Reviving Khadi in India: Khadi Loses its Sheen

Khadi, which symbolized self-reliance and emancipation during the freedom struggle in India has lost its sheen over
the years. And there are several reasons for the same. Post 1947, India opted for state led large scale
industrialization.

With many Indian industrialists setting up huge textile mills, the mass production of fine cloth led to the availability
of cloth at lower prices. People began to buy machine made textiles and thus Khadi began losing out to the mill
fabric. In January 1953, the All India Khadi and Village Industries Board was set up to provide employment to
thousands of spinners all over India.

In 1957, the Khadi and Village Industries Commission (KVIC) was established to take over the work of the board. KVIC
was formed as a nodal agency to promote Khadi all over India through its exclusive outlets known as
Khadi Bhandars. The Government of India (GoI) has ever since continued its support to Khadi.

However, there were a few problems. According to designers, the production of Khadi was inconsistent and the cloth
was prone to shrinkage and fabric stretch. Besides, fabric colours in khadi were also limited. Red-tapism and
bureaucracy prevalent in the Indian system, further hampered the growth of the Khadi sector. Inspite of having a
wide distribution network, there were problems, especially middleman. Corruption was rampant. There were many
bogus Khadi units operating in the country, which made it extremely difficult to claim rebates from the Government
of India (GoI).

KVIC received huge financial assistance from the GoI in the form of subsidies and rebates. In May 2000, the Ministry
of Small Scale Industries, announced a special package of Rs. 12.16 billion to the industry. In order to face the
challenges of globalization and strengthen its position in the market, KVIC launched two separate brands, Sarvodaya
and Khadi in August 2001. Sarvodaya comprised consumer goods like incense sticks, spices, honey, and pickles.

The Khadi brand included products like essential oils, herbal oil & soaps, face scrubs, dry fruit honey, designer
garments etc. The Khadi brand was introduced exclusively for exports and upmarket. The fabric was being promoted
as a fashion fabric. Many high-profile fashion designers were roped in to create garments using the fabric. KVIC
allotted huge funds into research and development to improve the quality of  Khadi. It allotted around Rs. 0.4 billion
for promoting the fabric emphasizing its Unique Selling Proposition (USP), eco-friendliness.

Background Note

Khadi has its roots in the freedom struggle of India. Khadi, the home spun cloth was central to Gandhi's vision of self-
reliance and self- rule. Gandhi wanted Indians to spin their own cotton thread and to weave Khadi, thereby,
providing employment to many Indians and contributing to the country's self-sufficiency.

Post-independence, Khadi fabrics were woven on handlooms from cotton, silk, and woollen yarn, which were hand-
spun. The production of Khadi is labour intensive as the weaving has to be done manually. The pure cotton collected
from cotton farms is first ginned and bales are made.

These bales are then converted into rowings and distributed to different spinning units. In the spinning units, the
cotton fibre is manually converted into yarn using charkas. The yarn is then woven into fabric using handlooms.

During the post-independence era, Indian industrialists set up capital intensive textile mills. Due to mass production,
these mills could offer fine cloth at lower prices. Synthetic material like polyester was available at a very low price
compared to Khadi. Thus, despite all policy incentives to popularize Khadi, people bought machine made textiles.
In order to popularize khadi among the masses, in 1957, the government set up the KVIC. It had the following broad
objectives:

- The social objective of providing employment

Besides Khadi, KVIC also dealt with other products such as toilet soaps, detergents, honey, pickles, spices, incense
sticks, handmade paper, leather, ceramics, and many other agro-based products. To keep the spirit of Khadi alive
and promote it as a national fabric, KVIC has set up many outlets across India. As a result, thousands of spinners,
who wove the fabric could sell their output through the vast network of KVIC retail outlets.

However, the situation did not improve much. The poor quality of garments sold through the KVIC outlets, resulted
in customers' dissatisfaction. People even complained that the quality of Khadi had deteriorated and hence it faded
easily. In the 1990s, very few people bought Khadi. Khadi was bought only during the annual discount sale.

Synthetic material was quickly replacing the hand-made fabric. People who had got used to the high quality of
imported materials, felt that Khadi was rough and coarse and associated it with shapeless kurtas, mostly worn by
politicians. And therefore, in spite of the GoI's financial assistance to thousands of traditional spinners in India, they
had tough time selling their product.

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. With increasing interest of the western world in use of handloom and Khadi, many Indian
designers began to use Khadi for their designs. The government also made efforts to promote Khadi. In September
2000, Vasundhara Raje, Minister for Small Scale Industries, initiated a movement to revive all the 7,000 KVIC shops in
India and make Khadi more fashionable and affordable. The KVIC Board hired the services of leading fashion
designers to help create a new range and brand of Khadi wear.
In May 2001, KVIC set up the first air-conditioned shop in New Delhi. The décor was modern and the clothes were
neat and fashionable. The outlet sold Khadi garments designed by high profile designers. On the opening of this
outlet, well-known fashion designer, Rohit Bal commented, "Khadi is the Indian alternative for linen. It is as
comfortable and now, we've proved that it is as fashionable". In January 2002, a high-profile textile exhibition,
featuring Khadi ensembles designed by prominent Indian designers, was launched in New Delhi to popularise the
traditional hand-spun cotton.

The idea of the exhibition was to promote wholly hand spun, hand woven and hand patterned fabric, as a unique
luxury product. The exhibition displayed western as well as traditional Indian attire made from the finest Khadi
available in the country. Besides, nearly 110 varieties of the fabric (from the sheerest to the coarsest) were
showcased. Designer Rakesh Thakore, whose collection was showcased in the exhibition commented, "If packaged
well, Khadi can be sold internationally." The exhibition was sponsored by a Swiss charitable trust, Volkart Foundation
in association with the Indian National Trust for Art and Cultural Heritage (INTACH).

With many designers experimenting with Khadi, the designs are no longer as simple as they used to be. A great deal
of emphasis was given to the details of the designs and many new colours were introduced. Eco-friendly vat dyes
were used. In March 2002, Preyasi, the official designer for KVIC, launched "The Khadi Range Collection-2002." In the
collection, Khadi was used to create apparel such as, casual shirts, waist coats, skirts, wrap-arounds, trousers,
parallels, and tops for women.

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. Therefore, in 2000, the global consulting firm, Arthur Anderson was hired to suggest
restructuring strategies for KVIC. According to the report, submitted to the Ministry of Small Scale Industries, KVIC
should be a policy-making body and play a strategic role rather than being involved in the operations.

It also suggested that KVIC should be made a market-oriented organization, and given the freedom to decide on the
issues of rebate. In order to improve the marketing and retailing aspects of the sector, it was proposed that an
independent marketing company be formed, which would be disintegrated from the existing Khadi and village
industries structure.

This company would also deal with improvements in the quality of products, packaging and marketing. It also
recommended that the special rebate on Khadi products be made available in the first week of every month, instead
of the usual 90-day period after the month of October. The declining production, sales, rural employment
opportunities and share of Khadi in the total business of KVIC had become a matter of serious concern for the
government.
This had assumed greater significance as the population and per capita consumption of clothes in India had
considerably increased over the years. Keeping this in view, the GoI took many initiatives to promote the sector and
exploit the full potential of Khadi as a product category in all its forms. As a part of these initiatives, KVIC registered
Khadi as a brand name, thereby, protecting it legally.

In order to compete with other varieties of textile and make it more acceptable in the market, improvisation was
needed and new products and designs had to be developed. Keeping this objective in mind, in October 2001, KVIC
signed a memorandum of understanding with the Ahmedabad-based National Institute of Design (NID) to provide it
design support in order to improve the diminishing market-share of Khadi.

Under the agreement, a special cell would be set up at NID (financed by the KVIC) to provide design support services
in Khadi, village industries, packaging, marketing, communication, publicity, disseminating materials and other
design-related activities.

Khadi Goes for a Facelift

Over the years, the Khadi Boards of different states have been experimenting on blending of Khadi with other
materials and improving its quality. In July 2002, a collection of ensembles in 'Tencel Khadi' (a blend of Tencel and
Khadi in the ratio 30:70) was created by Bangalore-based designer, Deepika Govind, in association with the
Karnataka Khadi Board. Tencel is a lyocell fiber natural in origin and hence, environment friendly. It offers the
comfort and luxury of a natural fiber as well as the performance and practicality of a man-made fabric. Tencel Khadi
showed lesser shrinkage (4-5%) as compared to the high shrinkage seen in Khadi garments (about 7 %).

Due to Tencel's softness, it would become easier to work with Khadi and lend better drape quality to finished
garments. Tencel Khadi would provide excellent scope for exports. In 2002, the Austria-based company, Lenzing AG,
proposed to make Khadi more eco-friendly by blending the bio-degradable 'modal fibre' with Khadi. This blend
would absorb 50 per cent more humidity than cotton. The blend, besides strengthening the Khadi yarn, would make
it easy to wash and maintain.

Future of Khadi

The saleability of any textile depends on its USP and performance. For many years, the promotion for Khadi had
been on emotional and political grounds while its quality and variety had been ignored completely. Khadi has very
little to offer in terms of fabric performance. It looks attractive when starched and kept in showrooms but, it does
not remain the same after washing. Even finer counts and blends of Khadi cannot withstand many washes and thus,
cannot be used for day-to-day purposes.

It was becoming extremely difficult for Khadi to compete with the high-tech, colour-fast, wrinkle-free, mill-made
cottons and blends available today. According to analysts, Khadi requires government sanction in every single
activity and has therefore been stuck in a bureaucratic swamp, unable to increase its output or raise the quality of
the fabric.

In 2002, Khadi formed less than half per cent of India's textiles. In order to grow, the production of Khadi needs to be
decentralized. A research and development wing should also be established by KVIC to experiment with new
patterns and colours. Besides, weavers can also be given grants to enable creating new designs.

KVIC must allot a special advertising budget to promote the fabric. KVIC plans to launch an advertising campaign in
India and abroad to create awareness among people about Khadi and its uses. For this, it allocated an advertising
and promotional budget of about Rs. 0.4 billion. It also plans to set up Khadi shops at all the international airports in
India. KVIC is also exploring the possibilities of using e-commerce to market its products. However, Khadi, like any
other craft of India, would need to face the challenge of quality and produce contemporary designs, which suit the
tastes of the present generation.

Points to ponder and discuss

1. A series of actions and initiatives have been taken by the authorities since India’s independence to revive,
promote and sell Khadi. Please list out these actions and initiatives under three categories, namely Strategic Level,
Business Level and Functional Level.

2. Considering the Five Forces Model, discuss and list out various factors/ circumstances at play in this case, that you
relate to each of these forces.

3. Discuss in group and list out the reasons for failures and decline of Khadi, as understood by you/ your group. Give
convincing arguments in favour of your answer(s).

4. Draft a ‘Vision Statement’ and a ‘Mission Statement’ for KVIC as you deem fit, to give it a decisive direction and
the required strategic push towards future success. Remember the ‘What’, ‘Who’ and ‘How’ of a business, besides
other important aspects, while framing these vital statements.

5. If you were the Head of KVIC, what strategic decisions would you take, to do a ‘Turn-around’ and make Khadi a
successful business venture? Prepare and present your case in form of a PPT of not more than eight slides.