In a narrow lane of Varanasi’s Nati Imli neighbourhood, a weaver spends several days at the loom finishing a Banarasi silk saree. The silk, the zari thread, and the labour together cost him around Rs 3,000, and when the finished piece is sold to the trader who commissioned it, his profit comes to roughly Rs 200. The same saree, once it reaches a showroom or an export catalogue, sells for upwards of Rs 10,000. Nobody in this chain is lying about where the money went. It simply never reached the person who wove the fabric.

This is the contradiction sitting underneath one of India’s more celebrated export stories. India’s handloom exports crossed $1.8 billion in FY2022-23, growing at a compound annual rate of roughly 7 percent over the preceding five years, a figure widely cited as evidence of the sector’s revival. What that figure does not report is that over roughly the same decade, the number of handloom workers in India fell from 43.32 lakh in 2010-11 to 35.2 lakh in 2019-20, and handloom fabric production itself fell from 7,104 million square metres in 2013-14 to 5,134 million square metres by 2017-18. Export earnings climbed. The people producing the exports, and the volume of what they produced, both shrank.

Exports measure the value of goods sold. They do not measure who earned the money. This article treats those as two different questions, because in India’s handloom sector, they have two very different answers.

Value Creation Is Not Value Capture

Development economists working on global value chains draw a standard distinction that applies directly here. A rising export figure reflects value creation: more goods, sold at higher aggregate prices, moving through a supply chain. It says nothing about value capture: which link in that chain actually keeps the money. A handloom saree can gain enormous value between the loom and the export invoice, through branding, quality certification, marketing, and access to a foreign buyer, without any of that gained value flowing back to the person who wove it. Treating export growth as evidence of artisan prosperity conflates these two entirely separate things.

Following the Chain

A typical handloom export order passes through five or six hands before it reaches a foreign buyer: the weaver, a master weaver who supplies yarn and pattern instructions, a trader or aggregator, an exporter who handles documentation and logistics, and finally a retail brand or importer. Each link adds a margin. One documented estimate of this split is stark: a saree that retails for Rs 4,000 may pay the weaver who wove it only Rs 400 to 600, roughly 10 to 15 percent of the final price. In most clusters today, weavers no longer own their yarn or their looms. They work as subcontractors under a job-work system: the master weaver supplies the raw material and the design, and the weaver is paid a flat rate per finished piece, regardless of what that piece eventually sells for.

The income data confirms this is not an isolated pattern. 67.1 percent of India’s handloom weavers earn less than Rs 5,000 a month, and another 26.2 percent earn between Rs 5,001 and Rs 10,000. Only 6.7 percent of weaving households cross the Rs 10,000 threshold, according to the Fourth All India Handloom Census. For comparison, MGNREGA’s guaranteed rural daily wage floor is Rs 250 to Rs 325, an amount many full-time weavers, paid by the piece rather than the day, do not reliably clear.

Table 1. Distribution of handloom weaver households by monthly income. Source: Fourth All India Handloom Census (2019-20).

Why Intermediaries Exist, and Why That Is Not the Real Problem

It would be a mistake to read this as a simple story of predatory middlemen. Master weavers, traders, and exporters perform functions an individual weaver, working alone in a village, genuinely cannot: they extend working capital between orders, enforce the quality control that export buyers demand, handle export documentation and compliance, and maintain the buyer relationships that a single artisan has no practical way to build. Removing intermediaries entirely is not a realistic fix, and clusters that have tried to bypass them without replacing these functions have generally struggled. The actual problem is not that intermediaries exist. It is the bargaining power imbalance between them and the weavers whose labour they depend on, an imbalance strong enough that even as export prices rise, weavers have no mechanism to negotiate for a larger share of that increase.

The Credit Trap behind the Bargaining Gap

That imbalance is sustained by a specific mechanism economists call an interlinked market: the same party who buys a weaver’s output also supplies the weaver’s working capital, in the form of yarn advances or informal cash loans against future production. Because the weaver’s loom, credit, and only realistic buyer all run through the master weaver, there is no point in the transaction where the weaver can walk away and negotiate elsewhere. Wages become whatever the master weaver offers, not what the weaver’s skill or the export price would otherwise justify. This is why cooperative structures, which were designed specifically to break this dependency by giving weavers a shared source of credit and a direct route to buyers, matter so much more than another marketing scheme or design workshop. Where they are genuinely weaver-run rather than captured by the same power dynamics they were meant to replace, cooperatives are the one intervention that changes the bargaining relationship itself, rather than just the price of the finished product.

Banaras: What a GI Tag Protects and What It Doesn’t

Geographical Indication tags solve a real problem, but it is a narrower problem than it is usually given credit for. A GI tag fixes information asymmetry: it lets a consumer trust that a saree sold as Banarasi was actually woven in Banaras, rather than machine-made elsewhere and mislabelled. What it does not do is change who negotiates the price, or how that price is divided once the sale is made. Banaras brocades and sarees received their GI tag in 2009, specifically to protect the roughly two lakh weavers and allied workers in and around Varanasi from being undercut by power-loom imitations.

The tag has done real work on authentication. It has not reversed the sector’s economic decline. Dealers in Varanasi report that the turnover of hand-woven Banarasi silk fell from an estimated Rs 30 billion to somewhere between Rs 5 and 7 billion over the following seven to eight years, even as GI-protected sarees carried a documented price premium in export and retail markets. Academic fieldwork from the same cluster found handloom weavers in Banaras earning as little as Rs 10 to 15 an hour on piece-wages, barely Rs 150 for a full day’s labour, less than an unskilled manual labourer would earn on a construction site. A higher, better-protected price at the top of the chain did not, on its own, produce a higher wage at the bottom of it.

Table 2. Handloom sector contraction alongside rising export value.

Who Is Leaving and Whose Labour Isn’t Counted

Two further patterns confirm that this is a structural problem rather than a temporary one. First, participation is falling even where opportunity is supposedly rising: if handloom exports are growing, a functioning labour market should be drawing more people into weaving, not fewer. Instead, younger family members are leaving the occupation for more stable urban or informal work, a shift documented across successive handloom censuses. Second, a significant share of the labour behind every handloom export is not counted as labour at all. Women, who make up nearly 72 percent of the sector’s recorded weavers and allied workers, also carry out most of the unpaid preparatory work, spinning, dyeing, and yarn sizing, and finishing work such as folding and packaging, within the household. This labour is essential to the finished export product and is almost never separately paid or counted in official wage figures, which means even the low incomes reported above likely overstate the effective hourly return once this hidden labour is factored in.

Conclusion

India’s handloom export figures will likely keep climbing. The government’s continuing investment in the sector, and the trajectory of the last five years, suggest that is not in question. What is in question is whether that growth number means anything for the person at the loom. As long as export value is the only metric policymakers track, GI tags, marketing grants, and trade fairs will keep strengthening the brand at the top of the chain without necessarily strengthening the weaver’s position within it.

A more honest measure of success would track the share of export value that reaches the weaver directly, alongside average weaver income, the rate at which young people are entering rather than leaving the occupation, and whether women’s preparatory labour is paid at all. Until one of those numbers starts moving in the weaver’s favour, a rising export figure is not a livelihoods success story. It is simply a story about where the money went, minus the one place it was supposed to go.