ur&sllrun@asnqtrr iTi'TRI }I'ISSION I{IIADI AN D V I LLAG Ii IN D l' l]S CO$'I qrr ag v* xurr relrlr dqnrq' mniT {r$rfi liini.r,li o{ ${icro, Srnall & I'letlisnr [nterprises' Gcvt' of India' gqrarqtanactTrrr NTTONU TMPLEMENTATION DIVISION Dated: 23.70.2077 No. nfOTfnDP/ 3'a Tranchef 2017-18 To, The Under SecretarY, GoW. Of India, Ministry of MSME, Udyog Bhavan, New Delhi' 110 011 under Sub: Compliance of 3rd Tranche revised restructured conditions plan to KRDP fulfilling the adoption of comprehensive reform empower and revitalize 400 eligible KIs -Reg' Sir, therein Kindly refer letter of even number dated 12'09'201'7 forwarding related to adoption of compliance report on "L1th condition from third tranche as follows : .r*p..ft.nsive reform plan to empower and revitalize 400 eligible KIs is as on 09.10.2Ot7 Finalized restructured tranche Evidence Status condition fUC shall have adoPted the Report on Completed. comprehensive reforms Plan to adoption of adoPted empower and revitalize the four Comprehensive KVIC has reform to hundred (400) eligible Khadi Reform Plan comprehensive Plan and revitali4q,4gq-[E- institutions, empou/er Mission meeting held In this context, it is informed that as discussed in the ADB report on adoption of on ZTth and ZBth Supi.*U.. ZOL7, the revised compliance herewith for ready comprehensive reforii plan to revitalize 400 KIs is forwarded reference. to ADB for further It is therefore, requested to kindly forward the said document needful action. ThisisissuedwiththeapprovalofCompetentAuthority. Yours fl Encl: As above. Dy. Chief Execut Copy to: ffils, MSME, New Delhi. il fn.'senior Project Officer [Urban) ADB, New Delhi' 3l Shri Vivek Maihur, Senior Officer, MSME' New Delhi' mqfdq s aat*s. ftii'rdrcrrfufi'l rffi-Ilo"l:r:' (;rarl{rilrY;r,.l, lria ,).or(i lrii'r !'llr]r: iWl' hlrrr:tlr:ir 4lri)i)iir .l.r.,tr (. (:h l t,:.,1.',:. (i 1 1',:J{t \ 0:r 2 2 ar 7 1.: :i.li),/.l l/i liri )( kvill (rrll ilt fi)natJ: illl.l!v( (ilr ii(]v.il) \"/ilirsilfl ra!vw Revised Khadi Reform and Development Programme Adoption of Comprehensive Reform Plan October 2017 [Status] Contents Background ...........................................................................................................................................................2 Key elements of the Comprehensive Reform Plan ..........................................................................................3 Production reforms under DRA .....................................................................................................................3 Marketing reforms under DRA: .....................................................................................................................3 Selection of KIs for DRA .....................................................................................................................................4 Financial Assistance ............................................................................................................................................5 Annexure I ............................................................................................................................................................7 Annexure II ...........................................................................................................................................................8 Annexure III ...................................................................................................................................................... 20 1 [Status] Background The textile industry has made tremendous strides with the adoption of modern technology, branding, and savvy marketing. In contrast, khadi has been unable to keep pace with drastic changes in lifestyle, fashion trends and technological advancements impacting the textile markets. As a result, the community-based production and marketing model is neither able to gain market share nor substantially contribute to rural employment. Since the khadi artisans are dependent on the Khadi Institutions (KIs), the enhancement of their earnings, empowerment and inclusion is directly linked with the efficient function of the KIs. KIs play a vital role in production and marketing of Khadi. Robust operations of KIs is important to ensure sustainable employment opportunities for artisans and enhancement of their earnings. However, most, if not all, KIs are in need of modern implements, better working conditions for artisans, skills for high-value products, and sales and marketing support. Therefore, strengthening of KIs formed an integral part of the Khadi Reforms and Development Program designed and supported by Asian Development Bank. As a part of Tranche 1 MSME and KVIC, as a part of Khadi Reform Package, adopted the implementation of Comprehensive Reforms Plan. The reforms plan was adopted in order to revitalize the selected Khadi Institutions. The policy condition laid down as a part of Khadi Reform Package is given below: KVIC will develop a Comprehensive Reform Plan to be implemented in a phased manner for 300 KIs selected with due regard to regional balance and the inclusion of backward areas. Reform of these KIs could serve as model for other KIs. The elements of the Comprehensive Reform Plan to ensure viability of KIs and enhancement of artisan earnings and empowerment are as follows: Production reforms: To include supply of charkhas, looms, warping machine, yarn processing unit, spinning sheds and working capital support to cover the increase in working capital requirement due to capacity enhancement and other reform measures. Marketing Reforms: Linked to overall marketing reforms to enable expert inputs from the MO for product strategy including product processing, designing and local marketing strategy. Marketing reforms will also include renovation of sales outlets. Governance Reforms: Re-organization of artisans into Self Help Groups System Reforms: Supply of basic information technology infrastructure (including accounting systems) and electronic networking of KIs with KVIC. 2 [Status] As a part of Tranche 3 KVIC adopted the implementation of Comprehensive Reform Plan in 400 selected KIs with a resolution passed during the Commission meeting held on 26 September, 2017. The Commission decision is provided at Annexure I. The comprehensive reform plan is being implemented in the Khadi Institutions with the help of Direct Reform Assistance (DRA) under the Khadi Reform Package. The plan is being implemented in a phased manner for 400 KIs spread across the country with a key objective to ensure viability of KIs and enhancement of artisan earnings and empowerment. DRA is being extended to select existing khadi institutions (KIs) to emerge as self-reliant and organize Khadi programme on their own without the assistance from government. Reforms of these 400 KIs are expected to serve as model for other KIs. Key elements of the Comprehensive Reform Plan The key elements of the Comprehensive Reform Plan are as follows: Production reforms under DRA The production reforms are aimed at improving the production efficiency of the KIs through various interventions covering the entire production value chain. Key interventions under production reforms are as under: Implements (Charkhas and looms) Construction or renovation of work shed for Common Facility Centre (CFC) Machinery for CFC i.e. Ready warp, yarn dyeing, printing, readymade garment facilities, testing laboratories, servicing and maintenance etc. Installation of machineries IT and Managerial assistance (Computers & accessories, Remuneration to Reform Implementation Officer) Training Margin money for Working Capital Marketing reforms under DRA: The marketing reforms are aimed at improving the market perception and the final product value of the khadi and VI products through various interventions. Key interventions under marketing reforms are as under: Renovation of Sales outlet and store layout Inventory management Staff rationalization Local publicity 3 [Status] Selection of KIs for DRA Khadi activities are highly decentralized and scattered countrywide and the products manufactured under Khadi are highly diversified. Accordingly, selection of institutions is a critical task for the program to ensure that the number of institutions is adequately representative of the population and different kinds of institutions, considering various parameters like Infrastructure, Financial Performance, Management and Human Resources, Marketing and Institutional Governance, so that the selection process is effective. The eligibility criteria for the KIs to apply for DRA was decided by KVIC based on the production and average sales for 3 years, minimum number of artisans, number of sales outlets and the financial outgo of the institution. Some general conditions were also framed, to implement DRA as envisaged under the program which were Adoption of Khadi Mark is mandatory; Direct Benefit Transfer to artisans through Aadhaar seeded bank accounts only; Khadi institutions which have availed for any other scheme will not be eligible for any financial support under KRDP The institution should arrange adequate land and building to accommodate the infrastructure envisaged in the programme and creates equitable mortgage and hypothecation deeds in favour of KVIC for its assets. The RII may collectively represent production and marketing of three different kinds of khadi, viz. Cotton, Wool and Silk. The criteria was found to be too stringent, as a result very few KIs came forward