MSME ministry asked to redraw rebate scheme for khadi industry

The finance ministry has asked the micro, small and medium enterprises ministry to redraw its rebate scheme for khadi and village industries. MSME has asked for Rs 447 crore to spend on the market development assistance scheme under which a rebate is extended to the seller for selling khadi products. In addition, it has asked for a $150-million (Rs 700 crore) loan from the Asian Development Bank for the same.

"The finance ministry's view is that the ministry should approach the plan commission and not seek year-to-year extension of the scheme. Furthermore, it had asked the MSME ministry to redesign the scheme in a manner that it should benefit the artisan and not the seller, which was the case so far," a senior government official said.

The finance ministry has been allocating roughly Rs 100 crore per annum for the scheme and had asked the MSME ministry to cut down the yearly spend, given that khadi had picked up in the market and is being sold in top stores across the country. When contacted, an MSME official told The Indian Express that there has been a proposal to shift from rebate scheme to marketing development assistance. In this scheme, everybody will share the assistance from producers to sellers, he added. Under pressure from khadi production units, the MSME ministry had decided to revamp its policy of extending 10 per cent annual rebate to Khadi and Villages Industries Commission's retail sales through its retail outlets. It had suggested the splitting of the rebate at three different stages — production, marketing and retailing.

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