The Union Government has approved a proposal to amend the Khadi and Village Industries Commission (KVIC) Act, 1956, paving the way for a modern legal framework aimed at strengthening India’s khadi and village industries ecosystem. The proposed amendments seek to align the legislation with current economic priorities, improve institutional governance, promote rural entrepreneurship, and enhance the global competitiveness of village industries.
The reforms are designed to support the government’s vision of inclusive and sustainable rural development while ensuring that the khadi and village industries (KVI) sector remains relevant in an evolving economic landscape.
Modern Framework for Rural Development
One of the key objectives of the proposed amendments is to bring the KVIC Act in line with contemporary policy frameworks and national rural development priorities. The revised legislation aims to create greater synergy between khadi and village industries and other government initiatives focused on employment generation, livelihood enhancement, and rural economic growth.
A significant feature of the proposal is the revision of the definition of “rural area” to align it with the provisions of the Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin): VB-G Ram G Act, 2025. This change is expected to broaden the scope for convergence with rural development programmes and ensure that a larger number of beneficiaries and enterprises become eligible for support.
Higher Investment Limits for Village Enterprises
The proposed amendments also seek to update the financial parameters governing village industries by enhancing the fixed capital investment limit per artisan or worker. The revised threshold will be aligned with the investment criteria applicable to micro enterprises under the Micro, Small and Medium Enterprises Development (MSMED) Act.
This move reflects the increasing capital requirements of modern rural enterprises and is expected to enable more village industries to qualify for benefits available to the MSME sector. Easier access to finance, government support programmes, and institutional credit could help expand the scale of operations and improve productivity.
Focus on Innovation, Branding and Exports
Recognizing the growing importance of market competitiveness, the proposed amendments place renewed emphasis on branding, product innovation, exports, standardization, digital transformation, and the protection of Geographical Indications (GIs).
These measures are expected to strengthen the identity of khadi and village industry products, improve quality standards, and expand their reach in both domestic and international markets. Increased focus on digitalization is also likely to help rural enterprises leverage e-commerce platforms and modern marketing channels, creating new business opportunities for artisans and entrepreneurs.
Institutional Reforms for Inclusive Governance
The amendment proposal also introduces several governance reforms aimed at making the Khadi and Village Industries Commission more representative and inclusive.
The revised framework proposes enhanced representation of women, Scheduled Castes (SCs), Scheduled Tribes (STs), the Central Government, and the Mahatma Gandhi Institute for Rural Industrialization (MGIRI) within the Commission.
In addition, the amendments include an enabling provision allowing the Central Government to notify new village industries from time to time. This flexibility is expected to help the sector respond more effectively to changing market demands, emerging technologies, and new economic opportunities.
Implementation Through Existing Institutional Network
The Ministry of Micro, Small and Medium Enterprises (MSME) will implement the amended provisions through the existing network of KVIC field offices, State Khadi and Village Industries Boards (KVIBs), Khadi Institutions, Village Industries Institutions, and entrepreneurs operating across the country.
Once Parliament enacts the amendment, the Ministry will notify the revised provisions and launch nationwide awareness and dissemination programmes. These will include workshops, seminars, and outreach campaigns to ensure smooth implementation and greater awareness among stakeholders at the grassroots level.
Importantly, the government has clarified that these communication and awareness activities will be carried out within the Ministry’s existing budgetary allocations, without any additional financial burden on the exchequer.
Strengthening the Rural Economy
The proposed amendments are expected to strengthen the khadi and village industries sector by improving access to finance, technology, markets, and innovation. They are also likely to encourage greater value addition, support rural entrepreneurship, and create sustainable employment opportunities across manufacturing, services, and trading activities in rural India.
The reforms will benefit stakeholders across all States and Union Territories through the existing institutional framework involving the Ministry of MSME, State Governments, and implementing agencies.
The government has emphasized that the proposal does not introduce a new scheme. Instead, it seeks to modernize and strengthen the statutory framework of the KVIC Act, 1956, which serves as the legal foundation for various programmes and initiatives supporting India’s khadi and village industries sector.
Author: Shivam
Shivam Dwivedi is a senior journalist with extensive experience in research-driven journalism, policy communication, and multi-platform storytelling. His areas of interest include international relations, defence, science & technology, education, urban development, agriculture, spirituality, and environmental sustainability. His work focuses on in-depth analysis, public discourse, and impactful narratives across governance and development sectors, with a strong commitment to the Sustainable Development Goals (SDGs). Contact: [email protected]
