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Introduction

The Government of India has taken many initiatives to boost the village industries and the production and market of Khadi. It has set up a separate commission in this regard to boost the employment opportunities as well as assist in procuring and processing of Khadi and other village industries.

Khadi and Village Commission was set up by the Government of India with a view to assist in building up reserves of raw materials for supply to the producers as well as their processing and thereby creating employment opportunities in the rural sector.

The Government provides loans or grants to the eligible applicants to meet their business needs.

Objectives of KVIC

The Government of India has launched the Khadi and Village Commission as part of the Ministry of the MSME. This commission was launched mainly for the promotion and upbringing of the khadi industry and various other village industries. Some of the objectives of the KVIC are mentioned below,

  • Promotion of production and sale of Khadi in rural areas
  • Generation of employment opportunities
  • Creation  of self-sufficiency and self sustenance among the rural communities
  • Creation of a strong and reliant rural community
  • Production of saleable articles and promoting rural or local artisans

Functions of KVIC

The various functions of the KVIC in pursuing their objectives are mentioned below.

  • To promote the sale and marketing of Khadi and Village Industries products, as well as handicrafts
  • To form and develop common service platform or facilities that enable in processing of raw materials including semi-finished goods
  • To form a reserve of raw materials and subsequent disbursal for supply to producers
  • Promoting research in the village industries sector related production techniques and equipment
  • To provide financial assistance to individuals and non-individuals for the development and operation of Khadi and Village industries

Eligible Agencies to provide financial assistance to borrowers

The eligible agencies that can provide assistance to the borrowers in the form of term loans are listed below.

  • Societies registered under Co-operative Societies Act 1912
  • Institutions registered under Societies registration Act, 1860
  • Nationalized Banks
  • Co-operative Banks
  • Scheduled and Non-Scheduled Banks
  • Industrial Development Banks
  • State Financial Corporations
  • Charitable Institutions
  • Registered Trusts

Eligibility for KVIC Assistance

The eligible applicants that can avail the benefits of the KVIC assistance in the form of term loans are the following individuals or non-individuals. The main criterion for individual applicants is the minimum age of 18 years and minimum education of 8th standard.

The other eligible non-individuals are,

  • Charitable Trusts
  • Co-operative Societies engaged in production activities
  • Societies registered under Societies Registration Act, 1860
  • Self Help Groups (including those that fall Below Poverty Line but excluding those that have received benefits from any other Government schemes)

Documents for KVIC

The documents required for loans under KVIC are listed below.

  • KYC documents for Identity proof and address proof of the applicant (Aadhaar Card, PAN Card, Voter’s Id, etc.
  • Caste Certificate or Community Certificate to define or verify the category of application
  • Copy of rent or lease deed for shed or premises of business that is not older than 3 years
  • The project report with the breakup of one cycle of capital expenditure and working capital component.
  • In the absence of working capital requirement, an approval letter or certificate from the controlling office of the bank is required ascertaining it.

Schemes under KVIC

The government has provided many means or forms of assistance under KVIC in the form of various schemes that are best suited for the borrowers’ individual needs. Some of the schemes of the KVIC are mentioned below.

PMEGP

This is the flagship scheme of the KVIC that aims to generate ample employment opportunities for the rural as well as urban areas. The assistance is provided in the form of Government subsidies and the basis of the allocation of these subsidies is the category of the beneficiaries (general or special)n as well as the Location of the beneficiary (urban or rural). The borrowers have to come up with the prescribed minimum margin money for loans under PMEGP. These loans are for a minimum lock-in period of 3 years and a maximum period of 7 years at a rate of interest ranging from 11% to 12% depending on various factors as per the lender and Government guidelines.

The percentage of subsidy and the margin money to be furnished are mentioned below.

Category

Margin money to be provided

Urban areas

Rural areas

General

10%

15%

25%

Special

5%

25%

35%

The maximum amount of loans under this scheme is Rs. 25,00,000 for manufacturing sector and Rs. 10,00,000 for service or business sector.

Scheme of Fund for Regeneration of Traditional Industries (SFURTI)

This scheme was launched in the year 2005 as part of boost to the MSME sector. It was aimed at providing a common platform for the traditional artisans and industries in generation of competitive atmosphere and to provide long-term sustainability to them. The maximum financial assistance under SFURTI is Rs. 8,00,00,000.

Interest Subsidy Eligibility Certificate (ISEC)

This is one of the prime schemes under the KVIC for the MSME sector. It is applicable for all the eligible and registered institutions under KVIC. The scheme provides finance at a concessional rate of 4% per annum for working capital requirements. It mobilizes funds from the banking institutions to bridge the funding gap in relation to budgetary allocations.

Market Promotion Development Assistance

This scheme is aimed to provide promotional services and developmental opportunities or assistance to the Khadi and village industries. The assistance provided under this scheme is in the following percentage.

  • Assistance for Artisans – 40%
  • Assistance for Producers – 40%
  • Assistance for Sellers – 20%

Khadi Reform and Development Programme (KRDP)

This scheme was launched with the aim to 

  • provide employment generation opportunities,
  • enhance artisan’s earnings 
  • Ensure the positioning of Khadi considering the present needs of Khadi industry.

The main focus of this scheme is on Repositioning of Khadi and to link it to market requirements as well as to provide selective subsidy.

FAQs – KVIC

1. How to apply for loans under KVIC?

The applicants can apply for the loans under KVIC by directly approaching the commission.

2. What are the main objectives under KVIC?

Some of the main objectives of KVIC are generation of a strong and active rural community, generation of self reliant and self sufficient village or rural units, employment generation in rural areas, to promote artisans and handicrafts thereby producing saleable products.

3. Is PMEGP part of KVIC?

PMEGP is a Government scheme launched to provide easy financing options with subsidies from the Government and is governed or implemented by KVIC.

4. What is KVIB?

Khadi and Village Industry Boards (KVIB) is one of the implementing agencies in the State under the KVIC.

5. What is the maximum financial assistance under SFURTI?

The maximum assistance provided to eligible applicants under SFURTI is Rs. 8,00,00,000.

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