Modified Market Development Assistance Scheme
20–35% subsidy on prime cost · Khadi & Polyvastra production · India
The Modified Market Development Assistance (MMDA) scheme by KVIC provides financial assistance to registered Khadi institutions, artisans, and workers based on a percentage of the production cost. It funds technology upgrades for institutions, direct incentive payments to artisans via bank transfer, and market development for selling outlets. Submit quarterly claims online at kviconline.gov.in within 15 days of each quarter ending.
About This Scheme
The Modified Market Development Assistance (MMDA) scheme by KVIC provides financial assistance to registered Khadi institutions, artisans, and workers based on a percentage of the production cost. It funds technology upgrades for institutions, direct incentive payments to artisans via bank transfer, and market development for selling outlets. Submit quarterly claims online at kviconline.gov.in within 15 days of each quarter ending.
Full official description
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.
Benefits
- 35% of prime cost as MMDA for Cotton/Wool/Polyvastra Khadi; 20% for Silk Khadi
- Artisans (spinners & weavers) receive 35% of the MMDA directly to their Aadhaar-linked bank account
- Karyakartas (production & sales staff) receive 14% of MMDA as bonus (capped at ₹10,000/quarter for Silk)
- Producing institutions get 34% for technology upgrades, new designs, and quality tools
- Selling institutions get 17% for modernizing shops, exhibitions, and sales promotion
- Composite institutions (produce + sell) receive 51% of MMDA
💡 Why Startups Should Care
This subsidy on prime cost — up to 35% for cotton/wool Khadi — directly supports the artisans and institutional workers (Karyakartas) who keep traditional Khadi production economically viable against cheaper mill-made alternatives.
Who Can Apply (Eligibility)
- Must be a registered Khadi Institution (Producing, Selling, or Composite)
- Must be affiliated with KVIC or State/UT Khadi and Village Industries Boards
- Must hold valid Khadi/Polyvastra Certificate and Khadi Mark Certificate
- Must have KVIC-approved annual budget
- Must maintain a separate bank account for MMDA funds
- Claims must be submitted within 15 days of each quarter end (Jul 15, Oct 15, Jan 15, Apr 15)
Exclusions
- Production of Khadi/Polyvastra for Government supplies under DGS&D Rate Contract is not eligible
How to Apply
- Visit the KVIC Online MDA Claims Portal (kviconline.gov.in/mdaclaims).
- Register your Khadi institution on the portal.
- Submit detailed claims as per the prescribed format (Annexure-III and IV utilization statements).
- Provide production and sales records for the claim period.
- Subsidy is disbursed after claim verification.
Frequently Asked Questions
What percentage of financial assistance is calculated on Prime Cost for Cotton, Muslin, and Wool Khadi products under this market development program?
The Modified Market Development Assistance is calculated at 35% on Prime Cost for Khadi (Cotton, Muslin, Wool) and Polyvastra products.
How much of the total assistance amount do artisans like spinners and weavers receive as direct incentive for Cotton and Woolen Khadi production?
Artisans including spinners and weavers receive 35% of the total Modified Market Development Assistance amount as incentive or bonus through their Aadhaar-seeded bank or post office accounts.
What specific costs are excluded when calculating the Prime Cost for determining the financial assistance under this market development scheme?
Prime Cost excludes establishment margin, trade margin, insurance, and bank interest, covering only raw material cost plus conversion charges up to grey cloth plus processing charges.
Can institutions engaged in both production and selling activities receive assistance under this scheme, and what percentage do they get?
Yes, Composite Institutions involved in both production and selling activities receive 51% of the Modified Market Development Assistance amount for Cotton, Woolen, and Polyvastra Khadi.
What is the maximum quarterly limit for Karyakartas receiving incentive payments under the Silk Khadi category of this assistance program?
Karyakartas in Silk Khadi category receive 10% of the total Modified Market Development Assistance amount with a maximum ceiling of ₹10,000/- per quarter per Karyakartha, whichever is less.
How frequently are the Modified Market Development Assistance funds released to institutions and artisans under this financial support program?
Funds are released on a quarterly basis based on actual claims settled in the previous quarter through the online portal via Direct Benefit Transfer system.
What essential certificates must my Khadi institution possess to be eligible for participation in this market development assistance program?
Your institution must hold a valid Khadi/Polyvastra Certificate and a valid Khadi Mark Certificate to be eligible for Modified Market Development Assistance.
Within what timeframe must institutions submit their quarterly claims to avoid forfeiture of their assistance under this market development scheme?
Claims not submitted within 15 days of the quarter's completion will be forfeited and returned to the institutions, so timely submission is mandatory.
What type of bank account arrangement is mandatory for institutions receiving Modified Market Development Assistance funds under this program?
Institutions must maintain a separate bank account specifically for Modified Market Development Assistance funds, which will be subject to verification by Khadi and Village Industries Commission.
Who is responsible for processing and releasing the Modified Market Development Assistance funds after institutions submit their quarterly claims?
Directorate of Khadi scrutinizes claims and recommends them to Directorate of Accounts within 7 working days, which processes and releases funds within 5 working days.
What specific workers and staff members are classified as Karyakartas eligible for incentive payments under this market development assistance scheme?
Karyakartas include salesmen, saleswomen, cashiers, accountants, marketing executives, helpers, tailoring staff, store-keepers, godown-keepers, and artisans engaged in pre-processing and processing activities like dyeing.
Can institutions producing Khadi for Government Rate Contract supplies receive the full Modified Market Development Assistance under this scheme?
No, Government Rate Contract production is not eligible for full Modified Market Development Assistance, but artisans and Karyakartas receive a specific incentive at 17.15% on prime cost.
What annual documentation must institutions provide to maintain their eligibility and ensure proper utilization of the assistance funds received?
Institutions must furnish annual utilization certificates rendered by registered Chartered Accountants and quarterly utilization certificates to demonstrate proper fund utilization to Khadi and Village Industries Commission.
How long can institutions utilize their Modified Market Development Assistance funds for specific purposes like modernization and technology upgradation projects?
Utilization for modernization, renovation, and research and development may be allowed up to two years from actual receipt date with specific sanction from Khadi and Village Industries Commission.
What percentage of financial assistance is available for Silk Khadi products and how does this differ from other Khadi product categories?
Silk Khadi receives Modified Market Development Assistance calculated at 20% on Prime Cost, which is lower than the 35% rate for Cotton, Muslin, Wool Khadi and Polyvastra products.
Ready to apply?
Visit the official government portal to apply for this scheme.
Apply on myScheme.gov.inDocuments Required
- Detailed claims as per prescribed format (Annexure-III and IV utilization statements)
- Production and sales records for the claim period