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Both HCMs and investors are caught in an unfortunate gridlock. Enterprises battle for funds and investors are apprehensive about the investment worthiness of the sector. Here’s what this looks like and how it could be better.

HCMs face systemic bias on cultural, social, and investment fronts that limit their ability to access funding, scale up, and drive growth.

Hundred rupee notes rolled up

Access to capital is limited, cost of capital is high

Traditional financing is not meeting HCM needs



Working capital is a huge challenge



HCMs avoid banks altogether
HCMs struggle to access working capital

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Hand holding a grey pencil

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Unfamiliarity with navigating investor speak

Creative founders are impeded by business speak + lack of access to investment networks

HCMs are unsure of what financing options are available

Lack of financial literacy is a hurdle

HCMs fully understand the right financing fit for their enterprise






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Lack of business ecosystem support

Limited sector-specific networks + infrastructure

Lack of sector-specific portfolios + investors

HCMs rely on insular networks (friends / family / founders) for advice and resources





HCMs find unfair growth + return expectations to be a huge problem compared to tech enterprises
“It is not easy to find investors who understand that our growth has always been and shall always be driven by the quality of artisans and their craft. The continued upskilling of our artisans is integral to our business model if we have to scale sustainably, but it takes time and patience. We want to find an all-weather ally as an investor partner rather than just an investor.”

Nitin Pamnani


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Policy is at odds with on-ground needs

Complex taxation structures are a burden



HCMs struggle with varied, complex GST structures for different crafts

Low adoption + use of MSME registration



HCMs have and don't use or don't have MSME / Udyam registration
Ashoke Chatterjee
“There are 30+ official departments and ministries responsible for the CMH sector. They are too many in number and lack coordination and unified efforts, resulting in fragmented policy making and implementation. We need a focused platform for these ministries and civil society to come together and bring about meaningful reforms in the sector.”


Investors lack the data and incentives to back the CMH sector with capital aligned with the needs of HCMs.

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Lack of scale + success stories

  • Lack of visible exits in the sector adds to the perception that HCMs lack innovative, investment-ready solutions.

  • HCMs work across a wide range of products, processes, regions and crafts. Investors struggle to understand the sector and unique challenges of its enterprises.

  • The prevalent “small, charity-led, creative, slow to scale” perception makes it hard for investors to know what will galvanise the model into full scale potential.

“We don’t see too many investors coming forward to invest in the creative economy for the fairly simple reason that they don’t see scale and sustained growth. We need catalytic investors who can see the massive potential of these enterprises to generate employment for millions while also furthering India's sustainability ambitions with the use of eco-friendly materials.”

AB Chakravarthy


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CMH seen as “more risky” than other sectors

  • HCMs are perceived as high-risk as they often lack operational track records and collateral that investors need to gauge credit-worthiness.

  • Technology and innovation — both considered good investment propositions — are not strongly associated with the sector.

  • Ticket sizes required by HCMs are too big for micro-finance, too small for private equity investors and not attractive enough for traditional VCs and large impact investors.

Samir Sathe

“We are moving towards a more capitalist society. Unless there is a promise of money in return, investors and lenders won't deploy capital. Innovation by itself is good but it's not financeable, unless it is scalable. The artisan economy's scalability hinges on judiciously balancing a capitalist mind and a socialist heart.”


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Clear impact or growth not discernible

  • Lack of CMH-specific impact measurement frameworks that take into account the intangible benefits of creative manufacturing and India-specific ground realities linked to caste, class, community, and culture affects investor confidence.

  • Lack of a supportive + accessible intermediary ecosystem offering the right compliances and certifications for supply chain transparency makes it harder for impact investors to track true impact or deploy money where it can make a significant difference.

Audrey Selian

"The lack of a unified framework to track and report impact is very challenging. Survey tools alone do not always capture the lived experience of communities on the ground. We should be looking at impact in terms of increase in per capita incomes, access to health, education, and skills training programs.”


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Information asymmetries abound

  • Lack of data about the size, scale, and potential of the CMH sector impedes active investor participation.

  • Investors lack knowledge of on-ground financing needs of HCMs, the role of catalytic capital at different stages of enterprise growth, or in what part of the CMH value chain it needs to be deployed.

  • Investors lack access to sector-specific intermediaries needed to facilitate the use of innovative financing at scale in the CMH sector.

  • HCM pipelines are difficult to source and investors want assurance that they will have access to a steady supply of investment-ready enterprises.

“One of the challenges in investing in artisan-centric projects is the lack of evidence around what really works for this ecosystem. Second, the fragmented nature of the artisan ecosystem with its cluster-based model does not always map to donor preferences. Overall, there is a lack of awareness and we need investor education.”

Anushree Parekh


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Regulatory challenges get in the way

  • Impact investors lack policy-level incentives to de-risk the CMH sector, preferring instead to invest in bankable sectors like health, education, and financial inclusion.

  • CSR actors are not incentivised to offer non-programmatic support to nonprofits, resulting in discontinuity in projects.

  • Inflexible structures of charitable entities and changing FCRA rules adversely impact grant-based funding in India.

Padmini Sekhsaria

“At present, philanthropic or CSR actors do not have the leeway to use their capital to deliver a mix of grants and financing to support the long-term sustainability of newer or impactful ideas. The regulatory framework in India has not significantly evolved to allow for such flexibility. Due to the lack of policy-level incentives, most of us hesitate to consider smaller, craft-led, impact enterprises that lack organisational structure or a strong return profile, as good investment opportunities.”


The right interventions + investor support can trigger a much-needed shift towards a more sustainable and equitable future spearheaded by the CMH sector.

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