In a narrow bylane of Moradabad, India’s peetal nagri (brass city), 30-year-old Zeeshan Ali runs a brass handicrafts unit. Ali was busy giving directions to a handful of workers, who were packing a small export consignment to be shipped to the Netherlands. The package is scheduled to reach Mumbai’s Jawaharlal Nehru Port in a day or two.
Registered with the Export Promotion Council for Handicrafts, the unit’s order books are full, because exquisitely designed Indian handicrafts are in big demand in global markets, especially Europe, the US and West Asia. “After a recent visit to the Netherlands, I will be travelling to the UK soon to meet a few importers of handicrafts,” Ali says. His unit’s sales turnover in FY22 was about Rs 5 crore.
In fact, even during the pandemic, export-oriented units in the brass city were exempted from the lock-down restrictions, which enabled them to cater to the sudden surge in demand from western markets in the later months of 2021. However, even as the demand from key export markets, especially Europe, continues to be robust, they are now worried because inflated costs of inputs – zinc, copper and coal – have shrunk their margins. Some of the units are struggling to execute export orders that looked lucrative when clinched.
A short distance away from Ali’s unit is Rasheed Ahmed’s JR Handicraft. He was overseeing six workers, who were giving finishing touches to assorted brass handicrafts – bells, lamp stands and other decorative items used in temples across India. The unit, located on the Lal Masjid road, is abuzz after a period of lull, as abatement of the pandemic led to opening of temples in South India.
Both these units are amongst thousands of such tiny firms which operate from 200-900 sq ft facilities in the bylanes of Moradabad where skilled workmen convert brass scraps to attractive pieces of handicraft by enameling, engraving and polishing. Many of these units have started to use metals like aluminium, stainless steel and iron to embellish the products with new designs, even as the traditional look is the main attraction for the western buyers.
According to the Uttar Pradesh government officials, there are more than 5,000 units in Moradabad engaged in manufacturing of handicraft items. The brass city has been in existence for over 120 years. According to estimates, more than 0.15 million labourers are engaged in the town’s handicraft industry. Moradabad township was established in 1600 by Murad, son of the Mughal Emperor Shahjahan.
According to Hamid Husain, treasurer, Moradabad Handicrafts Exporters Association, handicraft products worth 8,000 crore are exported annually from the industrial cluster, with top buyers being the US, the UK, Germany, the Netherlands and West Asian countries. Besides, products worth Rs 4,000 crore are supplied to the domestic market. Despite competition from China, Indian handicraft products are preferred by western buyers because of their unique designs, he adds.
However, both Ali and Ahmed are concerned about rising commodities prices. Prices of copper and zinc, used for making brass in 1:2 ratio, are now ruling at Rs 700 a kg and Rs 550 a kg, respectively, up from Rs 350 and Rs 275 a year ago. Prices of coal, used for smelting, have also risen sharply to 65 per kg from Rs 30 per kg a year ago.
“The cost of brass has seen a sharp spike because of higher commodities prices, while buyers have been resisting a corresponding rise in prices of handicraft items,” says Ahmed, who supplies various items to mostly temples located in Southern India states.
It takes about 90 days to execute an export order. So, the commodity price fluctuations could upset the business plans of exporters like Ali and hit their margins.
Also, small handicraft units don’t always get the GST refunds for exports on time. “It takes a couple of months for the 18% GST to be refunded and this hits our cash flows,” Ali says. “The government has to restore incentives like the Merchandise Export from India Scheme, which was withdrawn last year,” says Mohamad Allen, another exporter of handicraft products from Moradabad.
The Uttar Pradesh government had earlier announced incentives under the ‘one district, one product’ scheme to provide skill development and other infrastructure support to SMEs in Moradabad for handicraft products.
The Moradabad handicraft industry is also facing an acute labour shortage because of low wages and the hazardous nature of manufacturing carried out by small units. “My three sons do not want to take up moulding jobs as wages are too low,” Shakeel Ahmad, who earns around `200-300 per day for making decorative brass spoons, said.
