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What is Khadi MPDA Scheme? Explained

  • Posted By SuperCA
  • On 09 August

What is Khadi MPDA Scheme? Explained

The Marketing Development Assistance Schemes (MDA) was implemented by the Ministry of Micro, Small and Medium Enterprises in order to promote and market their Khadi Products. A modified version of the MDA scheme known as the Market Promotion and Development Assistance Scheme (MPDA) was implemented by the Khadi and Village Industries Commission (KVIC). It is a combination of different schemes, sub-schemes and  various components like publicity, marketing promotion and marketing development assistance.In this blog, let us look at the Khadi MPDA scheme of the government.


Objectives of the scheme

The main objectives of the Khadi MPDA scheme are listed below:

  1. Supporting the marketing development activities of khadi entrepreneurs
  2. Providing financial assistance to Khadi entrepreneurs
  3. Ensuring equal distribution of subsidy to the entrepreneurs
  4. In a Bling segmentation of market for village and Khadi industry products
  5. Rohingya opportunities in the National International markets for Khadi and village units
  6. Reinforcing marketing activities by participating in exhibitions and hosting them
  7. Creating a demand for village industry and Khadi industry products
  8. Promoting the Khadi MPDA scheme and the incentives provided to entrepreneurs
  9. Enhancing the infrastructure by establishing more Khadi Plazas


Allocation of funds

A total fund of Rs. 977.05 crores has been allocated by the Ministry of Micro Small and Medium Enterprises under the Khadi MPDA scheme. The marketing development assistant scheme also known as the MDA was launched in April 2010 and was responsible for disbursing the subsidy of 30% to production Institutes, 45% to selling Institutes and 25% to the entrepreneurs.

Whereas, according to the new and modified Khadi MPDA scheme, the assistance is disbursed in the ratio of 40%, 20% and 40% respectively. This will help the entrepreneurs to gain financial freedom.


Guidelines of the Khadi MPDA scheme

In order to claim assistance under the Khadi MPDA scheme, the Khadi Institutions will have to follow a set of guidelines which has been approved and formulated by the government of India. These are listed below:

  1. The Institutions who are responsible for producing must submit their quarterly claims of the production done, within 15 days of ending of the quarter through the online MDA processing system of KVIC.
  2. In case the claims have not been submitted within the specified time then they will be forfeited and the assistance will be provided to some other Khadi institutions.
  3. The claims which are submitted to the state directors or the Divisional directors are processed on a daily basis and afterward, recommendation is sent to the directorate of khadi in order to release a subsidy.
  4. The recommendations will be forwarded to the directorate of accounts by the Directorate of khadi after examining the forwarded clams within 7 working days.
  5. The claims are processed by the directorate of accounts and are released to the concerned Institutes and entrepreneurs within five working days.
  6. The assistant will be computed at 30% of the prime cost.
  7. Only the cost of raw materials is covered in the prime cost for computing the assistance and does not contain the establishment Margin, trade margin, insurance and bank interest.
  8. The khadi Institutions wish to apply for assistance, should compulsorily submit an utilisation certificate furnished by a registered Chartered Accountant. The certificate must contain the registration number and address of the chartered accountant.


Benefits of the Khadi MPDA scheme

The micro, small and medium enterprises enjoy a lot of benefits with the allocated financial assistant. These benefits are listed below:

  1. Production Institutions can participate in activities which help in improving the production and quality of khadi products. They can also
    1. upgrade the technology and infrastructure of the Institution
    2. Setup common facility centres
    3. Delegate design consultants in order to stay up to date with the latest designs of the fashion industry.


  1. The selling Institutions can use the assistant for their sales and promotion and to,
    1. Restore sales units
    2. Upgrade the outlets with latest technology to increase the volume of sales
    3. Participate in National and international fairs
    4. Employ experienced professionals of marketing in order to promote and advertise Khadi products
    5. Increase sales through different marketing methods like E-Commerce franchisees etc
    6. Promote Khadi products by giving discounts on occasion of national celebrations like Independence Day Republic Day Gandhi Jayanti etc
    7. Train marketing and sales personnel who possess advanced marketing strategies.


  1. The entrepreneurs are benefited by the Khadi MPDA scheme in,
    1. Initiating Aadhar linked post office or bank account to route the funds.
    2. Achieving increased production and targeted sales.
    3. Being engaged in spinning, Dyeing and weaving activities regularly by the Khadi institutions.


  1. Market promotion

Eligible entrepreneurs and khadi Institutions are provided assistance in order to renovate their sales outlet, to construct more Khadi Plazas and to take part in the international trade fairs and establish connections with international buyers and sellers. The claim for space rent, duty allowances and airfare is covered under the Khadi MPDA scheme during the participation in international fairs.


Operating conditions for releasing a fund

The terms and conditions for the release of a fund as stated by the KVIC are given below:

  1. The funds will be released through a direct benefit transfer known as a DBT to the eligible entrepreneurs. Therefore, they need a separate Aadhar linked postal or bank account.
  2. The entrepreneurs need to achieve the specified production target fixed by the KVIC.
  3. The khadi institutions which operate according to the updated guidelines of the KVIC will receive the funds.



In this blog, we discussed the Khadi MPDA scheme. We also discussed the objectives of the scheme and the fund allocation. We learnt about the guidelines of the Khadi MPDA scheme along with its benefits and operating conditions for the release of a fund.