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Government mulls corporatising KVIC’s marketing unit

“KVIC and the government are now exploring the possibility of assigning the marketing function to a professional entity on a profit-sharing basis,” a government official closely associated with the development told ET.

, ET Bureau|
Last Updated: Jan 19, 2020, 11.55 PM IST
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KVIC has maintained that corporatisation of the organisation is not required and has conveyed the same to the MSME ministry through a letter, a third official said.
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NEW DELHI: The government is considering corporatising the marketing arm of Khadi Village and Industries Commission (KVIC) as it looks to boost the organisation’s turnover to Rs 5 lakh crore, two officials aware of the matter said.

“KVIC and the government are now exploring the possibility of assigning the marketing function to a professional entity on a profit-sharing basis,” a government official closely associated with the development told ET.

The talks are, however, at a preliminary stage, the official added.

Minister for micro, small and medium enterprises (MSMEs) Nitin Gadkari has been pushing for modernisation of khadi and increasing KVIC’s revenues in the second term of the BJP government. KVIC had reported a turnover of Rs 75,000 crore in 2018-19. It is expected to touch Rs 1 lakh crore in 2019-20.

A Reserve Bank of India-led panel in its report on the MSME sector had recommended such a measure last year.

“The committee recommends KVIC should be corporatised with focus on promotional work. The marketing function may be hived off and also corporatised to enable private participation and enabling (the) use of khadi in the private sector,” the recommendations of the panel had said.
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“We want that at least on the marketing, and exports side of things, we can introduce corporate culture,” a second official told ET, seeking anonymity. “This will help quick decision making.”

The Khadi and Village Industries Commission Act, 1956 allows KVIC “to promote the sale and marketing of khadi or products of village industries or handicrafts and for this purpose forge links with established marketing agencies wherever necessary and feasible”.

KVIC has, however, maintained that corporatisation of the organisation is not required and has conveyed the same to the MSME ministry through a letter, a third official said.

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