In India, Khadi is not just a cloth, it is a whole movement started by Mohandas Karamchand Gandhi. The Khadi movement promoted an ideology, an idea that Indians could be self-reliant on cotton and be free from the high priced goods and clothes which the British were selling to them. The British would buy cotton from India at cheap prices and export them to Britain where they were woven to make clothes. These clothes were then brought back to India to be sold at hefty prices. The khadi movement aimed at boycotting foreign goods including cotton and promoting Indian goods, thereby improving India’s economy. Mahatma Gandhi began promoting the spinning of khādī for rural self-employment and self-reliance (instead of using cloth manufactured industrially in Britain) in 1920s India thus making khadi an integral part and icon of the Swadeshi movement. The freedom struggle revolved around the use of khādī fabrics and the dumping of foreign-made clothes.

Source: http://en.wikipedia.org/wiki/Kh%C4%81d%C4%AB