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Handicraft exporters sustain on rising domestic demand
Jul '11
Rising income and living standards have helped the Indian handicraft industry to sustain itself, as it grapples against low demand in its key export markets – the US and the Europe, which account for around 60 percent of the industry's overall exports.

India's handicraft exports plummeted from Rs. 172.88 billion in 2006-07 to Rs. 105.33 billion in 2010-11, registering a fall of 40 percent. This led a number of handicraft exporters to review their business plans and cash in on the growing domestic demand.

Economic development and rise in supplementary incomes in India have enabled people to spend more on luxurious better quality items. In view of this, a number of handicraft exporters have opened their retail stores within the country and are registering good sales.

Handicraft export firms are now expecting that a major part of their revenues in future will flow in from domestic sales. Hence, a number of Indian firms which, over the years, have been exporting to the EU are now opening outlets across India.

Producers-cum-exporters who have shifted their focus from exports to domestic sales have found that people are buying even those goods which were once considered to be very costly.

High degree of joblessness and low income ratios in the US and the EU have lead to a considerable fall in demand for exquisite items likes handicrafts in these markets. As against this, domestic sales are seen accounting for around 25 to 30 percent of the overall sales of most of the Indian handicraft firms.

Influenced by such soaring demand, some of the big export houses have already established subsidiary firms to exclusively cater to domestic operations, while other firms too are deliberating on the same lines to enhance their domestic presence.

However, several administrative issues are impeding the export houses from venturing into domestic market in a big way. To overcome this problem, one of the large handicraft export houses has established an all together separate firm for domestic operations.

Moreover, the increasing domestic demand has also attracted new players to foray into handicraft production, which has helped to widen the range of items. Besides, organized retail is also helping the trend forward as several export houses have collaborations with retail chain stores, malls and other big labels.

Tata's have also been urged by the Textiles Ministry to allot retail space for handicraft items in their Westside outlets.

Fibre2fashion News Desk - India

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