Modified Market Development Assistance Scheme

The scheme "Modified Market Development Assistance Scheme" was launched on 1st April 2010 by the Ministry of Micro, Small & Medium Enterprises (MSME), Government of India. The scheme aims to rationalize financial assistance, promote market segmentation, strengthen marketing networks, and provide incentives to artisans and Karyakartas. The scheme provides financial assistance, calculated at 35% on Prime Cost for Khadi (Cotton, Muslin, Wool) and Polyvastra, and 20% on Prime Cost for Silk Khadi, distributed among producing institutions, selling institutions, artisans, and Karyakartas. This assistance supports technology upgradation, engaging design consultants, value addition, modernization and computerization of sales outlets, and direct incentives to artisans and Karyakartas, thereby improving production and sales of Khadi. The scheme is implemented by the Khadi and Village Industries Commission (KVIC), primarily through its Directorate of Khadi. The applications for this scheme are accepted online.

Financial Assistance on Prime Cost

Rate: The Modified Market Development Assistance (MMDA) is calculated at 35% on Prime Cost for Khadi (Cotton, Muslin, Wool) and Polyvastra. For Silk Khadi, the MMDA is calculated at 20% on Prime Cost.
*Definition of Prime Cost: Prime Cost includes the cost of raw material plus conversion charges up to grey cloth plus processing charges, explicitly excluding establishment margin, trade margin, insurance, and bank interest.

Distribution of MMDA (for Cotton, Woolen, and Polyvastra Khadi)

Producing Institutions:

• 34% of the total MMDA amount.
• These funds are to be utilized for procuring tools and equipment, upgrading technology, engaging designers and consultants for new designs, value addition to post-fabric processes, and engaging technicians for maintenance of Charkhas, looms, and other equipment.

Selling Institutions:

• 17% of the total MMDA amount.
• These funds are for sales promotional activities such as computerization, bar-coding, billing, debit/credit card swiping machines, accounts, renovation of sales outlets, introduction of mobile sales vans, participation in domestic and international exhibitions, extension of sales discounts, and capacity building of sales personnel.

Artisans (Spinners & Weavers):
35% of the total MMDA amount, passed on as an incentive or bonus through their Aadhaar-seeded bank or post office accounts.
Karyakartas:

• 14% of the total MMDA amount, passed on as an incentive or bonus through their Aadhaar-seeded bank or post office accounts.
• Karyakartas include persons involved in production and post-production activities such as salesmen, saleswomen, cashiers, accountants, marketing executives, helpers, tailoring staff, store-keepers, and godown-keepers.
• It also covers artisans engaged in pre-processing activities of spinning and weaving, and processing of Khadi and Polyvastra such as dyeing, who are workers of Khadi Institutions working in production centers.

Composite Institutions:
Khadi institutions involved in both production and selling activities receive 51% of the MMDA amount, to be utilized for both product development and market development purposes.

Distribution of MMDA (for Silk Khadi)

Producing Institutions: 40% of the total MMDA amount.
Selling Institutions: 20% of the total MMDA amount.
Artisans (Reelers, Twisters, Winders & Weavers): 30% of the total MMDA amount, passed on as an incentive or bonus through their Aadhaar-seeded bank or post office accounts.
Karyakartas: 10% of the total MMDA amount, passed on as an incentive or bonus, with a maximum ceiling of ₹10,000/- per quarter per Karyakartha, whichever is less.
Composite Institutions: Khadi institutions involved in both production and selling activities receive 60% of the MMDA amount.

Government Supplies (Rate Contract)

• Production of Khadi and Polyvastra products for Government supplies under Rate Contract (RC) of DGS&D is not eligible for the full MMDA.
• However, only artisans and Karyakartas of Khadi Institutions engaged in production and supply for Government supply/Rate Contract will be eligible for an MMDA incentive at 17.15% on prime cost (calculated as 35 ÷ 100 × 49).

Disbursement Conditions

• MMDA is disbursed through an online portal via Direct Benefit Transfer (DBT). KVIC disburses the amount for artisans (spinners, weavers, and Karyakartas) directly to their Aadhaar-linked bank or post office accounts.
• Funds are released on a quarterly basis based on actual claims settled in the previous quarter.
• Directorate of Khadi scrutinizes claims and recommends them to the Directorate of Accounts within 7 working days, which then processes and releases funds to the respective institution and artisans' bank accounts within 5 working days.
• Utilization of MMDA for specific purposes such as modernization, renovation, and research and development may be allowed up to two years from the date of actual receipt, with specific sanction from KVIC.

Conditions for Availing the Benefits

Separate Bank Account: Institutions must maintain a separate bank account for MMDA funds, which will be subject to verification by KVIC.
Utilization Certificates: Khadi Institutions availing MMDA are bound to furnish utilization certificates annually as rendered by a registered Chartered Accountant (CA). Quarterly utilization certificates must also be furnished by KIs.
Artisan Payments: The portion of the total MMDA amount earmarked for artisans must be passed on to them in the form of incentive or 'bonus' through their bank or post office accounts, in addition to their normal earnings. Such additional incentives/bonus out of the MMDA grant should not be included in the cost of Khadi.
Transfer to Selling Institutions: Producing institutions transferring Khadi wholesale must pass on the relevant percentage (e.g., 17% for Cotton/Wool/Polyvastra or 20% for Silk Khadi) of the MMDA amount to purchasing/selling institutions through wholesale invoices.
Timely Claims: Claims not submitted within 15 days of the quarter's completion will be forfeited and returned to the institutions.
Aadhaar Linkage: KVIC must ensure that 100% Aadhaar-linked bank/post office accounts are opened for all artisans and that MMDA funds are routed through these accounts only.
Target Achievement: KVIC ensures that institution-wise specified targets fixed for increasing production and sales have been achieved and stock holding has been reduced.
Recovery of Dues: Recovery of dues out of MMDA claims shall not exceed 75% of the eligible amount for institutions having a combined production target (Khadi + Polyvastra) up to ₹1,00,00,000/- per annum.

• The applicant must be a Khadi Institution.
• The applicant must be affiliated or registered with Khadi and Village Industries Commission (KVIC), State/Union Territory Khadi and Village Industries Boards (KVIBs), or State/Union Territory Khadi and Village Industries Board units.
• The applicant must hold a valid Khadi/Polyvastra Certificate.
• The applicant must hold a valid Khadi Mark Certificate.
• The applicant's annual budget must be duly approved by Khadi and Village Industries Commission (KVIC).
• The applicant must be engaged in the activity of production of Khadi to be considered a "Producing Institution" for the purpose of Market Development Assistance.
• The applicant must be engaged in the activity of selling Khadi purchased from producing institutions to be considered a "Selling Institution" for the purpose of Market Development Assistance.
• The applicant must be engaged in both production and selling of Khadi to be considered a "Composite Institution".

• The production of Khadi and Polyvastra products for Government supplies under Rate Contract (RC) of DGS&D is not eligible for the full Modified Market Development Assistance, as these items are not sold through retail outlets.
• However, artisans and Karyakartas of Khadi Institutions engaged in such production and supply are eligible for a specific MMDA incentive.

Online

Registration Process

Step 1: Visit the 'KVIC Online' Portal of the Khadi and Village Industries Commission. This portal serves as the primary interface for submitting quarterly claims.
Step 2: Click on "New Registration? Click Here". On the next page, click "Online Registration of Khadi Institutions". You will be taken to the registration page.
Step 3: In the registration form, fill in all the mandatory fields and upload all the mandatory documents in the specified format and size. If required, verify your Email ID and Mobile Number via OTP.
Step 4: The following details will be sent to your registered Mobile Number an Email ID:

• Username and Password.
• Unique ID.
• Acknowledgement Letter.

Claim Application Process

Step 1: Visit the 'KVIC Online' Portal of the Khadi and Village Industries Commission.
Step 2: Use the credentials you created during registration to log in. In the right pane, click "MMDA". Navigate to the application form for quarterly claim.
Step 3: In the form, fill in all the mandatory fields and upload all the mandatory documents in the specified format and size.
Step 4: Carefully review all the information provided and the documents uploaded. Make any necessary corrections.
Step 5: Acknowledge and agree to the terms and conditions / declaration (if any) by ticking the designated checkbox. Click "Submit" to submit your quarterly claim. You'll receive a confirmation message.
*These claims must be submitted within 15 days of the completion of the quarter through the online MDA processing system of KVIC.
*The specific submission deadlines are July 15th for Quarter I, October 15th for Quarter II, January 15th for Quarter III, and April 15th for Quarter IV.
*Claims not submitted within this stipulated timeframe will be forfeited and returned.
*Applicants are advised to save a copy of their submitted claims and any acknowledgment receipts for future reference.

Post-Application Processes

Step 1:**** Processing and Recommendation by State/Divisional Directors

• All claims received by the State/Divisional Directors of KVIC are processed for the release of Modified Market Development Assistance on a daily basis.
• The State/Divisional Directors must complete their recommendation to the Directorate of Khadi through the online MDA processing system of KVIC within 7 working days.

Step 2:**** Scrutiny and Recommendation by Directorate of Khadi

• Upon receiving the recommended claims from the field offices, the Directorate of Khadi is responsible for scrutinizing them.
• The Directorate of Khadi must then recommend these claims to the Directorate of Accounts within 7 working days through the online system.

Step 3:**** Fund Release by Directorate of Accounts

• The Directorate of Accounts, after receiving recommendations from the Directorate of Khadi, will process and release the Modified Market Development Assistance payments.
• The funds will be disbursed directly to the respective institution's bank account and artisans' Aadhaar-linked bank or post office accounts within 5 working days.