Yes, traditional handicraft industry was ruined under the British rule. The following points are in agreement to this statement:
1. The British had introduced a discriminatory tariff policy which led to a high export tariff on Indian made goods, which made the price of products high in international markets that lead to less demand of Indian made goods which ended up ruining the handicraft industry.
2. As Britain began importing duty-free goods from Britain to India, the demand for locally made goods started decreasing as the mechanically produced goods were much cheaper which resulted in ruining the market for handicraft.
3. The princely states of India used to provide patronage to local art, handicraft but during British rule, the princely states were ruined by the East India Company which thus resulted in a decrease in demand for the Indian made goods. Slowly the Indian handicrafts lost the market and then diminished.