Textiles: What does govt’s extension of Handicrafts Cluster Development scheme till 2026 means for artisans, SMEs

The government in September this year had approved the Production Linked Incentive (PLI) scheme for the textile sector.

Ease of Doing Business for MSMEs: Ministry of Textiles on Tuesday announced approval to the extension of its Comprehensive Handicrafts Cluster Development Scheme (CHCDS) up to March 2026. With a total outlay of Rs 160 crore, the scheme intended to offer support in terms of infrastructure development, design and technology access, market support, and more to handicraft artisans and SMEs to enhance production and exports. As per Invest India, the domestic textiles and apparel sector has a 5 per cent share in India’s GDP and 12 per cent in export earnings. Textile handicraft products included bags, shawls, saris, home decor items, etc.

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“India has great strength in textile handicrafts in places such as Bareily, Moradabad, etc., The artisans making them are micro-units operating in clusters. With the extension of this scheme, these businesses are likely to expand and enhance production with the help of technology and market support. Such goods are value-added products that are loved by foreigners particularly and are willing to purchase them even at a slightly higher price. Hence, the scheme has the potential to help in exports as well of such products,” Delhi-based RK Vij of Indorama Synthetics, which is into the polyester fabric, and also Vice President of The Textile Association (India) told Financial Express Online.

According to the ministry, under the scheme, soft interventions (steps for improvement) like baseline survey and activity mapping, skill training, improved tool kits, marketing events, seminars, publicity, design workshops, capacity building, etc., will be provided to SMEs. On the other hand, hard interventions like common facility centers, emporiums, raw material banks, trade facilitation centers, common production centers, design, and resource centers will also be granted.

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“It would be beneficial particularly for artisans and micro-entrepreneurs based in small towns and rural areas to ultimately enhance their livelihood as well. Operating in silos may not benefit them from an expansion and design and development perspective but a cluster approach would certainly help them improve the quality of their products and sell more. This scheme can also help boost exports of textile handicrafts as the demand for such products from India is worldwide but there is a lack of platforms that can enable these products to grow internationally,” Mahendrabhai G. Patel, MD, Patel Enterprises told Financial Express Online. The company imports and supplies old machines for textile yarn manufacturing.

Under the scheme, integrated projects will be taken up for development through central/state handicrafts corporations/autonomous, body-council-institute/registered co-operatives/ producer company of artisans/registered special purpose vehicles (SPV), having good experience in handicrafts sector as per requirement and as per the detailed project reports prepared for the purpose, the ministry said in its statement. Moreover, handicraft clusters with over 10,000 artisans will be selected for the scheme.

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While Sanjay Singh who owns a saree store in Moradabad is not aware of CHCDS but he said if the scheme helps him to expand his business to other cities in the coming few years, he would be willing to explore it. “I was out of business from last year until June this year due to Covid. We are seeing customers returning now as more people are vaccinated now and the virus has subsided now to a great extent. If I can not just recover the losses but also accelerate the business by being in the textile cluster then I would certainly want to have a presence there to manufacture and sell sarees,” Singh told Financial Express Online.

Importantly, the government in September this year had approved the Production Linked Incentive (PLI) scheme for the textile sector. The scheme was approved for man-made fibre (MMF) apparel, MMF fabrics, and 10 segments of technical textiles with a budgetary outlay of Rs 10,683 crore. The scheme will lead to more than Rs 19,000 crore of investment in the textile sector in the five-year period with a cumulative turnover of over Rs 3 lakh crore, the government had said.