Abstract: While India’s “One District One Product” (ODOP) initiative has successfully identified regional heritage across textiles, clothing, and regional crafts, existing digital platforms often rely on static catalogs that fail to convey the deep “biographical” narratives of these artifacts. This research addresses the problem of the “narrative gap,” where a lack of immersive storytelling leads to economic stagnation and a loss of perceived value for traditional products. Previous digital archiving has focused primarily on 2D documentation, which lacks the interactivity required for modern consumer engagement and museum-grade education. This paper proposes a novel AI-Augmented WebXR framework to activate technology-driven storytelling for social and economic development. The methodology integrates Generative AI and Retrieval-Augmented Generation (RAG) to create a “Digital Master Artisan” capable of context-aware dialogue, while Computer Vision is employed to interpret complex geometric patterns in 3D-rendered artifacts. Our findings suggest that this intelligent storytelling model creates a “premium brand” effect, allowing artisans to justify higher price points and compete in global markets. The significance of this research lies in its ability to transform passive digital catalogs into “virtual museums,” offering a sustainable software engineering model for cultural preservation and the economic empowerment of rural communities.