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KVIC’s stringent rules act as a deterrent for other manufacturers and retailers, who say it’s like the pre-1991 licence raj.

New Delhi: A little over a month before India begins its year-long celebrations to mark the 150th birth anniversary of Mahatma Gandhi in 2019, the policies of the state-run firm in charge of one of the greatest symbols of his legacy are being slammed as a blot on his philosophy.

“Like swaraj (self-rule), khadi is our birth-right, and it is our life-long duty to use that only. Anyone who does not fulfil that duty is totally ignorant of what swaraj is,” Gandhi had written almost 96 years ago, according to the Mani Bhavan Gandhi Sangrahalaya in Mumbai.

“We cannot claim to have understood the meaning of swaraj till khadi becomes as universal as currency.”

And yet, the Khadi and Village Industries Commission (KVIC) — the government body entrusted with the promotion of handspun cloth and other handmade natural products — is being accused of using its mandate to strangulate competitors in the private sector who manufacture and sell the fabric, contradicting the Mahatma’s vision.

The KVIC today not only owns the trademark over khadi, but even on the charkha or spinning wheel, both of which are synonymous with Gandhi and the freedom struggle.

KVIC’s mandate

The KVIC Act, first enacted in 1956 and subsequently amended, specifies that the mandate of the commission is to “ensure genuineness and to set up standards of quality and ensure that products of khadi and village industries do conform to the said standards, including issue of certificates or letters of recognition to the concerned persons”.

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Any retailers wishing to sell khadi have to mandatorily obtain the Khadi Mark — a certificate of recognition — from KVIC, which is also responsible for the promotion of khadi among customers as well as artisans.

However, an expert who has worked extensively on Gandhi and his principles, said the Khadi Mark ideally should not be owned by anybody or any organisation. “Weaving and spinning are age-old practices and not confined to any time period. No organisation can exert its authority on these activities. The idea of exclusive ownership was never part of Gandhi’s ethos,” the expert said on the condition of anonymity.

Also read: KVIC’s Rs 525 cr notice on Fabindia. Can a govt body trademark Bapu’s Khadi and seek rent on it?

Crackdown on retailers

While the act gives KVIC the mandate to promote and ensure standard and quality of the fabric sold by other retailers, there have been many complaints that in doing so, it has drawn up stringent regulatory rules for others, which act more as a deterrent. The private companies complain that it is like going back to the dreaded pre-1991 licence raj.

KVIC, which falls under the ministry of micro, small & medium enterprises, recently sent legal notices to more than 200 companies — including Fabindia — for selling products under the ‘khadi’ brand, and even for categorising them as ‘handwoven’ or ‘handspun’.

This, the companies say, run counter to Prime Minister Narendra Modi’s vision for promoting and expanding the reach of khadi across the country.

“We have sold only handspun and handwoven fabric under the khadi brand. There has been no deviation. But it is unfortunate that despite this, KVIC has slapped a notice,” said a senior official of one of the private companies.

“This kind of move by the KVIC is leading to harassment. It almost works against the free market concept. It is like going back to the pre-liberalisation era.”

KVIC’s perspective

KVIC chairman V.K. Saxena insists it has the mandate to promote cottage industries besides fabric, and that while it has no regulatory power, it is within its ambit to keep a quality check on khadi.

“Khadi is a national fabric and there are certain standards that need to be complied with, but unfortunately, Fabindia has been using words such as ‘khadi’, ‘handwoven’ or even ‘handspun’ to sell mill-made cloth,” he said.

KVIC has also started organising awareness and promotional campaigns in schools and colleges. “We want to create awareness among the youth and educate them about the fabric, which is associated with the freedom movement, swaraj and stands for purity and honesty,” Saxena said.

To be sure, khadi is big business and a money spinner for KVIC.

With PM Modi as its brand ambassador, KVIC’s average annual sales have doubled – to Rs 1,828 crore between 2015 and February 2018 from Rs 914 crore in 2004-14.

KVIC’s average exports have increased by more than 133 per cent from Rs 88 crore to Rs 205 crore in 2015-18. Production of khadi fabric has also jumped from the average of 91 million sq m to 157 million sq m.

However, one of the key goals behind KVIC — employment generation — is not being achieved. Although budget distribution and fund allocation have gone up from Rs 1,395 crore to Rs 2,135 crore in 2015-18, the number of people employed has fallen from 2,127 to 1,641.

Debatable legal position

Manoj Kumar, corporate law expert and managing partner at Hammurabi and Solomon, told ThePrint that having the trademark legally gave KVIC the power to crack down.

“After having a trademark ownership on the brand khadi, it does not remain a generic word. Therefore, any use of the brand khadi needs to be licenced by the trademark owner, which in this case is the KVIC,” Kumar said.

“The production or dealing in Indian hand-made cotton cannot be prohibited, though it cannot be called khadi.”

However, according to K&S Partners — experts in issues related to intellectual property rights — the name ‘khadi’ or ‘khaddar’ is defined under the Khaddar (Protection of Name) Act, 1950. The definition says that these words — whether in Hindi, English or any other Indian language — when applied to any woven material, shall be deemed to be a trade description. As such, there cannot be a trademark on these words.

Also read: Patanjali to enter khadi market dominated by Fabindia and state-owned KVIC

“Being a trade description, it is not eligible for registration as a trademark. In view of this definition, it is also debatable whether khadi could be used on products other than handspun or handwoven cloth,” said Latha Nair, partner at the firm.

“Yet, KVIC has gone ahead and claimed trademark rights in khadi by registering the same as a trademark for scores of products — including safety matches, footwear, stationery, toys, processed food, coffee, tea, sugar, pharma products, soaps, perfumes, plaster of Paris, limestone, leather, firearms and even methane gas.”

Meanwhile, the All India Artisans and Craftworkers Welfare Association has commissioned a study to review KVIC’s position.

“Khadi is defined as handwoven and hand-spun fabric,” said Madhura Dutta, executive director, AIACWA. “Handwoven, by itself, refers to a much wider and diverse range of handloom production traditions in India.”

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