INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,
MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)
ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue IV, April 2025
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Changing Structure of The Textile Industry After the MFA Phase-
Out: A Study of Kerala’s Traditional Handloom Sector
Dr. AMUTHA R.
Assistant Professor, Department of Commerce Sree Narayana College Kannur
DOI : https://doi.org/10.51583/IJLTEMAS.2025.140400023
Received: 16 April 2025; Accepted: 21 April 2025; Published: 03 May 2025
Abstract: The termination of the Multi Fibre Arrangement (MFA) in 2005 marked a significant shift in global textile trade
dynamics, introducing a quota-free regime that intensified competition. While India capitalized on expanded export opportunities,
traditional sectors like Kerala's handloom industry faced substantial challenges. This study examines the post-MFA structural
transformations within Kerala's handloom sector, focusing on institutional frameworks, market integration, and socio-economic
impacts on weavers. The study adopts a descriptive and analytical research design based exclusively on secondary data sources.
Findings reveal that despite institutional support, the sector grapples with issues such as limited market access, inadequate
technological adoption, and declining youth participation. The study underscores the necessity for targeted policy interventions to
revitalize this traditional industry.
Key Words: Handloom Industry, Multi Fibre Arrangement, Kerala, Textile Sector, Globalization, Institutional Support
I. Introduction
The handloom industry in Kerala has historically been a vital component of the state's socio-economic fabric, providing employment
and preserving cultural heritage. Governed under the Village and Small Industries (VSI) sector, it benefits from institutional support
through bodies like the Kerala Khadi and Village Industries Board (KVIB), HANTEX, and HANVEEV. However, the post-MFA
era introduced a liberalized trade environment, exposing the sector to intensified global competition. This study aims to analyze the
structural changes in Kerala's handloom industry following the MFA phase-out, assessing institutional roles, market dynamics, and
the socio-economic well-being of weavers.
Review of Literature
Chaudhary (2011) highlighted the uneven benefits of liberalization, with larger firms outperforming smaller entities due to
resource advantages. Kurup (2008) described the handloom sector as a "survival industry" facing crises from mechanized
competition.
Lakshmy Devi (2014) pointed to government apathy and policy failures leading to economic distress among weavers.
Norris (2013) emphasized ethical branding as a competitive strategy for handloom clusters, particularly in Kerala.
Kamath and Cowan (2012) explored the role of social capital and collective identity in the resilience of handloom communities.
These studies underscore the multifaceted challenges confronting Kerala's handloom sector in the liberalized trade regime.
Bhattacharya, R., & Shah, M. (2021) "Digital Empowerment and the Indian Handloom Sector: Post-Pandemic Resilience
Strategies." This study, published in the Journal of Rural and Industrial Innovation, explores how digital platforms have emerged
as a critical tool for survival in the post-COVID-19 phase. The authors argue that the pandemic forced traditional sectors, including
handloom, to adopt digital strategies such as WhatsApp commerce, Instagram marketing, and onboarding on platforms like Amazon
Karigar and GeM (Government e-Marketplace). However, they note that while urban clusters adapted quickly, traditional clusters
in Kerala lagged due to infrastructure deficits and digital illiteracy.
Verma, A. (2022) "Sustainable Revival of Indian Handlooms: Policy and Practice in the Age of Global Fashion." Published in
Textiles and Society, this article analyzes the integration of sustainability goals with handloom revival policies. It points out that
although the Ministry of Textiles has launched several green initiatives, Kerala’s handloom sector has yet to tap into the eco-fashion
market fully. It recommends enhanced collaboration with global ethical fashion brands and aligning production practices with SDG
goals.
Ghosh, S., & Joseph, R. (2020) "Post-MFA Global Trade and the Crisis in India’s Traditional Textile Sector." This study finds
that the benefits of MFA phase-out were monopolized by large exporters. Traditional producers, including Kerala’s weavers,
experienced intensified pressure from cheaper synthetic imports and loss of niche markets. The paper emphasizes the need for
market re-differentiation based on heritage value, customization, and fair-trade principles.
Anuradha, K. (2023) "E-Commerce and Handloom: A Missed Opportunity?"
Published in the Indian Journal of E-Governance and Rural Development, this paper explores barriers preventing handloom
INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,
MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)
ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue IV, April 2025
www.ijltemas.in Page 240
societies from scaling online. It identifies regulatory complexities, lack of training, and absence of digital infrastructure in handloom
clusters, particularly in Kerala. It recommends government-sponsored digital bootcamps for cooperative societies.
Narayanan, P., & Rao, T. (2021) "Youth in Loom: Re-engaging Kerala’s Next Generation with Handloom." This sociological
study examines the generational disconnect in handloom clusters. Interviews revealed that young people perceive handloom work
as outdated, economically unviable, and lacking dignity. The authors suggest educational reforms, innovation grants, and cultural
branding to reposition handloom as a viable creative industry.
Ministry of Textiles, Government of India (2022) Handloom Census Report Highlights – Post-COVID Recovery and Digital
Integration The latest handloom census data suggests a slow but steady shift toward formalization and digitalization in the handloom
sector. However, Kerala ranked lower in e-commerce integration and value-added production compared to other southern states.
The report advocates for targeted regional support based on cluster maturity.
Objectives of the Study
To evaluate the performance of Kerala’s traditional handloom industry in the post-MFA period.
To assess the socio-economic impacts on handloom workers, including income levels, employment stability, and quality of life.
To examine the effectiveness of institutional mechanisms such as HANTEX and HANVEEV in supporting the sector.
To analyze the challenges and opportunities for the handloom industry within the liberalized global market.
II. Methodology
This study adopts a descriptive and analytical research design based exclusively on secondary data sources. The objective is to
examine the structural transformations in Kerala’s traditional handloom industry following the phase-out of the Multi Fibre
Arrangement (MFA), with emphasis on institutional frameworks, economic performance, and socio-political implications.
Data Sources:
The analysis relies on a wide range of authentic and credible secondary data obtained from the following sources:
Annual Reports of the Ministry of Textiles, Government of India (2005–2023)
Kerala State Planning Board Economic Reviews (various years)
Handloom Census of India (2009–10 and 2020–21)
Reports and publications from the Kerala Khadi and Village Industries Board (KVIB), HANTEX, and HANVEEV
Research articles, working papers, and policy briefs from peer-reviewed journals and UGC CARE-listed publications
News articles and trade analysis from reputed business and economic publications such as The Hindu Business Line, Economic
Times, and Textile Outlook International
Data Selection Criteria:
Data were selected based on relevance to the following key themes:
Impact of MFA phase-out on handloom production and export in Kerala
Institutional and cooperative performance (HANTEX, HANVEEV)
Socio-economic trends of handloom workers
Policy interventions and market shifts post-2005
Conceptual Model: Impacts of MFA Phase-Out on Kerala's Handloom Industry
Phase
Factors/Elements
Description
1
MFA Phase-Out (2004)
This is the initiating event. The Multi-Fiber Arrangement (MFA) was a system of quotas
that regulated international trade in textiles and garments. Its phase-out in 2004 led to the
liberalization of the global textile market.
2
Global Trade Liberalization
The MFA phase-out resulted in the removal of quotas, leading to a more open and
liberalized global trade environment for textiles and clothing.
3
Increased Global
Competition
The liberalization of trade intensified competition in the global textile market. This
increased competition posed both opportunities and challenges for domestic textile
industries, including Kerala's handloom sector.
INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,
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ISSN 2278-2540 | DOI: 10.51583/IJLTEMAS | Volume XIV, Issue IV, April 2025
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4
Direct Impacts on Kerala's
Handloom Industry
The increased global competition had several direct impacts on Kerala's handloom
industry, which can be categorized into three main areas
* Market Dynamics
- Increased competition in both domestic and international markets
- Need for market adaptation to changing market demands and consumer preferences.
- New export opportunities for those who could adapt, but also the risk of losing market
share to more competitive nations.
* Production and Structure
- Challenges in competing with larger, more efficient firms in terms of production volume
and cost
- Technological limitations and slow adoption of new technologies
- Infrastructure gaps hindered modernization and scalability
* Socio-Economic Factors
- Wage pressure
- Job insecurity and the need for workers to adapt to changing skill requirements
- Occupational migration
- Changing skill requirements
5
Mediating Factors:
Institutional Support
The role of key institutions in influencing the impact of the MFA phase-out:
* HANTEX
- Marketing aid
- Sales support
* HANVEEV
- Focused on supporting handloom cooperatives.
* KVIB
- Financial assistance
- Policy implementation
6
Outcomes for Kerala's
Handloom Industry
The resulting changes and performance of the industry:
* Industry Growth
- Production levels
- Export performance
- Competitiveness
* Weavers' Welfare
- Income and living standards
- Employment stability
- Social well-being
* Cultural Heritage
- Preservation of traditional skills
- Continuity of weaving traditions
III. Results and Discussion
Industrial Performance and Structural Adjustments:
The post-MFA era has witnessed nuanced transformations in Kerala's handloom industry. While the liberalized global market
opened avenues for textile exports, the traditional handloom segment, marked by decentralized and household-based production,
lacked the capacity to immediately leverage these opportunities. Production volume marginally increased in better-organized
cooperatives, particularly those supported by schemes under KVIB and HANTEX. However, the fragmented nature of the industry
and its reliance on legacy infrastructure stifled broader scalability and technological diffusion.
INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,
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Furthermore, many units continued to rely on outdated looms, traditional dyeing methods, and manual labor, which while preserving
authenticity, failed to meet rising international quality and volume standards. This limited their capacity to deliver large-scale orders
with consistent quality and timelines, making them less attractive to bulk buyers or international retailers.
Marketing and Global Integration Challenges:
Kerala’s handloom products have niche appeal due to their ethnic designs and eco-friendly production processes. Despite this,
market penetration, especially in export markets, remains low. The absence of sustained branding initiatives and weak linkages
with e-commerce platforms have limited the sector’s visibility. In contrast, states like Andhra Pradesh and Tamil Nadu have
leveraged digital platforms and government-backed marketing campaigns to position their products better in global markets.
Additionally, there's a lack of integration between handloom units and modern retail or fashion supply chains. Few cooperatives
have established relationships with designers or participated in trade expos. This weak linkage results in lost opportunities for
product innovation and high-margin sales channels.
Socio-Economic Impact and Quality of Work Life:
The handloom industry continues to be a significant source of employment in Kerala, particularly for marginalized and rural
populations. However, the socio-economic conditions of the workforce reveal persistent issues. The average earnings of
handloom workers remain below the state’s minimum wage thresholds in many districts. Irregular work, seasonal demand
fluctuations, and delayed payments in cooperatives further exacerbate financial insecurity.
Notably, women constitute a substantial portion of the workforce, yet they are often confined to lower-paid or unpaid domestic
roles in the cottage industry model. Access to leadership positions in cooperative societies remains limited, and there is little
evidence of gender-specific training or support schemes.
Occupational migration—especially among youth—is a major concern. The younger generation perceives handloom as unprofitable
and lacking social prestige, leading to talent attrition. This trend, if unchecked, could result in a severe skill gap and cultural loss in
the coming decades.
Institutional Gaps and Policy Implementation:
While several support structures exist—such as HANTEX, HANVEEV, and the KVIB—many initiatives suffer from underfunding,
delays, or poor implementation. Stakeholders frequently reported challenges in accessing government subsidies, lack of awareness
about available schemes, and bureaucratic hurdles. Additionally, financial assistance from banks remains difficult to secure due to
collateral requirements and informal work arrangements.
Recommendations
Strategic Policy Reorientation
Integrated Textile Missions should be launched focusing exclusively on traditional handlooms, combining support for production,
marketing, and welfare under one umbrella.
Revise and expand the National Handloom Development Programme (NHDP) to include region-specific provisions for states like
Kerala that operate under unique cooperative-led models.
Decentralize decision-making within handloom institutions to district-level boards to ensure faster implementation and monitoring
of schemes.
Branding, Marketing, and E-Commerce Enablement
Establish a dedicated Kerala Handloom Export Promotion Cell to provide end-to-end export services including logistics,
documentation, buyer-seller meets, and certification.
Introduce a "Kerala Handloom Heritage" brand, akin to “Khadi India,” with uniform labeling, quality assurance, and ethical
sourcing certification.
Partner with leading e-commerce platforms and fashion retailers for dedicated storefronts and brand storytelling, emphasizing the
socio-cultural significance of Kerala’s weaves.
Offer incentives to fashion designers and entrepreneurs for integrating handloom into mainstream fashion lines.
Infrastructure and Technological Modernization
Subsidize semi-automatic looms and provide interest-free loans for infrastructure modernization with repayment moratoriums for
the initial years.
Build common facility centers (CFCs) at district level for pre-loom and post-loom processing including dyeing, designing, finishing,
and packaging.
INTERNATIONAL JOURNAL OF LATEST TECHNOLOGY IN ENGINEERING,
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Establish Textile Technology Parks focusing on skill development, R&D, and machinery access for small weavers.
Social Security, Gender Inclusion, and Youth Engagement
Ensure universal coverage under E-Shram and expand benefits like health insurance, pension, accident coverage, and maternity
support for all registered weavers.
Launch Women Weaver Empowerment Missions (WWEM) to provide leadership training, financial literacy, and cooperative
management roles for women.
Initiate ‘Weave Your Future’ fellowships for youth under the age of 30 who engage in design innovation, entrepreneurship, or
digital transformation in the handloom sector.
Provide residency and incubation programs in association with national design institutes for youth who work on sustainable and
contemporary reinterpretations of traditional patterns.
Financial and Institutional Mechanism Reforms
Mandate priority sector lending quotas for handloom-related businesses with simplified KYC norms and collateral-free loans.
Digitize all cooperative and KVIB functions including subsidy distribution, member tracking, performance metrics, and scheme
alerts.
Form district-level grievance redressal committees chaired by handloom representatives to address scheme delays, corruption, and
wage issues.
IV. Conclusion
The phase-out of the Multi Fibre Arrangement (MFA) in 2005 marked a turning point in the global textile trade, ushering in an era
of heightened competition and open markets. While India’s large-scale textile exporters managed to leverage these changes,
Kerala’s traditional handloom sector—anchored in cooperative models and community-based practices—has faced significant
challenges in adapting to this liberalized environment. This study reveals that although the handloom industry continues to hold
cultural and economic significance, its structural vulnerabilities remain pronounced. Key concerns include limited access to
advanced technology, underdeveloped marketing channels, lack of product innovation, financial instability, and inadequate policy
implementation. These issues are compounded by a decline in youth participation and rising occupational migration, threatening
the sector’s long-term sustainability.
However, the findings also highlight the latent potential of Kerala’s handloom industry—particularly its alignment with global
trends such as ethical production, slow fashion, and eco-friendly textiles. With appropriate state-level interventions, modernization
of cooperative management, and integration with digital marketplaces, the industry can be repositioned as both an economic
contributor and a preserver of cultural heritage. To ensure future viability, a multi-pronged strategy is required—one that balances
modernization with preservation, market access with community empowerment, and economic efficiency with social inclusion. If
strategically revitalized, the handloom sector can emerge not only as a livelihood source but also as a symbol of sustainable and
inclusive industrial growth in Kerala.
V. Acknowledgement
With profound gratitude, I acknowledge the unfathomable grace and blessings of the Almighty, whose guidance has made this work
possible. I extend my heartfelt appreciation to Dr. Satheesh C. P., Principal, and the Management of Sree Narayana College, Kannur,
for their invaluable support and for granting me the necessary facilities and permission to undertake this work. I am deeply thankful
to the staff of Kannur and Calicut for their assistance and exceptional service. My sincere appreciation also goes to my family,
friends, and colleagues for their unwavering support and insightful suggestions, which played a crucial role in the completion of
this work. Lastly, I extend my gratitude to everyone who contributed, directly or indirectly, to this endeavor—your support, though
not individually mentioned, is genuinely appreciated.
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MANAGEMENT & APPLIED SCIENCE (IJLTEMAS)
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