Lok Sabha Question No. 1369 (UNSTARRED), answered on 2017-07-24
Subject: Performance of KVIC
Ministry: MICRO,SMALL AND MEDIUM ENTERPRISES
Asked by: RAYAPATI SAMBASIVA RAO, GOWDAR MALLIKARJUNAPPA SIDDESHWARA, YERRAM VENKATA SUBBAREDDY

## GOVERNMENT OF INDIA

## MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

## LOK SABHA UNSTARRED QUESTION NO. 1369 TO BE ANSWERED ON 24.07.2017

## PERFORMANCE OF KVIC

## 1369.  SHRI RAYAPATI SAMBASIVA RAO:

SHRI G.M. SIDDESHWARA:

SHRI Y.V. SUBBA REDDY:

Will the Minister of MICRO, SMALL AND MEDIUM ENTERPRISES be pleased to state:

- (a)  whether  the  Government  has  reviewed  the  performance  of  the  Khadi  and  Village  Industries Commission (KVIC) during the last three years, if so, the details and the outcome thereof and if not, the reasons therefor;
- (b) the details of the new khadi outlets opened across the country during the said period, State/UTwise;
- (c)  whether  the  KVIC  has  increased  its  sale,  if  so,  the  details  thereof  including  percentage  and amount of increase in sale during the said period;
- (d) whether Indian Railways and Air India are being encouraged to use khadi made fabrics in trains and aeroplanes, if so, the details of value of total demand orders placed by Indian Railways and Air India for khadi fabrics during the said period; and
- (e)  the  other  steps  taken  by  the  Government  to  modernise  and  promote  khadi  industries  in  the country?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES (SHRI GIRIRAJ SINGH)

- (a): Ministry  of  MSME  has  held  periodic  review  of  the  performance  of  Khadi  and  Village Industries Commission (KVIC) schemes at various levels and suggested some modifications which were  implemented  by  KVIC  thus  achieving  performance  which  shows  steady  progress  year  after year. Some of the major initiatives undertaken by KVIC are as follows:
1. Erstwhile  Market  Development  Assistance  (MDA)  scheme  has  been  modified  as  Market Promotion Development Assistance scheme (MPDA) which is formulated as a unified scheme by merging  different  schemes/  sub-schemes/  components  viz.  Market  Development  Assistance, Publicity,  Marketing  and  Market  promotion  and  adds  a  new  component  of  Infrastructure (inclusive of new component of Marketing Complexes/Khadi Plaza).
2. Under modified MDA, pricing would be fully de-linked from the cost chart and products can be sold at market-linked prices at all stages of production. Modified MDA shall be calculated at 30% of  Prime  Cost  (cost  of  raw  material  plus  conversion  charges  upto  grey  cloth  plus  processing charges without margins.) the MMDA shall be distributed among producing institutions (40%), Selling Institutions (20%) and artisans (40%).
3. KVIC  have  introduced  'Khadi  Mark'  wherein  producers  of  Khadi  has  to  obtain  Khadi  Mark Certificate for attaching Khadi Mark label with the Khadi and Khadi product to be sold by them in the market. KVIC have prescribed a one page application form, to facilitate Khadi Institutions (KIs) to apply easily.

4. An online application system has been made operational for disbursement of MDA/MPDA to KIs and artisans.  Institutions  are  uploading  data  and  filing  their  MDA/MPDA  claims  pertaining  to 2016-17 in the online system.
5. To enhance the earnings of Khadi artisan, who are mainly hand-spinners, the base rate of hank conversion was increased from Rs. 4.00 to Rs. 5.50 per hank.
6. KVIC  has  developed  an  online  application  system  for  release  of  ISEC  fund/interest  subsidy amount directly to the cash credit account of KIs. Under the system the financing bank branch will upload the claim and the amount will be directly credited to the KIs account.
7. With change in PMEGP negative list, Khadi units can now be set up under PMEGP.
8. Activity of Spinning Solar Charkha has been permitted through PMEGP.
9. KVIC launch  e-Portal  and  introduced  online  process  flow  of  application  and  disbursement  of Margin  Money  directly  to  financing  bank  branches  through  Corporation  Bank  being  a  single national level nodal bank by adopting Direct Benefit Transfer (DBT).
10. An online application system has also been developed for providing Khadi Certificate.

(b): In view of the requirement to expand market reach, under 'Market Promotion Development Assistance' (MPDA) assistance to set up new Khadi plazas has been envisaged.

KVIC is having network of around 7050 sales outlets run by KVIC, KVIB institutions. A sub scheme  namely  'Assistance  for  Marketing  Infrastructure'  was  introduced  for  the  renovation  of Departmental Sales Outlets of KVIC and State KVIBs and retail sales outlets of Khadi Institutions to increase the turnover of Khadi products through improved marketing infrastructure.

Under the scheme, financial assistance is provided at the maximum limit of Rs. 25.00 lakh in urban areas and Rs. 20.00 lakh in rural areas, in terms of 75% to institutional sales outlets, 85% to State KVIBs outlets and 100% to KVIC outlets.

The following Departmental Khadi Sales Outlets have been set-up across the country during the last three years:

- i. Dr.  B.R.  Ambedkar  Institute  of  Rural  Technology  &  Management  &  Institute  of Renewable Energy, Nashik (Maharashtra)
- ii. Opened premier 'Khadi Showrooms' known as Khadi Lounge at New Delhi, Mumbai and Jaipur.

Two  sales  outlets  run  by  KVIC/KVIB  institutions  have  also  been  set  up  at  Airports  of Visakhapatnam  and  Lucknow,  respectively.  The  list  of  sales  outlets  opened  by  KVIC,  KVIB institutions during last three years are as follows:

Number of sales outlets opened

| Sl. No   | State/UT      |   2014-15 |   2015-16 |   2016-17 (Provisional) |   Total |
|----------|---------------|-----------|-----------|-------------------------|---------|
| 1.       | Punjab*       |         3 |         3 |                       0 |       6 |
| 2.       | Delhi         |         1 |         0 |                       0 |       1 |
| 3.       | Uttar Pradesh |         1 |         2 |                       4 |       7 |
| 4.       | Odisha        |         2 |         2 |                       0 |       4 |
| 5.       | Gujarat       |         2 |         1 |                       2 |       5 |
| 6.       | Maharashtra   |         2 |         2 |                       1 |       5 |
|          | Total         |        11 |        10 |                       7 |      28 |

(c): Yes Madam. The sale of KVI products has seen considerable increase during the last three years which can be seen from the following table:

|         | Sales (Rs. in crore)   | Sales (Rs. in crore)   | Sales (Rs. in crore)   | %increased   |
|---------|------------------------|------------------------|------------------------|--------------|
| Year    | Khadi                  | V.I.                   | Total                  |              |
| 2014-15 | 1170.38                | 31965.52               | 33135.90               | 6.36         |
| 2015-16 | 1510.00                | 40384.56               | 41894.56               | 26.43        |
| 2016-17 | 2005.75                | 49991.61               | 51997.36               | 24.11        |

(d): Yes Madam.  In pursuance of the clarion call  given by  Hon'ble Prime  Minister for use of Khadi items in Government departments. Air India has taken initiative in introducing Khadi for inflight crew including air-hostess on VIP flights.  The details of value of total demand orders placed by Indian Railways and Air India during last three years are as follows:

(Rs. in crore)

| Sl.No.   | Demand orders   |   2014-15 |   2015-16 |   2016-17 |
|----------|-----------------|-----------|-----------|-----------|
| 1.       | Railways        |      55.4 |     76.27 |     67.49 |
| 2.       | Air India       |       0   |      0    |      7.97 |
| Total    | Total           |      55.4 |     76.27 |     75.46 |

(e): In  order  to  modernize  and  promote  khadi  industries,  KVIC  is  implementing  the  following schemes:

i)  Prime  Minister's  Employment  Generation  Programme  (PMEGP)  is  a  credit  linked  subsidy scheme, for setting up of new micro-enterprises and to generate employment opportunities in rural as well as urban areas of the country through KVIC, State Khadi & Village Industries Board (KVIB) and  District  Industries  Centre  (DIC).    General  category  beneficiaries  can  avail  of  margin  money subsidy of 25% of the project cost in rural areas and 15% in urban areas. For beneficiaries belonging to special categories such as SC/ST/Women/PH/Minorities/Ex-Servicemen/NER, the margin money subsidy is 35% in rural areas and 25% in urban areas. The maximum cost of projects is Rs.25 lakh in the manufacturing sector and Rs.10 lakh in the service sector.

ii) Scheme of Fund for Regeneration of Traditional Industries (SFURTI) was launched in 200506 for making Traditional Industries more productive and competitive by organizing the Traditional Industries and artisans into clusters.

iii)  Market  Promotion  Development  Assistance  (MPDA)  -  MDA  scheme  of  KVIC  has  been modified  as  MPDA  scheme  formulated  as  a  unified  scheme  by  merging  different  schemes/  subschemes/components of different Heads implemented in the 11 th Plan, namely, Market Development Assistance, Publicity, Marketing and Market Promotion.  A new component of Infrastructure namely setting up of Marketing Complexes /Khadi Plazas has been added to expand the marketing net worth of  Khadi  &  VI  products.  Under  the  erstwhile  MDA  scheme  financial  assistance  was  distributed amongst  Producing  Institutions  (30%),  Selling  Institutions  (45%)  and  Artisans  (25%).  Under  the Modified MDA (MMDA) financial assistance is distributed amongst Producing Institutions (40%), Selling Institutions (20%) and Artisans (40%).

iv) Interest Subsidy Eligibility Certificate (ISEC) Scheme provides credit at concessional rate of interest through Banks as per the requirement of the Khadi institutions. The institutions are required to  pay  interest  of  only  4%,  any  interest  charged  by  banks  over  4%  will  be  paid  by  Central Government through KVIC.

- v) Workshed Scheme for Khadi Artisans was introduced in 2008-09 to provide financial assistance for  construction  of  workshed  to  khadi  artisans  belonging  to  BPL  category  through  the  khadi institutions with which the khadi artisans are associated.  This empowers khadi spinners and weavers to chart out a sustainable path for growth, income generation and better work environment.

vi)  Strengthening  infrastructure  of  weak  Khadi  institutions  and  assistance  for  marketing infrastructure:  This scheme provides need-based support towards the Khadi sector for nursing the sick/problematic institutions elevated from 'D' to 'C' category as well as those whose production, sales  and  employment  have  been  declining  while  they  have  potential  to  attain  normalcy  and  to support creation of marketing infrastructure in other identified outlets. Under this scheme, financial assistance is provided to existing weak Khadi institutions for strengthening of their infrastructure and for renovation of selected khadi sales outlets.

The other steps taken are as follows:

1. Exhibitions are also conducted  at district/state/zone and national level for providing marketing  support  to  the  entrepreneurs/unit  and  KVI  units  are  extended  financial  support  up  to Rs.1.25 lakh to participate in the international exhibitions.
2. To  increase  the  registration  of  MSMEs  in  the  country,  the  Government  has  undertaken measures  that  the  PMEGP  units  can  adopt  the  Udyog  Aadhaar  Memorandum  (UAM)  to  register online for filing for industrial land application for credit, pollution clearance etc.
3. Online registration for Khadi certificate has been introduced.
4. Financial assistance is also being provided for the renovation/modernization of Sales Outlets of institutions as well as Departmental Sales Outlets (DSOs) and State KVIBs.
5. Tie  up  with  M/s.  Paytm  has  been  made  to  make  available  Khadi  products  on-line  and  the same has been launched through Khadi Gramodyog Bhavan, New Delhi.
6. KVIC as a part of its aggressive marketing efforts introduced 'Gift Voucher Scheme' for its patrons from Departmental Sales Outlets (DSOs) at Delhi, Kolkata, Mumbai, Goa, Patna, Ernakulam, Bhopal  and  Visakhapatnam  Airport.  The  'Gift  Voucher  Scheme'  consists  of  attractive  'Gift Vouchers'  in  the  denomination  of  Rs.  500/-,  Rs.  1000/-  and  Rs.  5000/-  respectively  has  been launched.

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