Khadi and Village Industries Commission (KVIC)

The Khadi and Village Industries Commission (KVIC) is a statutory body formed by the Government of India under the Ministry of Micro, Small and Medium Enterprises. Set up in April 1957, this organisation is governed by Khadi & Village Industries Commission Act. The Government’s purpose behind setting up this commission is to promote Khadi and other micro to medium scale industries in the rural areas. It also organises various programs such as training the artisans and marketing the products for the development of such industries across India. Let’s dive in and find out more about the functions and objectives of KVIC and the schemes offered by the commission.

Some of the important functions of KVIC are:

• To plan, promote, organise, and implement programs for the development of Khadi & village industries.

• To create a reserve of raw materials for supply to producers.

• To facilitate the processing of raw materials as semi-finished goods.

• To provide sales and marketing services for Khadi & Village Industry products.

• To offer training services to artisans engaged in these industries.

• To encourage and promote research in the production techniques and equipment employed.

• To provide financial aid to small businesses for developing and operating adequately.

• To offer supply designs and other technical information to individuals and institutions in rural areas.

The KVIC was established with certain social and economic objectives for the development of khadi & village industries. They are:

• To generate more employment in the rural areas.

• To boost production of commercial articles.

• To create self-sufficiency amongst the impoverished section.

• To build up a strong community spirit amongst the rural population.

Some of the key features of KVIC schemes include:

• Subsidised Interest rates: Beneficiaries enjoy a subsidised interest rate of 4% whereas the balance interest is borne by KVIC.

• Financing pattern: Higher subsidy is available for businesses in rural areas compared to urban businesses to promote rural economy.

• No income limit: There is no minimum income criteria to avail the benefits under KVIC schemes.

• Moratorium period: In addition to a loan tenure of 3 to 7 years, a 6 months moratorium is provided on repayment.

The KVIC offers financial assistance under interest subsidy schemes. You can take these low-interest loans that eligible banking and financial institutions offer. The sum disbursed under the interest rate subsidy scheme can either be used as working capital. The following financial institutions are eligible to grant loans at subsidised interest rates under the KVIC scheme:

Only the following individuals and entities are eligible to apply for the KVIC loan under its schemes:

• An individual who is above 18 years of age and has completed minimum education up to 8th standard

• Self Help Groups (except those who have received financial aid from the Government under any other scheme)

• Charitable Trusts

• Co-operative Societies registered in India and engaged in production activities and

• Other registered societies

To meet its objectives, KVIC offers various schemes. Let us take a look at them:

• Prime Minister’s Employment Generation Programme (PMEGP)

To generate employment in rural areas, the KVIC launched the PMEGP scheme in 2008. It is a credit-linked subsidy scheme where the beneficiary invests a certain percentage of the project cost to avail subsidy.  The quantum of subsidy and contribution is determined based on the category to which the applicant belongs. (Refer to the table below).

The balance amount, after the applicant's contribution, is offered by the banking institution. However, you must note that the maximum limit set for the project cost is Rs. 25 Lakhs for the manufacturing sector and Rs.10 Lakhs for the service sector.

• Interest Subsidy Eligibility Certificate (ISEC)

This scheme is specifically designed to offer loans at subsidised rates to khadi and the polyvastra sector businesses. To avail this scheme, the beneficiary must be registered with KVIC and must have a valid eligibility certificate.

The beneficiary businesses can avail loans for working capital at a concessional rate of 4%, irrespective of the total interest charged by the bank. The interest above 4% is borne by the Central Government under this scheme and is directly paid to the lending bank.

• Scheme of Fund for Regeneration of Traditional Industries (SFURTI)

This scheme was launched with the primary objective of organising the khadi industry, providing employment to artisans, and enhancing the marketability of products. It is a comprehensive scheme that also focuses on providing training to artisans to improve their capabilities and skills.

Entities like NGOs, State and Central Government Institutions, and Panchayati Raj Institutions are eligible to apply for this scheme. It covers three types of interventions: software, hardware, and thematic interventions.

• Khadi Reform and Development Programme (KRDP)

This scheme focuses on increasing the employment and earning of spinners and weavers in the khadi & village industry. This program is assisted by Asian Development Bank.

KRDP aims to meet the present market demand and make khadi a global brand. Under this program, specific attention is given to five village industries - honey, herbal health and cosmetics, handmade paper, agro-food, and leather.

• Honey Mission Programme

This scheme is developed to promote beekeeping and provide employment opportunities to Adivasis and farmers in economically backward areas. They are trained in the scientific method of beekeeping with proper tool kits.

The Honey Mission programme focuses on the dynamics like employment generation, the utility of organic honey, scientific beekeeping training, and its contribution to forest conservation.