Government of India introduced the scheme of Market Development Assistance (MDA) on Production in place of rebate after experimenting with several pilot schemes. The scheme has been given effect from 1st April 2010, to help Khadi institutions to reorient their activities extending adequate emphasis towards increasing artisans' earnings as well as ensuring quality of Khadi to customers. Under MDA scheme 25% of assistance is earmarked for payment among spinners and weavers as additional incentive through their bank/post office account.
Decontrolling and de-linking the sales price from the cost chart in the MDA scheme offering scope to the institutions to add value to Khadi, so that the products can be sold at market oriented price. The scheme of MDA on Production aims at uniform distribution of sales throughout the year unlike the erstwhile rebate scheme where most of the sale took place during the special rebate season of 108 days.
A well-dispersed sale spread over the year is helping Khadi Institutions to keep inventory levels down, thereby offering greater scope for mobilization of required working capital.