Overview of KVIC
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.
What is KVIC?
KVIC full form 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.
Departments of the Khadi and Village Industries Commission
The headquarters of KVIC is located in New Delhi and its six Zonal Offices are spread in a few main cities of India at:
- New Delhi.
- Bhopal
- Bengaluru
- Kolkata
- Mumbai
- 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.
Key Objectives of KVIC
The Khadi and Village Industries Commission (KVIC) was established to promote and develop rural industries across India. Its primary objective is to create sustainable employment opportunities in rural areas while preserving traditional crafts and strengthening the village economy. KVIC works towards improving the production, marketing, and distribution of khadi and village industry products. It also supports rural entrepreneurs through financial assistance, skill development programs, and various government-backed schemes. By encouraging self-employment and local manufacturing, KVIC contributes to inclusive economic growth and rural development.
Functions of KVIC
KVIC performs several functions to promote khadi and village industries in India. These include:
- Planning and implementing programs for the development of khadi and village industries.
- Providing financial assistance, subsidies, and support to rural entrepreneurs.
- Organising training and skill development initiatives to improve productivity and employment.
- Promoting the marketing and sale of khadi and village industry products through exhibitions, retail outlets, and digital platforms.
- Supporting research and development activities to improve product quality and competitiveness.
- Coordinating with banks and financial institutions to facilitate credit for eligible beneficiaries.
- Preserving traditional crafts, artisan skills, and indigenous industries across rural India.
Role of Khadi Village Industries Commission in the Economy
KVIC plays a significant role in strengthening India’s rural economy by generating employment, promoting entrepreneurship, and supporting traditional industries.
Employment Generation
KVIC creates self-employment and wage employment opportunities in rural and semi-urban areas through various schemes and development programs. It helps reduce migration from villages to urban areas by providing local livelihood opportunities.
Income Generation
By supporting artisans, weavers, and rural entrepreneurs, KVIC helps improve household incomes and economic stability. Its initiatives encourage small-scale production and sustainable income generation.
Exports
KVIC promotes Indian handmade and eco-friendly products in international markets. Khadi, honey, handicrafts, and other village industry products contribute to export earnings and enhance the global recognition of Indian traditional goods.
Preservation of Traditional Handicrafts and Textiles
KVIC plays a crucial role in preserving India’s cultural heritage by supporting traditional artisans and promoting indigenous crafts, handloom products, and khadi textiles.
Sustainable Development
The commission encourages environmentally friendly production methods and the use of locally available resources. Its focus on sustainable manufacturing supports balanced economic growth while minimising environmental impact.
KVIC Schemes and Programs
There are a host of schemes under the KVIC scheme list aimed at achieving the objectives set for the commission.
1. KVIC PMEGP:
The scheme was 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):
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.
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.
Interest Rate for KVIC Loans
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 of 11 and 12%. 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.
Read Also : Government Loan Schemes for Small Businesses in India
How to Avail Loans from Banks Under the KVIC Scheme
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.
Difference Between KVIC and Other MSME Schemes
| Parameter | KVIC | Other MSME Schemes |
| Primary Focus | Promotion of khadi and village industries | Development of manufacturing, service, and trading MSMEs |
| Target Beneficiaries | Rural artisans, entrepreneurs, self-help groups, and village industries | Small businesses, startups, manufacturers, and service providers |
| Employment Objective | Rural employment generation and self-employment | Business growth, expansion, and competitiveness |
| Financial Support | Subsidies, margin money assistance, and scheme-based benefits | Loans, credit guarantees, technology support, and subsidies |
| Key Schemes | PMEGP, SFURTI, ISEC, MPDA | CGTMSE, MSME Credit Schemes, CLCSS, ZED Certification |
| Coverage Area | Primarily rural and village sectors | Both rural and urban MSMEs |
| Main Goal | Rural development and promotion of traditional industries | Growth and modernization of MSMEs |
Conclusion
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.
FAQs
- What is the full form of KVIC?
KVIC stands for Khadi and Village Industries Commission. It is a statutory body under the Ministry of MSME that promotes rural employment and village industries across India.
- What is the main objective of KVIC?
The main objective of KVIC is to generate employment opportunities in rural areas, promote self-employment, and support the development of khadi and village industries.
- What is the PMEGP scheme under KVIC?
The Prime Minister’s Employment Generation Programme (PMEGP) is a credit-linked subsidy scheme that helps individuals and businesses establish new micro-enterprises in manufacturing and service sectors.
- Who is eligible for a KVIC loan?
Individuals above 18 years of age, self-help groups, charitable trusts, registered societies, and producer cooperative societies can apply for KVIC loans subject to scheme eligibility conditions.
- What is the interest rate on KVIC loans?
KVIC loans generally carry the prevailing MSME lending rates offered by banks. Under the ISEC scheme, eligible institutions can avail financing at a concessional interest rate of 4%.
- How can I apply for a KVIC loan online?
Applicants can apply through the official KVIC PMEGP portal by submitting personal details, project information, bank details, and the required supporting documents online.
