Reviving Khadi in India|Business Strategy|Case Study|Case Studies

Reviving Khadi in India

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Case Details:

Case Code : BSTR055
Case Length : 9 Pages
Period : 1985 - 2003
Organization : Minister for Small Scale Industries
Pub Date : 2003
Teaching Note :Not Available
Countries : India
Industry : SSI

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Reviving Khadi: From Freedom Fabric to Fashion Fabric

In 1985, designer Devika Bhojwani pioneered the Swadeshi label of Khadi ensembles. Those were distributed through nearly 5000 Khadi Emporia. To display Khadi's potential, KVIC organized a fashion show in Mumbai in 1989.

Nearly 85 dazzling garments created by Devika Bhojwani were presented at the show. This was the first step towards changing Khadi's earlier image of being unfashionable. Commenting on the poor state of Khadi, Devika Bhojwani said that failures in the Khadi sector were a result of red tapism and bureaucracy prevalent in the Indian system. Even though the country had a wide distribution network, the middlemen, commissions and cuts had gradually weakened the system. She further said that though the government was taking the initiative to revive Khadi, nothing much would improve until the implementation, and the cost per garment etc. were controlled. In 1990, the Delhi based designer, Ritu Kumar presented her first Khadi collection, Tree of Life, which helped put Khadi in the fashion circuit...

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Government Support to Khadi

The GoI had been providing huge subsidies and grants to the Khadi sector. Khadi was given a rebate of Rs. 1.49 billion and Rs. 1.4 billion in 1998-99 and 1999-2000 respectively. In 2000-2001, funds to the tune of Rs. 1.29 billion were released for the same.

During the same time, concerted efforts were made to root out corruption in the payment of rebate. Regular vigilance raids were conducted in various parts of the country to detect malpractices in claiming of Khadi rebates and to distinguish between genuine and bogus Khadi and village industries. In May 2000, the Ministry of Small Scale Industries announced a special package of Rs.12.15 billion for KVIC. Of this, Rs.0.3 billion had been allocated for renovation of the existing outlets, while Rs 0.4 billion was sanctioned for promotional activities. Though the GoI provided huge financial assistance to KVIC, the funds did not produce the desired result. It was also being felt that the structure of KVIC needed to be changed to enable it to face the challenges of globalization...

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