KVIC Scheme – Full Loan Details for Khadi and Village Udyog

Overview:

KVIC is a statutory body formed by the Government of India under the KVIC Act of 1956 that aims to nurse employment and economic uplift in rural India. The term Khadi goes back to the Swadeshi Movement launched by Mahatma Gandhi in 1920 by propagating the use of hand-woven and home-spun fabrics. It was a form of protest to shun British goods and the simplicity of the method was remarkable. Khadi is a hand-made cloth using the simple charkha, an implement common in rural India.

The full form of KVIC is the is Khadi and Village Industries Commission constituted as an apex body under the Ministry of Micro, Small and Medium Enterprises to help plan, promote, facilitate, organize and aid in the development of Khadi and Village Industries in rural India in conjunction with other agencies involved in rural development.

Structure of KVIC:

The headquarters of KVIC is located in New Delhi and its six Zonal Offices are spread in a few main cities of India at:

1. New Delhi.
2. Bhopal
3. Bengaluru
4. Kolkata
5. Mumbai
6. Guwahati

Further to the zonal offices, there are 29 other offices in different states to oversee the implementation of different programs in alignment with the commission’s objectives.

KVIC Terminology:

It is imperative to get a greater insight into the common terms in use for a comprehensive understanding of the entire KVIC scheme.

1. Khadi: Originating as a political weapon in the Swadeshi Movement, it literally denotes hand-woven or hand-spun fabric by using the common charkha or wheel. The common raw materials used are cotton, silk, wool and synthetic ploy. The usual source area of the fabric in India are:

• Cotton: Andhra Pradesh, Uttar Pradesh, Bihar and West Bengal.
• Silk: West Bengal, Bihar, Odisha and North Eastern States.
• Wool: Haryana, Himachal Pradesh, Jammu and Kashmir.
• Poly: Gujarat, Rajasthan.

2. Village Industry: It denotes any industry that is located in the rural area using a fixed capital investment per artisan or weaver not exceeding Rs.1 lakh.

Objectives of KVIC

• Promotion of Khadi: The Khadi and Village Industries Commission (KVIC) is committed to reviving and promoting Khadi as a symbol of sustainable and eco-friendly living. Khadi’s importance extends beyond fashion. It embodies a self-reliant and environmentally conscious lifestyle that KVIC actively encourages through its initiatives. 
• Development of Village Industries: KVIC not only supports khadi but also focuses on the growth of various village industries by providing khadi loans. These include agro-based, small-scale, and craft industries, which create economic opportunities and support the livelihood of rural communities across India. 
• Employment Generation: By promoting the khadi industry, KVIC plays a key role in providing employment, especially in rural and semi-urban areas. Supporting these traditional industries enables KVIC to contribute to India’s socio-economic development, offering jobs to artisans, weavers, and other craftspeople. 
• Preservation of Traditional Skills: KVIC aims to safeguard and revitalize India’s traditional skills and crafts. This preservation effort helps sustain the cultural heritage of rural India, while also making these skills economically viable, benefiting local artisans and craftspeople. 
• Market Promotion: To boost the visibility of Khadi and village industry products, KVIC establishes market linkages and provides marketing support domestically and globally. This expands the reach of products created by rural entrepreneurs, giving them a platform to sell and gain recognition. 
• Financial Assistance: KYC offers financial support to individuals, institutions, and organisations involved in the khadi and village industries. This financial assistance helps overcome funding barriers and encourage entrepreneurship in rural areas.

What is KVIC Scheme?

There are a host of schemes under the KVIC scheme list aimed at achieving the objectives set for the commission. The KVIC scheme details include:

1. KVIC PMEGP:

This is one of the first KVIC schemes launched by replacing The Rural Employment Generation Program (REGP) and the Pradhan Mantri Rozgar Yojana (PMRY) by the Ministry of MSME. The Prime Minister’s Employment Generation Program (PMEGP) is basically a credit-linked subsidy program aimed at creating employment opportunities across all areas of the country.

2. Interest Subsidy Eligibility Certificate (ISEC):

It is designed to be the major source for KVIC Projects involving the institutions registered with KVIC. It mobilizes funds from the banking institutions to bridge the funding gap about budgetary allocations.

3. Scheme of Fund for Regeneration of Traditional Industries (SFURTI):

It aims to promote cluster development involving Khadi and Village Industry products. The nodal agency for the implementation of the scheme is KVIC.

4. Market Promotion Development Assistance (MPDA Scheme):

It aims to augment the income of the artisans. The distribution of assistance is in the ratio of:

• Artisans: 40%
• Producer: 40%
• Seller: 20%

5. Khadi Reform and Development Program (KRDP):

The prime objective of this scheme is employment generation and the enhanced earning of the artisans. It aids in repositioning the Khadi in alignment with the current needs.

6. KVIC Honey Mission

The KVIC Honey Mission promotes beekeeping, providing training and resources to enhance honey production. This initiative supports agricultural pollination, creating a new source of income for rural farmers. 

Functions of KVIC

• Planning and Promoting KVI Development: KVIC takes a leading role in designing and implementing initiatives that promote the growth of Khadi and village industries (KVI). The KVIC loan scheme fosters economic development and self-sufficiency.  
• Collaboration with Rural Development Agencies: The Commission works in close partnership with various agencies to coordinate rural development efforts linked to Khadi and village industries. It creates synergy in programs for rural upliftment. 
• Maintaining Raw Material Reserves: To ensure a steady supply chain, KVIC maintains reserves of essential raw materials for Khadi and village industries, supporting continuity in production and quality. 
• Establishing Common Service Facilities: KVIC provides essential processing facilities, such as tools and technology centres. This helps artisans and small businesses prepare raw materials efficiently. 
• Supporting Product Marketing: KVIC assists artisans in marketing their products through multiple channels, from local marketplaces to e-commerce. It helps artisans reach broader markets. 
• Creating Connections with Marketing Agencies: To increase sales and visibility of KVI products, KVIC establishes partnerships with various marketing agencies, enhancing access to potential buyers. 
• Encouraging R&D in KVI Sector: By funding research, KVIC aims to modernise traditional practices, improve productivity, and address the unique challenges faced by KVI products, ensuring sector growth and innovation. 
• Financial Support for KVI: The Commission provides crucial financial assistance to individuals and organisations in the Khadi and village industries. One such option is through the Khadi Gramodyog loan. It enables them to overcome initial capital barriers and sustain their business. 
• Enforcing Product Standards: KVIC ensures all products meet quality standards. It protects consumers from counterfeit products and maintains the authenticity of khadi products. 
• Proposing New Programs: KVIC actively develops and implements projects to support khadi and village industries. It helps foster rural employment and economic resilience in India. 

Features of 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. Quantum of Loan:

• Manufacturing Sector: Maximum Rs.25lakhs.
• Business and Service Sector: Maximum Rs.10 lakhs.

2. Per capita investment cap:

• Plains: Rs.1 lakh.
• Hills: Rs.1.5 lakhs.

3. Funding Pattern:

The following grid is indicative of the funding pattern defined in KVIC loan components. It is to be importantly noted that the special category includes the reserved, minorities, women, ex-servicemen, disabled, northeast, and border areas among others.

Category	Beneficiary contribution	Rate of subsidy
Urban	Rural
General	10%	15%	25%
Special	5%	25%	35%

4. KVIC Loan tenure: The normal tenor of the loans provided under the scheme is 3 to 7 years, including a moratorium of 6 months.

5. Margin Money: It is kept in a separate SB account with a lock-in of 3 years but adjusted with the KVIC loan.

6. Income Ceiling:  There are no income ceilings under the KVIC loan, but only that the loan is provided for new ventures and the borrower must not have enjoyed any other loan.

Eligibility Criteria for Khadi and Village Industries Commission Loan:

PMEGP loans are disbursed to both individuals and organizations that meet the eligibility criteria.

1. Individuals above 18 years of age and have passed minimum class eight:

• Manufacturing Unit: Rs.10 lakhs.
• Service Unit: Rs.5 lakh.

2. Self-Help Groups provided they have not taken any other loan.

3. Registered Societies.

4. Producer Co-operative Societies.

5. Charitable Trusts.

6. Loan Eligible Sectors: As per the norms of the KVIC scheme, the loan is extended to only a few sectors as under:

• Food processing (Agro-based).
• Hand-made fibers and paper.
• Mineral Products.
• Polymer and chemical products.
• Forest products.
• Rural engineering.
• Biotechnology.
• Service and textiles.

Documents Required for KVIC Loan:

There are a host of documents that are essential for the KVIC online applications.

• Various KYC documents of the borrowers.
• Caste or community certificate to determine eligibility in one of the specific categories.
• Subsidy claim as per eligibility.
• Certified copy bye-laws of the society or association.
• Copy of rent or lease deed for the premises or shed which is not more than 3 years old.
• The project report specifies 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.

Rate of Interest applied in KVIV Loan:

The rate of interest applicable to PMEGP loans and KVIC is at the normal rate applicable to MSME enterprises. Presently, the rate charged by most banks is in the range Starting from 1.25% per month. However, the rate under ISEC is 4%. The shortfall of this concessional rate and the actual chargeable is met by the commission through the “Grants” head of the budget. This facility is extended only to makers of Khadi and Polyvastra.

Government Loan Schemes for Small Businesses in India

KVIC Online Application:

The portal of KVIC – http://www.kvic.org.in provides a digital interface for online applications: https://www.kviconline.gov.in/pmegpeportal/jsp/pmegponline.jsp. It is an elaborate and comprehensive procedure seeking all personal details including aadhaar, date of birth, qualifications, special category details, location of the unit, operational details, loan and bank particulars, etc. After saving the application, the digitized format of the application has to be uploaded. After the final submission, the application ID and password for future use are transmitted to the registered mobile number.

Conclusion

The KVIC scheme offers a significant boost to rural industries, empowering artisans and small-scale enterprises with financial assistance and support. Through various initiatives, it aims to preserve traditional skills, generate employment, and promote eco-friendly Khaid products across India. By fostering sustainable growth in rural areas, KVIC plays an integral role in uplifting local economies and preserving cultural heritage. As businesses in rural sectors look for financial support, Lendingkart offers flexible financing options customised for MSMEs. We ensure access to capital that fuels growth and sustainability.

KVIC FAQs::

1. What are the primary KVIC Objectives?

The commission was formed with a strong bias towards the principles of swadeshi, one of the major thrust principles in our freedom movement. In fact, Mahatma Gandhi has likened Khadi to the livery of freedom. Being rooted in the Indian ethos, the objectives of KVIC can be broadly summarized into three basic principles as under:

• Social Objective: It is aimed to be achieved by providing the scope of employment in the rural.
• Economic Objective: Aiming to produce easily saleable articles.
• Greater Objective: The primary aim of the first two is qualified in the third by inculcating a strong sense of community in the rural masses and engendering the spirit of self-reliance among them.

2. How is the KVIC Functions defined?

To achieve the objectives set for the commission, there is a strong need to implement and monitor the schemes effectively. The various programs designed for the commission, encompasses the functions of KVIC.

• Creation of a reserve of raw materials and implements to maintain a continuous supply flow to producers.
• Form common community service facilities to process raw materials into semi-finished goods.
• Promote and facilitate the sale and distribution of Khadi and Village Industry products inclusive of handicrafts.
• Promote research to improve upon the production techniques and equipment to benefit the village industry sector at large.
• Provide financial assistance and technical know-how to individuals and institutions to develop the Khadi and Village Industry

3. What is the meaning of Khadi Gram Udyog?

It is the marketing arm of KVIC which markets the products manufactured in the rural industries under the aegis of KVIC. The name khadi itself is a fabric sourced from different regions of the country where the raw material is abundantly found. There are also a host of Khadi natural handmade personal care products manufactured at Uttarakhand Khadi Products. The best part is that the products are also available online in keeping the trends at the Khadi Shop.

4. What are the activities not covered by KVIC loan?

Most of the harmful; activities like meat and slaughterhouses, tobacco products, eateries serving liquor, cultivation of cash crops among the indicative few. The activities stated are not exhaustive.

5. Is the rent and cost of land included in the project cost?

The cost of lease and rent if not older than 3 years can be included, whereas there is a bar on the inclusion of the cost of land in the project cost.

Bottom Line:

Employment generation and boosting the labor-intensive rural economy is the major objective of KVIC, most of the NBFCs other than the ones that enjoy good penetration in the country do not figure in the scheme of things about the commission. Lendingkart a non-deposit-seeking NBFC  occupies a significant position in the lending sector in the country with ample scope.

To apply for a business loan with Lendingkart in 3 simple steps, visit us at www.lendingkart.io.

KVIC News

72 New Units Are Launched By KVIC Under Prime Minister’s Employment Generation Program To Support Craftsmen

In the presence of the Chairman of the Khadi and Village Industries Commission (KVIC), Mr. Manoj Kumar, Mr. Narayan Rane, Minister of MSME, inaugurated 72 Units supported by the Prime Minister Employment Generation Program.

The Prime Minister praised today’s cleanup campaign on Juhu Beach as well as KVIC’s efforts to assist 72 units as part of the Prime Minister Employment Generation Program.

Under this program, KVIC has approved 25,105 projects as of September 15, 2022, released more than 802 crores in margin money and created 2,00,840 new jobs. KVIC anticipates that these 720 projects will create 5760 jobs with a margin of 27.43 crores.
Update Date: 29th September 2021

Khadi and Village industries make space for 7 lakh new jobs in FY22

Khadi and village industries had created 6.32 lakh jobs in FY21 and are planning to surpass that limit this financial year by aiming to generate 7 lakh new jobs. Khadi and Village Industries Commission (KVIC) implements PMEGP for creating jobs.

Under PMEGP, 5.95,320 jobs were created in FY21. Kumhar Sashaktikaran Yojana, Honey mission are some of the schemes of village industries for creating jobs.  6.32 lakh jobs in total were created using all these schemes in FY21.

KVIC has generated 3.30 lakh new jobs as of November 22, 2021. Out of which, 3.27 lakh jobs are created under PMEGP.  2000 jobs were created under Kumhar Sashaktikaran Yojana, 550 under wellness and cosmetic industry, 397 under the handmade paper and fiber-based industry, 100 under the honey mission. 22 jobs were created under rural engineering and the new technology industry. and the remaining 10 jobs were created for leather artisans.

Khadi and Village industries faced lesser covid impact as they are largely based in rural parts of the country where Covid took some time to reach.
Update Date: 21-12-2021

Khadi Village Industries Commission records highest ever turnover

The Khadi Village Industries Commission (KVIC) recorded an annual turnover of INR 95,741.74 crore in the 2020-21 season, which is a record high for the KVIC industry. The 2019-2020 season which is the pre-pandemic season recorded a revenue of INR 88,887 crore and surprisingly in the pandemic season, the turnover was a record high for the industry. KVIC reported an increase of 7.7 percent despite the pandemic and the nationwide lockdown that was imposed for around 3 months. The Ministry of Micro, Small and Medium Enterprises (MSME) stated that during the pandemic, the production and sales of the KVIC were affected just like all other industries, but with the advent of the Atma Nirbhar Bharat program, Khadi gained more prominence, and the industry started a strong turnaround. The pandemic although didn’t affect the sales of the KVIC industry, the production unit took a slight hit as spinning and weaving activities couldn’t take place in the pandemic. It was found that due to economic stress during the pandemic, a large number of youth took money for manufacturing activities under the PMEGP which ensured that production didn’t go down as such and thus the supply kept meeting the demand at all times and meanwhile the KVIC kept its focus on the employment of artisans and unemployed youth so that they don’t lose their livelihood.
Update Date – 21-06-2021