Social capital in today’s world has emerged as a transformative force. The jobs situation, economic disparities and environmental degradation necessitate a re-evaluation of traditional business models. An excellent example here would be handicraft-oriented cottage industries from the diverse corners of India.
In 2023, village industries employed over 17 million artisans nationwide, exporting $8,726 million worth of total textile and handicrafts (excluding readymade garments). The cottage industry is crucial to rural India’s employment, offering livelihood opportunities, especially for marginalized groups and women.
Often family or community-run, these industries promote inclusivity, skill development, and local economic growth.
In India, dual taxation on both raw materials and finished goods, along with GST, further strains their income, benefiting wealthy middlemen instead.
Social enterprises have emerged as a solution, focusing on societal issues within the Social and Solidarity Economy (SSE).
Power of Social Capital
Social enterprises (SEs) complement conventional channels by integrating marginalized groups into the workforce and expanding social welfare. They leverage social capital to overcome development challenges and inequalities globally, championing fair wages, direct market access, and sustainable practices for artisans.
Over 100 million people are employed in SSE enterprises globally. .
There is a need to create extensive offline and online platforms which will enable rural products to reach urban markets, while unified payment systems under India’s DPI make digital transactions seamless. Government initiatives like GI Tags require automation and ease of generation but they offer promise, although their impact has been limited.
Decentralised Models: Decentralisation keeps companies agile, allowing quick adaptation to market shifts. There are numerous family entities, such as in the field of carpet makers, furniture makers in India, employing a decentralised production system, turning fixed costs into variable ones and ensuring high product quality through specialist collaboration.
Nimble Supply Chain: Flexible supply chains also enable quick pivots. Hence should be encouraged with third party inspection mechanism so that the community-owned enterprise with say with over 2,400 artisan shareholders, empowers artisans in decision-making, directly shaping the supply chain.
Sustainability and Market Linkages: Global demand for sustainability offers growth opportunities. Organisations linking artisans to markets, promoting sustainable production should be encouraged by the government so that it facilitates economic development of the country.
Conscious Fashion: Younger consumers seek purpose-driven brands. Small entrepreneurs from Tier II and III Indian cities use digital platforms to connect artisans with buyers, tapping into the conscious fashion movement.
Challenges emerge as closed networks can limit aspiring entrepreneurs, stifling innovation and risk-taking.
However, social networks spread information quickly, enabling opportunity recognition and adaptability. Enterprises that effectively leverage open environments can foster innovation, responsiveness, and growth. Social entrepreneurship, by nurturing grassroots talent and building equitable partnerships, becomes a catalyst for transformation.
Leveraging structural capital within networks unlocks exponential growth through continuous learning and resource exchange. These dynamics would fuel the revival of India’s artisanal heritage, promote sustainable prosperity and drive transformative economic growth in the country.
The writer is MD, The Central Cottage Industries Corporation Ltd. Views are personal