The craft sector contains many paradoxes. Artisanal contribution to the economy and the export market increases every year and more and more new crafts-people are being introduced into the sector - especially women - as a solution to rural and urban unemployment. At the same time mass-produced goods are steadily replacing utility items of daily use made by craftspeople, destroying the livelihood of many, without the concomitant capacity to absorb them into industry, However, with ever-increasing competition from mill-made products and decreasing buying power of village communities due to prevailing economic conditions, artisans have lost their traditional rural markets and their position within the community.
There is a swing against small scale village industries and indigenous technologies in favour of macro industries and hi-tech mechanised production. There are number of reasons for the craft people's current state: from the lack of capital to invest in raw materials to a scarcity of raw materials and their availability at reasonable rates; from the absence of direct marketing outlets to difficulty of access to urban areas that are now the main markets for craft products, from production problems to a lack of guidance in product design and development based on an understanding of the craft, the producer and the market - the constraints are many and varied
· Disappearing markets: Craft is basically a commercial activity. In order to make a living from craft production, the artisan needs to sell his/her products regularly, realise a viable income from each sale and be assured of regular sales in the future. Production for home consumption is radically different from production for a commercial market. Given changing and competitive markets, the traditional craft skill, however beautiful, needs sensitive adaptation, proper quality control, correct sizing and accurate costing, if it is going to win and keep a place in the market. In other words the right combination of human, financial, physical and social capital is essential. There has been a dramatic shift in consumer choice from artisanal goods to factory made ones. For example, hand woven cotton fabrics have lost out to mill-made synthetic ones; plastic, china and glassware have wiped out the market for earthenware.
· Wages and capital: Wages for the craft people are meagre. Even the highest wages are low relative to the earnings of many others in the agriculture or other non- farm activities. Irregularities in the supply of work mean that there is forced underemployment. Quality of work can only be sustained if the craft people can obtain a living through working for the market. The combination of low wages and insufficient work tends to exacerbate poverty among craft people. The demand for a consistent market needs to be complimented by an availability of social networks and accessibility to financial and physical capital. Creating employment is not a matter of creating 'jobs', but of strengthening these workers and producers to overcome structural constraints and enter markets where they would be competitive.
· Working capital is another most pressing need of artisans. Capital investment is the key not only to the development, but also to the continuing survival, of artisans and their craft. Lack of finance and cash flow is almost always the crux of craft people's problems.
· Technological obsolescence: Modern technology has enabled machines to imitate even the most intricate designs that were once the exclusive domain of the artisans, developed and perfected over centuries and passed down from generation to generation. Any form of innovation implies an element of risk and investment of capital. Given that most Indian artisans live on the margin of subsistence, they have virtually no reserves to invest in technological innovation (physical capital).While India possesses a tremendous tradition of handicrafts, many artisans struggle to keep their skills alive but also to satisfy an ever-increasing demand of high-quality products and designs. The sector is highly unorganised and the artisans lack access to key resources, such as information on market trends, raw material, adequate credit and technology.