KVIC ' S MARGIN MONEY SCHEME

1.0 INTRODUCTION :

Government of India through Khadi and Village Industries Commission has introduced Margin Money Scheme ( MMS) in order to create large employment opportunities in rural areas of the Country. This scheme is to encourage establishment of village industries in the Country by providing certain fixed amount as Margin Money. Since 1997, this programme is being implemented through Nationalised Banks. To supplement the efforts of the Nationalised Banks and to ensure that the scheme reaches the nook and corners of the State, this scheme is being now extended to Co-operative Banks, Private Sector Scheduled Commercial Banks and State Financial Corporation.

2.0

FEATURES OF THE SCHEME :

i) This scheme is applicable for units coming up in rural areas only for establishing village industry projects.

Sub: Khadi Reform and Development Programme under ADB assistance.

The Asian Development Bank (ADB) has approved to assist KVIC to implement Khadi Reform and Development Programme (KRDP) in their Board meeting held on 2nd Oct. 2008. The reform programme contains several measures for total transformation of the Khadi sector making it self reliant, more responsive to artisans and also expand to its full potential.

2.

The reform package proposes sectoral as well as institutional reforms which are to be

implemented over a period of 3 years. The details of work that are to be carried out during the tenure of reform process are capsuled in two documents namely, Khadi Reform Package the basic document (Annexure-I) and the Policy Matrix (Annexure-II) a compilation of activities in the pre-determined time frame. The KRDP encompass support for institutional reform for 300 Khadi institutions to be identified based on the selection criteria devised by ADB (Annexure-III).

3.

It is requested that these documents may kindly be studied properly and preserved

carefully, as it may be required for frequent reference during implementation of reform process. Those are also being uploaded in the KVIC website.

4.

All Programme Directors / In charges at Central Office of KVIC, State / Divisional

Directors of KVIC and Chief Executive Officers of State KVI Boards are requested to study the reform package and policy matrix carefully and brief their team about the reform programme and the activities to be accomplished along with time schedule as detailed in the policy matrix. 5. It is also requested that adequate publicity to the Khadi Reform and Development

Programme may also be given in consultation with Director (Publicity), Director (RID) so that all stake holders have clear understanding about of the reform programme and the process involved.

CHAPTER - II TEXTILE INDUSTRIES One of the oldest industries in India is the cotton textile Industry. The word textile is derived from the Latin word Texere meaning to weave and originally applied only to woven fabrics1. Then it expanded to mean fibres, and fabrics produced by interlacing or any other construction method. Thuks, threads, cords, ropes braids, lace embroidary, nets and fabrics made by weaving, knitting, bonding, felting, or Tuffing are included in Textiles. An organized cotton textile industry is one of the oldest and most firmly established major large scale industries in the world2. The cotton textile industry may be considered as the real swadeshi industry of India built under Indian management and sacrifice. In addition to providing means of livelihood for nearly 10 million handloom weavers, the mill industry provides direct employment to nearly 8 lakh workers representing about 20% of the total industrial population of the country3. The cotton textile industry thus is the biggest large scale industry in India. The annual value of cotton mill production is more than 30 percent of the value of the country's industrial output4.

An important section of the country's farming population finds employment in the production of cotton or 'white gold', the industry's basic raw material. The processing of cotton into finished products in the mills is a major source of employment to a large section of the people. From early times India has been noted for its fine cotton fabrics. The Calicos of Calicut and Muslins of Dacca - now in Pakistan - were celebrated all over the world for their fine texture and embroidery. Cotton spinning and weaving were highly developed in India even 2,000 years ago5. Indian handlooms produced fabrics of rare quality, including embroideries, silk, carpets and chintz. Even after the introduction of power-driven machinery in England Indian yarns were imported into the U.K. The large quantities of cheap and graceful Calicos, Muslins and Chintz that were imported into the U.K. by the East India Company at the end of the 17th century became rivals to Lancashire fabrics. This alarmed the woollen and silk manufacturers so that the use of the Indian Calicos and cotton goods in dress or furniture was prohibted in Britain for some time6. The English cotton manufacturing industry was revolutionized with the application of steam and power loom so that cotton piece goods in the U.K. were produced at a very cheap rate. Lancashire goods began to pour into India and became great rivals to the handloom product produced by the weavers in this country. Lancashire gained prominence while the Indian cotton textile industry declined. The first cotton mill in India was started at Calcutta in 1818. But the attempt was not successful7. It was in 1854 that the cotton mill industry in India gained a real footing when a cotton mill was established at Bombay under Parsi enterprise. From its inception the industry passed through vicissitudes of fortune till it reached its present status. As the industry grew up the yarn trade with China fetched it good profit. The Indian market was not initially favourable, because of competition with Lancashire goods but the natural advantages of humid climate, raw materials and an external market helped the growth of the industry consi-derably. During the latter part of the last century Japan became a rival to India in yarn trade with China and the Far Eastern Asia. During the first World War (1914-1918) Japan obtained better opportunities for marketing her yarn to China8. India was dependent considerably on the U.K. for the supply of machinery, caustic soda, bleaching powder, etc., for her cotton mills. The home market was not favourable to the industry because of

competition with Lancashire fabrics which poured into India in huge quantities. Production of yarn was more profitable than the production of cloth because the yarn could be marketed outside9. Railway freight charges in India for transporting coal to the cotton mills were high as the coals had to be obtained from the Damodar Valley, the only important coal producing area in the country. It was, therefore, more profitable to import coal from South Africa by sea route for the cotton mills of India. This situation continued till water power was developed in Bombay and other areas in the early part of the 20th century10. Such were the many problems of the cotton mill industry in the early days of its development. After the First World War the condition of the industry improved slightly. The Tariff policy adopted in 1927 and pacts with Great Britain and Japan to restrict imports helped to improve the condition of the industry immediately before the Second World War11. The internal market became favourable and the spinning and the weaving sections of the industry made considerable progress. Cloths could also be exported outside. During the Second World War the industry made great progress since the demand for cloths in the country increased partly due to import difficulties and partly due to the increasing requirements of cloths for the Army. The cotton mills began to work for three shifts a day instead of two shifts. Cloth, however, was not available in good quantities for civilian consumption so that in 1943 the supply of cloth to civilians was restricted to by the Government and cloth control order was made effective12. The standard cloth scheme was launched on and from 1st April The textile industries begand to appear and there were 294,000 acres of land in the district of Tirunelveli under cotton cultivation14. Three large spinning-mills, thirteen ginning-factories, and six steam-presses were employed in the treatment of the product. In addition to these, there were numerous hand-gins (manial), worked either by cotton-growers on their own account or owned and controlled by small capitalists15. Hand-spinning as a serious industry has long been extinct, the few spindles which had survived the competition of imported machine-made yarn having fallen into almost complete disuse with the establishment in the district of the spinning factories, first at Papanasam and later at Tuticorin and Kovilpatti16.

The Tinnelvelly Mills at Papanasam which are driven by water-power, represent a very great advance on an idea first put forward by Lord Napier, Governor of Madras. In 1869, he visited the district and suggested a scheme for the utilization of the Tamiraparani as a motive power to work a cotton mill. He selected a site between the Papanasam falls and the Kodaimelalagian dam. It was considered that in all seasons the water would suffice both for irrigation and for the mills then under17. Accordingly in the same year M.Duval, a French engineer stationed at Pondicherry, was engaged by the government and sent down to Tinnevelly to examine the project scientifically. He finally selected a spot on the island of high ground which is enclosed by three of the streams in which the Tamiraparani flows above and below the Kodaimelalagian dew the southernmost arm. the investment of the commercial department of East India Company. Weavers who accepted the Residents terms and agreed to supply cloths for his trade were exempted from the loom tax. With the disappearance of the department the tax was reimposed, the importation of machine-made cloths soon started, and the weavers struggle had begun24. A class of capitalists rendered possible a combination of workers and a fairly large and continuous output of woven fabrics, which made weaving a profitable industry. industryBefore 1980, Ichalkaranji was famous for cotton poplin, dhoti, and cotton saris. In mid-1980s, weavers of the city started producing denim, canvas, chiffon, and fabric for school uniforms (khaki drill). Fabrics such as seersucker, Oxford, herringbone, ripstop, chambray, tweed, and twill made in or around the Ichalkaranji city are used by many domestic and international fashion brands such as Raymonds of India, Armani, Banana Republic, Hugo Boss, and Paul Smith.*9+

The presence of a qualified workforce and the level of technical know-how and easy accessibility to finest weavers of Ichalkaranji for outsoaring and over all good social ambiance were among the factors that influenced Italian textile major Tessitura Monti,[10] Turkish textile maker Soktas, Bombay Rayon Fashions Ltd

(BRFL),*11+ Raymond Zambaiti Ltd (A joint venture of Raymonds Ltd and internationally renowned Cotonificio Honegger S.P.A ,part of Gruppo Zambaiti),*12+ world famous German Mens wear brands Liebe, Boys R Bad and Looty[13] etc.. while planning investment near Ichalkaranji city.

Spinning

In 1962 the Deccan Co-operative Spinning Mill Ltd. came into existence in Ichalkaranji, which was the first Co-operative Spinning Mill in Asia.[14] As of 2010 over 20 modern spinning mills this region has become one of the major centre [15] for spinning mills in India. Some of these spinning mills are 100 % Export Oriented Units of Cotton Yarn.

The Khadi and Village Industries Commission (KVIC) is a statutory body established by an Act of Parliament (No. 61 of 1956, as amended by act no. 12 of 1987 and Act No.10 of 2006. In April 1957, it took over the work of former All India Khadi and Village Industries Board.

Objectives
The broad objectives that the KVIC has set before it are...

The social objective of providing employment. The economic objective of producing saleable articles. The wider objective of creating self-reliance amongst the poor and building up of a strong rural community spirit.

Functions
Some of the major functions of KVIC are ...

The KVIC is charged with the planning, promotion, organisation and implementation of programs for the development of Khadi and other village industries in the rural areas in coordination with other agencies engaged in rural development wherever

necessary.

Its functions also comprise building up of a reserve of raw materials and implements for supply to producers, creation of common service facilities for processing of raw materials as semi-finished goods and provisions of facilities for marketing of KVI products apart from organisation of training of artisans engaged in these industries and encouragement of co-operative efforts amongst them. To promote the sale and marketing of khadi and/or products of village industries or handicrafts, the KVIC may forge linkages with established marketing agencies wherever feasible and necessary.

The KVIC is also charged with the responsibility of encouraging and promoting research in the production techniques and equipment employed in the Khadi and Village Industries sector and providing facilities for the study of the problems relating to it, including the use of non-conventional energy and electric power with a view to increasing productivity, eliminating drudgery and otherwise enhancing their competitive capacity and arranging for dissemination of salient results obtained from such research.

Further, the KVIC is entrusted with the task of providing financial assistance to institutions and individuals for development and operation of Khadi and village industries and guiding them through supply of designs, prototypes and other technical information.

In implementing KVI activities, the KVIC may take such steps as to ensure genuineness of the products and to set standards of quality and ensure that the products of Khadi and village industries do conform to the standards.

The KVIC may also undertake directly or through other agencies studies concerning the problems of Khadi and/or village industries besides research or establishing pilot projects for the development of Khadi and village industries.

The KVIC is authorized to establish and maintain separate organisations for the purpose of carrying out any or all of the above matters besides carrying out any other matters incidental to its activities.