India’s Khadi industry to receive $150 million loan from ADB

Last updated: October 2, 2008

Manila, Philippines (BBN)- 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.

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.

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.

Reviving the khadi industry is expected to bolster employment opportunities in India, particularly in the rural areas where 73 per cent of the country’s poor live.


India’s 11th Five Year Plan notes khadi production has huge employment prospects, particularly for women and minorities.

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.

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 per cent of India’s textile market, according to an ADB press statement.

BBN/SI/SS/AD-02October08-11:46 PM (BST)

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