GST poised to strike death knell in handicrafts sector

A weaver of mine from the Chanderi village in Madhya Pradesh came with a handful of sarees looking woebegone and when I asked him why he said sadly, “first it was the farmers, now it is us in the handloom sector that will die.” It was as if an ice cold hand had slapped me. For it was chillingly true. Considering crafts is the largest sector after agriculture, employing a whopping 49 million artisans, the GST is poised to strike its death knell – both literally and figuratively. Actually, let me correct myself.

If agriculture and crafts sector with handloom being its largest chunk, are the backbone of the economy, then surely the crafts sector is taking the biggest punch with GST. It will set us back to the pre-independence times when the sahukar or the village lala held every small farmer’s land and life in his greedy little fist. The film Mother India was not a figment of the writer’s imagination but a reality that was lived by thousands if not lakhs of people.

Decoded — the GST will mean that yarn debts will increase and individual enterprise will gasp for survival.  It is like pulling the ventilator plug of the dying man and reasons are not far to seek: Most individual weavers have no access to buying yarn as many live in remote clusters or even cash to buy it.

Nishant Malhotra of the Weaver Story that works on reviving designs and weaves.

There is a supply chain in place in most areas where either credit is extended by the middleman of the bigger middleman and once the weaver has finished weaving he is given his weaving fees, which is often a pittance. He is obviously not in any position to dictate his fees. Unless weavers align themselves into co-operatives they will have no option but to fall into the trap of the local moneylender or work for the middleman who gives them yarn on credit or buys off their finished product.

There is five per cent tax on all yarns and five percent on all finished products. So in some textiles it will affect input and in some it will affect output. The five percent on raw material will be charged by the yarn supplier to the weaver then on services like warping and twisting there is an 18 percent tax. So the input cost goes up by 23 percent. Which the consumer won’t see as line items but the cost of sarees will go up because the raw material is more expensive.

On the finished sari, five per cent will have to be charged during the sale. So the overall impact is 28 per cent but the customer will see only five per cent as a line item on the invoice or bill. And six percent is payable if you are paying online. Thankfully there is zero per cent on khadi (select items). On all products above one lakh it is 12 per cent and the same goes for value added products like kalamkari, Madhubani, block printing etc where the embellishment happens after the textile is in place.

Banaras is literally at standstill because the weavers’ working capital for higher yarn cost is near impossible to manage and orders are not getting fulfilled hence there is a problem of circulation of money. There is immense pressure in Banaras to implement the GST as it is the Prime Minister’s constituency and they want to promote it as the best way out. It completely negates the work of revivalists who are doing yeoman’s service in trying to both create a demand and infuse design life into the community.

Since independence there has been no tax on Banaras handlooms as it is a struggling art form and the weaver community is finding it tough to accept the change. “The trade involves multiple layers from yarn supplier to the end gadidhar. This entails many participants whose services are not very well defined in the process or the GST list of services. The cumulative effect of same may at time will be well over 15 per cent, making the handloom product further uncompetitive.

The weaver community is always in dire need of funds, and this will worsen their situation,” says Nishant Malhotra of the Weaver Story that works on reviving designs and weaves. Handloom is a decentralised occupation and mostly rural based. With no formal schooling most weavers have not even completed middle school and also belong to lower middle class making them incompetent run the GST process and to mention HSN numbers etc in the invoices. Sarees in Banaras move from hand to hand from the actual weaver to the final shopkeeper - no formal invoicing happens at any stage expect when sold in retail, feels Nishant. As it is the younger generations in the weaver families do not want to continue weaving in want of greener pastures.

The GST will have a crippling effect and kill the sector. No work has happened for almost 10 days and the wage earner is now losing patience. Weavers Story has started an online campaign with a hashtag #nogstonhandlooms to bring attention to matter and reach out to amend matters. While Tamil Nadu is the one state where the cooperative movement is very strong, and can allegedly bring down the government, there seems to be anger in sectors like Kanchipuram and Arini for it is felt that industry needs have not been looked into.

I have myself paid an extra five percent tax on a Co-optex saree yesterday.  “The new GST rates on yarn, services like twisting and warping and then GST on the finished product will be prohibitive for production and working capital management of the weavers with input costs going up by almost 23 percent. Subsidies are a way to signal empathy and encouragement to the handloom community and the ministry has to look at this seriously," says Vinutha Subramaniam, CEO and Director, Parisera an online handloom and crafts portal.

“More so because of the lack of education, empowerment of weavers is at stake. There should have been a concentrated focus on creating responsible and accountable co-operative systems that would ensure a fair deal to the weavers. In the absence of that support structure, and the lack of clarity on how GST is going to apply, the small, independent weavers will probably now fall in the clutches if the middlemen.

The big players may well be the ones to gain the most,” says Savitha Suri, a handloom revivalist who also manages a serious social media page on handlooms and crafts. Both Savitha and Vinutha feel that handlooms need to be treated kindly so weavers do not lose sustainability. In areas where there are fewer weavers, co-operatives too are not an option.

On the demand generation side, revivalists and handloom marketplaces and social media are doing many things to get respectability for the Indian handcrafted apparel. Social media sector leaders like Suneeta Mishra and Susmita Misra who run the Facebook page Magic of Sarees say that “weaving is the second largest occupation of the country can’t be emphasized enough. In our little way with 20000 members we are working on creating a demand by highlighting specific textile traditions from different regions.” 

This sentiment is echoed by Sunita Buddhiraja whose page Six yards and 365 days too focuses on only handwoven sarees to be worn all the year and not only on ceremonial occasions. Her page too has about 20,000 members. The much hyped Gandhinagar meet of textiles and handwoven turned out to be a damp squib according to some who participated hoping it would be a business to consumer opportunity but was only a business to business one with no direct impact but in the realm of the
“possibility”.

Last week when I wrote about the impact of GST on the contemporary art and its practitioners, my mailbox was inundated with artists friends and others who feared for their survival. And the worst is that they can’t even join co-operative movements but have to fight for survival individually for they don’t have a collective voice.  

Dr Alka Raghuvanshi is an art writer, curator and artist and can be contacted on alkaraghuvanshi@yahoo.com