(The Gist of Kurukshetra) Handloom Sector in Kerala [OCTOBER-2018]

(The Gist of Kurukshetra) Handloom Sector in Kerala


Handloom Sector in Kerala

The handloom sector in Kerala employs about 1.75 lakh of people directly and indirectly and this stands second to the coir sector in providing employment among the traditional industries of the state. The handloom industry in the state is concentrated in Thiruvananthapuram, Kannur, Kozhikode, Palakkad, Ernakulam, Thrissur, Kollam and Kasargode Districts. The Kerala Kasavu sarees are praised by women all over India for their fineness of count and natural colours, texture and golden borders. Kerala is also known for the manufacture of cotton handloom fabrics in Kannur, Vadagara and Kozhikode and has captured an export market. Balaramapuram in Thiruvananathapuram district is the most historically important andone of the oldest handloom centers in Kerala. The weavers belonging to Chaliyas community migrated from Nagarcoil and Thirunelveli in Tamil Nadu during the period of Balarama varma, ruler of Travancore about 250 years back. Kuthampully in Thrissur District is also well known for handloom fabrics. In Kuthampully, Devangas migrated from Karnataka are engaged in weaving. It is believed that this community of traditional weavers were brought by the Kochi Royal family about 500 years.

Major Initiatives by the Government:

Government's policy initiatives like enactment of the Micro Small and Medium Enterprises Development (MSMED) Act, 2006; Pruning of reserved Small Scale Industries (SSI) list; advising Financial Institutions to increase their flow of credit to the SME sector. Reservation of items for exclusive manufacture in MSME sector statutorily provided for in the Industries (Development and Regulation) Act, 1951. The President, under Notification dated May 9, 2007, has amended the Government of India (Allocation of Business) Rules, 1961. Pursuant to this amendment, Ministry of Agro and Rural Industries and Ministry of Small Scale Industries were merged into a single Ministry, namely, "Ministry of Micro, Small and Medium Enterprises".

Major Schemes of the Government: Scheme of Fund for Regeneration of Traditional Industries (SFURTI):

The objectives of the scheme are to organize the traditional industries and artisans into clusters to make them competitive and provide support for:

  • Their long term sustainability & sustained employment;

  •  To enhance marketability of products of such clusters;

  •  To equip traditional artisans of the associated clusters with the improved skills;

  •  To make provision for common facilities and improved tools and equipments for artisans;

  •  To strengthen the cluster governance systems with the active participation of the stakeholders

  •  To build up innovated and traditional skills, improved technologies, advanced processes, market intelligence and new models of public private partnerships;

Stand-up India:

To facilitate bank loans between Rs. 10 lakh to Rs. 100 lakh to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one Woman borrower per bank branch of all scheduled commercial banks for setting up a green field enterprise. The Stand-Up India scheme is based on recognition of the challenges faced by SC, ST and women entrepreneurs in setting up enterprises, obtaining loans and other support needed from time to time for succeeding in business.

Scheme for the Development and Promotion of Women Entrepreneurs:

With a view to encourage women in setting up their own ventures, government implements a scheme, namely, "Trade Related Entrepreneurship Assistance and Development (TREAD). The scheme envisages economic empowerment of women through the development of their entrepreneurial skills in non-farm activities. There are three major components of the scheme:

Government of India grant up to 30% of the total project cost to the NGOs for promoting entrepreneurship among women. The remaining 70% of the project cost is financed by the lending agency as loan for undertaking activities as envisaged in the project. ii. Government of India grant up to Rs. 1 lakh per programme to training institutions/ NGOs for imparting training to the women entrepreneurs, subject to these institutions/ NGOs bring their share to the extent of minimum 25 % of Government of India grant and 10 % in case of NER. iii. Need-based Government of India grants up to Rs.5 lakh to National Entrepreneurship Development.


The sector is always fund starved. Banks are often unwilling to lend. Besides, whatever bank finance these sector gets, comes at far higher interest costs than what large enterprises can negotiate. Long receivables cycles make a mess of working capital management. Little access to trained labour, technical progress and management support limit their growth. Other common problems faced by small enterprises are related to availability of technology, infrastructure and managerial competence, and limitations posed by labour laws, taxation policy, market uncertainty and imperfect competition.

Way Forward:

The challenge now is to create a policy environment that will encourage the growth of more MSME that can hold their own in a competitive market. The problems faced by MSMEs need to be considered in a disaggregated manner for successful policy implementation as they produce very diverse products, use different inputs and operate in distinct environments. In general, there is need for tax provisions and laws that are not only labour-friendly but also entrepreneur-friendly. More importantly, there is need for skill formation and continuous upgrade both for labour and entrepreneurs. While the government has to strengthen the existing skilling efforts for labour, there is an urgent need for managerial skill development for entrepreneurs running MSMEs — an area that is considerably neglected. Further, the government could consider dedicated television and radio programmes, similar to agriculture, to help educate entrepreneurs running small businesses.


For future growth in Indian economy and GDP increase, the share of MSME contribution would increase from current 8 % to 15 % by the year 2020. This would be realized by the growth of the new wave MSME led by entrepreneurship focused on innovation and technologies, creating opportunities for women entrepreneurs, and developing skilled resources. Issues related to credit, like adequacy, timely availability, cost and mortgages continue to be a concern for MSME. These enterprises are dependent on self-finance. Profit margins are also low. The government drive for financial inclusion could benefit such entities. The government could consider dedicating specialized financial schemes for addressing difficulties in assessing and providing credit for small enterprises, as also providing line of credit to firms which are under financial stress. However, it remains to be seen whether new institutions such as MUDRA Bank can open the credit markets for small enterprises.

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Courtesy: Kurukshetra