Kashmir Handicraft Crisis: While Kashmir’s handicraft sector is facing a major crisis due to the ongoing war between Iran, Israel and America in West Asia, Kashmir’s carpet industry has been particularly affected by it! While the war has severely hit the industry’s most important markets, exporters say old orders are being canceled and new orders have almost completely stopped!

From the government’s side, after Dubai, after the international exhibitions for handicrafts being organized in China and Denmark, the hope of getting new orders has also ended and the livelihood of lakhs of people directly or indirectly associated with the trade is at stake.

Huge impact on exports and Gulf countries

Kashmir carpets, known for their fine workmanship and historical importance, are exported to about 25 countries, with West Asia emerging as a major market. Along with hand-woven carpets, traditional handicrafts—such as papier-mâché, pashmina shawls, Kani weaving, Sozni embroidery, Khatabandh woodwork, and walnut wood carving—are the backbone of the valley’s export economy.

But now the Gulf conflict has hit the backbone of Kashmir’s export economy, which is heavily dependent on Gulf countries; The share of these countries in total handicraft exports is about 60 percent. Due to the war, the huge increase in the cost of new shipments and pending payments for old orders has also put this industry in serious economic crisis.

Difficulties of traders and artisans

According to Tariq Ghani, President of Kashmir Chamber of Industries, the biggest and immediate impact of this has been that there has been a sudden huge decline in new orders coming from buyers across the region. Due to uncertainty, disrupted trade routes and economic concerns, importers have also stopped purchasing.

The ongoing war between Iran, Israel and America has given a deep blow to the handicraft sector of Kashmir. Gulf countries together have about 60 percent share in the exports from Kashmir. In this respect, these countries are the most important markets for Kashmiri handicrafts, pashmina, carpets and other related products.

Shipment cost and air freight increases

President of Kashmir Chamber of Commerce and Industry (KCC&I), Javed Ahmed Tenga, said that this situation is unprecedented, and the traditional cycle of business has been completely disrupted. “Traditionally, the month of Ramzan is considered to be the busiest and most important time for sales and payments in the Gulf countries. It is during this time, Kashmiri exporters receive a major portion of their annual earnings in return for the shipments made throughout the year. Due to the current instability, not only banking and trade payment channels have been disrupted, but new orders from buyers have also come to an almost complete halt.”

This has created an unprecedented liquidity crisis for thousands of exporters, artisans and weavers of Kashmir. They had sent their goods with confidence, but now they have outstanding export bills, increasing interest burden and no sure idea as to when the payment will arrive. Stoppage of orders is the biggest concern at this time, because it has a direct impact on the future production cycle and employment in the entire sector.

“We have many families involved in this trade – from weavers to washermen, and from dealers to exporters. And if no orders come, we will all face difficulties.” Highlighting the seriousness of the situation, Farooq Ahmed, an exporter from Srinagar, said that tourist inflow had already declined after the Pahalgam attack.

Usually, with the start of the tourist season, demand also increases, but this year the situation was completely opposite. “Orders have completely stopped. Due to the uncertainty in the sector, buyers are not making any firm commitments to purchase new items. Even our old customers are postponing their decisions. Moreover, payments are also getting delayed, so we are being hit from both sides – neither money is coming in nor we are getting any new business.”

Shipment costs increased due to increase

He said, the seriousness of this crisis has increased further due to the huge increase in the cost of shipment. International cargo rates have increased rapidly due to disruption in air routes, increased risk appetite and increase in insurance premiums.

Exporters say that due to the war, the prices of raw materials have not only increased but the freight charges, both air and sea, have also increased significantly. This has further weakened their competitiveness in global markets.

What further increases these challenges is that the ‘Global Village’ located in Dubai has been closed for about 15 days. It is a major international retail platform, where many traders from Kashmir exhibit and sell their products. Due to this closure, an important source of sales has been closed at the very time when it was needed most. This has had a direct impact on the income of traders. This crisis is affecting the entire process from production to sales.

Exporters are facing great difficulties in continuing their operations, traders are facing a steady decline in sales, and artisans and weavers are facing reduced work and delays in receiving their wages.

impact on production and sales

There has already been a huge decline in the exports of handicrafts from Jammu and Kashmir. This figure was around Rs 1700 crore in the year 2013, which has come down to Rs 733 crore in the year 2024-25 – that is, a huge decline of about 57 percent has been registered. Industry insiders have warned that current geopolitical tensions could push the sector into an even deeper crisis.

With uncertainty persisting in West Asia and no resolution in sight in the near future, exporters fear that a prolonged disruption could lead to permanent loss of markets as international buyers may turn to other options to purchase goods.