Modified Market Development Assistance Scheme

Modified Market Development Assistance Scheme gives financial support to Khadi institutions, artisans, and workers by encouraging the production and sale of Khadi and Polyvastra products. The scheme is run by the Khadi and Village Industries Commission (KVIC) under the Ministry of Micro, Small and Medium Enterprises, and quarterly claims are still being accepted online for 2026-27.

Launched on 1 April 2010, the scheme pays a share of the prime cost of products to producing institutions, selling institutions, artisans, and Karyakartas. The money helps modernize outlets, upgrade technology, and pay direct incentives to workers through their Aadhaar-linked bank accounts.

Modified Market Development Assistance Scheme - Introduction

Modified Market Development Assistance Scheme promotes the growth of Khadi and Polyvastra products by supporting technology modernization, market expansion, and providing direct financial incentives to hardworking artisans and Karyakartas. Managed by KVIC, the scheme helps an institution streamline production and boost sales performance.

The scheme provides structured financial aid based on prime cost percentages. Whether a person is an artisan or represents a Khadi institution, the scheme helps modernize outlets, engage designers, and improve overall product quality. The online application process runs through the official KVIC portal. Related help is also available under the Khadi Gramodyog Vikas Yojana for institutions and individual artisans.

Key Information

Benefits

This scheme provides financial assistance based on the prime cost of products. Prime cost covers raw materials, conversion charges to grey cloth, and processing fees, while it excludes administrative margins, insurance, and bank interest.

The total assistance is split among the people involved. For Cotton, Muslin, and Wool products, artisans such as spinners and weavers receive 35% of the Modified Market Development Assistance amount directly to their Aadhaar-linked bank or post office accounts. Karyakartas, including salesmen, cashiers, accountants, and production helpers, receive 14% of the amount as a bonus, capped at ₹10,000 per quarter for Silk Khadi.

Producing institutions get 34% of the amount for technology upgrades, new designs, and quality tools. Selling institutions get 17% for modernizing shops, holding exhibitions, and sales promotion. Composite institutions that both produce and sell receive a combined 51% share for Cotton products to cover their end-to-end development needs.

Institutional funds should be used to upgrade technology, purchase tools, hire design consultants, and modernize sales outlets with features like bar-coding and digital payment systems. Institutions should maintain a separate bank account for these funds so that the money stays clear and easy to verify.

Eligibility

To take part in the scheme, an institution needs to meet the following conditions:

• Must be a registered Khadi institution affiliated with KVIC or a State/Union Territory Khadi and Village Industries Board.
• Must hold a valid Khadi/Polyvastra certificate and a valid Khadi Mark certificate.
• Must have an annual budget approved by KVIC.
• Whether it works as a production center, a selling outlet, or a composite unit, it must keep clear business records of its operations.

Exclusions

Production under Government Rate Contracts (RC) of DGS&D does not qualify for the full assistance amount, since these items are not sold via retail outlets. However, artisans and Karyakartas involved in such production still remain eligible for a specific incentive calculated at 17.15% of the prime cost.

Application Process

Claims are submitted online every quarter. The steps below explain how to register and file a claim.

STEP 1 - Visit the official KVIC portal and register the institution to receive a unique ID, username, and password. On the registration page, fill in all the mandatory fields and upload the required documents in the specified format and size.

STEP 2 - Log in with the credentials received on the registered mobile number and email ID. Navigate to the MMDA section to open the quarterly claim form.

STEP 3 - Fill in all required details, upload the supporting documents, and verify the information. Make any needed corrections before moving ahead.

STEP 4 - Review the claim carefully, tick the declaration box, and click Submit. Save the acknowledgment receipt for records.

Important Deadlines: Claims must be submitted within 15 days of each quarter ending, that is by July 15, October 15, January 15, and April 15. Claims filed after this window are forfeited and returned.

After submission, State and Divisional Directors process the claims and recommend them to the Directorate of Khadi within 7 working days. The Directorate of Accounts then releases the funds to institution bank accounts and artisan Aadhaar-linked accounts within 5 working days.

Documents

Keep the following documents ready while filing a claim:

• Claims prepared in the prescribed Annexure format, including quarterly claims on prime cost for the production achieved in the earlier quarter.
• Quarterly utilization statements in Annexure-III format.
• Annual utilization certificates certified by a registered Chartered Accountant in Annexure-IV format.
• Records verifying payments made directly to artisans through bank or post office accounts.
• Annual stock taking statement and audited balance sheet showing the closing stock for authentication.

References

Official Modified Market Development Assistance Guidelines | KVIC Official Website

FAQ's

What is the financial assistance rate for Cotton and Woolen Khadi?

Assistance is paid at 35% of the prime cost for Cotton, Muslin, Wool, and Polyvastra products.

How are incentive payments delivered to artisans?

Incentives are delivered directly to the artisans' Aadhaar-linked bank or post office accounts through direct benefit transfer, keeping the process clear.

Are Karyakartas eligible for incentives?

Yes, Karyakartas like salesmen, accountants, and production helpers are eligible for their share of the incentive, capped at ₹10,000 per quarter for Silk Khadi.

What if an institution misses the 15-day application window?

Claims not submitted within 15 days after the end of the quarter are forfeited and returned, so timely filing is required.

Can funds be used for modernization?

Yes, funds can be used for technology, renovation, and equipment, provided the usage guidelines are followed and KVIC sanction is taken where needed.