FASHION CROWDFUNDING AND THE PROTECTION OF ARTISAN COMMUNITIES IN INDIA: ADDRESSING LEGAL GAPS IN FASHION LAW

ABSTRACT

This article analyzes crowdfunding as a participatory financing model, with particular attention to the regulatory vacuum regarding the equitable distribution of benefits derived from projects based on traditional artisanal techniques within the fashion industry. (e.g., patterns or designs). Upon analyzing various regulations such as the Indian Contract Act, 1872 (formation and enforcement of contracts); the Consumer Protection Act, 2019 (consumer protection against breaches); and tax and GST regulations when there is a sale of goods or services, none of these regulations govern a specific benefit on financing for artisan communities in India. This is because the Indian financial authority, the Securities and Exchange Board of India, published a consultation on crowdfunding but has not issued definitive regulations, which clearly indicates a legal gap. In conclusion, Indian legal system does not guarantee the protection of traditional textile knowledge nor the equitable participation of artisan communities in fashion industry crowdfunding campaigns.

Keywords: Artisan Communities, Crowdfunding, Legal Gap, Textile Patterns, Culture, Designers

1. INTRODUCTION

The fashion industry in India draws significantly from traditional knowledge developed by various artisan communities over generations. Among the most representative are the communities of Kutch, recognized for their intricate embroidery and textile work; Varanasi, famous for its Banarasi silk weaves; Jaipur and Udaipur, distinguished for their artisanal block printing and textile dyeing techniques; Lucknow, known for its delicate Chikankari embroidery; and the regions of Assam and West Bengal, recognized for the production of traditional textiles such as Muga Silk, Eri Silk, Jamdani, and Kantha. These cultural expressions constitute not only a source of identity and cultural heritage but also a means of economic livelihood for thousands of artisans and their families.

However, currently, Indian legal frameworks do not possess specific regulations that comprehensively protect these communities against the use of their traditional designs, patterns, embroidery, or techniques by fashion designers and companies. Although intellectual property-related protection mechanisms exist, such as the Designs Act, 2000, the Copyright Act, 1957, and the Geographical Indications of Goods (Registration and Protection) Act, 1999, these norms do not expressly guarantee economic participation or recognition for artisan communities when their traditional knowledge is incorporated into new commercial creations.

This issue becomes particularly relevant in the context of crowdfunding, a participatory financing mechanism used by designers and fashion ventures to obtain resources for the development and commercialization of their collections. Despite India has a general legal framework applicable to these activities, primarily comprising the Companies Act, 2013, the Indian Contract Act, 1872, and the Consumer Protection Act, 2019, there is no specific regulation determining how benefits obtained should be distributed when funded campaigns are based on traditional artisanal knowledge. Consequently, a regulatory gap is evident regarding the protection of artisan communities and the equitable distribution of benefits derived from the commercial exploitation of their cultural heritage within the fashion industry.

2. BACKGROUND: CROWDFUNDING AND FASHION LAW IN ARTISAN COMMUNITIES IN INDIA.

Crowdfunding, also known as participatory financing, has been defined by Belleflamme, Lambert and Schwienbacher (2014) a participatory financing model that enables project funding through contributions from multiple individuals via online platforms (p. 4). Similarly, Mollick (2014) describes crowdfunding as an alternative to traditional financing systems, enabling the public to directly support entrepreneurial, cultural, and creative initiatives (p. 1). In India, crowdfunding operates under a general legal framework composed of contractual, consumer protection, and corporate regulations. However, despite the existence of such regulatory provisions, there are no specific rules governing the use and protection of traditional artisanal knowledge when it serves as the foundation of crowdfunded projects.

This issue becomes particularly significant within the context of Fashion Law. According to Scafidi (2006), Fashion Law refers to the body of legal rules regulating the fashion industry and its related rights and obligations (p. 9). Scafidi (2006) argues that fashion requires specialized legal solutions due to its cultural and economic relevance (p. 10). This perspective is especially pertinent in India, where artisanal communities play a crucial role in preserving traditional textile techniques and cultural expressions that contribute substantially to the country’s fashion industry and cultural identity.

From an intellectual property standpoint, India provides protection through the Copyright Act, 1957, the Designs Act, 2000, and the Geographical Indications of Goods (Registration and Protection) Act, 1999. Nevertheless, these legal instruments were primarily designed to safeguard individual creations and commercial interests, which limits their effectiveness when applied to collectively developed traditional knowledge and cultural expressions maintained by artisanal communities. Given the economic importance of the textile and apparel sector in India, this limitation has significant implications for communities whose traditional knowledge constitutes an essential component of commercial fashion projects.

By comparison, the Peruvian legal system protects intellectual creations through the principle of originality established in Legislative Decree No. 822. According to Bullard (2005), copyright law safeguards the specific form in which ideas are expressed, rather than the ideas themselves, with originality being the key requirement for legal protection (p. 235). Although Peru and India continue to face challenges in protecting traditional knowledge and collective cultural expressions, Peru has developed legal mechanisms that provide greater recognition of artisanal contributions within the fashion sector. However, a regulatory gap remains evident in India regarding the protection of artisanal communities and the equitable distribution of benefits when their traditional techniques become the central element of crowdfunding campaigns in the fashion industry.

3. LEGAL ANALYSIS

The legal challenges arising from the intersection of crowdfunding, Fashion Law, and traditional artisanal knowledge in India reveal a significant regulatory gap that existing legislation has yet to adequately address. Although for Belleflamme, Lambert and Schwienbacher (2014) crowdfunding has become an increasingly important financing mechanism for creative industries, including fashion (p. 6). The Indian legal framework remains focused primarily on financial, contractual, and consumer protection aspects rather than on the protection of traditional cultural assets that may constitute the core value of crowdfunded projects.

India currently recognizes, in practice, donation-based crowdfunding and reward-based crowdfunding. As already indicated, these financing models operate under a general legal framework derived from the Indian Contract Act, 1872 (Government of India, 1872), the Consumer Protection Act, 2019 (Government of India, 2019), and certain provisions of the Companies Act, 2013 (Government of India, 2013). As already indicated, the Securities and Exchange Board of India (SEBI) identified and analyzed these crowdfunding models in its Consultation Paper on Crowdfunding in India (SEBI, 2014). Despite acknowledging the growing relevance of crowdfunding as a funding mechanism, neither the consultation paper nor the applicable legislation addresses situations in which the economic value of a project is derived from traditional artisanal knowledge belonging to local communities.

This omission becomes particularly problematic in the fashion industry. Scafidi (2006) states that in many cases, these traditional practices constitute the principal element that differentiates a fashion product in the marketplace (p. 12). Consequently, when a designer launches a crowdfunding campaign to finance a fashion collection inspired by or directly incorporating such traditional techniques, the success of the campaign may depend substantially on cultural assets developed collectively by artisans rather than solely on the designer’s individual contribution.

From a legal perspective, this raises important questions concerning ownership, recognition, and benefit-sharing. Existing intellectual property legislation in India, including the Copyright Act, 1957 (Government of India, 1957), the Designs Act, 2000 (Government of India, 2000), and the Geographical Indications of Goods (Registration and Protection) Act, 1999 (Government of India, 1999), provides protection for creative works, industrial designs, and geographically linked products. Nevertheless, these legal instruments were primarily conceived to protect identifiable authors, commercial entities, or registered rights holders. They are therefore not fully adapted to the collective, intergenerational, and often undocumented nature of traditional artisanal knowledge.

A hypothetical example illustrates this limitation. Consider a fashion designer who launches a reward-based crowdfunding campaign offering garments featuring traditional Kutch embroidery as rewards for contributors. The campaign successfully raises capital because consumers are attracted by the authenticity and cultural uniqueness of embroidery. While Indian law regulates the contractual relationship between the platform, the designer, and the contributors, it does not establish whether the Kutch artisans should be consulted, credited, or financially compensated for the commercial use of their traditional knowledge. As a result, the community that developed and preserved the technique may receive little or no economic benefit from a project that derives substantial value from its cultural heritage.

This situation contrasts, to some extent, with developments in Peru. Although the Peruvian legal system also faces challenges in protecting collective cultural expressions, it has adopted legal instruments specifically addressing traditional knowledge. Legislative Decree No. 822 protects original intellectual creations through the principle of originality, while Law No. 27811 establishes a legal framework for the protection of collective knowledge of Indigenous peoples. These mechanisms reflect an acknowledgment that traditional knowledge possesses economic and cultural value deserving legal recognition. Moreover, public debates involving the use of indigenous designs and textile patterns by fashion designers have contributed to greater awareness of the need to recognize the contributions of artisan communities. Such discussions demonstrate that the value of a fashion product frequently derives not only from the designer’s creative vision but also from the cultural heritage embodied in traditional techniques and designs.

Support for this perspective can also be found in international doctrine. The World Intellectual Property Organization (WIPO) has repeatedly emphasized that traditional cultural expressions and traditional knowledge differ fundamentally from conventional intellectual property because they are collectively created, transmitted across generations, and closely linked to community identity. WIPO (2017) has therefore advocated principles such as prior informed consent, recognition of source communities, and equitable benefit-sharing when traditional knowledge is used for commercial purposes (pp.8-10). However, these principles have not yet been fully incorporated into the Indian crowdfunding framework.

Consequently, the principal legal issue is not the absence of crowdfunding regulation itself, but rather the absence of specific mechanisms governing the relationship between crowdfunding projects and traditional artisanal communities. Indian law currently protects the financing process, yet it fails to address who should benefit when traditional knowledge constitutes the central asset attracting investment. This regulatory gap creates a risk of economic exploitation, cultural appropriation, and unequal distribution of benefits. Therefore, future legal reforms should consider integrating mechanisms requiring community recognition, prior consultation, and equitable benefit-sharing in cases where traditional artisanal knowledge serves as a key component of crowdfunded fashion projects. Such measures would promote a more balanced relationship between innovation, commercial development, and the protection of cultural heritage.

4. CASE LAW DISCUSSION

• Ganesh S. Hingmire and Others v. Prada Group and Others (Bombay High Court, India, 2025).

In 2025, a Public Interest Litigation (PIL) was filed before the Bombay High Court alleging that Prada had commercially exploited the traditional Kolhapuri Chappal, a product protected under the Geographical Indications of Goods (Registration and Protection) Act, 1999. The petition claimed that Prada’s “Toe Ring Sandals,” showcased during its Spring/Summer 2026 collection, closely resembled footwear traditionally produced by artisan communities in Maharashtra and Karnataka. The central legal issue concerned whether the use of a GI-protected cultural product without recognition or compensation constituted misappropriation of traditional knowledge. The Bombay High Court dismissed the PIL on procedural grounds, holding that only registered proprietors or authorized users could pursue such claims. The case illustrates the limitations of Indian intellectual property law in ensuring effective recognition and equitable benefit-sharing for artisan communities whose traditional designs generate significant commercial value.

• National Institute for the Defense of Competition and the Protection of Intellectual Property v. Kuna – Shipibo textile design (Commission for the Protection of Collective Knowledge and Intellectual Property Chamber – INDECOPI, 2011-2012)

The case developed within the scope of an investigation initiated by INDECOPI between 2011 and 2012, through actions related to the protection of the collective knowledge of the Shipibo-Konibo people. The use of traditional textile designs known as Kuna by third parties in the fashion sector, without authorization or recognition from the community, was questioned. The legal issue revolved around the possibility of commercial exploitation of traditional cultural expressions without prior consent, applying Law No. 27811. The case reinforced the administrative criterion for the protection of collective knowledge and the need for authorization for its use. This precedent highlighted the importance of cultural recognition and the protection of indigenous identity against its incorporation into the fashion industry.

• Navajo Nation v. Urban Outfitters, Inc. (United States District Court, 2016)

The case of Navajo Nation v. Urban Outfitters, Inc., heard before the United States District Court for the District of New Mexico in 2016, originated from the commercial use of designs and names associated with the Navajo artisan and cultural community without authorization. The lawsuit alleged trademark infringement, misappropriation of cultural identity, and unfair competition under the Lanham Act. The central legal issue was that the products marketed included apparel and accessories with traditional textile patterns and the use of the term “Navajo.” The dispute was resolved through an out-of-court settlement, in which the company withdrew the products questioned and restricted the use of said designation. This case highlights the limitations of trademark law in fully protecting traditional cultural expressions of artisan communities against their exploitation in the fashion industry. But, even in developed legal systems such as the United States, the protection of artisanal communities is not comprehensive, as it relies on tools such as trademark law or private agreements. This leaves significant gaps in protection against the commercial use of their designs in the fashion industry and in creative financing models such as crowdfunding.

5. CRITICAL ANALYSIS / FINDINGS

The current legal framework governing the intersection between Fashion Law, crowdfunding, and traditional artisanal knowledge reveals significant normative gaps, particularly in contexts where artisanal communities are integral to the creation of cultural and economic value in fashion products. A central inconsistency lies in the absence of specific legal mechanisms that recognize artisans as co-creators when their techniques, textile knowledge, and cultural expressions are incorporated into commercially financed fashion projects.

From a comparative perspective, Peru illustrates a partially progressive approach. Although no explicit fashion-specific regulation exists, the principle of originality under Legislative Decree No. 822, combined with administrative protection of traditional knowledge, has enabled the recognition of indigenous and artisanal contributions in certain public debates and administrative contexts. A well-known national controversy involving a fashion designer and Shipibo-Konibo artisans sparked public discussion on cultural appropriation and the ethical limits of using ancestral techniques without acknowledgment or compensation. This debate revealed an emerging interpretative trend: cultural and artisanal contributions are increasingly being recognized not merely as raw input, but as protected creative expressions embedded in collective identity.

However, inconsistent practice remains. While some designers explicitly credit artisan communities and integrate them into the creative narrative of fashion production like the Peruvian designer Jorge Salinas (Milan Fashion Week 2025), others continue to appropriate traditional techniques. This duality reflects the absence of a clear legal standard defining authorship and economic participation in collaborative cultural production.

In India, these challenges are further amplified within the crowdfunding ecosystem. Existing regulation focuses primarily on financial transactions and consumer protection, leaving unregulated the question of who benefits when traditional knowledge forms the basis of a crowdfunded fashion project. As a result, designers may obtain full economic advantage from campaigns that are fundamentally dependent on artisanal creativity, while communities remain structurally excluded from financial returns.

From a government perspective, the current framework disproportionately benefits designers, platforms, and investors, while marginalizing artisan communities who are often the primary custodians of cultural heritage. This imbalance raises critical questions of distributive justice and cultural equity. In my view, the law remains insufficiently progressive, as it fails to adapt to collaborative and culturally embedded forms of creativity. Reform is necessary to incorporate mandatory recognition mechanisms, prior informed consent, and benefit-sharing obligations, particularly in crowdfunding models within the fashion industry. Such measures would not only correct existing inequities but also strengthen the sustainability and legitimacy of cultural production in global fashion markets.

6. CONCLUSION

This research has demonstrated that the connection between Fashion Law, crowdfunding, and traditional artisanal knowledge reveals significant regulatory gaps in both India and, to a lesser extent, Peru. While existing legal frameworks in both jurisdictions provide protection for intellectual creations based on originality and certain mechanisms for safeguarding cultural expressions, they remain primarily designed for individual authorship and do not adequately address collective, intergenerational forms of creativity. As a result, artisanal communities often remain under-recognized despite being central contributors to the cultural and economic value of fashion products financed and commercialized through modern digital platforms.

The central argument of this study is that current legal structures fail to ensure equitable recognition and benefit-sharing when traditional knowledge is used as the foundation for commercial fashion projects, particularly within crowdfunding models in the fashion industry in India. This creates a structural imbalance between designers, platforms, and artisan communities, who are frequently excluded from the economic returns generated by their cultural heritage.

Looking forward, the evolution of Fashion Law is likely to require a more inclusive and adaptive regulatory approach that recognizes collective creativity and integrates stronger mechanisms for participation, transparency, and fair distribution of benefits.

REFERENCE(S):

Belleflamme, P., Lambert, T., & Schwienbacher, A. (2014). Crowdfunding: Tapping the right crowd. Journal of Business Venturing, 29 (5), 1-37.

Bullard González, A. (2005). Defending pirates: Is intellectual property theft? Themis Law Review, 203-238.

Case of protection of collective knowledge of the Shipibo-Konibo people (Kuna designs (INDECOPI, 2011-2012)

Consumer Protection Act, 2019.

Companies Act, 2013.7

Copyright Act, 1957.

Designs Act, 2000.

Geographical Indications of Goods (Registration and Protection) Act, 1999.

Ganesh S. Hingmire & Ors. v. Prada S.p.A. & Ors. (Bombay High Court, 2025)

Indian Contract Act, 1872.

Law No. 27811, Regime for the protection of collective knowledge of indigenous peoples linked to biological resources, 2020.

Legislative Decree No. 822, Copyright Law, 1996

Mollick, E. (2014). The dynamics of crowdfunding: An exploratory study. Journal of Business Venturing, 29 (1), 1-16.

Navajo Nation v. Urban Outfitters, Inc., (United States District Court, 2016)

Scafidi, S. (2006). Who owns culture? Appropriation and authenticity in American law. Rutgers University Press, 9-11.

World Intellectual Property Organization. (2017). Protect and promote your culture: A practical guide to intellectual property for indigenous peoples and local communities. WIPO. https://www.wipo.int/edocs/pubdocs/en/wipo_pub_1048.pdf