How To Start a Handicraft Business

A handicraft business combines traditional skills with modern entrepreneurship. India’s rich craft heritage, growing demand for handmade products, and access to digital marketplaces have made handicrafts a viable small business option. From home-based artisans to export-oriented units, the sector offers flexibility, low entry barriers, and strong employment potential when planned carefully.

Here’s a clear roadmap that explains the practical steps involved in setting up and running a handicraft business successfully: 

Understanding the Handicraft Market in India

India’s handicraft market is driven by domestic retail demand, tourism, exhibitions, and exports. Products such as handloom textiles, wooden artefacts, metalware, pottery, and jewellery have steady demand across urban and international markets. Studying customer preferences, price sensitivity, and seasonal demand helps reduce inventory risk and improve sales planning.

Selecting the Right Handicraft Product

Product selection should balance skill availability, raw material access, production time, and selling price. Items that are lightweight, durable, and easy to ship perform better online and in exports. Unique regional crafts with geographical identity often command higher margins.

Sourcing Raw Materials and Artisans

Sourcing raw materials locally can drastically help reduce costs. Working directly with artisans or self-help groups ensures quality control and ethical sourcing. Consistency in design and finishing is essential when scaling production for retail chains or export orders.

Pricing, Branding, and Sales Channels

Pricing should include raw material costs, labour, packaging, logistics, platform commissions, and margins. Branding through storytelling, eco-friendly packaging, and certification improves perceived value. Sales channels may include local exhibitions, own website, online marketplaces, export houses, and retail partnerships.

Here’s an overview of the legal and regulatory requirements for operating compliantly: 

Business Registration Options

Most handicraft businesses start as sole proprietorships due to simplicity. Partnerships and private limited companies suit businesses planning to scale, hire staff, or raise funding. The structure impacts taxation, compliance, and loan eligibility.

GST Registration and Handicraft Exemptions

Several handicraft products are exempt from GST when sold by artisans. However, GST registration becomes mandatory once turnover crosses the prescribed threshold or when selling through e-commerce platforms. Exporters must comply with GST rules even for zero-rated supplies.

Udyam Registration for MSMEs

Udyam registration provides recognition as a micro, small, or medium enterprise. It enables access to priority sector lending, government schemes, subsidies, and easier bank financing for working capital and expansion. 

Thoughtful financial planning helps balance production costs, artisan payments, and marketing spends, while ensuring access to funds for growing your business:

• Startup Cost Planning

Estimate expenses related to raw materials, tools, workspace, labour, packaging, and participation in exhibitions or online platforms. 

• Production Cost Control

Track material usage and labour costs closely to maintain healthy margins without compromising on craftsmanship quality.

• Income and Expense Monitoring

Regularly review sales inflows and operational outflows to manage cash gaps between production and product sales.

• Working Capital Management

Maintain sufficient funds to pay artisans, source materials in advance, and handle order fulfilment timelines.

• Funding Requirement Evaluation

Identify whether short-term or long-term financing is needed based on production scale, sales cycles, and expansion plans.

• Credit Health Review

Check your credit score beforehand, as it influences financing eligibility, repayment flexibility, and overall borrowing cost.

• Alternative Funding Sources

Explore small business loans, government-supported schemes, or artisan-focused financing options to reduce financial strain during early stages. 

A business loan on Bajaj Markets offers convenience, transparent terms, and funding scale suitable for diverse business requirements: 

• Quick access to funds

Once approved, loan proceeds are sent to your bank account promptly, enabling you to capitalise on supplier discounts or urgent purchases.

• Hassle-free digital process

Complete the application online with minimal paperwork and monitor each stage from submission to disbursal through a single portal.

• Wide loan range

Loan amounts available typically span from ₹1,200 up to ₹80 Lakhs, suitable for micro needs as well as substantial business outlays.

• No collateral necessary

Unsecured loan offerings remove the need to pledge property, lowering entry barriers for small and growing enterprises.

• Extended repayment choices

Flexible tenures up to 96 months let you align EMI commitments with projected revenue streams and seasonal business cycles.

• Attractive interest rates

Interest rates begin at around 14% per annum, which helps keep monthly repayments manageable when planning long-term financing.

• Clear and upfront charges

Fee schedules and processing costs are disclosed before finalisation, enabling straightforward comparison and informed decision making.

A business loan can support craft production, marketing and scale-up activities while ensuring timely payments to artisans and suppliers:

• Raw Material Procurement

Finance purchase of fabrics, dyes, yarns, metal, wood or other materials required for uninterrupted production runs. 

• Studio Setup and Machinery

Fund workspaces, specialised tools, looms, kilns or small machinery to increase productivity and product quality. 

• Artisan Wages and Training

Ensure timely payments to craftsmen and invest in skill development to improve craftsmanship and output consistency.

• Packaging and Fulfilment

Cover costs for quality packaging, labelling and packing equipment to protect products and enhance presentation for buyers.

• Exhibitions and Retail Channels

Pay fees for craft fairs, pop-ups and retail tie-ups to reach customers and generate bulk orders.

• E-commerce and Digital Marketing

Invest in an online store, photography, listing fees and targeted marketing to expand reach beyond local markets.

• Seasonal Working Capital

Bridge cash-flow gaps during festival seasons or large order fulfilments to avoid production delays. repayment terms. 

For a handicraft enterprise seeking funding, both your individual CIBIL Score and the company’s credit report influence a lender’s decision. Personal scores typically fall between 300 and 900; scores above 750 are generally regarded as excellent and can lead to better interest rates.

The Company Credit Report (CCR) gives lenders a consolidated view of the firm’s credit exposures and repayment patterns. The accompanying CIBIL Rank ranges from 1 (best) to 10 (weakest), and a lower rank strengthens your borrowing case.

Keep personal credit disciplined, limit outstanding debt, and ensure timely business repayments to improve loan eligibility and negotiate preferable financing for your handicraft venture.

The application process for a business loan on Bajaj Markets is straightforward and online, making it easier to access funds for your handicraft venture:

• Click on the ‘Apply Now’ button provided on the page

• Provide accurate personal details along with your handicraft business information

• Select a suitable loan amount and repayment period based on your requirements

• Complete and submit the application for prompt review and approval