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KVIC to adopt market-linked pricing

17
Jun '10
Under the Khadi Reforms Development Program announced recently by Khadi and Industries Village Commission (KVIC), several initiatives have been announced to revive and ensure sustainability of khadi institutions. One of the reforms that have been suggested is market-linked pricing to replace cost chart.

Khadi institutions that avail sales rebate under the KVIC programme are currently required to follow a Cost Chart for pricing of Khadi products. This arrangement does not provide the flexibility in product pricing for increasing the sales profile of Khadi.

Accordingly the Cost Chart will be discontinued. The transition from centrally administered pricing to market-linked pricing will be accompanied with training and familiarization process.

Simultaneously, KVIC will introduce a system of 'Benefit Chart' for KIs registered with KVIC or Khadi and Village Industries Boards (KVIBs) as well as for the envisaged new Khadi ventures.

The Benefit Chart is intended to ensure that surpluses, generated by shift to market-linked pricing and expected increases in the price realization through proposed product and marketing reforms are used for the benefit of the Khadi artisans and workers.

After removal of price restriction the institutions will be encouraged to formulate pricing strategies as determined by market forces. KVIC will conduct training programme for product pricing and its implementation. KVIC will also provide other market related inputs to enable institutions in determining market oriented pricing.

The benefits that will accrue are that, atleast 50% of the surplus will be distributed as bonus / incentive to artisans. Balance earning will be utilized for creating provisions for future capital requirement including artisans' implements and their welfare. Proper flow of benefits to the artisans will be monitored by KVIC through audit of artisans' passbooks.

Fibre2fashion News Desk - India


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