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Khadi MPDA Scheme

Khadi MPDA Scheme

Khadi MPDA Scheme

Marketing is the most essential element for the success of any enterprise. Unlike large enterprises, MSMEs do not have enough resources to handle their promotional and marketing activities. In order to overcome the challenges faced by the entrepreneurs in promoting and marketing their khadi products, the Ministry of Micro, Small and Medium Enterprises have implemented Marketing Development Assistance Schemes (MDA). Market Promotion and Development Assistance Scheme (MPDA) is a modified scheme of the MDA formulated and implemented by the Khadi and Village Industries Commission (KVIC). It is an amalgamation of different schemes, sub-schemes and components of different Heads such as publicity, marketing promotion and marketing development assistance. Let’s have a look at the MPDA scheme for Khadi sector in this article.

Objectives of the Scheme

The scheme has the following objectives:

  • To support the marketing development activities of Khadi entrepreneurs.
  • To provide financial assistance and equal distribution of subsidy to the khadi entrepreneurs.
  • To enable market segmentation for Khadi and Village Industry products.
  • To expand opportunities for Khadi and Village units in the national and international markets.
  • To reinforce marketing activities by hosting and participating in exhibitions.
  • To create demand for Khadi and Village Industry products.
  • To promote the scheme and the incentive offered to the entrepreneurs.
  • To enhance infrastructure by building more Khadi Plazas.

Fund Allocation

The Ministry of MSME has allocated the total fund of Rs.977.05 Crores under the scheme. The Marketing Development Assistance Scheme (MDA) which was launched in April 2010 disbursed the subsidy of 30% to the production institutes, 45% to the selling institutes and 25% to the entrepreneurs. Whereas, the assistance disbursed under the modified MPDA scheme varies on the ratio of 40%, 20% and 40 % respectively. It will eventually benefit the entrepreneurs in gaining financial freedom.

Guidelines of the Scheme

The Government of India has formulated and approved a set of guidelines for the Khadi Institutions to claim assistance under the scheme and they are,

  • The producing institutions should submit their quarterly claims for the production achieved within 15 days of completion of the quarter, and it must be submitted through the Online MDA Processing System of KVIC.
  • The claims that are not submitted within the stipulated time will be forfeited, and the assistance will then be given to other Khadi Institutions.
  • Claims submitted to the State/Divisional Directors are processed daily, and a recommendation is later sent to the Directorate of Khadi for the release of subsidy.
  • On examining the claims forwarded by the field offices, the Directorate of Khadi will advance the recommendations to the Directorate of Accounts within 7 working days.
  • The Directorate of Accounts processes and releases the claims to the concerned institutes and entrepreneurs within 5 working days.
  • The assistance will be calculated at 30% of the prime cost
  • The prime cost for the calculation of assistance covers only the cost of raw materials and doesn’t include the establishment margin, trade margin, insurance and bank interest.
  • The Khadi Institutions applying for the assistance should submit the Utilisation Certificate (UC) rendered by the registered Chartered Accountant (CA). The registration number and address of the CAs should be mentioned clearly in the certificate.

As all the funds are disbursed through Debit Transfer System, the khadi institutions and artisans should maintain a separate bank account which will be verified by KVIC at regular intervals.

Benefits of the Scheme

The scheme provides various benefits for the MSMEs in achieving their targeted goal. With the allocated financial assistance,

  1. Production Institutions can indulge in activities that improve the production and quality of khadi products and also,
  1. Selling Institutions can make use of the assistance for their sales and promotional activities and for
    • Restoration of sales units
    • Upgrading the outlets with the latest technologies that will increase the sales volume
    • Participating in national and international fairs
    • Employing experienced marketing professionals to promote and publicise the khadi products in digital and print media
    • Increasing sales through different marketing channels such as e-commerce, franchisees etc.
    • Promote Khadi products by offering them for discounted prices on occasion of national celebrations such as Gandhi Jayanthi, Independence day, Republic day etc.
    • Training marketing and sales personnel with advanced marketing strategies
  1. The scheme benefits the entrepreneurs in,
    • Initiating Aadhaar linked bank/post office account through which funds are routed.
    • Achieving targeted sales and increased production.
    • To be engaged regularly with spinning, dyeing and weaving activities by the Khadi Institutions and not as an ‘on-job’ work basis.
  1. Market Promotion
    • The assistance is provided to the eligible entrepreneurs and the Khadi institutions to refurbish their sales outlet, construct more khadi plazas, to take part in the International Trade Fairs and establish connections with international buyers and sellers. While participating in the fair, the claim for the space rent, airfare and duty allowances can be obtained under the scheme.

Operating Conditions for the Fund Release

The general terms and conditions as stated by the KVIC for the release of the grant are,

  • Funds are released to the eligible entrepreneurs through Direct Benefit Transfer (DBT) and thus a separate Aadhaar linked postal/bank account must be opened for all the entrepreneurs.
  • The entrepreneurs must attain the institution wise specified production target fixed by the KVIC.
  • Funds will be released to the Khadi Institutions that operate in accordance with the updated guidelines posted by the KVIC.