MANILA, PHILIPPINES - The Asian Development Bank (ADB) is lending $150 million to help India revive the popularity of khadi, a widely-revered handspun and handwoven cloth left behind by poor production and marketing.

Reviving the khadi industry is expected to bolster employment opportunities in India, particularly in the rural areas where 73% of the country’s poor live. India’s 11th Five Year Plan notes khadi production has huge employment prospects, particularly for women and minorities, the Bank said in a press release this week.

A $2 million grant will be provided by the Japan Special Fund, through ADB, to support the implementation and monitor the progress of the khadi industry reform package funded by the ADB loan. Khadi is a versatile fabric, cool in summers and warm in winters. The raw materials may be cotton, silk, or wool, which are spun into threads on a spinning wheel called charkha. Its production was originally promoted for rural self-employment in the 1920s by political and spiritual leader Mahatma Gandhi.

“But even with the recognition of khadi in India and the large and diverse potential market the country provides, sales have nearly stagnated and fallen behind the overall strong market demand enjoyed by the textile market,” said Jiro Tsunoda, Senior Finance Specialist of ADB’s South Asia Department.

Khadi has been isolated from evolving consumer taste due to ageing equipment, inconsistent product quality, lack of professional expertise and funding, and lack of unity and resolve within the industry to adjust to changing market trends. As a result, the product accounts for only less than 1% of India’s textile market.

In contrast, the country’s overall textile sector has grown tremendously with the adoption of modern technology, branding, and strong marketing. Khadi production is organized by nongovernment organizations known as khadi institutions through artisans, such as spinners and weavers. The finished product is sold through outlets of khadi institutions around the country.

The state agency Khadi and Village Industries Commission provides policy, technical, and marketing support. In turn, the national government extends financial subsidies to promote the product.
The ADB loan, which will be released in four tranches over a period of three years, will revitalize the khadi industry by establishing a policy reform and implementation framework that will include a comprehensive reform package for khadi development.

The program will promote and market khadi by establishing a “khadi mark” including the design of a logo to indicate the product is genuine and to help build awareness and popularity of khadi. A marketing organization majority owned by the private sector will also be set up.