Definition of village industry clarifies rural location, per-capita capital limit, hilly-area uplift and inclusion of non-manufacturing units. The Act defines khadi as cloth woven on handlooms in India from cotton, silk or woollen yarn handspun in India or mixtures thereof. It defines village industry to include industries in rural areas producing goods or services subject to a ceiling on fixed capital investment per head (subject to central notification), preserves schedule-listed industries previously recognised despite non-rural location, applies an elevated capital ceiling in hilly areas, and includes non-manufacturing units established solely to support village industries.