Khadi Gramodyog Vikas Yojana : 2025-26
Introduction: Weaving a Self-Reliant Future
The Khadi and Village Industries Commission (KVIC) stands as a testament to India’s enduring legacy of self-reliance and artisanal craftsmanship. Rooted in the Swadeshi movement and championed by Mahatma Gandhi, Khadi is not merely a fabric but a symbol of economic independence, rural empowerment, and sustainable livelihoods. As India strides towards its goal of a ‘Viksit Bharat’ (Developed India) by 2047, the role of its rural and semi-urban economies has never been more critical. The Khadi Gramodyog Vikas Yojana (KGVY), an umbrella scheme implemented by the Ministry of Micro, Small and Medium Enterprises (MSME), is a cornerstone of this vision.
The KGVY is a comprehensive initiative that encapsulates the essence of “Aatmanirbhar Bharat” (Self-reliant India) by fostering the growth of Khadi and other village industries. It is a two-pronged strategy, with the Khadi Vikas Yojana (KVY) focusing on the revitalization of the iconic Khadi sector, and the Gramodyog Vikas Yojana (GVY) dedicated to the development of a diverse range of rural enterprises. As we look towards the fiscal year 2025-26, the KGVY is poised for a significant leap forward, buoyed by remarkable recent growth, increased budgetary support, and a renewed policy focus on empowering artisans and expanding market reach.
This deep-dive analysis will explore the multifaceted objectives of the Khadi Gramodyog Vikas Yojana, dissecting its two core components and their sub-schemes. We will examine the phenomenal performance of the KVIC in recent years, which sets the stage for ambitious targets in 2025-26. Furthermore, we will delve into the future-oriented strategies, policy shifts, and technological integrations that are set to redefine the Khadi and village industries landscape. This is a story of tradition meeting modernity, of empowering the grassroots, and of weaving a stronger, more inclusive Indian economy, one thread and one village enterprise at a time.
I. Khadi Vikas Yojana (KVY): Reinforcing the Fabric of the Nation
The Khadi Vikas Yojana (KVY) is the soul of the KGVY, dedicated to nurturing the entire Khadi ecosystem – from the spinners and weavers to the institutions that support them and the outlets that bring their creations to the world. The primary objectives of the KVY are to enhance the productivity and wages of Khadi artisans, modernize the production infrastructure, and significantly boost the production and sales of Khadi products, thereby securing and enhancing the livelihoods of millions.
The recent performance of the Khadi sector is nothing short of spectacular. In the financial year 2024-25, the KVIC achieved a historic turnover of ₹1.70 lakh crore, a testament to the growing demand for Khadi and the effectiveness of government initiatives. This represents a staggering 447% increase in sales since 2013-14. The production of Khadi fabric alone has seen a 366% increase in the same period. This momentum provides a powerful launchpad for the ambitious target of ₹2 lakh crore in turnover set for 2025-26.
The KVY operates through a synergistic blend of schemes designed to address the diverse needs of the Khadi sector:
A. Modified Market Development Assistance (MMDA): The MMDA is a pivotal scheme that has replaced the earlier rebate system, allowing Khadi to be sold at market-driven prices. It provides financial support to Khadi institutions, calculated as a percentage of the prime cost of the product. For cotton, muslin, wool, and polyvastra, the MMDA is 35%, while for silk Khadi, it is 20%. A crucial feature of the MMDA is its equitable distribution: a significant portion is passed on directly to the artisans and workers as an incentive, thereby directly supplementing their income. This scheme is not just about financial support; it’s about empowering institutions to be more competitive and responsive to market dynamics.
B. Interest Subsidy Eligibility Certificate (ISEC) Scheme: Access to affordable credit is a major challenge for small institutions. The ISEC scheme addresses this by providing bank loans to Khadi institutions at a concessional interest rate of just 4%. The difference between the actual interest rate and the 4% paid by the institution is subsidized by the KVIC. This scheme has been instrumental in reducing the financial burden on Khadi institutions, enabling them to invest in raw materials, modernization, and expansion without being crippled by high borrowing costs.
C. Workshed Scheme for Khadi Artisans: The working conditions of artisans have a direct impact on their productivity and well-being. This scheme aims to provide a better and more organized workspace for artisans. It offers financial assistance for the construction of individual and group worksheds. For an individual workshed, the assistance is ₹1,20,000 or 75% of the cost, whichever is less (this goes up to 90% for the North-Eastern Region). For a group workshed, the support is ₹80,000 per artisan. By providing a dedicated and improved workspace, the scheme not only enhances productivity but also fosters a sense of community and dignity among the artisans.
D. Strengthening of Infrastructure of Existing Weak Khadi Institutions and Assistance for Marketing Infrastructure: Many Khadi institutions, particularly the older ones, struggle with dilapidated infrastructure. This component of the KVY provides financial aid of up to ₹15 lakh for the revival of such institutions. Additionally, it supports the renovation and modernization of sales outlets, with funding up to ₹25 lakh for KVIC, KVIB, and institutional sales units. This is crucial for creating a better customer experience and enhancing the brand image of Khadi.
E. Centre of Excellence for Khadi, Quality Assurance, and Branding: To compete in the modern marketplace, Khadi needs to be synonymous with quality and contemporary design. The KVIC is focusing on establishing a Centre of Excellence for Khadi to drive innovation in design, product development, and quality control. This includes leveraging partnerships with institutions like the National Institute of Fashion Technology (NIFT) to blend traditional craftsmanship with modern aesthetics. The “Khadi Mark” is also being promoted to guarantee the authenticity and quality of Khadi products, protecting both consumers and genuine artisans from counterfeit products.
Looking Ahead to 2025-26 for KVY: The focus for the Khadi Vikas Yojana in 2025-26 will be on scaling up these initiatives. The remarkable increase in artisan wages, which have risen by 275% in the last 11 years (with a 100% increase in just the last three years), will continue to be a priority. The government is also considering amendments to the KVIC Act to further boost marketability, streamline the supply chain, and promote exports. The “Vocal for Local” and “Make in India” campaigns will continue to be powerful drivers of demand. Furthermore, the increasing global consciousness about sustainable and eco-friendly fashion presents a massive opportunity for Khadi, and the KVY will be at the forefront of capitalizing on this trend.
II. Gramodyog Vikas Yojana (GVY): Cultivating Rural Enterprise
While Khadi is the flagship, the Gramodyog Vikas Yojana (GVY) is the broad canvas on which the larger picture of rural economic transformation is being painted. The GVY’s objective is to revive, develop, and promote a wide array of village industries, thereby creating diverse and sustainable employment opportunities in rural areas. It aims to revive traditional skills, provide artisans with modern tools and training, and help them access new markets.
The government’s commitment to the GVY is evident in the significant increase in its budget. For the financial year 2025-26, the budget for rural employment initiatives under the GVY has been more than doubled to ₹60 crore, a clear indication of the renewed impetus on this front. This increased allocation will be instrumental in expanding the reach and impact of the GVY’s various components.
The GVY is a multifaceted scheme that provides support to a range of village industries:
A. Leather and Footwear Industry: This component focuses on training artisans in footwear design and production and providing them with modern machines and toolkits. The goal is to move beyond basic products and create high-quality, contemporary leather goods that can compete in both domestic and international markets.
B. Pottery and Mineral-Based Crafts: The GVY supports traditional potters by providing training in wheel pottery and distributing electric potter wheels and other modern tools. This not only reduces the drudgery of manual labor but also improves the quality and variety of pottery products.
C. Beekeeping and the Honey Mission: Beekeeping is an ideal supplementary income source for farmers and rural households. The Honey Mission, a key part of the GVY, provides training in beekeeping and distributes bee boxes and toolkits to beneficiaries. This not only generates income from honey and other bee products but also contributes to increasing agricultural productivity through pollination.
D. Agarbatti (Incense Stick) Industry: The GVY supports the agarbatti industry, which has a large domestic and export market, by providing training and distributing pedal-operated and automatic agarbatti-making machines. This helps in scaling up production and ensuring consistent quality.
E. Wooden Craft and Toy Industry: This component aims to revive and promote traditional wooden crafts and toy-making by providing training and modern toolkits to artisans. With the government’s push to make India a global toy manufacturing hub, this sector has immense potential for growth.
F. Handmade Paper and Fiber Products: The GVY provides training and machinery for handmade paper making, paper conversion, and the creation of various fiber-based products. This is an eco-friendly industry with a growing demand for its products.
G. Agro-Food Processing Industry: This is a vast sector with immense potential for value addition and employment generation. The GVY supports a wide range of activities, including the processing of palm gur, tamarind, oilseeds, spices, fruits, and vegetables, by providing training and modern machinery.
H. Service Industry: Recognizing the growing demand for skilled professionals in rural areas, the GVY also provides skill-based training for electricians, plumbers, and other service providers, along with toolkits to help them set up their own enterprises.
Looking Ahead to 2025-26 for GVY: The substantial increase in the budget for the GVY for 2025-26 will allow for a significant expansion of all these programs. In FY 2024-25 alone, over 37,000 machines and toolkits were distributed under the GVY, the highest annual figure to date. With the increased budget, this number is set to grow even further. The focus will be on creating more clusters of specific industries, providing common facility centers, and strengthening backward and forward linkages. The GVY will also play a crucial role in empowering women, who are a major part of the village industries workforce. The scheme will continue to be a key driver of the “Aatmanirbhar Bharat” vision at the grassroots level, creating a vibrant and self-sustaining rural economy.
The Broader MSME Ecosystem and the Path Forward for KGVY
The Khadi Gramodyog Vikas Yojana does not operate in a vacuum. It is an integral part of the broader MSME ecosystem, and its success is intertwined with the overall policy landscape for small and medium enterprises. The Union Budget 2025-26 has introduced several measures that will have a positive ripple effect on the KGVY.
The enhancement of the credit guarantee cover for micro and small enterprises will make it easier for KVIC-affiliated institutions and village enterprises to access loans. The introduction of customized credit cards for micro-enterprises registered on the Udyam portal will provide much-needed working capital. The new scheme for first-time entrepreneurs, particularly from marginalized communities, will also create a new pipeline of entrepreneurs for the Khadi and village industries sector.
The future of KGVY in 2025-26 and beyond will be defined by several key trends:
- Digital Transformation: The KVIC is revamping its e-commerce portal to provide a seamless online shopping experience for customers worldwide. This will be a game-changer for expanding the market reach of Khadi and village industry products.
- Design and Innovation: The collaboration with NIFT and other design institutions will continue to be crucial for creating contemporary products that appeal to a younger, fashion-conscious demographic.
- Sustainability and Green Economy: The eco-friendly nature of Khadi and many village industry products is a major selling point in a world increasingly concerned about sustainability. The KGVY is well-positioned to leverage this trend.
- Export Promotion: With the proposed amendments to the KVIC Act, there will be a greater focus on boosting exports. This will involve setting up export promotion facilities and participating in international trade fairs.
- Youth Engagement: The KGVY will need to continue to find innovative ways to attract and retain young people in the Khadi and village industries sector, not just as artisans but also as entrepreneurs and designers.
Conclusion: A New Dawn for India’s Rural Economy
The Khadi Gramodyog Vikas Yojana is more than just a government scheme; it is a movement that is empowering millions of people, reviving traditional skills, and building a more resilient and inclusive Indian economy. As we look towards 2025-26, the KGVY is at an inflection point. The historic growth of recent years, coupled with increased budgetary support and a favorable policy environment, has created a fertile ground for unprecedented expansion.
The ambitious targets set for the coming years are not just numbers on a spreadsheet; they represent the aspirations of millions of artisans and rural entrepreneurs who are the backbone of our nation. The journey ahead will require a concerted effort from all stakeholders – the government, the KVIC, the Khadi institutions, the artisans, and the consumers. But with a clear vision, a robust strategy, and an unwavering commitment to the principles of self-reliance and sustainable development, the Khadi Gramodyog Vikas Yojana is poised to write a new and glorious chapter in the story of India’s economic transformation. The threads of Khadi and the products of our village industries are not just weaving fabric and creating goods; they are weaving the very fabric of a new, confident, and self-reliant India.