The Ramakrishnaiah Committee (1987) recommended that any product could be considered as rural as long as the concerned industry has a per capita investment of Rs 50,000 (now raised to Rs 1,00,000 and Rs 1,50,000 for the tribal areas) and is located in a habitat with population less than 20,000 (now raised to 50,000).

The paradigm shift, as explained above, needed an institute capable of dealing with a large number of technologies and industrial contexts involving myriads of materials, manufacturing processes and consumer oriented designs.
A ‘hub and spokes’ model was considered essential and thus MGIRI was established (by revamping the JBCRI) as a hub linking the rural industries with a network of specialized S&T and management institutions. The entire project of establishment and trial-run took nearly 8 years (2001 to 2008) and was a collaborative effort of the KVIC with IIT Delhi.