Government Approves Proposal to Amend the Khadi and Village Industries Commission Act, 1956 to Strengthen Rural Economy and Modernize the KVI Sector

The proposed amendments seek to bring the KVIC Act in line with current policy frameworks; to support Government's vision of inclusive and sustainable rural economic development

The Ministry of Micro, Small and Medium Enterprises 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

The Government has approved a proposal to amend the Khadi and Village Industries Commission (KVIC) Act, 1956 with the objective of modernizing the legal framework governing the Khadi and Village Industries (KVI) sector. The proposed amendments aim to

align the Act with contemporary economic and rural development priorities, strengthen institutional governance, promote inclusivity, formalize rural enterprises, and enhance the competitiveness of village industries in domestic and global markets.

The proposed amendments seek to bring the KVIC Act in line with current policy frameworks and support the Government's vision of inclusive and sustainable rural economic development.

Among the key proposed changes is the alignment of the definition of "rural area" with the provisions of the Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin): VB-G Ram G Act, 2025, thereby broadening the scope for convergence with national rural development programmes and ensuring greater inclusivity.

The proposal also enhances the limit of fixed capital investment per artisan or worker in accordance with the investment thresholds applicable to micro enterprises under the Micro, Small and Medium Enterprises Development (MSMED) Act. This revision reflects the present-day scale and investment requirements of village industries and will enable eligible enterprises to access benefits available to the MSME sector.

Recognizing the need to improve the competitiveness of the KVI sector, the amendments place greater emphasis on branding, exports, innovation, standardization, digitalization, and the protection of Geographical Indications (GIs). These measures are expected to strengthen the market presence of khadi and village industries both within India and internationally.

The proposal also introduces institutional reforms to ensure more inclusive governance of the Commission through enhanced representation of women, Scheduled Castes, Scheduled Tribes, the Central Government, and the Mahatma Gandhi Institute for Rural Industrialization (MGIRI). In addition, an enabling provision empowers the Central Government to notify new village industries, ensuring that the sector remains responsive to emerging economic opportunities and technological advancements.

The Ministry of Micro, Small and Medium Enterprises 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. Following enactment of the Amendment Act, the Ministry will notify the amended provisions and undertake nationwide dissemination and awareness programmes, including workshops, seminars, and outreach campaigns, to facilitate effective implementation at the grassroots level.

The proposed amendments are expected to significantly strengthen the khadi and village industries ecosystem by improving access to finance, technology, and markets; promoting innovation and value addition; encouraging rural entrepreneurship; and generating sustainable employment opportunities. The reforms are also expected to contribute to inclusive rural economic growth by enhancing the productivity and competitiveness of village enterprises across manufacturing, services, and trading sectors.

The communication and awareness activities related to the implementation of the amendments will be undertaken within the approved budgetary allocations of the Ministry of MSME, with no additional financial implications.

The amended provisions, once enacted, will benefit the entire Khadi and Village Industries sector across all States and Union Territories through the existing institutional framework of the Ministry of MSME, State Governments, and implementing agencies.

The proposal does not involve the launch of a new scheme. Rather, it seeks to strengthen and modernize the statutory framework of the Khadi and Village Industries Commission Act, 1956, which underpins various programmes and initiatives of the Ministry of MSME.