Assignment on  Problems of Handloom in Bangladesh
Subject: Textile | Topics:


products and selling them the raw materials. Smuggling of Indian fabrics must be stopped to protect the domestic industry. The authorities should not allow illegal marketing of the fabrics imported for the RMG industry. ACCORDING to a recent media report about 70 per cent of the handlooms have been closed down in the Narsingdi district, once known as the Manchester of Bangladesh for its exquisite handloom textiles. It is now a shadow of what it once had been.

Reportedly, 0.1 million looms were, thus, closed down in the district over the last thirty-five years, throwing over 80,000 weavers out of employment. This picture of the handloom industry in other parts of the country is no different.
It means neglecting an industry which can create jobs, directly and indirectly at a cost much lower than the mechanised sector. Replacement of the labour intensive hand loom factories by mechanised powerlooms created a serious problem of unemployment.

In Bangladesh, over 10 million people are reportedly employed by the handloom industry, which meets nearly 50 per cent of the country’s fabric requirement. Value addition by the handloom sector, according to one estimate, stands at Taka 10 billion. It, thus, meets 40 per cent of domestic textile requirement, accounting for 63 per cent of textile production. The handloom industry meets the bulk of the common people’s requirements for saris, lungis, bed sheets and the like.

If developed, the handloom industry can create jobs throughout the countryside. Besides, the handloom products can be exported. Lungis, gamchas, caps bedsheets, bedcovers etc., produced by handloom factories are exported to the Middle Eastern and South East Asian countries. ‘Grameen check’ is increasingly used to make apparels for the export-oriented readymade garments (RMG) industries. Handloom spun fabrics have substituted the previously imported fabrics for RMG industries. The handloom industry can add further value for the RMG sector, for the domestic and foreign markets. Due to lack of support, 37.6 per cent of the handlooms all over the country are not operational.

The handloom industry needs government support to be able to come out of the trouble it is in. The government should come up with a programme, supportive of the industry capable of creating employment.The experts are suggesting for providing loans at concessional lending rates and ensuring the supply of raw materials, in adequate quantity and in time, to the weavers. The industry needs a marketing strategy so that the weavers can get remunerative prices for their products. Credit is one of the major problems facing the handloom entrepreneurs.

The current problems
At present, a major problem of the industry is that the weavers do not get adequate wages for their labour. According to a national daily, a senior taanti or “ostad” earns about Tk 2,500 to Tk 3,000 per month. Junior weavers get much less, around Tk 1,600. As a result many weavers do not want their children to come to this profession. For many, the garments industry offer a lucrative alternative. A good piece of jamdani sari needs the labour of one to two months, and the wage paid to the weavers does not compensate for their labour. The producers often do not have direct access to sari markets and because of their dependence on the middlemen, who often form informal cartels, they are deprived of their share of profit. Sometimes, the producers fail to recover the costs.
Thankfully, the government and other organizations are trying to revive the old glory of Dhakai Jamdani. In a bid to avoid the middleman they are trying to establish direct contact with the waivers. A Jamdnai Palli has been established near Dhaka. Jamdani, one of the oldest forms of cottage industry in Bangladesh, was once was a dying trade. It was successfully revived due to the pioneering work of entrepreneurs such as Monira Emdad. Tangail Saree Kutir along with other sari stores on Baily Road, strive to support the thousands of weavers of Bangladesh who have struggled to keep this age old tradition and fashion alive. Organizations like Radiant Institute of Design, Shanto Mariam University of creative technology, etc. are helping designers create new Jamdani designs.

Women handloom workers facing the brunt of economic reforms

Note: One of the points high up on Angela Merkel’s agenda is the development of three-way economic partnerships between G8 countries, African countries and ‘emerging economies’ like Brazil, China and India. Is this a good idea? Here, Narasimha Reddy from the pioneering Centre for Handloom Information and Policy Advocacy in India describes how this unique woman-dominated industry is affected by globalisation, liberalisation and economic reforms, adverse government policies and discriminatory competition…

The handloom sector is unique in India. It has been the most popular manufacturing sector in the previous centuries, and has been the mainstay of rural industrialisation in India. Handloom sector has been catering to the clothing needs of India, and various other countries for centuries altogether. Modern textile industry has grown on this sector, through mechanization and modernization. However, the most modern industry follows the principles of weaving set by the traditional handloom weaver. Unlike any other industrial endeavour, handloom sector still continues alongside the most modern textile machinery.

There are number of factors that have contributed to such resilience. Principal among them is that the weaving is household profession, passed on through generations. In these households, women play an important role. Women weavers have been the principal stabilisation force through years of crises and problems for the handloom sector.

The handloom sector is only the manufacturing sector wherein one finds large number of women producing products which are worn by large number of women. Women producing for women is a unique feature of the handloom sector.

Despite such features, which are outwardly unique, women weavers were never given the primacy they require. Their role in production was never acknowledged beyond the confines of the home. Their work most often went unpaid. Governments never recognised formally as a target group. Even the private initiatives of NGOs, or fashion boutiques, tend to ignore their contribution and role. The most radical to rightist political mobilization

structures in handloom sector are devoid of any issues and participation of women. Women participation in political mobilization is completely nil.

Women constitute a major workforce in the handloom sector. Also, most of the handloom products are meant for women. Thus, handloom sector is the unique sector, wherein 60 percent of the women produce almost 70 percent of women products. However, their working, living and wage conditions need to be improved.

They need to be empowered in various ways. Almost all the government schemes, projects and programmes on handloom sector have been and continue to bypass this major workforce through various means. They do not
have identity cards, which are the principal means through which government welfare measures are sought to be implemented. There is no scheme, or project, or programme which addresses their needs.

Women weavers have been subject to domestic violence and victims of violence in many places. They have also been at the receiving end of discrimination of all types. Whenever handloom sector is in crisis, the burden of carrying through the crisis is the most on women weavers, through increase in physical, psychological and social pressures. Their health condition is a major concern, as also their role in relations of production and also the future of girl children. While performing critical functions in production, their role in decision-making is rather poor.

Women handloom weavers: Facing the brunt

From centuries, production has been defining gender relations, be it agriculture or any sector. Presently, trade policies would like to redefine production to suit international trade. The impacts of such changes on the production system are bound to be felt in the existing gender relations as well. Given this, it is apparent that trade policies are also trying to define gender relations in the same way, which is status-quoist, at best.

Trade policy is like a torrent of rain on an undulating social terrain, accentuating the existing fissures, especially socio-economic relationships between men and women.

The trickle-down of trade benefits is yet to happen. However, changes have affected many sections more negatively because they were not informed and were unprepared.

Trade affects women more because of the existing structure of production. The state, and the governments have failed in changing these discriminatory production systems in the last 60 years, and trade-based current policies are accentuating it. Government wants women weavers to shift from handloom weaving to apparel making.

But this does not improve the structural position of women, except a shift in their skills and increasing burden on their physique. It would lead to deskilling of women and thus their social position.

Women to benefit from the current scenario need to move up the value chain in production and also move up in respective sectors, from primary levels. They need to be in the leadership, entrepreneurship and value addition levels.

The wheels of misfortune
FOR centuries now, Muhammad Ali’s lineage has been at the heart of our culture, weaving elements of satisfaction and necessity into our lives through what we have, in essence, come to define as fashion.
A handloom weaver by trade for the best part of 45 years now, weaving has not been merely a profession for Ali but a proud inheritance. It is the only trait he has ever mastered. While that may seem to bode well for him in this age of specialisation, an air of uncertainty now strongly reverberates from the dust-gathered, cobweb-covered walls of his workplace, the handloom factory known as ‘Kabir Weavering.’

Despite his fading health, Ali with his fractured spectacle-lenses, has
to put in a gruelling 12-hour shift on a daily basis in the truly atrocious surroundings, his factory provides. Ali returns home in Araihazar, Narayanganj, with his tail firmly tucked in between his legs. The remunerations are barely enough to support his family. The bulk of his rather paltry daily income remains in his paymaster’s pocket as re
payment for Ali’s loan from him.

Following in the footsteps of his uncle, Abdul Awal has been a handloom weaver for the last 20 years, working in different private handloom factories at Shekher Char as well as Babur Haat, Narsingdi. Awal can weave from eight to ten gaj (yard) of cloth during his work hours that extend from early morning till 9:00pm everyday.
A sum of Tk 10 is handed to him for every yard of fabric he weaves, an amount that falls tragically short of meeting the financial requirements of his family.

Living in a nearby tin-shed home with his wife and three children, his living expenses consume nearly Tk 2,000 every month – Tk 500 as rent for the two rooms and the remainder on groceries. The education of his children have had to be compromised as a result as Awal cuts a fragile figure, looking older than his age with barely enough clothes to dress himself with as fate would cruelly have it.
Having left his home district of Narayanganj for Narsingdi with hopes of securing better remunerations and ensuring financial stability in his household, Ali’s search for greener pastures has landed him the same fate, endured by most other weavers in the region.
In an area renowned for and to an extent, defined by its strong handloom weaving traditions, Babur Haat harbours thousands of privately owned handloom units. Some of these factories, like Ali’s, are in a dire state, containing machineries that have been lying inactive for decades now and that number is rising ominously.

The start of the plight, now endured by a large number of handloom weavers alike, can tentatively be traced back to the government’s decision to allow for an open market to form the basis of the economy, back in the early 1990’s. As a result, local weavers had, unsurprisingly, been exposed to foreign competition and with the massive influx of Indian weaved saris and shalwar-kameezes into local markets, the demand for local products fell off drastically.

The victims, however, were the weavers and the small factories. Poor pay and lack of government incentives have almost shattered the local handloom industry.

For the simplest benarasi sari that Zahid Hossain makes, it consumes three days and earns him Tk 500 from it. He has been in the profession for the last 35 years.

The cost of producing the simplest form of benarasi sari is more than Tk 2,000 but they have a price ceiling of Tk 2,500 to sell it in the market, which apparently limits their opportunity to make profit, says Bhola Mer Karim, an owner of a benarasi sari factory.
Substantial effort is perspired to weave the fabrics.

Mohammad Iqbal, a handloom weaver says that for weaving a benarasi, he has to pull the Zokki (the handloom machine), to press each Bana yarn inside the Tani yarns. He has to paddle the machine numerable times.
Most of the weavers lack job security due to the downfall in the industry. During the mid-nineties, the government provided a loan of Tk 18,000 to every weaver. The initiative was revived once again in 2001 but most weavers were bankrupt because of a high rate of interest and higher prices of raw materials.

The high price of imported raw materials such as the yarns and accessories and repeated natural calamities further ruined their fate. Without available training facilities, weavers are maintaining their ancestral profession in the most unsatisfactory manner.
These are the same weavers who cater their products to large fashion houses like Aarong and Anjans in the country and to stores in Japan and Korea, says Akhter Hossain Rabin, former president of Benarasi Prathamik Tati Samity at Mirpur.
Nonetheless, because of poor pay, most handloom workers are deprived of a stable life. The industry which has a concentration in Tangail, Dhaka’s Mirpur area, Rupganj, Ruhitpur, Sylhet, Sirajganj, Pabna, Cox’s Bazar and Bandarban have suffered from Indian infiltration and poor remuneration by the local buyers.

Akhter proposes that the government open purchase centres near the handloom concentrated areas to ensure proper prices for marginal weavers, which over time, may well remedy the situation.

No census was carried out on the handloom industry after 2003. The last census reveals that nearly two lakh handlooms have shut down from an industry that earlier had a capacity of five lakhs.

The annual demand for weaved fabrics is measured at approximately 168 crore metres and the local handlooms now have the capacity to meet merely 40 per cent of the demand.

Sources from Bangladesh Handloom Board say that around six variations of handloom are available in the country consisting of Pit loom, Chittaranjan loom, Komor loom, Frame loom, Benarasi/Jamdani and power loom.
A good number of handloom weavers switched to power loom factories hoping to change their fate but, as one may be tempted to ask, at what price? By compromising the continuity of traditional handlooms – a hereditary trade that forms such a vital cog in the wheel that defines our culture, unfortunately, seems to be the obvious answer as of now.

1. A gender benchmark is required while preparing the sensitive and special
products list, in FTAs/ETAs/CEPAs.

2. bangladesh National foreign Trade Policy has to be made sensitive to the needs of women and production systems involving women.

3. There is a need to develop a Tool for Gender Impact Assessment (GIA), a la environment impact assessment, which can help in improving the content of trade policies.

4. Women handloom weavers should have specific growth and development
programmes and allocations in the national budget.

Many influential scholars of women frame women’s lives within a patriarchal paradigm.However, culture in the handloom weaver families in some ways undermined the establishment of centralized positions of authority through which a patriarchal system might operate. In contesting the relevance of the patriarchal paradigm for understanding handloom families, it is not argued that women were more liberated in handloom sector. Rather, evidence supports the conclusion that to the extent that women as individuals faced subordination in handloom weaver families, it cannot be attributed to the essentialized notions of gender in Indian society.
Because the family unit was such an important element in handloom sector there were compelling reasons to prevent families from collapsing into purely male-headed enclaves. Women’s active participation in the handloom production was not limited to those ingenious few who could overcome the gendered obstacles in their path; rather than contesting male authority, women’s common participation in the production can be explained as a product of the shifting alliances and conflicts that structured the Indian concept of authority, and created spaces where women, like other social actors, could exert their autonomy.

Handloom sector is ideal for studying women’s economic activities in India. The handloom sector resilience, prosperity, demographic growth, and social stability make it possible to study gender norms operating in a normal, mundane fashion.

Within the wider network of handloom production in India, women were involved in production and marketing of the products, as workers, as participants in commercialized domestic textile production, and as investors/master weavers. Because textile manufacturing was and is the most profitable economic activity in many parts of the country, it is no surprise that most illustrious families controlled handloom production as Gender and Trade Policy 4/7 master weavers. Women within these elite families became master weavers through both inheritance and marriage.

The following are aspects that require immediate attention:

Raw Material supply
Access to raw material such as yarn, dyes and dye stuffs has become a problem. (Yarn is made out of fibres such as cotton and is used to weave the cloth, horizontally and vertically. It is the primary material to produce the cloth or fabric.) Weaving is a rural and semi-rural production activity and weavers have to go far to get these raw materials. To top it off, yarn prices are steadily increasing. The availability of hank yarn – the basic material from which weaving is done – is a serious issue because it is controlled by modern spinning mills, who see more profit in large-volume cone yarn.
Secondly, since hank yarn is tax-free and has subsidies, enormous amounts are diverted to the powerloom and mill sectors. As a result, there is a perennial shortage of yarn for the weavers. Despite a few schemes, the hank yarn access issue has not been resolved. Colours are expensive, and presently there is no system or mechanism to increase their availability.

Raw material prices
Handloom primarily uses natural fibres such as cotton, silk and jute. Prices of these fibres have been increasing during production and processing. Cotton production in India is expensive because of intensive and high usage of costly agricultural inputs such as pesticides and fertilisers. Secondly, while the fibre production most often happens in the vicinity of the weavers, their processing is done in distant areas, and as such the prices to the weaver are higher. With the central government now encouraging primary fibre and yarn exports, handloom weavers would be on the last priority for yarn suppliers.

The solution lies in establishing relatively low-cost, decentralised spinning units in the villages where handloom and fibre productions co-exist. The units would enable direct linkage between farmers and weavers, which essentially decreases the cost of yarn and thus the cost of handloom products. Still, the cost of setting up the units may be too much for an individual, and hence governmental support will be required.

 Infrastructure and Investment
Investment in handloom sector has thus far been limited to input supply costs. There is no investment on sectoral growth. While there have been some piece-meal projects such as workshed-cum-housing and project package schemes, they merely perpetuate the existing conditions. There has been no thinking on basic requirements of the producer.

Facilities such as land, water and electricity need to be provided in many places that are a harbour for handloom manufacturing. On the other hand, powerlooms are getting more usable support from the government in procuring land, water and electricity.

Places like Pochampally (for e.g.) suffer from water pollution, where the Musi river drains the wastewaters of Hyderabad city. In many places across Andhra Pradesh, the only water available is groundwater, which is laden with salts and other contaminants. This affects the quality of production, economics and also the structure of production. Weavers simply have to put in more time to procure water for drinking and other needs, as well as compromise on dyeing quality.

Common facilities have not been developed such as godowns, credit facilities (banks in the vicinity), roads, proper sanitation, etc. have not been provided anywhere.

In recent years, the investment profile in handloom sector has also been changing. Traditional investors — known as master weavers — who had been investing for several decades in handloom production have been moving away, or have become reluctant to invest in new designs. There is a need for new programmes that enable the inflow of fresh investments and emergence of new entrepreneurs into the handloom sector.

 Design improvements
While there are suggestions that handloom sector should increase its design in response to changes in the market, the bottlenecks are many. The lack of change is not due to the weaver not being amenable to change, as is bandied. Rather, it is due to unwillingness of the investor to take risks and provide incentive to weavers for effecting the change. This apart, government has been providing substantial grants to the National Institute of Fashion Technology (NIFT) to provide design support to handloom cooperatives, but nothing much has come of it. NIFT was granted Rs.42.71 crores in 2004-’05 and Rs.22.78 crores for 2005-’06.
 Market for products
Handloom products require more visibility. This means better and wider market network. One-off exhibitions organised with the support of government do not suffice. Presently, handloom products are available only in few places. An umbrella market organisation — autonomous and financed by the government initially — should be formed to undertake this task, financed by the sales of the handloom products.
Patenting designs/varieties
Handloom designs are not protected. As a result, investors are not interested lest they end up with the risk and those who copy the benefits. Protection options include development of handloom/silk/jute marks and registration under Geographical Indications Act. However, more discussion is required on this if handloom has to come up with designs that suit the market preferences and are still protected against theft.

Cooperative system
While cooperatives do help in maximising the benefits for weavers in the entire chain of production, their present condition a cause of concern. The handloom cooperative system is riddled with corruption and political interference. Many handloom weavers are not members of these cooperatives. Government departments have to stop using them as primary sources for routing government funds and schemes. Cooperatives have to become independent of district-level government officers in terms of management and decision-making. An enabling role is called for, as detailed elsewhere in this article.

 Free export/import trade

— opportunity Post the WTO Agreement on Textile Clothing, there is going to be more free export and import of textiles. The handloom sector, as a traditional area, can claim some special packages or discriminatory measures, to protect this kind of production. Options and policy measures need to be worked out either by independent institutions or the government.

Budget allocations
Allocations for handloom in national and state budgets are being reduced. This has to be reversed. Budget has to increase with new schemes which address the problems of the sector, in view of the linkage and the need to protect rural employment.

 Intermediaries (individuals/institutions)
Government has created a few research, training and input institutions to help the handloom sector. These institutions include weaver service centres, institutions of handloom technology, NIFT, etc. But their performance has been below par and their presence has not helped in obviating the problems of handloom weavers.

 Enhancement of Value

There is a need for enhancing the value of handloom products through utilisation of organic cotton and organic yarn, application of natural dyes and by increasing the productivity of the looms through research and innovation – for example, changes in the width of the looms and some appropriate technical changes.

 Competition and unfair competition from mills and powerlooms
Competition is now uneven, with mill and powerloom sector getting subsidies in various forms. Secondly, powerlooms have been undermining handloom markets by selling their products as handloom.

 Wages, employment and livelihood issues
Wages have not increased in the last 15 years. Some sections of handloom weavers are living in hand-to-mouth conditions, with no house or assets.. These issues need to be addressed by the government; at least effectively implement the Minimum Wages Act. (The Quest Features & Footage,

The process to overcome the problems regarding the Handloom production and marketing

 The Small Scale Industrial Sector has emerged as a dynamic and vibrant sector of the economy during the eighties. At the end of the Seventh Plan period, it accounted for nearly 35 percent of the gross value of output in the manufacturing sector and over 40 percent of the total exports from the country. It also provided employment opportunities to around 12 million people.

The primary objective of the Small Scale Industrial Policy during the nineties would be to impart more vitality and growth-impetus to the sector to enable it to contribute its mite fully to the economy, particularly in terms of growth of output, employment and exports. The sector has been substantially delicensed. Further efforts would be made to deregulate and debureaucratise the sector with a view to remove all fetters on its growth potential, reposing greater faith in small and young entrepreneurs.

 All statutes, regulations and procedures would be reviewed and modified, wherever necessary, to ensure that their operations do not militate against the interests of the small and village enterprises.

Government have already announced increase in the investment limits in plant and machinery of small scale industries, ancillary units and export – oriented units to Rs 6 million, Rs 7.5 million, and Rs 200 thousand respectively. Such limits in respect of “TINY” ENTERPRISES would now be increased from the present Rs 200 thousand to Rs. 500 thousand, irrespective of location of the unit. Limit in plant and machinery for determining the status of SSI/Ancillary units as on date is Rs 10 million. For tiny it is Rs 2.5 million and for SSSBE Rs 500 thousand.

Service sub-sector is a fast growing area and there is need to provide support to it in view of its recognised potential for generating employment. Hence all Industry-related service and business enterprises, recognised as small scale industries and their investment ceilings would correspond to those of Tiny enterprises.

A separate package for the promotion of Tiny Enterprises is now being introduced. This constitutes the main thrust of Government’s new policy.

While the small scale sector (other than ‘Tiny Enterprises’) would be mainly entitled to one-time benefits (like preference in land allocation/power connection, access to facilities for skill/technology upgradation), the ‘Tiny’ enterprises would also be eligible for additional support on a continuing basis, including easier access to institutional finance, priority in the Government Purchase Programme and relaxation from certain provisions of labour laws.

It has also been decided to widen the scope of the National Equity Fund Scheme to cover projects upto Rs. 1 million for equity support (upto 15 per cent). Single Window Loan Scheme has also been enlarged to cover projects upto Rs 2 million with working capital margin upto Rs 1 million. Composite loans under Single Window Scheme, now available only through State Financial Corporations (SFCs) and twin function State Small Industries Development Corporation (SSIDCs), would also be channelised through commercial banks. This would facilitate access to a larger number of entrepreneurs.


  •  Inadequate access to credit – both short term and long term – remains a perennial problem facing the small scale sector. Emphasis would henceforth shift from subsidised/cheap credit, except for specified target groups, and efforts would be made to ensure both adequate flow of credit on a normative basis, and the quality of its delivery, for viable operations of this sector. A special monitoring agency would be set up to oversee that the genuine credit needs of the small scale sector are fully met.
  •  To provide access to the capital market and to encourage modernisation and technological upgradation, it has been decided to allow equity participation by other industrial undertakings in the SSI, not exceeding 24 per cent of the total shareholding. This would also provide a powerful boost to ancillarisation & sub-contracting, leading to expansion of employment opportunities.
  •  Regulatory provisions relating to the management of private limited companies are being liberalised. A Limited Partnership Act will be introduced to enhance the supply of risk capital to the small scale sector. Such an Act would limit the financial liability of the new and non-active partners/entrepreneurs to the capital invested.
  • A beginning has been made towards solving the problem of delayed payments to small industries by setting up of ‘factoring’ services through Small Industries Development Bank of India (SIDBI). Network of such services would be set up throughout the country and operated through commercial banks. A suitable legislation will be introduced to ensure prompt payment of Small Industries’ bills.
  •  To facilitate location of industries in rural/backward areas and to promote stronger linkages between agriculture and industry, a new Scheme of Integrated Infrastructural Development (including Technological Back-up Services) for Small Scale Industries would be implemented with the active participation of State Governments and financial institutions. A beginning in this direction will be made this year itself.
  •  A Technology Development Cell (TDC) would be set up in the Small Industries Development Organisation (SIDO) which would provide technology inputs to improve productivity and competitiveness of the products of the small scale sector. The TDC would coordinate the activities of the Tool Rooms, Process-cum-Product Development Centres (PPDCs), existing as well as to be established under SIDO, and would also interact with the other industrial research and development organisations to achieve its objectives.
  •  Adequacy and equitable distribution of indigenous and imported raw materials would be ensured to the small scale sector, particularly the tiny sub-sector. Policies would be so designed that they do not militate against entry of new units. Based on the capacity needs, Tiny/Small Scale units would be given priority in allocation of indigenous raw materials.
  •  A proper and adequate arrangement for delivery of total package of incentives and services at the District level will be evolved and implemented.


  •  In spite of the vast domestic market, marketing remains a problem area for small and tiny enterprises. Mass consumption labour intensive products are predominently being marketed by the organised sector. The tiny/small scale sector will be enabled to have a significant share of such markets. In addition to the existing support mechanism, market promotion would be undertaken through cooperative/public sector institutions, other specialised/professional marketing agencies and consortia approach, backed up by such incentives, as considered necessary.
  • National Small Industries Corporation (NSIC) would concentrate on marketing of mass consumption items under common brand name and organic links between NSIC and SSIDCs would be established.
  • Government recognises the need to widen and deepen complementarily in production programmes of large/medium and small industrial sectors. Parts, components, sub-assemblies, etc. required by large public/private sector undertakings would be encouraged for production in a techno-economically viable manner through small scale ancillary units. Industry associations would be encouraged to establish sub-contracting exchanges, in addition to strengthening the existing ones under the SIDO. Emphasis would also be laid on promotion of a viable and competitive ‘component’ market.
  •  Though the Small Scale Sector is making significant contribution to total exports, both direct and indirect, a large potential remains untapped. The SIDO has been recognised as the nodal agency to support the small scale industries in export promotion. An Export Development Centre would be set up in SIDO to serve the small scale industries through its network of field offices to further augment export activities of this sector.


  1.  A greater degree of awareness to produce goods and services conforming to national and international standards would be created among the small scale sector.
  2. Industry Associations would be encouraged and supported to establish quality counselling and common testing facilities. Technology Information Centres to provide updated knowledge on technology and markets would be established.
  3.  Where non-conformity with quality and standards involves risk to human life and public health, compulsory quality control would be enforced.
  4. A reoriented programme of modernisation and technological upgradation aimed at improving productivity, efficiency and cost effectiveness in the small scale sector would be pursued. Specific industries in large concentrations/clusters would be identified for studies in conjunction with SIDBI and other banks. Such studies will establish commercial viability of modernisation prescriptions, and financial support would be provided for modernisation of these industries on a priority basis.
  5. Indian Institutes of Technology (IITs) and selected Regional/other Engineering Colleges will serve as Technological Information, Design and Development Centres in their respective command areas.


  •  Government will continue to support first generation entrepreneurs through training and will support their efforts. Large number of EDP trainers and motivators will be trained to significantly expand the Entrepreneurship Development Programmes (EDP). Industry Associations would also be encouraged to participate in this venture effectively.
  •  EDP would be built into the curricula of vocational and other degree level courses.
  •  Women entrepreneurs will receive support through special training programme. Definition of “Women Enterprises” would be simplified. The present stipulation regarding employment of majority of women workers would be dispensed with and units in which women entrepreneurs have a majority shareholding and management control, would be defined as “Women Enterprises”.
  •  The persistent complaint of small scale units of being subjected to a large number of Acts and Laws, being required to maintain a number of registers and submit returns, and face an army of inspectors, would be attended to within a specified time frame of three months.
  •  Procedures would be simplified, bureaucratic controls effectively reduced, unnecessary interference eliminated and paper work cut down to the minimum to enable the entrepreneurs to concentrate on production and marketing functions
  • Handloom sector contributes about 30 per cent of the total textile production in the country. It is the policy of Government to promote handlooms to sustain employment in rural areas and to improve the quality of life for handloom weavers.
  • Schemes for the handloom sector will be redesigned keeping in mind the local and regional needs. Constraints of coverage will be removed so as to include bulk of the weavers who are outside the corporate/cooperative fold.
  • Existing schemes will be re-drawn and suitably revised under three major heads:
  • (a) Project Package Scheme: Under this scheme, area-based projects for product development, upgradation of technology, improvement of marketing facilities will be drawn up.
  • (b) Welfare Package Scheme: Number of welfare schemes and quantum of funds earmarked for them will be substantially augmented.
  • (c) Organisation Development Package: Schemes for participation in the share capital will be re-drawn under organisational development scheme for imparting a better management system in the existing state agencies.
  • Janta cloth scheme which sustains weavers often on a minimum level of livelihood will be phased out by the terminal year of the VIII Plan ad replaced by the omnibus project package scheme under which substantial funds will be provided for modernisation of looms, training, provision of better designs, provision of better dyes and chemicals and marketing assistance.
  • A vastly expanded role for the National Handloom Development Corporation (NHDC) is envisaged. NHDC would be the nodal agency for increasing the supply of hank yarn and of dyes and chemicals. Spinning capacity in the co-operative sector will be increased. National Co-operative Development Corporation will provide more assistance for this in the form of Seed Money, both for cotton growers spinning mills and weavers spinning mills.
  • For improving marketing of handloom products, a more intensive implementation of schemes for design and product improvement by national level publicity, exhibitions, and design exercise will be undertaken. A special scheme will be drawn up to graduate the handloom production, which is often of low value items, to high value products suitable for export markets. This will be done by better design inputs, upgradation of technology, diversion of weavers from cotton to silk and tassar weaving. Special projects for modernisation of looms for products suitable for export markets will be drawn up.


The key areas in handicrafts that could contribute towards a faster pace of rural industrialisation are production and marketing. Schemes for training and design development and for production and marketing assistance will be given encouragement.

Considering the importance of this sector from the point of view of employment and exports, it is proposed to provide an integrated development thrust to this sector with a view to enlarging the production base, thus enhancing the opportunities for employment and income through crafts as an economic activity and to giving it necessary inputs for quality improvement and effective marketing support both internal and overseas. Efforts will be made not only to preserve the traditional richness of the crafts but to engage the hereditary skills of the craftspersons to suit modern requirements.

Emphasis will be given to the following:-

– Extension of services like supply of raw materials, design and technical guidance, market support, training and procuring of related materials/inputs in an integrated and area-based manner through the setting up of craft development centres in identified clusters of villages.

– Market development support in the form of a package of assistance through expansion of marketing infrastructure, exhibitions, publicity, etc., through Central and State Handicrafts Corporations, voluntary organisations and support to direct marketing activity by craftspersons.

– Expansion of training activities by greater involvement of State Handicrafts Development Corporations, Co-operatives and voluntary organisations.

– Measures to sustain an increased exports of handicrafts through new marketing channels like trading companies, departmental stores, etc.

Government recognise the need to enhance the spread of rural and cottage industries towards stepping up non-farm employment opportunities.

  • The activities of the Khadi and Village Industries Commission and the State Khadi and Village Industries Boards will be expanded and the organisations strengthened to discharge their responsibilities more effectively.
  • There will be greater emphasis on improving the quality and marketability of the products pari passu with consumer preferences instead of merely depending on rebates and subsidies.
  • While the plan allocation for rural industries will be augmented, effective steps will also be taken to ensure better flow of credit from the financial institutions and a more coordinated and optimal utilisation of different development schemes and agencies operating in the rural sector. Bankability of projects undertaken in this sector would be stressed.
  • The programmes of intensive development of KVI through area approach with tie-up with DRDA, TRYSEM and ongoing developmental programmes relating to weaker sections like Scheduled Castes, Scheduled Tribes and Women would be extended throughout the country.
  • The traditional village industries would be given greater thrust. Involvement of traditional and reputed voluntary organisations will be encouraged.
  • Agro processing and food processing industries in KVI sector using appropriate technologies would be promoted with a view to utilise locally available agricultural produce and promote employment/resource generation in the countryside.
  • Functional industrial estates would be established in areas with concentration of agricultural/horticultural produce.
  • R & D in KVI sector would be strengthened through greater linkages with CSIR and other research institutions in the areas of production, finishing/packaging, processes and development of new tools and implements.
  • The training programmes would be upgraded and augmented to cover the expanded list of industries under the purview of the KVIC.

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