ARI (Average Rate Index) Division Schemes for MSME

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Introduction to ARI Division Schemes

ARI Division or Agro & Rural Industry is a collection of initiatives launched by India’s Ministry of Micro, Small & Medium Enterprises to promote and support MSMEs across India. The ARI division is concerned with Khadi and coir or coconut fibre. The division focuses on granting loans to small-scale artisans to promote market development, export & scientific and technological advancement in Khadi and coconut fibre. However, the scope of the number of schemes offered by the ARI divisions is more comprehensive than this. Let’s explore the different schemes offered by the ARI division under the Micro, Small & Medium Enterprises Ministry of India. 

Understanding ARI Division Schemes

The Ministry of Micro, Small & Medium Enterprises comprises two divisions: ARI (Agro and Rural Industry) and Small & Medium Enterprise. The ARI division is responsible for the administration of two bodies- The Khadi and Village Industries Commission (KVIC), Coir (Coconut fibre), and Mahatma Gandhi Institute of Rural Industrialisation (MGIRI). ARI division is also responsible for supervising and implementing the Prime Minister’s Employment Generation Programme (PMEGP).  The ARI division runs a collection of schemes for R&D, marketing, life insurance for the artisans, financial assistance for setting up a new enterprise, and infrastructural development. 

Types of ARI Division Schemes

Financial Assistance Under PMEGP

Prime Minister Employment Generation Programme (PMEGP)

The scheme is implemented by the Khadi and Village Industries Commission (KVIC) at the national level and by KVIC state directories at the state level. The scheme assists 25 lakh rupees for the manufacturing sector and around 10 lakh for the business/service sector for developing any project/unit. There is some extra funding provided for minorities and women. Any person above 18 with at least a VIII pass can apply for funds to develop a project costing above 5 Lakh for the manufacturing sector and above 5 Lakh for the business and service sectors. PMEGP only considers new projects.

Financial Assistance for Khadi Artisans 

Scheme for providing insurance to Khadi artisans under Janshree Bima Yojana 

To provide insurance coverage to Khadi artisans, a group of schemes under the Karigar Janashree Bima Yojana (JBY) was launched on 15 August 2023. KVIC formulated this scheme with the Life Insurance Corporation of India (LIC). Under this scheme, 200,000 Rs will be given if the person dies of natural causes, and 50,000 Rs will be provided for death because of any accident to the nominee assigned by the artisan. For permanent disability, 50,000 Rs will be provided, and for partial disability 25,000 Rs will be given to the Khadi artisans under this scheme. Permanent disability is defined as the loss of two eyes or two limbs, and partial disability is defined as the loss of one eye or limb under this scheme. Any Khadi spinner or weaver between the ages of 18 and 59 and below and marginally above the poverty line can avail of this scheme. The nominee of the deceased person can submit the original death certificate to the Pension Department of LIC of India through the Khadi institution to get the money under the scheme. 

Financial assistance to Khadi institutions under MDA

The government started a Market Development Assistance scheme on 1 April 2024 for Khadi artisans to promote and stimulate the growth of artisans in the market. This scheme is for Khadi institutions, and any Khadi institute with a valid Khadi certificate categorised as A+, A, B, and C can apply for the benefits under this scheme. The MDA will allot 20 % of Khadi and Polvastra’s production cost. However, the assistance provided is limited to the production target approved by the Standing Finance Committee (SFC) of the Khadi and Village Industries Commission (KVIC) for the given year. This smart MSME pricing strategy increases the sustainable manufacturing of Khadi and helps create a market for it. 

Schemes for providing financial assistance to Coir 

CSS of Export Market Promotion

The Coir Board is carrying out the Export Promotion Scheme to take a strategic and aggressive approach to market-specific promotion programs to aid Coir entrepreneurs in showcasing and popularising their products on global platforms and exploring new export markets. The scheme also assists in modernisation programs, facilitating sustainable development of the Indian Coir industry and supporting entrepreneurs’ participation in international trade fairs, product promotion events, seminars, and other marketing programs. The financial assistance of Rs. 2 lakh is given to eligible coir exporters to participate in international trade fairs and product promotion programs. 

Benefits of ARI Division Schemes for MSMEs

ARI division schemes benefit the Khadi Artisans and spinners, the coir manufacturers and production units, and all the MSME entrepreneurs associated with Khadi and Coir production. 

  • Any person who is 18 years of age and is VIII pass can establish a project/unit in the manufacturing and service sectors with assistance under PMEGP. The person will get financial assistance up to Rs.25 lakh for establishing a manufacturing unit and Rs.10 lakh for setting up a service unit. 
  • Khadi artisans from the marginal class or below the poverty line get life insurance. The Nominee assigned by the artisan can collect the money from the LIC through KVIC. 
  • Children of Khadi artisans studying at the 9th to 12th standard get a scholarship of Rs. 300 per quarter. 
  • The government also promotes the production of Khadi products under MDA. A 20% cost of production is compensated by the government to the Khadi Institute or groups by the government. 
  • The government also provides R&D grants for Coir production and manufacturing. Under these government funds, R&D activities, infrastructure creation, and civil construction/repairs are related to R&D activities.

Implementation of ARI Division Schemes

The ARI is a division under the Ministry of Micro, Small, and Medium Enterprises, and it runs a collection of schemes to support the growth and promotion of MSMEs. ARI implementation guide includes the details on eligibility criteria, application process, documentation process, evaluating mechanism, and stakeholders responsible for running the scheme. The ARI division website provides all of this information. The ARI division also implements schemes like the Prime Minister Employment Generation Programme (PMEGP). 

Best Practices for ARI Division Scheme Management

Many schemes are in place to support various MSME entrepreneurs and small-scale artisans, but they must be made aware of them. There are many practices that the ARI division can adopt to address this. 

  • The ARI division should provide clear and consistent communication through various channels to raise awareness about the multiple schemes run by the division. For this, different media channels like radio, newspaper, or directly going to the people help establish direct communication channels.
  • The application process to avail of various schemes should be robust and accessible. An online application system should be implemented with clearly defined eligibility criteria and establish expert committees consisting of artisans, financial institutions, and government stakeholders to review and approve proposals.
  • The artisans and many MSME entrepreneurs also need capacity-building and hand-holding to promote growth. The ARI division conducts training programs with industry experts and financial institutions, which will help the MSMEs in their small businesses and avail financial benefits from banks. 
  • The division should also work towards establishing MOUs with industries in India and abroad to enable information exchange and integrated service delivery.


Currently, MSMEs play an essential role in the Indian socio economic ecosystem by generating employment opportunities in both rural and urban areas. They contribute to rural industrialisation and development and the economic and sustainable growth of the country. However, they also need help with numerous challenges, like lack of access to finance, limited market reach, technological gaps, and infrastructural constraints. However, recent hand holding from the government has helped these MSME organisations overcome hurdles and stay on the growth path. The ARI division scheme is one of the significant contributors to the success of MSME organisations. One of the primary challenges addressed by the ARI Division Schemes is the lack of financial resources through PMEGP, MDA, and other schemes that provide economic and insurance assistance to the MSME organisations. The scheme also addresses the specific needs of the Khadi and Coir organisation, offering financial security in case of natural death and compensating Khadi institutions with 20% of the production cost. By continuously monitoring and adopting best practices, the ARI division can quickly become a catalyst for the sustainable growth of MSMEs in the Khadi and coir sectors. 

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Arpita Rathod Placement Representative
Arpita is a seasoned financial content writer with a specialized focus on Goods and Services Tax (GST). With a deep passion for the world of taxation and a Master's in English Literature, her specialization lies in taking challenging topics from diverse fields and breaking them down into digestible, engaging narratives.

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