Market Development Assistance (MDA) On Production Scheme

The Khadi industry has been prevalent in the country for quite some time now. However, as modernization seeps into the bones of the country, the material ‘khadi’ has taken a step back in the markets and the consumers’ must-have lists. This has affected the khadi set-ups of the country. To combat this concern, the government of India has introduced the Market Development Assistance (MDA) on Production Scheme.

The MDA (Market Development Assistance) Scheme will help the khadi sector to improve the production and quality of khadi and increase the artisans’ earnings. Through this scheme, the khadi set-up can register itself as a khadi institution, thereby enabling them to manufacture products that are in par with other textile goods in the market.


How does a khadi set-up benefit from this scheme?

A khadi set-up can benefit from this scheme in the following ways:

  • Uniform distribution of sales throughout the year
  • Funds released on quarterly basis
  • Fixed portion of MDA assistance to artisans as incentive/bonus
  • Flexible to produce whatever the market desires
  • Dynamic pricing
  • Total amount of funds on production distributed amongst the spinners and weavers, producing institutions and selling institutions in the ratio 25%, 30% and 45% respectively

Eligibility Criteria

What is the eligibility criteria to register as a khadi institution?

To register as a khadi institution, a khadi set-up should:

  1. Be registered under the Co-op. Society/Trust/Regd. Institution/Firm and company/any other prevailing Act
  2. Have a common work shed/building having adequate space for carrying out spinning and weaving activities
  3. Have a minimum of 25 charkhas and 5 looms to start the khadi activities
  4. Furnish the list of 25 spinners, 5 weavers and 2 supervisors 


How to register as a khadi Institution?

Prospective khadi institutions can apply for registration online here, and then fill in Annexure I to V in here.

After applying for registration, the application will go through:

  • Online verification by the state or divisional offices of Khadi and Village Industries Commission (KVIC), followed by physical verification conducted within 15 days
  • Processing of the certificate of registration post approval from Zonal Director, Directorate of KVIC, and approval for issue of khadi certificate 

Registration Fees 

The applicant needs to submit a fee of ₹15,000 for the purpose of registration by the medium of DD or at any nationalized bank drawn in the favor of the Chief Executive Officer. The registration fee will also be accepted through RTGS in the A/c no. 30693240188, State bank of India, Vile Parle (W) Branch, IFS Code: SBIN0000515.

Documents Required 

What are the documents required to apply for the scheme?

The documents required to apply for the scheme are as follows:

  • Copy of the Registration Certificate under the Society Act/ Trust Act/Firm and company Act and or under any other prevailing Act
  • List of current Managing committee/Trusties/Directors as the case may be
  • Copy of the Resolution of the institution for registration with KVIC
  • Details about common work shed/building/work place from where the activity is proposed and or is already being done
  • Copy of self-attested by laws of the Institution
  • Details of procurement of charkhas and looms, if already purchased, indicating the date of purchase
  • NOC from State Khadi and V.I.Board (if applicable)

For further queries and guidelines with regards to this scheme, click here.

Boost your Khadi Business with the RISC Scheme

Khadi business in India has been on the upswing recently with the Government introducing its new benefits to promote this sector. However, some entrepreneurs do not possess enough capital to expand their business. To solve this issue, the government has come up with the RISC scheme.


The RISC scheme assists you to get your business established and produce quality products for sale.

Under this scheme, The Rural Industry Service Centre (RISC) aims to provide infrastructural support and necessary services to the Khadi entrepreneurs to upgrade their production capacity, skill upgradation and market promotion.

Below mentioned is the list of agencies implementing the same:

  • Khadi Village Industries Commission and State Khadi Village Industries Board
  • Khadi and Village Industry Institutions connected with KVIC and KVIBs
  • National, State-level Khadi and Village Industry Federations
  • NGOs that have already worked in implementation of a programme and exclude the negative list of KVIC with financial assistance for minimum 3 projects from any Ministry of State, Central Government, Council for the Advancement of People’s Action and Rural Technology, National Bank for Agriculture & Rural Development and UN agencies.

Following are the details regarding the financial arrangement for the entrepreneurs who wish to apply for this scheme: 

Khadi and Village Industries Commission (KVIC) will bear a substantial portion of the cost of the project – whether it is for provision of training or to procure machinery. The applicant would have to bear the rest as a loan.

The following table explains the split between KVIC and the Khadi entrepreneur:-

Financial Pattern NE States Other areas
a) KVIC’s Share 90%* 75%
b) Own Contribution or Loan from Bank/Financial Institutions 10% 25%


*In case of North Eastern States 90% of project cost will be provided by KVIC up to a project cost of Rs.5.00 lakhs.

Also, there will be a cap on the amount that KVIC would contribute to a specific project. Following is the detailed information for the same:

Type of project KVIC’s contribution
Building/Infrastructure Maximum 15% of project cost.
Plant & Machinery for manufacturing and or testing facilities and packaging Minimum 50% of project cost
Raw material /new design, product Diversification, etc. Maximum 25% of project cost.
Skill upgradation & training  and/ or  Product catalogue Maximum 10% of Project cost.



How can a Khadi Entrepreneur benefit from this scheme?

In accordance to the RISC scheme, a Khadi entrepreneur can receive assistance with the following activities.

  • Provide testing facilities by establishing laboratory to ensure quality of the products
  • Make available improved machinery/equipment to be utilised as common utility facilities by the nearby unites /artisans to enhance production capacity or value addition of the product
  • Provide attractive and appropriate packaging facilities and machineries to the local unties / artisans for better marketing of their products
  • Make available training facilities to upgrade artisan’s skill in order to increase their earnings.
  • Provide new design or new product, diversified product in consultation with experts /agencies for a value addition of rural manufacturing units
  • Make available raw material support which mainly depend on seasonal procurement
  • Prepare product catalogue

Eligibility Criteria:

What is the eligibility criteria for this scheme?

The Khadi Entrepreneur needs to fall in the following list of Khadi and Village Industry (KVI) to be eligible for the RSIC Scheme

  • Khadi and Poly Vastra post weaving value addition facilities.
  • Herbal products: Cosmetics and Medicines
  • Edible Oil
  • Soaps and detergents
  • Honey
  • Hand Made Paper
  • Food processing
  • Bio-Pesticides, Bio Manure, and Bio-Fertilizer
  • Potteries
  • Leather
  • Woodwork
  • All other V.I. except those which are in the negative list 


How can a Khadi entrepreneur apply for this scheme?

A Khadi entrepreneur can apply for this scheme by visiting/ contacting the nearest RISC.

Click here to gain information about the various KVIC Courses and center details.