RESUMEN
Indian economy in its path of development has done the leap frogging from agriculture to service sector bypassing industrial sector. But still there exists a serious structural flaw in Indian economy. The agriculture sector which contributes just 14.1 percent to GDP employs 52.85 percent, which is higher than employment generated by industry and service sector put together, which together contributes 85.9 percent to GDP. The surplus labour in agriculture can be absorbed by the establishment and revival of Khadi and village industries as it creates employment at low per capita investment. The important objectives of establishing Khadi and village industries in Ind ia are: 1) providing employment to the ruralities 2) producing saleable articles 3) creating self reliance amongst the poor and 4) Building up of social rural community spirit.The Khadi and Village industry has registered a significant increase in terms of production and sales even during globalization period. The KVI undoubtedly is facing a stiff competition in the globalization period, but it has shown the signs of withstanding it without consistency! The KVI industry produced Rs. 4519.31 crore worth products in 1997-98 which increased to Rs. 18018.29 crore worth products in 2012-13. It had reached the height of Rs. 21852.04 crore in 2011-12. The corresponding sales also increased from Rs. 5065.20 crore in 1997-98 to Rs. 21111.51 crore in 2012-13. The record sale of Rs. 26860.13 crore was reported in 2011-12. Khadi and Village industries provided 56.5 lakh persons employment in 1997-98 which has increased to 121.73 lakh person employment in 2012-13. But the Khadi and Village industries has a long way to go as it suffer from too much of reliance on budgetary sources, lack of adopting new market techniques, lack of product innovativeness, could not market the brand image utilizing t he India‟s national heritage, etc. Moreover it has the potential to solve the unemployment problem of rural India to a greater extent. If we ignore the khadi and village industry, it is at our own risk!