What Happened
- The Khadi and Village Industries Commission (KVIC) is implementing the Khadi Gramodyog Vikas Yojana (KGVY) — an umbrella Central Sector Scheme for the development of the khadi and village industries sector across India.
- KGVY was formed in November 2019 by merging all existing KVI sub-schemes into a single umbrella, eliminating fragmentation and simplifying delivery.
- The scheme covers three broad components: Khadi Vikas Yojana (KVY), Gramodyog Vikas Yojana (GVY), and Khadi Grant, each targeting different aspects of the khadi and village industries ecosystem.
- Key interventions include production subsidies through Modified Market Development Assistance (MMDA), interest subsidies via Interest Subsidy Eligibility Certificate (ISEC), workshed construction support, modernisation of sales outlets, and revival of weak khadi institutions.
- KVIC signed an MoU with NSIC (National Small Industries Corporation) in September 2025 to improve market access for eligible MSME units working within the khadi ecosystem.
Static Topic Bridges
KVIC: Statutory Body and Legal Mandate
The Khadi and Village Industries Commission (KVIC) is a statutory body established under the Khadi and Village Industries Commission Act, 1956. It functions under the Ministry of Micro, Small and Medium Enterprises (MSME). KVIC's mandate covers the promotion, development, and regulation of khadi and village industries, including providing financial assistance, training artisans, and marketing khadi products.
- Established: 1957 under KVIC Act 1956 (replacing the All India Khadi and Village Industries Board)
- Nodal Ministry: Ministry of MSME
- Headquarters: Mumbai
- KVIC manages the Khadi Mark certification — a quality and authenticity guarantee for khadi products
- Government procurement preference: Central government offices are mandated to source stationery and other products from KVIC/khadi institutions
Connection to this news: KVIC's role as the implementing agency for KGVY places it at the centre of rural employment and artisan welfare, making its functioning and schemes perennially relevant for UPSC Prelims questions on statutory bodies.
Prime Minister's Employment Generation Programme (PMEGP)
PMEGP is KVIC's flagship credit-linked subsidy scheme for micro-enterprise creation in rural and semi-urban areas. It provides margin money subsidy of 15–35% of project cost (higher for special categories and NER/hill states) to first-generation entrepreneurs setting up new micro enterprises in manufacturing and service sectors.
- Implemented by: KVIC at national level; State KVIBs and DICs at state level
- Beneficiary subsidy: 15% (urban general) to 35% (rural, SC/ST/women, NER)
- Maximum project cost: ₹50 lakh (manufacturing), ₹20 lakh (service)
- Target: 4 lakh units and 32 lakh jobs over 2021–26 (15th Finance Commission cycle)
- Linked to bank credit; subsidy disbursed after lock-in period
Connection to this news: KGVY and PMEGP are complementary KVIC schemes — KGVY supports existing khadi and village industry institutions while PMEGP seeds new micro-enterprises in the broader KVI ecosystem.
Khadi's Special Status: GI Tag and Procurement Preferences
Khadi enjoys a unique dual protection — GI (Geographical Indication) tag protection under the Geographical Indications of Goods (Registration and Protection) Act, 1999, and mandatory government procurement preference. The GI tag for khadi (registered under CGPDTM) ensures that only hand-spun, hand-woven fabric can be called "khadi," protecting the product's heritage and artisan livelihoods.
- GI Act 1999 administered by the Controller General of Patents, Designs and Trade Marks (CGPDTM) under DPIIT
- Khadi Mark: KVIC's certification for authentic khadi — mandatory for products sold under the khadi brand
- Government e-Marketplace (GeM): KVIC products listed for institutional procurement by Central government
- Modified Market Development Assistance (MMDA) under KGVY: production-linked rebate to make khadi price-competitive in the market
Connection to this news: KGVY's MMDA component directly addresses khadi's price competitiveness challenge — without production subsidies, handloom/handspun products cannot compete with power-loom alternatives, making the scheme essential for sustaining artisan incomes.
Key Facts & Data
- KVIC established under: Khadi and Village Industries Commission Act, 1956
- Nodal Ministry: Ministry of Micro, Small and Medium Enterprises (MSME)
- KGVY formed: November 2019 (merger of all KVI sub-schemes into one umbrella)
- KGVY is a Central Sector Scheme (no State component)
- KGVY components: Khadi Vikas Yojana (KVY), Gramodyog Vikas Yojana (GVY), Khadi Grant
- Key sub-instruments: MMDA (production subsidy), ISEC (interest subsidy), workshed support
- KVIC–NSIC MoU: September 2025, for market access improvement for MSME units
- PMEGP subsidy range: 15% (urban general) to 35% (rural/SC/ST/women/NER)