Khadi commission mulls tie-up with pvt investor for sales unit

Khadi commission mulls tie-up with pvt investor for sales unit
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First Published: Wed, Aug 20 2008. 10 48 PM IST

A new start: A girl at a khadi centre in Gangtok. The khadi commission, that contributes 0.3% of the $52 bn textiles business in the country, plans to revamp some 300 units that produce the hand-spun
A new start: A girl at a khadi centre in Gangtok. The khadi commission, that contributes 0.3% of the $52 bn textiles business in the country, plans to revamp some 300 units that produce the hand-spun
Updated: Wed, Aug 20 2008. 10 48 PM IST
New Delhi: The Khadi and Village Industries Commission, or KVIC, is looking to partner with a private investor to set up a marketing arm to promote its products once it manages to secure a $150 million (Rs655.5 crore) loan from the Asian Development Bank, or ADB, according to a government official, who did not want to be named.
A new start: A girl at a khadi centre in Gangtok. The khadi commission, that contributes 0.3% of the $52 bn textiles business in the country, plans to revamp some 300 units that produce the hand-spun fabric. Photograph: PTI
It will also use part of the loan to revamp some 300 selected khadi units that produce the hand-spun fabric.
KVIC is in talks with ADB for this purpose, confirmed an official, who, too, did not want to be named, at the ministry of micro, small and medium enterprises, which governs the commission.
The commission will hold a 51% stake in the new entity and the rest will be held by its partner, he added.
Besides promoting sales of its products that are made primarily using local resources, the marketing unit will also build infrastructure and help modernize existing looms, the first official said.
ADB is likely to sanction the loan after a meeting of its board on 26 September and the Centre is expected to make a formal announcement in this regard on 2 October, the birthday of Mahatma Gandhi, who promoted the spinning of khadi both as a means of self-employment and as a symbol of the freedom struggle.
An ADB official in New Delhi refused to comment, saying no information could be shared prior to the board’s approval.
KVIC has 5,000 units across the country, but due to lack of research and development and technological innovation, they have had little success in penetrating the country’s growing $300 billion retail market.
KVIC contributes merely 0.3% of the $52 billion textiles business in the country. Efforts to restructure it are expected to double KVIC’s khadi production, currently worth Rs491.5 crore, in five years, the first official said.
“If we introduce new equipment, both production and earnings (in khadi business) will improve which will attract more employment,” said Ram Das, a KVIC member.
For years now, the government has been trying to replace the current scheme with a market development assistance regime which will allow direct aid for raising output, rather than pass on benefits to customers, but this has met with stiff resistance from KVIC units.
“With new investments, the sector will grow,” said Laxmi Dass, former chairman, KVIC, who is now chairman of Confederation of Village Industries, which has 70 federations as members.
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First Published: Wed, Aug 20 2008. 10 48 PM IST