There were media reports that the National Crafts Museum may be closed down.
"The government is promoting the activities of National Handicrafts and Handlooms Museum. There is no proposal whatsoever to close down the Museum," the ministry said in a statement.
It said the Hastakala Academy would be set up at the Crafts Museum premises, without dismantling any of the museum galleries and without disturbing museum activities.
"Further, establishment of the Hastakala Academy in the same premises will create a natural synergy between the activities of the Crafts Museum and the Hastakala Academy," it said.