In Karnataka, a satyagraha demanding 0% GST on handmade products highlights a larger issue

For theatre person and social activist Prasanna, starting an indefinite hunger strike or satyagraha as a mark of protest comes as organically and naturally as the handloom clothes he wears and makes.

The Gandhian has used satyagraya (a passive resistance often referred to as the “truth force” propounded by Mahatma Gandhi in his fight against the British) effectively several times before for various causes.

If the new Indian Goods and Services Tax (GST) has raised the hackles of several sectors in the past few months since its implementation nationwide on 1 July 2017, then the recent protest that stemmed out of Bengaluru demanding “zero percent GST” on handmade products and practising a tax denial satyagraha — can be seen as one of the most effective ones.

It got Karnataka chief minister Siddaramaiah to write to Union finance minister Arun Jaitley on 19 October, asking him to consider the demands raised by the satyagrahis under the forum called Gram Seva Sangh. “This representation requires serious and urgent consideration and a positive resolution. This would not only benefit a large segment of our rural population but would also give a boost to rural employment and sustainability. I, therefore, urge you to take this issue on a priority basis in the next GST Council and decide favourably — benefiting a large segment of rural artisans,” Siddaramaiah urged. Odisha’s Naveen Patnaik is the only other state chief minister to have written to the Prime Minister seeking “zero percent tax” on the handloom and handicraft sectors, back in September this year. A petition from the Federation of Handloom Organisations asking for the same on Change.org, endorsed by designer Rohit Bal, has gained over 7,900 signatures.

The Gram Seva Sangh (GSS) submitted an interim report to Siddaramaiah through a committee chaired by Professor Ashis Nandy, a noted social theorist. Other members of the committee include a long-standing associate of Prasanna’s in the handloom movement, Uzramma, of the Federation of All India Handloom Organisations, and noted filmmaker Shyam Benegal.

Pressure is building up from various sides

“Our movement is for giving better value to Indian villages and its products. GST is the beginning. It is the immediate cause. Because they (the Union Government) became so foolish as to have an equal tax on the rich and the poor. It was a blunder that prompted us to take up this cause. Our larger idea is to get the village poor a proper price for their products,” says Prasanna, sitting in his brother’s home in south Bengaluru’s Basavanagudi area, two days after he called off his six-day hunger strike. The entire movement started on 7 September in Bengaluru, gathering steam and support as it moved all over Karnataka, turned into a padayatra that saw support from religious heads, various village cooperatives, and went even into Hyderabad, before returning here. When the GST Council didn’t listen, it turned into a hunger strike.

Prasanna is constantly getting calls (he never carries a cellphone) from various supporters of the handloom cause, asking how they can participate. He tells them to do small things in their own way, host protests at their outlets, share their ideas on social media. The Satyagraha has found supporters among actors, singers, writers, and even political entities. Former Prime Minister Deve Gowda has agreed to push for the cause with Narendra Modi. Why did this protest start off in Karnataka, one would wonder? “Don’t you think all movements have to start somewhere? Aren’t you happy it started in Karnataka? In south India? If it has truth in it, it will spread. We are doing our job. People in Telangana, Andhra, Varanasi, Delhi have already joined us. It has started among enlightened consumers everywhere,” is how Prasanna sees it. “Our satyagraha is not over,” he declares, for good measure.

The handloom sector in India has enjoyed a largely protected status, at least on paper. There have been several sops and schemes, subsidies and loan waivers, and a tax-free environment to thrive in. But suddenly GST came and turned things on its head, which is why people in the sector seem rattled by the about-turn. It is also a change in attitude towards all things handmade over years, as Prasanna points out, where handloom and handicraft have become mere symbols and showpieces. “Because of intellectual neglect after seven decades of independence, we have reached a dead end — I would define this as thinking of industrial production as the only production and industrial product as the only product. And producing luxury goods as GDP!”

Prasanna has been working in the handloom sector for close to three-and-a-half decades. An IIT graduate, he’s a noted Kannada theatre person; in fact post-hunger strike, he’s busy staging a musical which is also part of the satyagraha. He started Charaka, a women’s cooperative in the Western Ghats that produces naturally-dyed handloom garments nearly 32 years ago, and built Desi, the brand for Charaka’s products, over time. He has attended and advised at scores of meetings with the planning commission, and the ministry of textiles.

Handloom and handicrafts alone don’t make up handmade sector

“After a while I realised it’s futile to talk about any one sector in the larger context of handmade production. Some of us started working on shaping the very idea of it,” says Prasanna. This has been one of the larger challenges in the GST context — what exactly constitutes handmade? The report submitted by the GSS also defines and lists around 200 products that should fall into the naturally made/ handmade products and services category. They include products and services in sectors such as agriculture produce, forest produce,
handloom and khadi produce, handicraft produce, services-produce, and cultural performance as a produce. He also reminds us that handmade is environmentally friendly and sustainable in the long run — the only way to go.

It was also the first time since the country’s independence that khadi, considered the fabric of the nation, and the trigger for Gandhiji’s Swadeshi movement, came under a tax net (khadi yarn has been exempted from GST but not khadi products).

Very quickly, some number crunching

Following are the numbers according to the data available from the Ministry of Textiles (Handloom Census 2009-2010). The latest (and fourth) census is still underway.

1. There are 43.31 lakh weavers in India, out of which 77 percent are women.

2. Out of these 43.31 lakhs, as many as 36.33 lakh are in rural areas.

3. Large sections of the weaver community belong to the minorities, and other socially and economically marginalised sections of society. Many of them live below the poverty line.

4. It is estimated that 61 percent of weavers work independently, 34 percent work under master weavers, and only five percent work through cooperatives and clusters.

Why GST is a killer for small artisans/weavers

The current pattern of GST imposed on the handloom and handicraft sector ranges from 5-12 percent on handloom and 12-28 percent on handicrafts for those with an annual turnover of over Rs 20 lakh. (The government reduced GST on almost 18 listed handicraft items from 28 to 12 percent in September after an appeal. ) A problem has also been created perhaps by the GST Council by approaching this whole taxation system with advice from the export promotion council, which has offered a very different perspective than what is viable for the local market, says Prasanna.

The GST in the handloom-handicraft sector is applied on materials bought/input purchases (for example 5 percent GST on cotton yarn), some percentage on dyeing, printing etc. In the handloom sector, from thread to cloth, there are many processes that have to be undergone. Each step invites a tax, with a resultant cascade effect, making a handloom product much more expensive that it already is (it can, for example go up to 28 percent) up the chain. Problems are also arising because large traders or buyers (who have GST) may be buying from small weavers who may not qualify for GST. But when they purchase, they insist on a GST number.

Prasanna talks about this quandry, when he says “We should not forget that handmade products are naturally expensive. Precisely because of that, machine made products are unnaturally inexpensive, because they are duplications. The government policy should be to redress this inequality — to use social justice, and positive discrimination policy that Ambedkar propagated for these products. Unfortunately the government is giving the benefit of this positive discrimination to large businesses. Shame on them!”

A Karnataka State tax official who did not wish to be named gave a rather cut-and-dried view of the GST on handmade goods, revenue numbers till date, and the demands made by the satyagrahis. “The GST differs from state to state. GST codes are applied product-wise; for us it’s not about handloom versus powerloom, so we don’t have any collated numbers according to that category. The GST Council determines the rates. We have no say in the matter.” Krishna Byre Gowda, Karnataka’s agriculture minister and the state’s representative in the GST Council could not be reached for his comment. The next GST Council meeting is likely to be held before 10 November.

Formalising an informal sector

One of the biggest hurdles that the GST has brought to the handmade sector is that it expects everything on paper, formalised, accounted for and submitted online, among a community of people who are largely illiterate, work from their homes in far-flung villages, and operate on a network of human trust, interaction, and integrity.

New Delhi-based Laila Tyabji, founder of crafts revival organisation Dastkar, and a renowned handloom aficionado quite nailed it on her widely shared Facebook post, where she said: “The hastily applied, unthought-through GST on handloom and handcraft has centuries-old patterns of production and sale in disarray. Every stage of the process, from yarn to finishing, goes through many hands, all based on a long-established system of credits, advances, and trust. If each stage has to be tabulated, paid for immediately, and taxed and invoiced online every month, prices would skyrocket and the whole production line come to a grinding halt.”

Uzramma, Hyderabad-based founder of the Decentralised Cotton Yarn Trust and Dastkar Andhra, also believes that this entire GST process is in favour of the corporate world, that has a tax department in place. “Small artisans can’t handle it. People in the finance ministry are not aware of rural reality. We are trying to make handlooms viable. Competition from the power-loom sector is bad enough. And now this!” says an exasperated Uzramma, who is known for her creation of the Malkha fabric — a beautiful mix of mulmul and khadi. “At Malkha, we will absorb the GST. We will not let it reach our weavers. But customers will have to pay more. We have been holding meetings and seminars to educate people. Our customers do understand the matter. I wish the Telangana chief minister would also take up our cause.”

Vishwanath Kenchi, a 48-year-old third generation weaver in Karnataka’s Gajendragad town in Gadag district talks of the logistical everyday problems that the GST has brought on. He heads the Markandeshwar Kaimagga Batte Utpadane Haagu Maarata Ghataka, a handloom cloth production and marketing cooperative that has under its wing 60 looms and 120 people — the largest such cooperative in the area that produces cloth on demand for larger brands and designers from across the country. He says he inevitably registered for the GST, because buyers stopped coming to him. “If we don’t have a GST registration number, buyers don’t want to come to us for cloth. Even large transport agencies that would deliver our consignments to the cities stopped accepting our consignments without GST number. It is even harder for those groups that have four to six looms.” They took out a procession on 13 October and submitted a representation to the special tehsildar to scrap the GST.

Handicrafts have it easier?

Gita Ram, chairperson of the Crafts Council of India, headquartered in Chennai, however is optimistic about the GST situation and believes the “situation is still fluid”. Many NGOs and the CCI have made representations to the GST Council seeking a single GST slab, “and they seem to be listening”. “It’s still very complex and none of us have understood all the problems… we need another six months to figure things out.” But she concedes that the people setting the GST rules don’t have an idea how “small” a small producer is! “They don’t have the wherewithal to approach a chartered accountant and pay him Rs 1,000 every month to get their online billing done.”

A lot of artisans are being affected because they are afraid, says Gita. “The artisans most affected are those who sell to traders, who want GST compliance. All handicrafts survive by going to other states and selling there at exhibitions. The universal GST regime has made it easier for the craftsperson with a turnover of less than Rs 20 lakh, on that one front.”

The demands made by the Gram Seva Sangh

1. Firstly define handmade as: “Any product that uses not less than two thirds hand processes such as a loom, a plough and not more than one third machine process can be considered as handmade.”

2. Turnover limit for individuals and Self Help Groups (SHGs) producing handmade products be increased to Rs 50 lakhs from the present limit of Rs 20 lakhs.

3. Handmade products produced and marketed by the producer co-operative societies and their federations should be subject to Zero Tax with no turnover limit.

4. Government should form a Handmade Board similar to Khadi and Village Industries Board, as a governance framework and regulatory authority for registered co-operative societies and federations of handmade products.

5. All input purchases made by these co-operative societies and federations should be given Zero Tax benefit. Similarly, all sales made by the these societies and federations should pass on the Zero Tax benefit to the consumer.

Nothing can change overnight

The whole point of this movement is steeped in a philosophy that looks at recharging the village as a pivotal point to return to a sustainable way of life. It hopes to inspire rural people to work together, form marketing cooperatives, promote entrepreneurship among them — something the Father of the Nation had hoped for more than 70 years ago for his country, and had made provisions for, as basic rights in the Indian Constitution.

“If you give entrepreneurship back to them you don’t have to dole out money, and solve the problem of unemployment. Village people are not asking for the world,” Prasanna reiterates. Uzramma adds that they are not petitioners. They are only asking for their rightful due. Prasanna also points out how cooperatives may have failed over years because of over-interference from the government. But if allowed to thrive, they are ideal role models of economy.

Consumers will have to choose handmade, and demand that they be made less expensive so they can be bought repeatedly. It’s a complete change in attitude that has to begin someplace. And that ‘someplace’ could be your thought process.

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