A significant part of the economy of a developing country consists of small and tiny production organizations run on an informal, self-employment basis. In literature, the informal sector has given various names such as household enterprises, small manufacture and handicrafts, unorganized sector in India. The origin of ‘Informal sector’ terminology came into existence in 1972 when an International Labour Organization (ILO) mission on unemployment visited Kenya and prepared a report on Employment, Income and Equality (ILO, 1972). However, some scholars agreed that the term ‘informal sector’ was coined by Keith Hart and later popularized by ILO mission (Hart, 1973; Harris and Todaro, Mathew, 2006).

The System of National Accounts (SNA) 1993 defined the informal sector as consisting of units engaged in the production of goods or services with the primary objective of generating employment and income to the persons concerned. These units typically operate at a low level of organization, with little or no division between labour and capital as factors of production and on a small scale. The units are mostly household enterprises and labour relations in the informal sector, primarily based on casual employment, kinship or personal and social relations rather than contractual arrangements with formal guarantees. The nature of work and employment in the informal sector may be permanent, temporary, seasonal, or part-time activities1. The first Indian National Commission on Labour (1966-69) defined, informal sector workforce as those workers who have not been able to organize themselves in pursuit of their common interest due to certain constraints like the casual nature of employment, ignorance and illiteracy, small and scattered size of establishments2. Thus, the term informal sector has referred to the tiny units of production with less than ten workers, which are working hard in the production of goods and services, but whose activities were not recognized, recorded, protected or regulated by the government.

More than 61% of the world's population makes their living in the informal economy, most of them in emerging and developing countries. It is a great source of employment for men 63% than for women 58.1% (ILO, 2018)3. India remains a dual society and a dual economy between the ‘modern’ and the ‘traditional’ and the roots of the duality are to be found in the colonial period. The colonial duality continues today as the divide between the formal sector consisting of large capital, foreign and domestic, as well as the state itself and the informal sector consisting of peasants, artisans, small producers and domestic workers. In India, there is a lack of actual size of the workforce engaged in the informal sector. As per the Economic Survey of 2018-2019, there is almost 93% of the total workforce in the informal sector. The National Statistical Commission (NSC) 2012, in his report ‘Report of the Committee on Unorganized Sector Statistics’ the share of the informal workforce is more than 90% of the total workforce (Prasanna, 2019).

According to the National Sample Survey Organization (NSSO) 1999-2000, in India, the unorganized manufacture sector provides employment for about 37 per cent of the workforce in India's economy. The 62nd round of NSSO (2005/2006) has reported that there were 17 million unorganized manufacturing enterprises providing jobs for about 36 million people in 2005-2006 (Mariappan, 2011: 20-21).

Labour Process in Informal Sector

The labour process refers to the connection between labour and their work. Labour process having a practical aspect and a relational aspect. In a practical aspect, the labour process is a set of activities that transform raw material into useful objects with the assistance of instruments of production. The relational aspect refers to the set of relations in which surplus labour is expropriated from the direct producer. The relations of production always combined with a corresponding set of relations into which men and women enter into the production process as they transform raw material into a finished object (Burawoy, 1982: 15). The roots of the labour process theory traced from the writings of Karl Marx. In Capital, volume 1, chapters 14 and 15, Marx studied the labour process under transition from pre-capitalism to capitalism in England. There is a shift in the labor process from simple cooperation, to manufacturing to Industrial stage. There is a diversity of production relations, including independent commodity production, putting-out system4 and wage labor described by Marx. The capital innovates and changes the labour process to maximize the appropriation of surplus from labor. His view of the evolution of modern industry is often struck by the character with the Indian informal manufacturing today. The wide-spread of putting-out relation and the dominance of merchant capital is still prevalent in the Indian informal manufacturing sector. Such type of sub-contracting or putting-out system is also common in craft-based industry. This system has been described as "a living testimony of the exploitation of the home-based rural enterprises by the master enterprises or the contractors, through contrived trade devices" (Pratim, 2007: 7). The putting-out mode of production is historically a result of the subordination of artisanal production to merchant capital or middlemen. Typically, a merchant or middlemen or master weaver supplies raw materials to the artisans and collects the finished product at an agreed price or piece-wage.

Under the putting-out system, the merchant or middlemen exercise tight control in the market of raw material and finished products. Production is organized through the supply of raw material to sites of production spread out in houses. A number of middlemen and contractors operate at several levels. In many cases, these levels are so numerous that the producer knows nothing about the master. This arrangement has spread quickly in textile, hosiery, readymade clothes, small machines and leather works. Of late, ironwork, clay-work, carpentry and stonework have also been brought within the ambit of this system (Basole & Basu, 2011).

Today, putting-out goes by the name of subcontracting. The subcontracting arrangements that are in close agreement with classical putting out relations where a merchant or middlemen put out work to an artisan or small producer. Raw materials are provided by the merchant along with specifications on what type of product is desired. The tools of production typically belong to the worker. The finished product is collected by the merchant, and the worker is paid piece-wages.

The putting-out system or subcontracting system is very much prevalent in carpet production in Kashmir, where the weavers in the carpet industry work exclusively for large merchants, middlemen and master weavers. The carpet weaver may possess part of the means of production (Loom, hooked knife and metal comb) but depend on middlemen or merchants or master weavers for key inputs such as raw materials, designs and wages.

Research objectives and Methodology

The study aims to examine the labour process under different production organizations of carpet Industry and also analyze the wage pattern among carpet weavers of Pulwama district. The present study is relied on two types of data, primary and secondary. Secondary data have been collected from the records available with the Directorate of Handicraft Jammu and Kashmir, Directorate of Economics & Statistics Govt. of Jammu and Kashmir, Newspapers and research papers. Primary data has been collected through interview schedule, focused group discussion and observation method carried out among carpet weavers of Kashmir valley located in the Pulwama district.

The data collected between March and June 2020 from four Blocks of Pulwama district through interview schedule. Fifty weavers have been identified through snowball, out of which seventeen respondents from Shadimarg block, nine from Newa block, five from Aripal block and nineteen from Kakapora block as shown in Table 1.

Table: 1 Block wise distribution of weavers

Block Frequency Percentage
Kakapora 19 38.0
Newa 9 18.0
Shadimarg 17 34.0
Aripal 5 10.0
Total 50 100.0

Figure 1: Block wise distribution of weavers

Carpet Industry: The Informal sector in Kashmir

The carpet industry of Kashmir occupies an important place in handicrafts and one of the largest informal manufacturing sectors. The tradition of carpet manufacture in Kashmir goes back to the time of Zain-Ul-Abidin 1420-1470 A.D brought carpet weavers from Persia and central Asia into Kashmir & to train local inhabitants5. Since then, carpet heritages have continued and got encouragement and patronage of different rulers, visitors to the valley, thus the skill passing on from generation to another. The Hand-Knotted Kashmiri Carpets are woven by all locales of Kashmir, specifically - Srinagar, Anantnag, Bandipora, Ganderbal, Budgam, Pulwama, Kulgam, Shopian, Baramulla and Kupwara. The Carpet industry in Kashmir has made a great contribution to production, employment, and export of handicraft products and contributes to the economic development. The production and export of carpet handicraft since 1990-91 to 2016-17 have been quite encouraging. The production of carpet handicraft in 1990-91 is 84.55 crores, and increased to 821.50 crores in 2016-17. The export of carpet handicrafts increased from 26.41 crores in 1990-91 to 369.81 crores in 2016-17 (Digest of Statistic, 2016-17).

Production Process in the Carpet Industry

Carpet manufacturing involves a good deal of specialization. The whole production process involves a large number of workers and a strong connection between people engaged at various levels of the industry. The different processes in carpet manufacture include determination of the size and quality of the carpet, developing design on graph paper, taleem writing, procuring raw-material, dyeing of raw-material, preparation of wrap, weaving, washing and drying and finishing process. Each step requires the involvement of labor power separately. The weavers are supplied with yarn, designs and taleem papers by middlemen/merchant/traders. A major part of carpet manufacturing is weaving. Carpet weaving is carried out on looms by weavers in their homes or in the master’s workshop. Most of the weavers have their own looms. Only a few do not have their looms and weave on master’s looms. Usually, the weavers are contractually bound with middlemen who have given them money in advance. This contract is only socially sanctioned. There is no formal legal agreement. The weavers mostly paid wages on a piece-rate basis.

Figure 2: Production Process in Carpet Manufacturing

Organization of Labour in Carpet Industry

The organizational arrangement of the carpet industry is diverse in nature. In the carpet industry, three types of weavers are found such as independent weaver, dependent weaver and wage worker. In the present study, nine (18%) respondents are independent weavers, twenty-six (52%) respondents are dependent and fifteen (30%) respondents are wage workers as shown in Table 2:

Table 2: Distribution of Weavers as per their Nature of Work

Nature of work Frequency Percentage
Independent Weavers 9 18.00
Dependent Weavers 26 52.00
Wage Workers 15 30.00
Total 50 100.00

Source: Data based on field Study

Figure 3: Distribution of Weavers as per their Nature of Work

Independent weaver or self-employed weaver

The independent weavers have their own loom, buys own raw material. The independent weaver works in his own premise, with its own capital, weaves the actual product and then sells it to the merchants or traders (Shown in Diagram: 2). He or she depends upon the same merchant for credit. The weaver has control over the capital and the labour process, but little control over access to the market.

These weavers can be an individual weaver or a master weaver. The number of weavers of such is on a decline over the last few decades. These are in the minority (18%), as shown in Table 2. The independent weaver should get a better price, but lack of holding capacity and fluctuating raw material prices force him to compromise with the payment delaying tactics of the traders. The weaver often fails to meet these requirements as he or she has no enough capital to do this job. For performing work, the weaver needs the yarn, has to prepare a wrap and more often than has not confronted the volatility of a market. So, the only option for him is to come under the control of middlemen or master weaver.

Figure 4: Independent weaver

Dependent weaver:

The weaver produces the product in his own premises with own equipment's but with working capital (raw-material and design) provided by the middlemen, in a self-directed labour process and hands over the woven carpet to the middlemen (shown in Diagram 3). The middlemen do not control over the weavers by directly overseeing their work, and they do impose a rudimentary discipline upon them by adjusting the flow of work to the relative productivity of each weaver and adjusting wages as a means of penalizing deficient workers and rewarding good ones. It was a common complaint that middlemen never paid the weavers in full, using the excuse that there was a default as to delivery time and inferior quality and shrinking size of carpet. The extensive middlemen networks also serve to reduce the price paid to the artisan per piece. This is the most common type among the contract (putting-out) arrangement among carpet weavers (52%), as shown in Table 2. Wages are determined on the basis of the complexity of the design, knots per square inch and bargaining capacity of the weaver, which has weakened considerably during the last decade as the industry is facing a decline.

Figure 5: Dependent weaver

Wage worker:

The weaver works in another's premises in the master's workshop (Karkhanas)6 with no independent access to capital and market as shown in Figure 6. Wage workers are in minority (30%) shown in Table 2 as compared to other dependent weavers. They still form an important part of the carpet manufacturing working class. The surplus is extracted from the direct producers by ensuring that workers produce greater value than returned to them in the form of wages.

Figure 6: Wage worker

Wages Pattern among Carpet Weavers

It is a well-known fact that the informal sector is plagued with extremely low wages. Many studies on the weavers in India revealed the existence of low wages. This is also depicted in our study that carpet weavers in Kashmir also earn very low wages.

Table 3: Distribution of Average Daily Earnings of the Weavers

Daily earnings of weaver Frequency Percentage
Up to 100 12 24.0
101-200 23 46.0
201-300 8 16.0
301 and Above 7 14.0
Total 50 100.0

Source: Data based on field study

Table 3 highlights the distribution of wage earnings among carpet weavers in Kashmir. The table reveals that 24% of the weavers earn below Rs 100 in a day. While majority of the weavers (46%) earn between Rs 101-200 per day. Only 14% of the weavers earn more than Rs 300 per day on an average. Earnings and working hours are directly proportional to each other. The reason for the low wages among weavers is the exploitative nature of middlemen or master weavers. While some respondents revealed the reason for low wages due to shrinking sizes of carpet and low quality.

Figure 7: Average Daily Earnings of Weavers

Table 4: Distribution of Average Working Hours per Day

Working Hours per day Frequency Percentage
Up to 5 hours 7 14.0
6-10 hours 26 52.0
11 hours and above 17 34.0
Total 50 100.0

Figure 8: Distribution of average working hours per day

Source: Data based on field study

The earnings of the weavers depend upon the total number of working hours in a day. Each weaver devotes differential time to the weaving work depending upon the nature of weaving profits and wages to be earned. Similarly, depending upon the market demands or depression in the market, the work schedule either becomes accelerated or slackness. The above Table 4 depicts the average working hours per day of weavers. 14% of the weavers were daily work up to 5 hours. The majority of the weavers 52% were working daily between 6-10 hours. However, 34% of the weavers work daily more than 11 hours in a day. Most of the weavers start their work around 8 O' clock in the morning, in the afternoon they have launch break, and the weaving work continues till evening around 6 to 7 P.M.

Figure 9: Average Working Hours per Day

Table 5: Distribution of Nature of Payment to Weavers

Nature of Payment Frequency Percentage
Weekly basis 2 4.0
Monthly basis 13 26.0
Piece rate Basis 35 70.0
Total 50 100.0

Source: Data based on Primary Study

In carpet weaving, there is no fixed criterion for the payments being paid to the weavers. The majority of the Carpet Weavers 70% are paid wages on a piece rate basis. The wages are paid on the basis of a rate fixed per area square feet. 26% of the weavers receive wages on a monthly basis. However, only 4% of weavers receive wages on a weekly basis.

Figure 10: Distribution of average working hours per day

Piece Wages as a Mode of Surplus Extraction>

The mode of surplus extraction refers to the specific way in which unpaid labour is extracted from the producers and appropriated by the dominant classes. In developed economies, the wage-labour/capital relation forms the single most important mode of surplus extraction. In developing countries like India, the surplus is extracted in various modes such as wage-labour, unpaid work and unequal exchange. In the first case, the surplus is pumped out of direct producers by ensuring that workers produce greater value than is returned to them in the form of wages. In the second case, one vital to both peasant production and artisanal production, the labour of women and children is extracted in return for direct subsistence. In the third case, the surplus produced in small-scale production, even if it be first appropriated by the direct producer, is eventually transferred from the small producer to a larger one, or to a merchant capitalist (Basole & Basu, 2011).

We now consider some specific institutional ways in which surplus is extracted from the informal sector with a specific focus on the carpet industry of Kashmir. There are various studies which revealed the fact piece wage widely prevalent in informal manufacturing sectors (Singh,1990; Vijayagopalan, 1993; Weber, 1997)

In carpet industry, the wages paid to the majority of weavers on the piece basis as shown in figure 7. For Marx, the piece-wage is nothing but a converted form of the time-wage, just as the time wage is a converted form of the value or price of labour-power. In time-wage, the labour is measured by the duration of labour and in piece-wage labour is measured by the quantity of products in which the labour has become embodied during a given time (Marx, 1992: 694).

As Marx, notes that the silent feature of piece-wage is "the personal interest of the worker to lengthen the working-day, since with it his daily or weekly wages raise" (Marx, 1992:696). Thus piece wage achieves an increased rate of exploitation via the increasing intensity of labour and a lengthened working day. Further, they obviate the need for control by the capitalist over the labour process, since "the quality and intensity of the work are here controlled by the very form of wage itself" (Marx, 1992: 695).

The two types of putting-out relations described by Marx, which give rise to a hierarchically organized system of exploitation and oppression, are still applicable to the carpet manufacturing industry in Kashmir:

  1. On the one hand, piece-wages facilitate the interposition of parasites (middlemen) between the capitalist and the wage-labourer. The gain of these middlemen comes entirely from the difference between the labour-price which the capitalist pays, and the part of that price which they actually allow workers to receive (Marx, 1992: 695). This system is found in Lucknow Chikan industry and woolen hosiery industry of Ludhiana in Punjab where middlemen/agents perform the work of bringing raw material to the weaver at her/his home and then carrying off the finished product. The extensive middlemen networks also serve to reduce the price paid to the artisan per piece (Weber, 1997; Singh, 1990).

In carpet industry middlemen (dalaal7), performs the work of bringing raw material and Taleem papers on which designs are scripted to the carpet weavers at home and then carrying off the finished good. The middlemen do not control the weavers by directly overseeing their work, they impose a rudimentary discipline upon them by adjusting the flow of work according to the relative productivity of each weaver, adjusting wages as a means of penalizing deficient workers and rewarding good ones.

  1. On the other hand, piece-wage allows the capitalist to make a contract for so much per piece with the head labourer - in manufactures with the chief of some group… at a price for which the head labourer himself undertakes the enlisting and payment of his assistant work people. ‘The exploitation of the labourer by capital takes place through the medium of exploitation of one worker by another worker’ (Marx 1992:695). This system is found in the Agra footwear industry as well as the Banarasi Sari industry where master artisan take responsibility for an order, execute part of the work themselves and recruit additional artisans as needed to fulfill the order (Knorringa 1999, Varman and Chakrabarti, 2006)

This system is also very much prevalent in the carpet Industry where master weavers (Wosta)8 as taking responsibility for an order, execute part of the work themselves and also employ additional artisans in his workshop (Karkhanas) as needed to fulfill the order. The exploitation of labourer (weaver) by the labourer (master weaver) is the character of the production relations in the larger part of the carpet manufacturing industry in Kashmir. The master weaver receives the contract on a piece-rate basis from exporters/traders/merchants, but he paid wages on time-basis to weavers work under him.


The findings of the study revealed that most of the weavers are dependent weavers (52%), while independent weavers represent (18%) and wage-workers (30%). The independent weavers exercise a better choice of control over the resources, and they are mainly wostas and middlemen who used to exploit the dependent labour. The independent weavers make profit out of work of the dependent weavers who from historical times to contemporary period are unable to come out of nets of exploitation. Historically, they were exploited by the rulers; forced to work for them for revenue but nowadays they forced by the circumstances to work for the wostas and middlemen on low wages. The findings revealed that the average daily earning of the weaver is very low. The majority of the weavers (46%) have daily earning range between Rs. 101-200, 24% respondents earn up to Rs. 100, 16% of respondents earn between Rs. 201-300 and 14% of the weavers earn more than Rs. 300 daily on an average. With such earnings they cannot meet the basic needs of family. As the result they took advances from the wostas and middlemen resulting in their life long bondage as the bonded labour and this process continues across generations. No generation is able to repay the taken loans. The daily income of weavers depends on the number of working hours, and working days in turn depend on the nature of wosta. 52% of the weavers have daily average working hours between 6-10 hours, 34% have between 11 hours and above, and 14% of weavers worked up to 5 hours daily. This finding reveals that their working hours are long, and long workings have harmful consequences on the life of workers. The carpet weavers receive a wage in different ways. For instance, 70% of the weavers receive wages on a piece-rate basis, 26% receive wages on a monthly basis, and only 4% weavers receive wages on a weekly basis. It is also observed how piece-wage is a source of exploitation for merchants/traders in the carpet industry. Among the chain persons involved in the carpet weaving the worst hit by is the weavers who face hardship and exploitation in every sphere of life.

Besides this, we have attempted to take a broad look at the organization of the informal industry in India. In particular, focus on production relations in the carpet manufacturing sector in Kashmir within which the division of labor is simple carried out with traditional tools and techniques. The diversity of production relations has been found to be complex taking emergence in three forms; independent commodity production, dependent or putting-out and wage labor. The relations of production in carpet industry are neither purely those of the independent producer (characterized by producer's control over the labour process and ownership of capital) nor only those of the capitalist (characterized by time-wage workers). Rather a variety of putting-out relations prevails, and the dominance of middlemen, master-weaver and merchant capital prevails in the carpet industry. However, it has also been observed how piece-wage is a mode of surplus extraction for capitalists in the carpet industry. Furthermore, it has also been analyzed that weavers are facing with a problem of middlemen exploitation, low earning and long working hours in the carpet industry.

Thus, there is a need to frame policies to tickle down the challenges imposed by the wostas and middlemen to the workers. In this regard the role government is vital because carpet industry in Kashmir in real sense is privately run which gives more chances to the wostas and middlemen to exploit the weavers there is a need to establish more and more public cooperatives to overcome this problem. The state should involve more and more craft-based organizations, SHGs and NGOs to save not only the industry but also the livelihood of carpet weavers. There is a need to free them from the vicious circle of poverty by making them aware about various government schemes meant for their development. They should be encouraged to participate in various programmes aimed to educate them about the ways to work independently and they should be given special focus if we want to see something out of golden hands; hands that have popularized Kashmir across the work the way nature has made it.

Declaration of Conflicting Interests

The author declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.


The author received no financial support for the research, authorship and/or publication of this article.


Basole, A., and Basu, D. (2011). Relations of Production and Modes of Surplus Extraction in India: Part II -' Informar Industry. Economic and Political Weekly, 46(15), 63–79.

Burawoy, M. (1982). Manufacturing Consent. Chicago: University of Chicago press.

Digest of statistics (2016-17). Directorate of Economics & Statistics, Govt. Of Jammu and Kashmir.

Harris, J. R., & Todaro, M. P. (1970). Migration, Unemployment, and Development: A Two Sector Analysis, American Economic Review, 60 (1): 126-42.

Hart, K. (1973). Informal Income Opportunities and Urban Employment in Ghana. The Journal of Modern African Studies, 11 (1): 61-89.

ILO (1972) Report on Kenya on Employment, Income and Equality, Geneva.

Knorringa, P. 1999. "Artisan Labor in the Agra Footwear Industry: Continued Informality and Changing Threats." Contribution to Indian Sociology, Sage Publications, New Delhi, 33 (1&2)

Mariappan, R. (2011) Growth & Productivity of the Unorganized Manufacturing Sector in India. Indian Journal of Industrial Relations, 47 (1), pp. 20-35.

Marx, K (1992) Capital: A Critique of Political Economy, Volume 1 (London: Penguin Classics)

Mathew, E. T. (2006) Employment and Unemployment in India. Delhi: Sage Publication.

Prasanna, M. (2019) Labour Reforms: No one Knows the size of India's Informal Workforce, Not even the Govt. Retrieved from accessed on 12-02-2020

Pratim, P. S. (2007). Subcontracting in India's Small Manufacturing Enterprises: Problems and Prospects. Institute for Studies in Industrial Development, (January).

Singh, M. (1990). The Political Economy of Unorganised Industry: A Study of the Labour Process. Newbury Park (California): Sage Publications.

Varman, R, and Chakrabarti, M. (2006) Case Studies on Industrial Clusters: A Study of Kanpur Leather and Footwear, Varanasi Silk Sari and Moradabad Brassware Clusters, Department of Scientific and Industrial Research, GOI Report

Vijayagopalan, S. (1993). Economic Status of Handicraft Artisans. New Delhi: NCAER.

Weber, W. C. M. (1997). Skill, Dependency, and Differentiation: Artisans and Agents in the Lucknow Embroidery Industry. Ethnology, 36 (1), 49–65.

  1. National Accounts and Balances: System of National Accounts retrieved from accessed on 6-02-2020.↩︎

  2. Women in Unorganized Sector retrieved from accessed on 5-02-2020.↩︎

  3. ILO, 2018 ‘Informal Economy’, retrieved from accessed on 13-02-2020.↩︎

  4. In putting-out system the merchants or employers provide raw material to the producers who usually worked in their homes and producers returns the finished product to the employers for payment on a piece or wage basis.↩︎

  5. accessed on 07-1-2020↩︎

  6. Workshops are locally known as Karkhans, where karkhandars (master weavers) are owners of establishments using wage labour.↩︎

  7. “Dalaal” means a middleman in local language.↩︎

  8. “Wosta” means master weaver in local language.↩︎