How To Start Khadi Business In India? [Step-by-step Guide]

. 8 min read
How To Start Khadi Business In India? [Step-by-step Guide]

Table of Contents:

1. Khadi Business In India

2. Khadi Business Model

3. Khadi Business Plan Structure

4. KVIC Scheme For Khadi Business Model

5. KVIC Loan

6. Khadi Gram Udyog Business List

7. Products Under Khadi Gram Udyog Business List

1. Khadi Business In India

The Khadi and Village Industries Commission (KVIC) was curated under the Ministry of MSME, Government of India during Khadi and Village Industry’s program provide franchises to stock and market Khadi and Village Industries products. The Khadi franchise comes in the name and style of “Khadi India Outlets”. In this blog, we'll look at the steps involved in setting up a Khadi Business In India franchise in detail.

Khadi is a handspun, handstitched and skin-friendly cloth material. The KVIC is a legal body originated by an Act of the Indian Parliament. The KVIC is in charge of the advertising, planning, industry, and implementation of curricula for Khadi Business Plan development and other village industries in the rural areas.

Khadi is a hand-spun and stiched natural fibre cloth coined in 1918 by Mahatma Gandhi during the freedom struggle of the Indian subcontinent, 'Khadi' term was used everywhere in India, Pakistan and Bangladesh. The first piece of hand-woven cloth was produced in the Sabarmati Ashram, Ahmedabad during the year 1917-18. The crudity of the cloth led Gandhi to call it Khadi. The cloth is usually hand-spun and woven of cotton cloth. However, it can also include silk or wool, which are all twirled into yarn on a spinning wheel known as Charkha.

Khadi Gram Udyog Business List

2. Khadi Business Model

Khadi is a varied fabric, cool in summer and warm in winter. To enhance its looks, khaddar is sometimes added to give it a thicker feel. It's widely endured in various fashion circles. Stylish dresses are made using khadi cloth such as-

  • Dhoti
  • Kurta
  • Handloom Sarees such as Puttapaka Saree, Kotpad Handloom fabrics, Chamba Rumal, Tussar silk etc.

Gajam Anjaiah, an Indian artist handloom designer and a Padma Shri recipient, is known for his modernisation and development of different tie-dye handloom products along with the Telia Rumal technique of weaving merchandise with the Ikat process. We can promote them by-

  1. Administering exhibitions, signing various corporate MoUs
  2. Including a 'Khadi Mark' on products
  3. By Supplying Khadi to government authorities and PSUs
  4. Vividly capturing the international market and opening new outlets are some other drives taken by KVIC to encourage the use of Khadi and advance the Khadi Business Plan market

The Indian government has been granting loans to unemployed youth for promoting Khadi and Village Industries, by executing a credit-linked subsidy scheme i.e Prime Minister's Employment Generation Program (PMEGP) since the year 2008-09, for setting up of new micro-enterprises (SMEs) and to generate more employment opportunities with Khadi Business Model.

3. Khadi Business Plan Structure

The headquarters of KVIC is situated in New Delhi, and its 6 Zonal Offices are present in a few main cities of India which are: New Delhi, Guwahati, Bhopal, Mumbai, Kolkata & Bengaluru. Other than these offices, there are 29 additional offices in several states to supervise the implementation of various programs in arrangement with the commission’s aims.

4. KVIC Scheme For Khadi Business Model

There are multiple schemes under the KVIC scheme list intended at accomplishing the goals set for the commission.

  1. KVIC PMEGP: The PMEGP scheme was launched in place of Pradhan Mantri Rozgar Yojana (PMRY) and The Rural Employment Generation Program (REGP) by the MSME Ministry. The PMEGP or Prime Minister’s Employment Generation Program is a credit-linked support program intended for creating employment opportunities across all areas of India.
  2. Interest Subsidy Eligibility Certificate (ISEC): The ISEC is designed to be a major source for all KVIC Projects concerning the organisations that are registered with Khadi Business Plan (KVIC). It enlists funds from the banking systems to link the funding gap about budget allocations.
  3. Scheme of Fund for Regeneration of Traditional Industries (SFURTI): The SFURTI Scheme under KVIC aims to encourage crowd development involving all Khadi and Village Industry products. The main agency for implementing this scheme is KVIC.
  4. Market Promotion Development Assistance (MPDA): MPDA intends to increase the income of local Indian artisans. The distribution of compensation is in the following ratio of- Artisans(40%), Producer(40%), & for Sellers(20%)
  5. Khadi Reform & Development Program (KRDP): The principal objective of the KRDP scheme is generating employment and enhancing the earning of local artisans. It helps in repositioning the Khadi in order with the current demands.
Khadi Business Model

5. KVIC Loan

The loans under the commission are routed through and governed by PMEGP guidelines. The financial assistance is based on various criteria related primarily to MSME specifications as under:

  1. Income Ceiling
  2. Margin Money
  3. KVIC Loan tenure (3 to 7 years)
  4. Funding Pattern (Urban, General, & Special Category)
  5. Per capita investment cap
  6. Quantum of Loan

Eligibility Criteria For KVIC Loan

PMEGP loans are distributed to both organizations and individuals that meet the eligibility norms.

  • Individuals above 18 years of age and have passed minimum 8th Standard: Manufacturing Unit: 10 Lakhs Rupees & Service Unit: 5 Lakh Rupees.
  • Self Help Groups granted they haven't taken any other loans.
  • Enrolled Societies.
  • Producer Co-operative Societies.
  • Other Charitable Trusts.
  • Loan Eligible Sectors- As per the norms of the KVIC scheme, the loan is extended to only a few sectors as under:
  1. Food processing (Agro-based)
  2. Service and textiles
  3. Biotechnology
  4. Forest products
  5. Mineral Products
  6. Hand-made fibres and paper
  7. Polymer & chemical products
  8. Rural engineering

Documents Needed For KVIC Loan

There are multiple lists of documents that are fundamental for the KVIC online application.

  • Different KYC documents of the borrowers.
  • Caste or community certificate to determine eligibility in any of the specific categories.
  • Subsidy claim as per eligibility.
  • Certified copy by-laws of the society or association.
  • Copy of rent or lease deed for the premises or shed which isn't older than 3 years.
  • The project report that'll specify the cost with the break-up of capital expenditure and working capital requirement for 1 cycle.
  • If there is no need for working capital, a certificate to that effect from the controlling office of the bank.

6. Khadi Gram Udyog Business List

Khadi Gram Udyog is the marketing department of KVIC (Khadi and Village Industries Commission) which markets all types of produced commodities in the rural companies under the KVIC agency. You can start the Khadi Udyog based company for a successful Khadi Business In India by applying the PMEGP (Prime Minister Employee Grantee Program). Under the PMRGY (Pradhan Mantri Rojgar Guarantee Yojana), you will also be eligible for a 15% subsidy for General Category and if you belong to OBC, SC, ST, or Ex Armed force then you can get the subsidy of around 25% of the total amount. For an urban or metropolitan area, 25% subsidy is available for general categories and 35% for Special categories.

The various schemes started by Khadi Gram Udyog Business List to boost the rural handicraft industry are:

  • Raw Material Assistance
  • Rural Craftsmen Training (Training to artisans)
  • Spinning Subsidy
  • Rebate on Khadi Cloth Products
  • Integrated Cluster Development Programme
  • Margin Money
  • Marketing Assistance
  • Technical Training To Board Staff

7. Products Under Khadi Gram Udyog Business List

The products that are compiled under Khadi Gram Udyog Business List are as follows:

  1. Tribal Paintings
  2. Metal craft
  3. Bamboo craft
  4. Jute
  5. Leather craft
  6. Khadi
  7. Jewellery
  8. Papier Mache
  9. Handlooms
  10. Wood craft
  11. Terracotta
Khadi Business Plan

Also Read:

1) Business License In India
2) Manufacturing Companies in India
3) Clothing Manufacturers In India
4) Clothing Franchises In India

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Q. How can I open a Khadi shop?

Ans- To open a Khadi Business In India you need to have all your Agreement and Term Details in order. To officially nominate the applicant as a Franchisee for Khadi India Outlets, a contract agreement would be signed by the Khadi and Village Industries Commission. After receiving this agreement, the new businessperson can start selling the Khadi and Village Industries Products officially.

Q. Is Khadi a government of India?

Ans- Yes, the KVIC or Khadi and Village Industries Commission was formed in India under the Act of Parliament, 'Khadi and Village Industries Commission Act of 1956' in April 1957.

Q. Is Khadi Indian brand?

Ans- Yes, Khadi is an Indian brand that was created during the Indian independence struggle. It is handspun and handwoven using a Charkha and is now marketed all around the international market for global outreach.

Q. How to Apply for Khadi Udyog business?

Ans- You can apply for the Khadi Udyog via the Prime Minister Employment Generation Programme. You need to verify your Aadhar number and other business-related items. Post the application process, the government body will authenticate your business details and approve the same if they find your application valid and suitable for the khadi Udyog.

Q. What is KVIC?

Ans- The Khadi and Village Industries Commission (KVIC) was curated under the Ministry of MSME, Government of India during Khadi and Village Industry’s program provide franchises to stock and market Khadi and Village Industries products.

Q. What is KVIC Terminology?

Ans- The KVIC Terminology is entirely based on its production varieties. A few terms which are used for a detailed understanding of the entire KVIC scheme are:

  • Khadi- A Symbol of the political weapon since the Swadeshi Movement
  • Cotton- Abundantly produced in Andhra Pradesh, Uttar Pradesh, Bihar & West Bengal
  • Silk- Recognized in West Bengal, Bihar, Odisha & North Eastern States
  • Wool- Recognized in Haryana, Himachal Pradesh, Jammu & Kashmir
  • Poly- Known majorly in Gujarat & Rajasthan