Directorate of Handicrafts & Handlooms, also known as the Government Institute of Cottage Industries, was established in 1957. Located at a distance of half km from the main market of city, the foundation of this institute was laid during the reign of the Chogyals of Sikkim. The institute was started with an aim to preserve and propagate the talent and skills of local artisans.

Exceptional to Sikkim, the institute is an authentic home to traditional handlooms and handicrafts. In addition, tourists visiting the place can also see hand-woven carpets made using traditional motifs. Some of the other items available in this institute include shawls, thangka paintings, Choktse, dolls and hand-painted masks.

Apart from this, items like dolls made from wood, lamp-stands, batiks, sporadic silks, brocade, dappled appliqué work and embroidered boots are also available. Sikkimese carpets and handmade paper made from bark of Algeri tree forms the speciality of this institute.

There are around 100 student workers present in this institute, who are engaged in the production of cottage crafts. All the students working in the institute strictly follows the conventional rule of Sikkimese designs. An emporium is also located within the complex of institute from where tourists can purchase all the above mentioned items.