India's handwoven carpet industry has immense potential to create jobs and exports: Report

New Delhi [India], September 29 : India's handwoven carpet industry holds significant potential for economic growth and job creation, particularly for women, according to a study conducted by IIM Bangalore and King's College London.
With a median turnover of Rs 1.5 crore, the industry demonstrates strong vertical integration and export orientation, with Rajasthan and Uttar Pradesh leading the way.
Carpet firms in Rajasthan (97 percent) and Uttar Pradesh (81 percent) are predominantly exporters, in contrast to Kashmir (46 percent), where trade show attendance is less common, and access to foreign clients is challenging.
Kashmir primarily exports luxury carpets, with Germany and the UAE being key destinations.
In Uttar Pradesh and Rajasthan, exports cater to the mass market, with the USA, followed by the UK, as the main destinations.
The report highlighted that nearly 90 percent of firms in Uttar Pradesh and Rajasthan have adopted innovative methods and designs, while Kashmir excels in luxury carpet exports to Germany and the UAE.
The study found that the carpet industry requires improved market linkages, export assistance, and innovation to further boost exports and employment.
"While market linkages and demand-side factors are more pressing concerns than credit access, there is significant potential for growth. For example, Kashmir could enhance its luxury carpet exports with better export assistance and innovation support. Uttar Pradesh and Rajasthan could benefit from exploring new export destinations and focussing on higher quality products," said Prof. Prateek Raj, Assistant Professor, Strategy, IIMB.
"By understanding the specific needs of each cluster, such as export assistance in Kashmir or quality upgradation in Uttar Pradesh and Rajasthan, we can enhance the industry's global competitiveness and boost MSME participation in international trade," said Prof. Kamini Gupta, Assistant Professor, King's College London.
For the carpet industry, market linkages and demand-side factors remain more critical concerns than credit access.
The majority of businesses (87 percent) reported no significant obstacles to obtaining credit, although 10 percent mentioned that complicated documentation was an issue.
Firms prefer bank loans, internal funds, and inter-firm credit, valuing relationships, low interest rates, trustworthiness, and simplicity.
In Uttar Pradesh, four out of every five businesses provide credit to third parties, while in Kashmir and Rajasthan, this percentage is half, according to the study.
The industry exhibits strong vertical integration, with nearly half (43 per cent) of firms involved in every major production function, the report stated.