’ primary focus is on education, with projects in a range of areas: arts and culture, social entrepreneurship, intercultural dialogue, health and research and philanthropic education. Through their geographic locations and range of projects, the Foundations represent a rich, multicultural network. They endeavor to identify local initiatives and provide close monitoring of their numerous stakeholders while sharing this experience internationally.By applying an entrepreneurial method to the universe of philanthropy, the Edmond de Rothschild Foundations contribute to the growing professionalism of the social sector. They moreover work towards the recognition of th e pluralism inherent to all societies and the respect for their citizen’s many identities. www. edrfoundations. org Craft Revival Trust Dastakar Earthy Goods Foundation Gramshree Kala Raksha Khamir ORUPA SAHAJ Shrujan Concluding Thoughts Appendices A. Methodology and Selection Criteria B. End Notes C. Bibliography D. Acknowledgments and Organization Database 6 58 60 61 62 Report published in: January 2013 Cover Photo Credit: KHAMIR Foreword One of the biggest issues in India is that our markets do not recognize the true value of craft. When this value is recognized, and if people are willing to pay a higher price for craft-based products, this should translate into higher wages for weavers and craftspeople and act as a boost to millions of rural-based livelihood opportunities associated with this sector. The economics however is not as simple, as finally it comes down to the conflict between pricing and sales.If you out-price goods, you sell only a limited number. If you don' t give crafts people enough work, it kills the craft. Sustainable livelihoods will ultimately depend on finding a fine balance between the two. Fabindia follows an inclusive model of capitalism, placing craft at the center of the quest for profitability and growth. I grew up watching my father build this company. I was also very idealistic so I started a co-operative in 1989 and ran it till 1991. While I soon realized this was not the answer, this experience helped me understand what I wanted to do with my role at FabIndia.If you look at business, success is generally defined by measurable outcomes, financial profit and the material impact. We are taught to squeeze each and every opportunity as hard as we can to maximize profit. In a conventional way, all of this makes a lot of sense. But my experience in business has been different. I operate a business, which is one of the most profitable businesses in the retail space in India. Yet, it is also one in which the central theme is to enable all our producers to become stakeholders and beneficiaries of the larger wealth creation process.When we created this idea, every business analyst who saw it said it would not be viable. But instead it has opened up new avenues for business, which are collaborative. It has connected people in new ways, allowing them to give very differently of themselves. The business operates from the principle that people are not just instruments. When people feel they are valued, respected, a part of something bigger than their own immediate interest, the nature of their contribution changes. And this is at the heart of interdependence that Fabindia recognizes.We are building a very transformative model, and we need to take that to scale. Our greatest motivation has come from the 100,000 artisans that we see affiliated to it – that’s the big picture, needle moving idea that uses mainstream retail to give relevance to this sector. There are several very successful small scale stories in the crafts space. Taking these to the next level necessitates investment and resources which recognize the value of craft and the socioeconomic returns it generates for craftspeople. This is the perspective that this Report and its authors bring to the fore-front.And I wish this initiative every success. WilliamBissel ManagingDirector,Fabindia 1 Executive Summary India's industrialization and participation in the modern world economy is decades old. Nevertheless, millions of Indians still depend on indigenous modes of production, traditional skills and techniques to make a living based on handmade products. These craftspeople or artisans are the backbone of the non-farm rural economy, with an estimated 7 million artisans according to official figures (and upto 200 million artisans according to unofficial sources) engaged in craft production to earn a livelihood. Despite some instances of well-known design houses using handmade products and successful crafts-based busines ses such as FabIndia and Anokhi, the majority of craft production remains unorganized and informal with its full market potential untapped, especially by the artisan, who more often than not struggles for sustenance. Propelled by loss of markets, declining skills and difficulty catering to new markets, a large number of artisans have moved to urban centers in search of low, unskilled employment in industry.According to the United Nations, over the past 30 years, the number of Indian artisans has decreased by 30%, indicating the need to re-invest in artisans to safeguard history, culture and an important source of livelihood. 2 The Indian Government, the private sector and the non profits are each involved in the sector but their roles have evolved in silos, with little specialization and much duplication. On a policy level a cohesive and concerted effort is required to overcome the challenges faced by the crafts ecosystem through funding and programs.Simultaneously, the private sect or has a significant role to play in uplifting artisans through different market-led efforts made by retail chains, high end-fashion designers and a relatively more recent wave of social businesses. Non profits have been particularly active in the crafts space since the early 1960s and have evolved numerous models to support artisans in earning better livelihoods. To realize the full potential of the crafts sector, the gaps, overlaps and challenges in the value chain must be overcome to create an ecosystem that enables crafts to thrive.The different stakeholders involved need to come together to build what we call the four cornerstones of artisans’ sustainability. Philanthropy has a key role to play in supporting the creation of such an ecosystem. Harnessing the potential of this sector requires different types of investments to preserve traditional crafts, strengthen the sector, and improve the incomes of artisans. Investment should focus on building the four cornerstones of artisans’ sustainability: 1. 2. 3. 4.Handholding the Artisan through the Value Chain Increasing Demand for Crafts and Strengthening Market Linkages Strengthening the Decentralized Production Model Building a Multi-Stakeholder Approach This would realize the tremendous opportunities the crafts sector in India provides to improve economic, environmental and social conditions of rural communities. These include: Economic Opportunities : Employment and income: The crafts sector has the potential to provide stable employment and income generation to diverse communities and to those with different levels of education. ? ? Migration: Promoting hand production in rural areas can effectively check migration of rural labor to urban centers and prevent loss of skills Economic growth: The global market for handicrafts is USD400 billion, of which India's share is below 2%, representing a tremendous growth opportunity. 3 Competitive advantage: Artisans can serve as key drivers of speci alization and competence in precision manufacturing, similar to Japan and Korea. Economic Opportunities Environmental Benefits: Low energy requirement: Production processes used in crafts typically ave a low carbon footprint and promote the use of locally available materials as well as natural and organic materials where possible. Environmental Benefits Social Empowerment: ? Women's empowerment: Crafts production represents an opportunity to provide a source of earning and employment for otherwise low skilled, home-based women, improving their status within the household. Return for future generations: Investing in artisans leads to a trickle-down effect of improving the health and education outcomes for future generations of the most marginalized populations. Handicrafts embody India's history and diversity: Over many centuries, an extraordinary legacy has nourished Indians crafts across religious, ethnic and communal boundaries. They highlight the country's unique cultural mosa ic and offer a powerful tool for pluralism and co-existence. There is an urgent need for philanthropy to realize the economic potential of the crafts sector by investing in high impact scalable models that have the potential to strengthen livelihoods in a sustainable manner. Social Empowerment 2 3 major categories in craft hadi (cloth that is woven from handspun yarn) cotton handlooms processing of cotton textile by hand silk handlooms processing of silk textiles by hand zari (silver and gold threadwork) and embroidery carpets miscellaneous products made of wood, bamboo, cane and grass leather manufacture earthenware plating/polishing/ engraving metals jewelry and related products making of musical instruments I. CHAPTER Craftspeople: The Backbone of India's Non-Farm Rural Economy 4 â€Å"To write about Indian handicrafts is almost like writing about the country itself.So vast, complex and colorful, and yet with a simplicity and charm, difficult to attain under comparable condition s† – Upadhyay, M. N. : Handicrafts of India. 4 India has one of the most diverse and ancient traditions of handmade products, and its handicrafts industry is an important economic and cultural asset. According to the Twelfth Five Year Plan, handicrafts production is expected to double between 2012 and 2017 and exports are projected to grow at the compounded annual rate of 18% during the same period. As a result, the craft sector will employ an additional 10% of individuals per year up to that time. 6 The crafts value chain encompasses the full range of activities required to bring a handicraft product from conception through production to delivery to consumers. The Government, the private sector and non profits have played and continue to play an important role in the sector's development, although their efforts remain isolated and thus limited in their impact.From Vishwakarma's Children to Poverty: A Socio-economic Profile of Artisans Chart1: The story of Indian crafts is deeply embedded in mythology, history and culture as can be seen in Chart 1. Artisans are considered to be the descendants of Vishwakarma the presiding deity of crafts and architecture. During the Vedic Age craftspeople enjoyed a high social standing and were part of the landed gentry, responsible for the creation of temples and palaces. In the caste hierarchy that evolved during the post Vedic period, craftspeople were associated with Shudras or the lowest caste due to the manual nature of their work.While Hindu artisans occupied the lower echelons of the caste system, due to the menial nature of their work, artisans from other non Hindu religious communities were equally stigmatized. This adverse status led to a deeply rooted stigma which persists today long after the abolition of the caste system. Nevertheless, in subsequent eras when India was inhabited by princely kingdoms, crafts continued to flourish because of their utilitarian nature, royal patronage and the organizatio n of artisans into guilds. Until the second half of the 17th century, crafts enjoyed a steady market.With the decline of princely states, the entry of the East India Company and colonization, employment in crafts especially handloom declined due to trade between India and the UK which was organized and regulated largely by colonial powers. The result was the fragmentation of the artisan community, marked by inequality between those that could produce for British markets, traders and those that were only exposed to local markets. Subsequent industrialization marked the steady decline in crafts markets and livelihood potential for artisans.Despite the central role played by crafts in the freedom movement, where Mahatma Gandhi incited the nation to produce by hand, and subsequent welfare measures implemented by the Indian Government, artisans (with the exceptions of traders, and extremely specialized master craftspeople) never regained the social status and sustainable income they once possessed. The uniqueness of India's craftspeople has been their ability to work across religious, caste and cultural divides. Such a meeting of distinctive traditions has fostered dialogue, social inclusion and an extraordinary creativity.ROYALPATRONAGE Craftsusedtoreceiveroyalpatronage, whichhasnowdisappeared. Further,folk craftsnolongerfitintoeverydayusageas theyoncedidduetoincreasing urbanization. Thehandicraftand handloomsectorsarea `24,300crore (USD4. 48bn) industrycontributing `10,000crore (USD1. 85bn) toIndia'sexportearnings of`1. 62lakhcrore (USD300bn). 8 An important economic and cultural asset India's myriad crafts traditions and living crafts skills are vehicles of its cultural identity, passed on from generation to generation and a means of sustenance for numerous communities engaged in production.Crafts constitute one of the primary sub-sectors within Creative and Cultural Industries, defined by UNESCO as â€Å"industries which produce tangible or intangible artistic and creative outputs, and which have a potential for wealth creation and income generation through the fostering of cultural assets and the production of knowledge-based goods and services. â€Å"7 The crafts sector encompasses diverse activities ranging from embroidery and painting to leatherwork and pottery, with variations and regional specificities within each group.There are thousands of living crafts in India. For simplicity, these can broadly be understood as handlooms and handicrafts. Together handicrafts and handlooms play an important role in the Indian economy. Handicrafts typically refer to artifacts made by hand for decorative, religious or functional purposes. These products are often found in diverse markets from runways in Paris, and highend designer stores to domestic retail outlets and tourist emporiums. SWADESHIMOVEMENT Handproductionwasstronglyrootedinthe independencemovementandGandhi’sprinciples.However,themovementlostsignificanceinthe public’spe rceptionafterthe50sand60s. INDUSTRIALIZATION Thefactorysectorhas inherenteconomiesof scaleandgreater bargainingpowerfor cheaperhigherquality rawmaterials,whichhas adverselyaffectedthe craftssector. Further, thissectorhasbeen divertinglaboraway fromskill-based occupations. GLOBALIZATION Challenge:Lackof consumerawareness abouttheimportance ofcrafts Opportunity:Crafts providecompetitive edgeandunique identitytoIndiaina globalmarketplace 5 6Broadly, artisans are divided into the following categories with a rigid hierarchical division of labor between more and less skilled artisans in a particular craft : ? Skilled master craftsman ? Wage-worker ? Fully self-employed artisan ? Part-time artisan An estimated 63% of artisans are self-employed while 37% are wage earners. 9 Traditional knowledge and craft skills are passed down from one generation to another, so that whole families and communities are engaged in production. An estimated 71% of artisans work as family units and 76% attribute their profession to the fact that they have learnt family skills. 0 It is important to note that most official figures count only the head of the production unit and wage earners in official figures, leaving out the 5-6 family members who are also dependent on crafts for sustenance, thus creating an incomplete understanding of the sector's size and importance. The vast majority of artisans operate in informal work settings. In fact, according to one study, Vishwakarma's Children in 2001 only 9% of craftspeople benefited from formalized employment, while 42% worked out of their homes. 11 Most artisan production units tend to be micro enterprises.In fact, 39% of artisans incur production expenditures of less than INR 12,000/ USD 215 a year and only 19% spend above INR 50,000/ USD 900 a year. 12 Typically artisans sell their products to diverse markets including local markets, city outlets, private agents, wholesalers or retail traders and exporters. A meaningful analysis of the secto r requires focusing on particular geographies and crafts. For this report, we focused on the crafts sector in the states Gujarat, Uttar Pradesh, Rajasthan and Odisha. These have among the largest number of artisans, as shown in the chart 2.In addition, Dasra's mapping of non profits involved in the sector, revealed the highest concentration of non profits working at scale in these states. The Crafts Value Chain is Fragmented For a comprehensive understanding of the current state of the crafts sector, as well as areas that need improvement, it is important to understand the crafts value chain. The crafts value chain shown in Chart 3 has been created based on our observations on the ground as well as inputs from sector experts. It aims to demonstrate the different stages in craft production from producers to markets and inputs required at each stage.It must be noted, however, that each craft will have a slightly different set of processes. The stages explained below have therefore bee n simplified to a certain degree to provide a general understanding of how the crafts sector functions. Chart3:TheCraftsValueChain PROCESS INPUTSREQUIRED Organization Human Resources ? LegalEntities ? Procuring and Processsing RawMaterials ? ? ? Credits Facilities Technology Chart2: DistributionofIndianArtisans 40% 29% 13% Production ? ? ? ? Design Technology Skills Enterprise Development Aggregation and Intermediary Trade Transport toMarkets ? Quality Checks ? Storage ? ?ODISHA UTTARPRADESH GUJARAT-RAJASTHAN Markets Marketing and Promotion 7 Source:ExportPromotionCouncilforHandicraftsand CouncilofHandicraftCorporationsandDevelopmentCommissioner(GovernmentofIndia) 8 1. Organization Artisans are usually structured into groups through informal contracts between traders, master artisans and low-skilled artisans. More formal systems of artisans’ organization involve four main types of entities:13 ? Self Help Groups (SHGs) are set up with the help of external technical intermediar ies such as non profits or through Government schemes, and typically comprise 10-20 artisans, usually women.SHGs serve as a form of social collateral, enabling artisans to establish linkages with input providers such as raw material suppliers, microfinance institutions and banks, and downstream players such as aggregators and retailers. Organization are often forced to rely on local traders who provide them with raw materials against orders, albeit at high prices, or switch to non-traditional raw materials. 3. Production Although techniques and processes vary widely from one craft to the next, crafts production generally takes place in households, with multiple family members engaged in different aspects of the process.Even where organized artisan structures exist, artisans typically produce within community settings. Production is generally seasonal, with crafts activity being suspended during harvest season, as most artisans are also engaged in agriculture to supplement their live lihoods. 4. Aggregation and Intermediary Trade ? Mutually Aided Co-operatives (MACs) are created to provide artisans with a platform for equitable participation. Legislated at the state Government level, MACs enable artisans to pool funds as equity and own their production units.However, due to strong Government influence, this structure has failed to gain popularity in most states other than Andhra Pradesh and Kerala. ` ProcuringandProcessing RawMaterials ? Producer Companies were created as a for-profit legal entity in the Companies Bill in 2002 to enable primary producers to participate in ownership and contribute equity. ? Private Limited Companies are for-profit legal entities that allow artisans to participate in ownership as shareholders, while enabling external funders to invest capital.Aggregation involves bringing together products from decentralized production units to enable economies of scale in transportation, storage and retail. Due to the dismal status of infrastruct ure and communication in India, aggregating products is a challenging task, and leads to many of the bottlenecks in the crafts supply chain today. Buyers and retailers lack incentives to overcome upstream, supply-side issues, which results in a loss of opportunities for artisans to access markets. Aggregationand IntermediaryTrade Markets 5. MarketsThe markets for the craft products can be broadly understood as local, retail shops – high-end as well as mainstream, exhibitions and exports. Among these, local markets are still the common markets for many artisans. 14 The contemporary markets, domestically as well as internationally, have grown with an expanding demand for ethnic products that have a story linked to them. However, these products are in low supply due to supply chain inefficiencies. However, most artisans continue to work independently as there is a widespread lack of awareness about the advantages of being organized into the above forms. ProductionDemand 2. Procu ring and Processing Raw Materials Traditionally, raw materials used by artisans were widely available due to the close linkages between evolution of crafts and locally available materials. Further, the jajmani system, which consisted of a reciprocal relationship between artisanal castes and the wider village community for the supply of goods and services, provided artisans with access to community resources. However, with the breakdown of these traditional structures, along with competition from organized industry, artisans find it challenging to buy quality raw materials at affordable prices.In the absence of raw material banks, they 6. Demand With the advent of globalization and the availability of cheaper and more varied products, crafts face severe competition in contemporary markets. They are typically perceived as traditional, old-fashioned and antithetical to modern tastes. There have been limited efforts to reposition the image of crafts and build consumer appreciation of th e history and cultural identity associated with handmade products. In addition, there are few instances of traditional crafts being â€Å"contemporized† to fit with changing consumption patterns. 10 India's Crafts Sector is in Disarray While crafts received royal and aristocratic patronage during pre-Independence days and played a central role in Gandhi's independence struggle, they have slowly lost relevance with the advent of industrialization. Currently, the sector carries the stigma of inferiority and backwardness, and is viewed as decorative, peripheral and elitist. This is compounded by the Government's treatment of crafts as a sunset industry, which has resulted in a lack of well-developed policies and programs to protect and strengthen the ecosystem for artisans.Traditional crafts have largely been marginalized by massproduced consumer goods, which tend to be cheaper due to the economies of scale associated with mechanization. The nature of the crafts sector and chall enges faced by artisans reduces their ability to compete with machine-made products. Catering to the mainstream market often necessitates a decline in quality and/or workmanship, leading to the eventual loss of skills over a few generations. There are very few instances like pashmina shawls where a traditional craft has successfully â€Å"contemporized† itself for Indian or overseas markets.Artisans were traditionally an essential part of the village economy, producing everyday utilitarian objects catered towards local markets, using designs and motifs that were of significance to their communities. However, with the advent of industrialization and increasing urbanization of markets for crafts, the historical artisan-consumer relationship has broken down, and largely been replaced by traders. This has rendered artisans' knowledge and skill, acquired over generations, virtually useless and made crafts an unsustainable source of livelihood.The five main challenges facing artisa ns in creating sustainable livelihoods in today's economy can be described as follows: low education levels for the family overall. The lack of education makes it difficult to manage inventory, access Government schemes and market information and bargain with traders and middlemen. It is estimated that in 2003 around 50% of household heads of crafts producing families had no education whatsoever, and more shockingly, around 90% of the women in these households were completely uneducated. 5 Outdated Production Methods- Artisans may also lack the financial capability to upgrade technology in production, or undergo necessary training on a regular basis, as would be available to them in a formal work setting. This compromises the quality of their products and raises the cost of production. 2. Inadequate Inputs Inadequate Inputs There are three main issues: Lack of Quality Raw Materials- Rural artisans often lack access to quality raw materials. Due to the low volumes required, they have low bargaining power and are forced to buy substandard materials at a higher price.In crafts such as weaving, handloom weavers have to compete with the power loom industry for high quality raw materials, which are more easily accessible to the power loom industry as a result of Government subsidies. Further, many raw materials used commonly by craftspeople such as wood, cane, silk, scrap and virgin metal are become increasingly difficult to acquire. The costs of some of these materials are rising faster than the wholesale price index. Lack of Funding- Craft producers suffer greatly from lack of working capital and access to credit and loan facilities.Often, producers are unable to fulfill bulk orders because they lack the capital to purchase raw materials, and simultaneously support their family's living needs while the order is being executed. While there are several Government schemes intended to fill this gap for artisans through institutions such as National Bank for Agricultur e and Rural Development (NABARD) and Small Industries Development Bank of India (SIDBI), it is difficult for the uneducated artisans to access these programs and manage the necessary collateral or funds for bribes.Banks cite poor recovery rates, wrong utilization of funds, lack of marketing facilities for finished products and lack of education on part of the borrowers as reasons for the low proportion of loans made to artisans. In general, this forces artisans to borrow from their local moneylender or trader at high interest rates. The All India Debt and Investment Survey (2002) showed that the proportion of money borrowed by rural households from money lenders rose by over 10% from 17. 5% in 1991 to 29. 6% in 2002. 16 1.Low Productivity The sector's informal nature and the low education of most artisans create issues such as: Unorganized Production- As a largely unorganized sector, handicrafts faces problems such as a paucity of professional infrastructure such as work sheds, stor age space, shipping and packing facilities. Low Education- Many crafts require the entire household to participate in production in some capacity. For example, in weaver households, women and girls traditionally undertake warping of the yarn, winding the thread onto bobbins, and share with men the task of starching the thread.In many cases, crafts also serve as a seasonal source of income for agricultural households. This means that children miss school, resulting in LowProductivity 11 12 Artisans' financial weakness also hampers their ability to sell they have low bargaining power at the marketing point and are forced to sell to buyers at a low price in order to recover costs and support themselves. Design Inputs- In most traditional societies, design evolved in the interaction between the artisan and the consumer.Further, the artisan was aware of the sociocultural context of the consumer, and could thus design products that suited their needs and tastes. Due to the breakdown of th e historic artisanconsumer relationship, and the increasing urbanization and globalization of markets for crafts, artisans have difficulty understanding how to tailor their products to changing demands. The artisan may not speak the same language as the consumer, both literally as well as metaphorically. An example of this includes women in SEWA's craft cooperatives who design block printed table napkins and mats, but may have never used these products themselves. f this, retailers have to directly source from select producers, which is often not viable in the long run, resulting in the loss of a large percentage of the market for artisans. 5. Lack of an Enabling Environment Information Asymmetry 3. Information Asymmetry Neglect by Central and State Governments- Rural artisans are neglected by both Central as well as State Governments, as is evident in the lack of available records regarding their numbers and socioeconomic status. The Government views the sector as a sunset industry , no longer relevant in India's technologydriven economic growth.Thus, schemes designed for artisans tend to have low priority in terms of execution and assessment. Within crafts, the Government's priorities are skewed towards the export market, with 70% of its crafts budget going towards development of environments to enable export. 17 Further, the fact that the crafts sector falls under the purview of 17 different Government ministries, ranging from the Ministry of Textiles to the Ministry of Women and Children, results in confusion and inaction. Lack of Interest by Second Generation- Rural youth are increasingly disinterested in continuing their family craft traditions, for three main reasons.First, having seen their parents struggle to find markets and fair prices for their products, they are inclined to pursue other trades. Second, the school system today does not integrate lessons regarding the importance of crafts into the school curriculum, and instead students are pushed to wards white collar office jobs, even if they are lower paying. Finally, crafts are strongly associated with a family's religion. In many cases, such as leatherwork, artisans are ostracized for being from the lowest caste, which further dissuades rural youth from joining the family trade.Reducing the obstacles faced by the sector can provide employment for millions of citizens especially those traditionally excluded from the mainstream, while restoring one of India's key cultural and economic strengths, a diverse and rich handicrafts industry. At the same time, it will provide the economy with key drivers of specialization and competence in global manufacturing. Lackofan EnablingEnvironment Due to their low education, artisans often cannot identify potential new markets for their products, nor do they understand the requirements for interacting with these markets.This reduces their understanding of the market potential of their goods, the prices of their products in different markets , Government schemes instituted for their welfare and diversification opportunities. 4. Fragmented value chain Lack of Market Linkages- While consumers of crafts products are increasingly becoming urbanized, crafts continue to be sold through local markets; artisans have few opportunities to reach new consumers through relevant retail platforms such as department stores and shopping malls.Further, due to their rural orientation, artisans are often unable to access training and technology to supply their products to online markets. Dominance of Middlemen- Although middlemen are necessary to enable effective market linkages, they often, if not always, exploit artisans by paying them a fraction of their fair wages. This may be due to lack of information on the part of middlemen about true manufacturing costs, or merely due to their ability to coerce artisans, who often lack bargaining power.Lack of Aggregation- Crafts production typically takes places in scattered clusters in rural are as, while markets are usually in urban centers. Currently, there is a lack of organized systems to efficiently aggregate goods from small producers, carry out quality checks, store approved goods in warehouses, and supply them to wholesalers and retailers in urban areas. In lieu Chart4: OverviewofKeyChallenges FacedbytheArtisans Fragmented ValueChain LackofMarket Linkages Lackofan enabling environmentNeglectby CentralandState Governments LackofInterest bySecond Generation LowProductivity Unorganized Production LowEducation Inadequate Inputs LackofQuality RawMaterials LackofFunding Fragmented ValueChain Information Asymmetry Dominanceof Middlemen Lackof Aggregation OutdatedProduction Methods 13 14 II. CHAPTER Government, Private Sector and Non Profit Initiatives Photo Credit: Sahaj 15 The Indian Government, the private sector and the non profits are each involved in the sector but their roles have evolved in silos, with little specialization and much duplication.Since independence, t he Indian Government has created a number of institutions, schemes and welfare programs for the crafts sector. However, on a policy level there has been no concerted and cohesive effort to address the challenges faced by the crafts ecosystem, with most governmental offerings mired in bureaucracy and inefficiencies. Simultaneously, the private sector has contributed to uplifting artisans through different market-led efforts made by retail chains, high end-fashion designers and a relatively more recent wave of social businesses.Non profits have been particularly active in the crafts space since the early 1960s and have evolved numerous models to improve artisan livelihoods. The chart below provides an overview of the evolution of crafts policy and programs in India. Government Program Although Government-led initiatives are often criticized, it cannot be denied that India is in a much more fortunate situation today in the preservation of its crafts than most other nations because of G overnment efforts immediately following Independence.During this period, the Government placed great emphasis on rural artisans, setting up the All India Handicrafts Board in 1952 to study the technical, organizational, marketing and financial aspects of crafts and design measures for improvement and development of crafts. The impetus for these efforts came in part from Mahatma Gandhi's legacy of the swadeshi movement and preserving cottage industries as a symbol of India's diversity and unity as a nation-state. Pioneering efforts were made to provide marketing support to artisans, and make regional crafts available at a national level through state-run emporiums.With industrialization becoming a foremost national priority in the 1960s and 1970s, the Government came to view crafts as more of a â€Å"sunset industry† and began to focus mainly on welfare schemes rather than approaching it as a sector capable of contributing to India's economic growth. Several divisions were mad e between State and Central Government responsibilities, and separate administrative bodies were set up for Khadi, Handloom, Handicrafts, Silk, and so on, all of which contribute to inefficiencies and inertia in policymaking for the sector today.At present, crafts are almost artificially bifurcated into Handicrafts and Handlooms, with two separate Development Commissioners in charge of each under the ministry of Textiles. In addition, 16 other ministries have crafts within their purview, including the Ministry of Agro and Rural Industries, Ministry of Tribal Development, Ministry of Rural Development and the Ministry of Women and Child Development.These bodies have often been pitted against each other on issues such as power loom versus handloom production, anti-dumping duty on foreign silk yarn to protect the interest of silk rearers versus removal of duty for handlooms and power looms and interest of petty traders versus greater control for home-based producers, leading to ineffic iencies and policy juggernauts. 19 Governmentefforts havechanneled anestimated `752crore intothecraftssector duringtheEleventh FiveYearPlan(200718 2011). Anumberofinstitutions havebeeninvolvedin fundingandimplementing developmentworkfor artisansthroughdifferent schemes.Suchas: 1. Councilforthe AdvancementofPeople's ActionandRuralTechnology (CAPART) 2. KhadiandVillage IndustriesCommission (KVIC) 3. SmallIndustries DevelopmentBankofIndia (SIDBI) 4. NationalBankfor AgricultureandRural Development(NABARD) Chart4:StakeholdersintheCraftsValueChain PROCESS Procuring and Processsing RawMaterials Aggregation and Intermediary Trade STAKEHOLDERS Organization InputSuppliers Production Markets LocalTraders IndependentArtisan SHG’sCo-operatives, Producercompanies NonProfits SocialBusinesses Government Exporters Retailers 16 17Despite these challenges, the majority of Government funds have been utilized in the following areas, largely with the support of non profits working in the sector: ? Welfare- Government efforts in the crafts sector are often designed with the intention of large-scale poverty alleviation. Schemes such as the Rajiv Gandhi Shilpi Swasthya Bima Yojana and the Janshree Bima Yojana for Handicrafts Artisans, under which artisans in the age group of 18-60 receive health and life insurance in association with the Life Insurance Corporation of India for themselves and three dependents, provide some social security.Market Linkages- One of the most widely lauded efforts of the Government in the crafts sector has been the establishment of Dilli Haat, an open-air crafts bazaar in the national capital modeled on a traditional village market where artisans from around the country can rent space and display their wares for two weeks at a time. Set up in cooperation with Dastkari Haat Samiti, a non profit organization that works with artisans across the country, Dilli Haat has provided artisans with much-needed market linkages and access to consumers.In addition , the Development Commissioners for Handicrafts and for Handlooms run a number of emporiums across the country, which are retail outlets for crafts from different regions. Capacity Building- In recent years, the Government has moved its focus towards sustainable development of crafts through the participation of artisans. Capacity building efforts such as the Artisan Credit Card scheme and the Baba Saheb Ambedkar Hastshilp Vikas Yojana scheme are generally led by the Development Commissioner of Handicrafts.Efforts include skills development, technological intervention, design and marketing support and reviving languishing crafts. The Development Commissioner for Handlooms runs Weavers Centers in many parts of the country along with the National Center for Textile Design to provide marketbased design input for handloom weavers. Awards- Each year, the Ministry of Textiles recognizes the work of several master craftspeople through the distribution of national awards. These are highly c oveted accolades that enhance the reputation enjoyed by master craftsmen and function as a quality approval of sorts. Private Sector InitiativesThe private sector has been the main conduit for crafts with over 95% of crafts production taking place through some form of private enterprise. Broadly, private involvement in the crafts sector is of four types: ? ? Traditional Intermediaries: Historically, private involvement in the crafts sector has been dominated by master craftsmen, traders and exporters who aggregated production, provided market linkages and offered financing mechanisms to artisans. Although not always the case, these relationships have often been exploitative to the artisan, who realized little of the value of his products.Design Entrepreneurs: These include high-end fashion houses that have imbedded traditional crafts in their collections. Designers such as Ritu Kumar, Tarun Tahiliani and Manish Malhotra have worked closely with master craftsmen to create product off erings for high-end domestic and international markets. However, none of these efforts have placed crafts distinctly at the center of their enterprises but rather integrated crafts into their work. Their impact on promoting crafts has therefore been largely indirect. Other fashion designers such as Anita Dongre have created a istinct crafts-based collection, Grassroots, that aims at marketing clothing that promotes the skills and knowledge of traditional artisans, and has been made using organic materials and eco-friendly processes. Mainstream Retail: There have been a few successful examples of crafts-based businesses, which have not only contributed to improving numerous artisans' livelihoods but have also provided unique blueprints for future market-based endeavors. However those that exist are success stories that need to be more systematically replicated.Social Businesses: These are a more recent wave of businesses that have originated out of non profits or hybrid models that c ombine social and commercial goals. ? ? ? ? ? ? Photo Credit: Sahaj Photo Credit: Sahaj ? ? ? The Role of Mainstream Retail While relatively few, a handful of retailers such as FabIndia, Anokhi and Contemporary Arts and Crafts have played a pivotal role in keeping crafts relevant and linked to contemporary consumers. These companies have developed 18 For Government efforts to have the maximum impact, Government bodies mplementing programs need to be reformed and a policy environment more conducive to greater participation and specialization by different stakeholders needs to be created. 19 socially conscious business models wherein they work closely with artisans and ensure that they are equal stakeholders in the business. Due to their relatively well-organized supply chains and focus on profitability, they are able to provide consumers with quality products better suited to urban tastes as compared to subsidized crafts available at Government-run emporiums.The success of these mode ls has been built on the zeal of their founding members, who have overcome challenges in the crafts value chain through innovative strategies that not only ensure bottom-line growth for businesses but also fair and consistent wages to artisans. These models include: ? Fabindia, founded by John and Bissell in 1960, India's largest private crafts business that has taken tradition techniques, skills and hand-based processes to global markets. The company has been recognized worldwide for its socially responsible business model that links over 80,000 craft producers to markets.This has been achieved through its innovations in supply chain management through Community Owned Companies (COC), which serve as intermediaries and are owned by communities. Artisans form a significant part of the shareholding of these companies. Fabindia's supply chain (in the chart below) consists of numerous backward and forward linkages in a multi-layered supply chain from suppliers or artisans to Fabindia st ores. These linkages ensure that products sold cater to consumer tastes, a quality standard and timely delivery. The multi-layered supply chain ensures that each group's strengths are leveraged efficiently. Anokhi, founded by Faith Singh, is a clothing chain well known as an alternative role model for good business practices, and the ongoing revival of traditional textile skills. The company works closely with the Jaipur Virasat Foundation that provides capacity building inputs to artisan suppliers on design, techniques, quality control and enterprise development. In addition, the foundation works in other areas of Rajasthan's cultural industries such as folk art, music and dance to promote livelihoods and preserve heritages.Contemporary Arts and Crafts (CAC), founded by Vina Mody and run in partnership with Feroza Mody, is a boutique retail outlet that provides unique and rare craft products to urban consumers. CAC's success is based on its strong relationships with artisan communi ties in Gujarat and Rajasthan from where products are sourced. The CAC team invests significant time in understanding craft products and working with artisans to create outputs that will be appreciated in urban markets.In addition to these efforts, stores such as Shopper's Stop and Lifestyle have expanded their selections of handmade products and ethnic wear, providing much needed market opportunities for the crafts. However, for a deep and sustainable impact on the artisan, retailers and mainstream businesses need to leverage their business acumen in tackling supply chain issues and creating a larger demand for these products. ? 6 The SRC repleshnishes the stock by getting more of the fabric from the weaver Fabindia’sSupply ChainStructure The weaver weaves some yardage and shows it to a regional supplier region company (SRC) HOWTHEFABRIC REACHESTHESHELVES Fabindia’s Supply Chain is split into 17 regional supply companies The Role of Social Businesses The emergence of the social business model has provided a new opportunity to revive the sector. With their emphasis on the end consumer, social businesses have a greater incentive to bring in efficiencies in quality control and production management, which are often lacking in non profit organizations.Pre-production, social businesses may offer access to quality inputs, equipment, financing and training. Post-production, they improve market linkages through procurement, storage, transport and retail. Social businesses achieve this by focusing on three main areas, which essentially sets them apart from non profits: ? Supply Chain Efficiencies: Given the scattered and homebased nature of crafts production, enterprises often face challenges in ensuring a regular supply chain for their products. Social businesses have focused on fixing the rural supply chain for crafts, either by filling in missing or Through an order booking system, the store manager books the quantity needed. From the SRC warehouse st ock moves to the Fabindia regional warehouse Around 40,000 artisans supply goods for Fabindia It now has 144 stores in 35 top towns 2 The SRC calls the designers; they approve the fabric, work with the weaver to develop some samples. Photo Credit: Top – Anokhi Bottom – CAC 4 20 The weaver brings the completed order to SRC warehouse 3 Designers show samples to Fabindia's product selection committee, the price is finalised and an order is placed with the weaver 21 eak links in the value chain through their own operations, or by establishing creative partnerships with non profits, Government bodies, corporations and community groups. ? Artisans’ Ownership: The advantage of functioning as a business rather than a non profit in the crafts space is the ability to involve artisans as owners by giving them shares in the company. This ownership brings with it an increased sense of responsibility and efficiency, which is sometimes difficult to achieve in a non profit. In this way artisans are not only vested in the company's growth but also financially benefit from it through issue of dividends.Market Linkages: Due to their focus on standardization and supply chain management, social businesses are in a better position than non profits to create and maintain links between artisans and markets – domestic as well as international. Corporates typically prefer to partner with social businesses to bring crafts products to market due to more efficient processes in the company. This ownership brings with it an increased sense of responsibility and efficiency, which is sometimes difficult to achieve in a znon profit.Further, in this way artisans are not only vested in the company's growth but also financially benefit from it through issue of dividends. The biggest advantage faced by social businesses is their ability to raise capital from artisans in the form of shares, as well as external investors such as venture capital funds and corporates. In re cent years, businesses in the crafts sector have attracted funding from impact investors such as Avishkaar, Grassroots Business Fund and Villgro, who invest in social enterprises with the dual expectation of social impact and financial returns. Industree- Linking Artisans to Mainstream Markets: Industree, a social enterprise that connects rural producers to urban markets has been able to rapidly scale up operations through equity investment by Kishore Biyani's Future Group. This has enabled them to set up a retail brand called Mother Earth, and increase the number of clusters from whom they source crafts as well as provide artisans an opportunity to link to mainstream urban markets. ? Support from Multi-lateral Agencies and FoundationsThe international development community and private foundations have been pivotal in providing support to many non profits working in the crafts sector. United Nations agencies such as UNESCO have provided platforms for sharing best practices, research and documentation such as the Jodhpur Symposium. These initiatives have typically focused on project design and building frameworks to build a movement that strengthens creative and cultural industries. Others such as the World Bank channel funding to crafts organizations.A number of private foundations such as Aid to Artisans, Sir Dorab Tata Trust and the Ford Foundation provided long term grants to crafts non profits to scale their impact. Innovative approaches include Friends of Women World Banking’s funding strategy of credit provision to artisans through non profits. Together these efforts have helped sustain non profits’ work and strengthened models creating an impact on artisans incomes. Thecooperativemovement spearheadedbyElaBhatt, founderofSelf-Employed Women'sAssociation (SEWA),inthe1970s alsohadapositiveimpacton thelivesofself-employed womenartisansthroughthe formationofcraft cooperatives.Thesemembership structuresallowedthemto workwithinequitable structure sandreceivecredit, designandmarketinginputs, withoutfearofexploitation bymiddlemen. The Evolution and Role of Non Profit Interventions Non profit organizations have been the strongest supporters of the craft industry, both in terms of livelihoods promotion as well as cultural preservation. Following post-independence industrialization, the crafts industry was no longer viewed as an economic priority by the Government, which created a void in terms of support and finance available for the sector.A number of non profits were established in the 1970s and 1980s to fill this void and enhance the sustainability of artisans livelihoods. Many of these were run with the help of volunteers and were able to grow and thrive under a strong, charismatic leader with a clear vision for the sector. Examples of successful social businesses in the crafts sector include: ? Rangsutra- Enabling Artisans to Own a Share of their Crafts: Rangsutra was set up as a company of artisans, all of them shareholder s, from remote parts of the country.It seeks to be a bridge between â€Å"artisans and customers, tradition and contemporary, and change and continuity† and ensures a fair price to the producer and quality products for customers. It currently has 1,100 shareholders and has attracted investments from Avishkaar and Artisan Microfinance Private Limited (AMFPL), a subsidiary of Fabindia. Photo Credit: Sahaj 22 23 Most non profits functioning in the crafts space today are registered as trusts, societies or Section 25 companies. They are broadly of two types, based on their scope of work: ?Producer Groups: A majority of non profits in this space ? work directly at the grassroots level, organizing crafts producers into collectives to realize various economies of scale in financing, marketing and product development. Examples are URMUL, Kala Raksha and SEWA Ahmedabad. ? Apex Organizations: These focus on enhancing the sector ? by providing services ranging from design interventions t o market linkages to groups of producers, who typically serve as part of their membership base.They vary in scale and level of outreach from national to state to local levels. Many apex organizations are well-positioned to act as a bridge between producer groups and Government bodies, both by channeling information regarding relevant Government schemes as well as by influencing Government spending. Prominent examples are Dastkar, AIACA, Dastkari Haat Samiti and Sasha. Non profit approaches have evolved significantly in two main areas: focus of the model and financial sustainability.Most non profit groups have focused on all parts of the value chain from organizing artisans to marketing products, largely due to a lack of other players specializing in certain areas. This has resulted in limited capacity to scale their operations. Fresher non profit approaches focus on one or two parts of the value chain such as aggregation or working closely with artisans’ groups. Further, ther e has been a realization in recent years that traditional grant funded projects for creating crafts production structures have not succeeded in establishing commercially sustainable structures.Newer non profits have attempted to embrace this change in perspective by incorporating fee-based enterprise development projects into their scope of work, others have spun off business models that target aggregation and marketing, while the non profit focuses on building artisan capacity. The different stakeholders described above have each made significant contributions to the crafts sector. However, since they act in isolation from each other, their impact remains limited and they have not been able to halt the downward slide of India's crafts sector. 24 25 III. CHAPTERHarnessing the Potential of India's Crafts Sector Photo Credit: Jaipur Rugs Foundation 26 The crafts sector in India has vast potential to improve livelihood opportunities, generate additional income and strengthen the purcha sing power of rural communities. For this potential to be fully realized, the gaps, overlaps and challenges in the value chain must be overcome to create an ecosystem that enables crafts to thrive. The different stakeholders involved need to come together to build what we call the four cornerstones of artisan sustainability. Non profits have a particularly important role in such a program.Based on Dasra’s research, interviews with experts in the crafts sector and advisory committee discussions, Crafting a Livelihood suggests four key actions with the potential to transform artisans’ livelihood in India. The four cornerstones are: 1. Handholding the Artisan through the Value Chain Any investment in improving the craft ecosystem as a whole must pay particular attention to strengthening the individual artisans and enterprises engaged in production. Since challenges faced by artisans are pushing them into other dailywage earning jobs, concerted efforts are needed to upgrad e the current piecemeal nature of production.Crafts promotion efforts should focus on making artisans aware of the value of their skill, which would make them take greater pride in their work and encourage the second generation to enter the sector. Further, it is essential to help artisans continuously upgrade their skills and product offerings. This requires design inputs and skills development efforts. 2. Increasing Demand for Crafts and Strengthening Market Linkages There is an urgent need to revive consumers’ interest in crafts and make crafts relevant to increasingly urban lifestyles.Efforts are needed to sensitize the emerging middle class consumer to the history and value of crafts in India to ensure a robust domestic market. Strengthening branding efforts and introducing geographical indicators such as a â€Å"Handmade in India† classification, will enable Indian crafts to compete in increasingly global markets. Crafts can be branded on the national, regional o r local, and enterprise level. On the national or regional level, some countries are known or even famous for their excellence in handicrafts, or in specific crafts.The branding of a country's handicraft image depends on the public perception of that country's culture and handicraft skills. Countries that, for different reasons, de-emphasize their indigenous culture and traditions and focus on their modernism create a much tougher environment for the promotion and export of their indigenous handicrafts. 21 Crafts lies well within the informal sector, bringing with it challenges of taking a completed product to market. Most artisans produce at relatively low volumes and at irregular intervals, creating few opportunities to market products at scale.New business models are needed that blend social and commercial goals to provide value added services to artisans particularly in aggregation of products and intermediary trade. As artisans are scattered across geographies, there is a need for players who can source products from them in a centralized fashion and introduce economies of scale into the supply chain. These intermediaries will provide the essential bridging Asartisansareoftenproducing formarketsthatarealiento them,theyneedsupport servicessuchastechnicaland designskillbuildingtohelp reachtheincreasinglyurban consumer.Theseinputswill increasetheirbargaining powerandbuildtheircapacity tosupplydifferentmarkets. Dasra'sfieldresearchhas shownthatbuildingthe capacityofartisansinthis mannercanresultinuptoa ten-foldincreasein incomes. 1. Handholding the Artisan through the Value Chain 2. Increasing Demand for Crafts and Strengthening Market Linkages AconsumersurveyinEurope revealedthat40%of consumerssurveyedwere willingtopayapremiumof 10%fororigin-guaranteed products. SalesofIndian craftsstandtoincrease 20 fromsuchefforts. 3. Strengthening the Decentralized Production Model 4. Building a Multi-Stakeholder Approach 7 28 services between small producers and the diff erent markets where products can be sold and thereby smoothen seasonality of production. Creativeclustershavebeen identifiedasanimportant meansformicroandsmall enterprisestogrowstrongly throughmutualstimulation andleveragingofcommon knowledgeandmarkets. Typicallytheybenefitfrom lowerVAT,tariffsandexcise dutiesonhandmadeproducts. Creativeclustershavethe potentialtonotonlycreate productionefficienciesbut alsoprovideaplatformfor artisanstoaccesslocaland domesticmarkets. 3. Strengthening the Decentralized Production ModelThe fragmented supply chain, lack of organization and seasonal production characteristic of the craft sector need to be overcome to maximize production potential. Geographically scattered production, which is typical of the crafts sector, requires services at artisan's doorsteps. Leveraging technology for information as well as for innovations in process will infuse efficiencies in craft production and enable artisans to produce more. Limited education and low exposure to the skills essential to running a business prevent artisans from scaling up their operations.Providing business support in areas such as quality control, standardized processes, inventory management, cashflow management and securing credit would help them create strong enterprises. To this effect, capacity building cooperatives and producer owned companies would ensure standardized systems and processes, quality control, and professionally run businesses that can access capital and enable them to compete in markets. Dasra's field research has demonstrated a potential three- to five-fold increase in individual income through these efforts.Moreover, fragmentation in the value chain can be overcome with clusters such as Special Economic Zones (SEZs) for crafts. These are defined as a combination of production and distribution activities operating within a common structure, capable of promoting creativity, research applications and distribution systems. Historically, clusters in Indi a have been created for production and bureaucratic efficiencies, ignoring their function as a sales platform. While the sales focus has been tried at Bhujodi in Kutch, creative clusters are generally the exception in India. ensitizes them to crafts, deepens their understanding of tradition in a way that they can implement in the mainstream. This fosters the perseveration of culture by continuously adapting it to modernity. Setting up academies for