GST cut offers lifeline to Kashmiri handicrafts amid export slump

Srinagar, Sep 6: At a time when Kashmir’s famed handicraft sector is grappling with falling exports and the menace of machine-made imitations, the Goods and Services Tax (GST) Council’s decision to slash GST on handicrafts from 12 percent to 5 percent has come as a rare ray of hope for artisans and traders. The Valley’s artisans, numbering over 3.71 lakh, have described the move as a “lifeline” for a centuries-old craft that has been struggling to survive.

Though artisans were not directly paying GST, dealers and exporters—who buy and market handicrafts—had to deposit 12 percent upfront. This blocked their working capital until the products were sold, discouraging bulk purchases and slowing down payments to artisans. With the new GST rate of 5 percent, traders believe liquidity will improve and sales will pick up, ensuring artisans are not left waiting endlessly for dues.

The Directorate of Handicrafts and Handloom Kashmir welcomed the move in a social media post. “A big thank you to #GSTCouncil for REDUCING GST on handicrafts from 12% to 5%. This has come as an elixir for the artisan community who have given their sweat and blood to keep #Kashmir’s craft heritage ALIVE,” the department wrote.

For artisans, the tax cut brings cautious optimism. Ghulam Rasool, a carpet weaver from Budgam, said the reduced levy will have a direct impact on his livelihood. “When dealers had to pay 12 percent GST, they would buy less from us and hold back payments. Now they will be more willing to stock carpets and shawls, which means we might finally see faster returns for our work. This is not just about tax—it is about respect for our craft,” he said.

Another artisan, Muhammad Jaffar, who specialises in papier-mâché, said demand for her products had sharply fallen in recent years.

“Middlemen often tell us they cannot afford to keep our work because of high costs and poor sales. If the tax cut helps them buy more, maybe our craft will see revival,” she remarked.

Data paints a worrying picture. Kashmir’s handicraft exports have been steadily declining, dipping to just around Rs 700 crore in the last financial year, compared to over Rs 1,700 crore a decade ago. Rising raw material costs, lack of modern marketing, global recessionary trends, and heavy competition from machine-made substitutes have all combined to shrink the Valley’s once-thriving export sector.

Exporters say price sensitivity is one of the biggest challenges in retaining buyers. “Even a small increase in cost pushes buyers toward alternatives,” said a Srinagar-based exporter, requesting anonymity. “The earlier 12 percent GST made Kashmiri products expensive and uncompetitive. With 5 percent, we can at least quote better prices.”

Adding to the crisis is the flood of machine-made items being passed off as “Kashmiri handicrafts” in domestic and international markets. Machine-embroidered shawls, imitation carpets, and factory-made papier-mâché products are sold cheaply but labeled as Kashmiri, eating into the genuine craft’s market share.

“Customers in Delhi, Mumbai, or even Dubai are often duped into buying power-loom or machine-made goods marketed as Kashmiri handcrafts. This not only robs artisans of income but also destroys the brand value of our heritage,” said Abdul Hamid, a walnut woodcarver from downtown Srinagar.

Industry experts say the government needs to strictly enforce Geographical Indication (GI) tagging and punish counterfeiters to protect Kashmir’s craft identity.

President of the Kashmir Chamber of Commerce and Industry (KCCI), Javid Ahmad Tenga, called the GST reduction “a timely and significant intervention,” but cautioned that more measures are needed to revive the sector.

“Handicrafts are the backbone of Kashmir’s economy after horticulture, employing lakhs directly and indirectly. The earlier 12 percent slab was illogical, as handicrafts are not luxury items but a livelihood for poor artisans. By reducing it to 5 percent, the government has given breathing space to a sector struggling for survival,” Tenga said.

He added: “This will help Kashmiri handicrafts regain some competitiveness in global markets. But unless the issues of marketing, credit access, and counterfeit machine-made products are addressed, the sector’s revival will remain incomplete. Exports have already dropped to Rs 700 crore, which is alarming. We cannot let centuries of tradition die out for lack of timely interventions.”

The GST cut is expected to reduce costs for traders and exporters, making products like Pashmina shawls, hand-knotted carpets, sozni embroidery, papier-mâché artifacts, and walnut wood carvings more affordable for buyers both in India and abroad. But stakeholders warn that structural reforms are equally necessary.

Experts suggest a three-pronged approach: stronger branding and GI enforcement to protect authenticity, easy credit schemes to help artisans invest in raw materials, and aggressive marketing campaigns in domestic and overseas markets.

For now, however, the artisans of Kashmir are taking heart in a rare policy decision that has tilted in their favor. Whether this relief will translate into a sustained revival remains to be seen, but for Ghulam Rasool, the carpet weaver, the moment is significant. “For years, we felt ignored. Today, at least, someone has thought of us. We hope this is just the beginning.”