Khadi & Village Industries: From Tradition to Enterprise

1. At a Glance

• Khadi and Village Industries (KVI) means hand-spun, hand-woven khadi plus rural non-farm industries such as honey, agarbatti, bakery and herbal products. It has moved from a symbol of nationalism to a policy tool for rural self-employment, linked to Vocal for Local and Atmanirbhar Bharat [1].
• The nodal body is the Khadi and Village Industries Commission (KVIC), a statutory body under the KVIC Act, 1956, administered by the Ministry of MSME [1][6].
• KVI sales were ₹1.87 lakh crore in 2025–26, the highest ever recorded. Employment was 2.04 crore [1].
• It matters for GS-III (inclusive growth, MSMEs, rural employment), GS-I (freedom struggle symbolism) and GS-II (statutory bodies, welfare schemes).

2. Why in the News

• 13 Oct 2026: a PIB release reported record KVI performance for FY 2025–26 and highlighted artisan and entrepreneur success stories [1].
• Khadi Mahotsav runs every year from 2 to 31 October, with a focus on youth, Khadi and "Vocal for Local" [1].
• FY 2024–25 provisional data put turnover at ₹1,70,551.37 crore, which was itself a record at the time [8].

3. Background & Evolution

• KVIC was set up by an Act of Parliament in 1956 as a statutory body to develop khadi and village industries [2][6].
• The KVIC Act is Act No. 61 of 1956, enacted on 25 September 1956 [6].
• 1961: Lok Sabha debated a Bill to further amend the KVIC Act [7].
• 1987: the KVIC (Amendment) Act inserted new definitions in Section 2, including "fixed capital investment" [6].
• 2006: an amendment came into force on 15 May 2006 [6].
• March 2008: the Prime Minister's Employment Generation Programme (PMEGP) began operating through KVIC [1].
• 2017: a review committee recommended redefining "Commission" in the Act, to shift KVIC from operations towards policy-making [3].
• 2019: notification S.O. 3912(E) extended the Act to the UTs of Jammu & Kashmir and Ladakh. The original Act had excluded J&K [6].
• Trajectory: sales rose from ₹31,154.19 crore in 2013–14 to ₹1.70 lakh crore in 2024–25 and ₹1.87 lakh crore in 2025–26 [8][1].
• Not verified in whitelisted sources (check before using): pre-1956 predecessor bodies such as the All India Khadi & Village Industries Board, and the claim that PMEGP was formed by merging PMRY and REGP.

4. Core Static Facts

Item	Fact
Body	KVIC, a statutory body [1]
Enabling law	KVIC Act, 1956 (Act No. 61), enacted 25 Sep 1956 [6]
Administrative ministry	Ministry of Micro, Small & Medium Enterprises [6]
Core function (S.15(1))	Plan, promote, facilitate and organise KVI in rural areas, coordinating with other rural development agencies where necessary [6]
Mandate areas	Training, raw materials, marketing, research, quality improvement, skill development, technical information [1]
Training network	35 departmental and non-departmental training centres [1]
Trainees, FY 2025–26	79,682, of whom 47,382 women (~59%) [1]
Khadi artisans	About 5 lakh, with women >80% [1]
Hank	840 yards of yarn in length and 1 pound by weight [1]
Spinner remuneration	₹4 per hank (2013–14) → ₹15 per hank, about +275% [1]
2025–26 sales / production / employment	₹1.87 lakh crore / ₹1,25,296 crore / 2.04 crore [1]
Growth over 2013–14	Sales +501%, production +380%, employment +56% [1]
PMEGP	Central sector scheme of MoMSME implemented through KVIC. Supports new non-farm micro-enterprises, mainly in rural areas [4]
PMEGP margin money (general category)	25% of project cost (rural), 15% (urban) [4]
PMEGP cumulative	10,18,185 units and ₹73,348 crore in loans sanctioned up to FY 2024–25 [5]. About 97.95 lakh people employed since March 2008 [1]
PMEGP margin-money budget, FY 2024–25	₹2,250 crore, including ₹100 crore for 2nd loans [9]
Gramodyog Vikas Yojana (GVY)	Distributes modern machines, toolkits and equipment: 37,769 in 2025–26, >3.23 lakh cumulative (May 2026) [1]
Khadi Vikas Yojana (KVY) – Modified Market Development Assistance (MMDA)	₹245 crore to 1,097 Khadi institutions, benefiting 1,45,484 artisans (2024–25) [1]
ISEC Scheme	Credit for Khadi institutions at a concessional 4% p.a. [1]
Workshed Scheme	Better work spaces: 1,309 artisans in 2025–26 (to Dec 2025) [1]

5. Multi-Dimensional Analysis

Economic

• Sales grew about 6x between 2013–14 and 2025–26, while production grew about 4.8x. Sales growing faster than production points to better pricing and marketing [1].
• Turnover rose about 10% year-on-year, from ₹1.70 lakh crore in 2024–25 to ₹1.87 lakh crore in 2025–26 (derived from [8][1]).
• PMEGP is a credit-linked subsidy that turns artisans into micro-entrepreneurs. One example: a Bihar bakery with ₹72 lakh turnover and 20 jobs [1].
• Export potential: a PMEGP-backed honey and cookie unit in Punjab employs about 200 people and exports to 36 countries, with the US as a major market [1].

Social / Gender

• Women are more than 80% of Khadi artisans and about 59% of KVIC trainees, so the sector is a lever for rural women's income [1].
• PMEGP gives higher subsidy and lower own contribution to SC and rural beneficiaries [4].
• The sector absorbs non-farm rural labour (2.04 crore jobs), which reduces distress migration [1].

Administrative / Governance

• KVIC delivers several schemes at once (PMEGP, KVY, GVY, ISEC, Workshed). The 2017 committee's push for KVIC to become a policy body rather than an operator is a live reform question [3].
• Spinner remuneration rose to ₹15 per hank, but this is still low in absolute terms. Wage adequacy remains an equity concern [1].

Scientific / Technological

• GVY machines and toolkits, plus R&D, aim to raise productivity and quality and make the sector competitive [1].
• KVY-MMDA supports value addition and market-oriented pricing [1].

Historical

• The charkha was a symbol of nationalism and self-reliance, and that idea is now reframed as Vocal for Local and Atmanirbhar Bharat [1].

Legal

• The functions in Section 15(1) are tied to "rural areas". The Act was extended to J&K and Ladakh in 2019 after the reorganisation [6].

6. Recent Developments (last 12–18 months)

• FY 2024–25 (released 2025): provisional turnover ₹1,70,551.37 crore (+447% over 2013–14). Employment 1.94 crore (up from 1.30 crore). KVIC Chairman: Shri Manoj Kumar [8].
• 2025: more than 5 lakh artisans, entrepreneurs and beneficiaries were covered under GVY, KVY and PMEGP [10].
• June 2025: KVIC disbursed ₹300 crore of PMEGP margin money to 11,480 service-sector beneficiaries [5].
• FY 2025–26: record sales of ₹1.87 lakh crore, 79,682 trainees and 37,769 GVY toolkits [1].
• 2–31 Oct 2026: Khadi Mahotsav, with a youth-focused "Vocal for Local" campaign [1].
• 13 Oct 2026: PIB feature on KVI as an enterprise ecosystem, covering honey, herbal products, banana fibre and vetiver agarbatti [1].

7. Prelims Hooks

• KVIC is a statutory body under the KVIC Act, 1956 (Act No. 61) [6].
• The KVIC Act was enacted on 25 September 1956 [6].
• The administrative ministry is the Ministry of MSME, not Rural Development or Textiles [6].
• Section 15(1) gives KVIC's role: plan, promote, facilitate and organise KVI in rural areas [6].
• The Act was extended to the UTs of J&K and Ladakh by S.O. 3912(E), 2019 [6].
• 1 hank = 840 yards of yarn and 1 pound in weight [1].
• Spinner remuneration rose from ₹4 to ₹15 per hank (2013–14 to present) [1].
• The Khadi Mahotsav runs from 2 to 31 October every year [1].
• PMEGP has operated through KVIC since March 2008 [1].
• PMEGP margin money for the general category is 25% (rural) / 15% (urban) [4].
• Under the ISEC Scheme, Khadi institutions get credit at 4% p.a. [1].
• Gramodyog Vikas Yojana covers machines, toolkits and equipment. Khadi Vikas Yojana includes MMDA [1].
• KVI sales in 2025–26 were ₹1.87 lakh crore, and employment was 2.04 crore [1].
• Women are more than 80% of about 5 lakh Khadi artisans [1].
• KVIC has 35 training centres [1].

8. Khadi Itself Is Only About 4% of the 'Khadi' Record

• Most of the ₹1.70 lakh crore record comes from village industries, not khadi cloth
• In 2024–25, khadi sales were ₹7,145.61 crore and khadi production was ₹3,784.52 crore [15].
• Total KVI sales that year were ₹1,70,551.37 crore [8].

• So khadi was only about 4% of the headline. The other 96% came from honey, bakery, agarbatti, PMEGP units and other village industries (worked out from [15][8]).

• The same gap shows up in jobs

• Khadi employs about 5 lakh people [15][1], out of 1.94 crore KVI jobs in 2024–25 [8].

• That is under 3% of the jobs counted in the headline.

• Why this matters in an answer

• Press releases put the charkha story and the turnover figure side by side. The record really belongs to a broad rural micro-enterprise sector, not to hand-spun cloth.

• If you write 'khadi sales hit ₹1.87 lakh crore', the examiner will mark it as a factual slip. Write 'KVI sales'.

• Khadi sales are almost double khadi production

• Sales (₹7,145.61 crore) were about 1.9 times production (₹3,784.52 crore) in 2024–25 [15].
• The extra value is added after the cloth leaves the spinner and weaver, through tailoring, branding and retail.
• So fast sales growth mostly shows success in selling. It does not show that more money reaches the person at the charkha.

9. Why Record Sales Have Not Become Big Artisan Incomes

• Sales grew about ten times faster than jobs
• From 2013–14 to 2025–26, sales rose 501% but employment rose only 56% [1].

• Sales per worker therefore went up a lot. But the sources give no figure for the average artisan's monthly income, so nobody can show that the gain reached the worker.

• Spinners are paid per hank, and the rate rises only by government decision

• A spinner is paid a piece rate: a fixed amount for each hank (840 yards of yarn) [1].
• The rate went from ₹10 to ₹12.50 in September 2024, and then to ₹15 from 1 April 2025 [17].

• Each rise comes as a KVIC announcement, not from a formula linked to inflation or to sales. When sales boom, the spinner's rate does not move on its own.

• The 275% rise starts from a very low base

• ₹4 to ₹15 per hank is a large percentage jump [1][17].

• But a percentage says nothing about whether a day's spinning earns a living wage. Use the percentage carefully in answers.

• The people earning least are mostly women

• Women are more than 80% of khadi artisans [1].
• Low piece rates therefore fall hardest on rural women. The gender success story and the wage problem are the same group of people.

10. What Auditors Found When They Checked PMEGP Units

• About 1 in 8 units could not be found or was not working
• Physical verification up to 2011–12 found 22,446 out of 1,64,283 PMEGP units non-working or untraceable. That is 13% [13].

• Margin money (the government subsidy given at the start) of ₹418.53 crore was tied up in these units [13].

• Why the employment number can overstate reality

• PMEGP reports cumulative jobs: about 97.95 lakh since 2008 [1].
• A cumulative figure adds up jobs at the time units are set up. The note's sources do not say how many of the 10 lakh+ units are still running today [5].

• Even on its own count, PMEGP had reached only 67% of its employment target by March 2016 [13].

• Money got stuck before it reached anyone

• CAG found PMEGP funds lying idle with several implementing agencies [13].

• Physical checks were behind schedule, and even when checks were done, the results were not followed up [13].

• Banks charged interest on the subsidy itself

• In 14 cases, three bank branches charged interest on the whole project loan, including the margin-money subsidy [13].

• This cancels part of the benefit the subsidy is meant to give.

• Selection was not transparent, and weaker groups lost out

• In Andhra Pradesh, CAG found many applications rejected with no reason recorded, and low coverage of SC and ST applicants [14].
• The cost of each job created there was well above the national average [14].
• So the higher subsidy for SC beneficiaries in the scheme design [4] does not guarantee they actually get the loans.

11. Why KVIC Checks Its Own Work

• One body runs the schemes and also reports their success
• KVIC hands out PMEGP subsidy, runs GVY, KVY, ISEC and Workshed, and publishes the turnover and jobs figures [1].

• No separate body checks those figures. The CAG problems above (idle funds, unchecked units) come from this set-up [13].

• The 2017 review committee saw this problem

• It recommended changing the definition of 'Commission' in the KVIC Act so that KVIC moves away from running operations and towards making policy [3].

• Because KVIC is a statutory body (created by an Act of Parliament), this change needs Parliament to amend the 1956 Act. No such amendment appears in the note's timeline after 2006 [6].

• The Standing Committee asked for targets that can be measured

• The Parliamentary Standing Committee on Industry (333rd report) asked KVIC to draw up a medium-term strategy, with measurable targets, to widen artisan coverage and jobs [15].
• That is a polite way of saying today's reporting tracks money spent and sales made, not results for artisans.

12. What Should Change, and Who Should Do It

• KVIC should report khadi and village industries separately in every headline
• Today one combined figure hides the fact that khadi is about 4% of sales [15][8].

• Separate figures would let Parliament judge the charkha programme on its own results.

• KVIC should publish how many PMEGP units are still running after 3 years

• KVIC and the Department of Posts have signed an MoU for postal staff to physically verify PMEGP units [16].

• Those visits should feed a public survival rate (the share of units still working), not just a count of units set up. This answers CAG's complaint that checks were not followed up [13].

• The Department of Financial Services and banks should stop interest on the subsidy portion

• CAG found banks charging interest on the margin money [13].

• A clear instruction to banks, plus spot checks, would protect the subsidy's value.

• KVIC should link the spinner's per-hank rate to a published formula

• At present, rates rise only when KVIC announces them (₹10 → ₹12.50 → ₹15) [17].

• Linking the rate to inflation or to khadi sales growth would pass on more of the boom to the artisan.

• MoMSME should act on the 2017 committee's restructuring advice

• It should move scheme delivery and checking apart, as the review committee suggested [3].
• KVIC can then set policy, while delivery and verification sit with bodies that do not grade their own work.

13. Anchors for Answers

• Data: Khadi sales ₹7,145.61 crore out of ₹1,70,551.37 crore total KVI sales (2024–25), so khadi is about 4% of the headline [15][8]
• Data: 22,446 of 1,64,283 PMEGP units (13%) were non-working or untraceable, with ₹418.53 crore of margin money involved [13]
• Data: KVI sales rose 501% but employment rose only 56% between 2013–14 and 2025–26 [1]
• Report/Committee: CAG Report No. 12 of 2017 (MSME chapter) found idle PMEGP funds, backlogged verification and interest charged on the subsidy [13]
• Report/Committee: KVIC review committee (2017) said KVIC should move from running operations to making policy [3]
• Report/Committee: Parliamentary Standing Committee on Industry, 333rd report, asked for a medium-term strategy with measurable targets [15]
• Law/Case: KVIC Act, 1956 (Act No. 61), Section 15(1); any restructuring of KVIC needs an amendment by Parliament [6]
• Scheme: PMEGP: credit-linked subsidy delivered through KVIC; KVIC–Department of Posts MoU for physical verification of units [16]
• Scheme: Spinner piece rate: ₹10 → ₹12.50 (Sept 2024) → ₹15 per hank (1 April 2025) [17]

14. Mains Relevance

• GS-III: inclusive growth and employment; MSMEs; rural non-farm sector.
• GS-II: government schemes for vulnerable sections; statutory bodies.
• GS-I: freedom struggle (Swadeshi and the charkha); role of women.
• Question stems: 1. Khadi has moved from a symbol of the freedom struggle to a driver of rural enterprise. Examine KVIC's role in this transition and the challenges that remain. (GS-III, 15 marks) 2. Evaluate PMEGP as a tool for non-farm rural employment generation. What reforms would improve its effectiveness? (GS-III, 10 marks) 3. Despite record sales, artisan incomes in the Khadi sector remain modest. Critically analyse. (GS-III, 15 marks)

15. Related Topics to Study Next

• PMEGP design and evaluation: KVIC's flagship credit-linked subsidy.
• MSMED Act, 2006 and MSME classification: the parent ministry's legal framework.
• PM Vishwakarma: a parallel scheme for traditional artisans; compare their target groups.
• SFURTI (cluster development): cluster approach to traditional industries under MoMSME.
• One District One Product (ODOP) and GI tags: market branding for local products.
• DAY-NRLM / SHGs: overlap in rural women's livelihoods.
• Swadeshi Movement (1905) and Gandhian constructive programme: the historical roots of khadi.
• Honey Mission / Sweet Revolution: the beekeeping and honey value chain run by KVIC.

16. NCERT Concepts to Revise

• Statutory body (Polity): KVIC is created by the 1956 Act, so its powers can change only by amending that law.
• Non-farm employment (Economy): KVI's core purpose is rural jobs outside agriculture, such as honey, agarbatti and bakery units.
• Micro, small and medium enterprises (Economy): KVIC sits under the MSME Ministry, and PMEGP builds micro-enterprises from artisans.
• Charkha (History): The spinning wheel is the nationalist symbol that the note reframes as rural self-reliance today.
• Constructive programme (History): Gandhi's village uplift programme promoted khadi, which is the historical root of KVIC's work.
• Subsidy (Economy): PMEGP works through margin-money subsidy and ISEC gives cheap credit, so you need to know how subsidies work.

17. Common Errors / Trap Areas

• Wrong ministry: KVIC falls under MoMSME, not the Ministry of Textiles or the Ministry of Rural Development [6].
• Statutory vs constitutional: KVIC was created by an Act (1956), not by the Constitution [1][6].
• Reading growth figures: "+501% sales growth" means about 6x the 2013–14 base (₹31,154 crore → ₹1.87 lakh crore), not 5x [1][8].
• Mixing up schemes: GVY covers machines and toolkits for village industries. KVY/MMDA covers market assistance to Khadi institutions. ISEC is concessional credit at 4% [1].
• Mixing up years: ₹1.70 lakh crore is FY 2024–25; ₹1.87 lakh crore is FY 2025–26. Employment was 1.94 crore and then 2.04 crore [8][1].