Integrated Development of Leather Sector Scheme Objective of the scheme In order to increase employment opportunities, productivity and competitiveness

in the global market, it is essential for the Leather Industry to have access to timely and adequate capital for upgrading its technology level.

In light of the foregoing the present scheme is aimed at enabling existing tanneries, footwear, footwear components and leather products units to upgrade leading to productivity gains, right-sizing of capacity, cost cutting, design and development. Eligibility Criteria All existing units in leather and leather products including tanneries, leather goods, saddlery, leather footwear and footwear component sector undertaking viable and bankable programmes on technology upgradation are eligible for assistance. Any unit in existence for at least three years and having cash profits for at least two years on November 03, 2005 would be considered as an existing unit. Modernization programmes funded by SIDBI/Banks as well as those programmes undertaken by existing production units from their own resources are eligible for assistance. Assistance shall be available only for such projects in which the loan has been sanctioned by SIDBI/Banks/FIs on or after November 03, 2005. In case of self-financed modernization programme, assistance under the scheme to be available only for such projects where the order for the purchase of machinery has been placed on or after November 03, 2005 and subject to necessary documents being filed as per format while making the application under the present scheme.

Eligibility Criteria (contd.)

Modernisation programme funded by SIDBI/Banks as well as by existing production units of their own resources are also eligible. Under the revised scheme Financial assistance available for such projects in which term loan sanctioned by SIDBI/Banks/FIs on or after August 29, 2008. In respect of self finance cases financial assistance is available to such projects where the order of machinery have been placed on or after August 29, 2008.

SCOPE OF THE SCHEME Technology Up-gradation will include the following: Measures for technology up-gradation, productivity enhancement, improved environmental safeguards, global competitiveness through cost control and minimization of waste. Measures for up-gradation and modernization of machinery facilities including in plant lay-out and civil and associated electrical work relating to foundation of machinery facilities but excluding building and other related infrastructure. Creation of in house R & D and testing facilities and establishment of sample making facilities. Installation of the following types of machinery in an existing unit by way of replacement of existing machinery and/or expansion will be eligible. Modernization of Tanneries. Modernization of footwear units & Modernization of footwear components units Modernization of leather goods Modernization of leather garments

Modernization of saddlery units

Steering committee may seek the advice of National institutions for considering any other activity not listed above. Existing units will have the option to go for single or multiple activities as mentioned above with overall assistance limit of Rs.200 lakh.

QUANTUM AND NATURE OF ASSISTANCE II

Cases prior to August 29, 2008 The Scheme provides investment subsidy to the extent of 30% of cost of plant & machinery for SSI and 20% of cost of plant & machinery for other units (i.e. non-SSI units) subject to a ceiling of Rs. 50 lakh for technology upgradation / modernisation and/or expansion. Cases subsequent to August 29, 2008

II.

The Scheme provides investment subsidy to the extent of 30% of cost of plant & machinery for SSI and 20% of cost of plant & machinery for other units (i.e. non-SSI units), subject to a ceiling of Rs. 50 lakh for technology upgradation /modernisation and/or expansion and setting up a new unit. The subsidy amount would be @ 20% for all units (both SSI and non-SSI) above Rs. 50 lakh, subject to a ceiling of Rs. 200 lakh. Investment subsidy would also be available to units investing their own resources. Subsidy amounting to more than Rs. 25 lakh would be released in four equal annual installments.

For the purpose of this Scheme, the definition of small-scale industry would be the same as notified by the Government on the date of sanction of the project.

The cost of upgradation under the scheme will include: Bill value of machines, Sales and excise tax, Transportation and transit insurance cost, Import related duty, Installation and commissioning charges including civil and electrical work restricted to 5% of total land cost of machine.

Implementation Mechanism Administrative & Monitoring Setup Eligible industrial unit to apply in prescribed form in triplicate to the concerned PIU. Declaration on the form to be unconditionally supported by an affidavit. PIU to acknowledge the receipt of application and allot a registration number. PIU to complete the technical appraisal of the application received and send the application along with its recommendation to the applicant within 15 days of the receipt of the application. Then the unit to apply to the concerned Bank/FI in the prescribed form for loan. The bank on sanction of loan to forward the application with their comments and recommendations as well as letter of sanction to PIU preferably within a month. Then the PIU to present the applications along with financial appraisal from bank and technical inputs from PIU to Screening Committee for decisions and approval.

The sanction of assistance to be accorded by the Steering Committee in the form of investment grants. The decision to be conveyed by the DIPP to SIDBI and the sponsoring Bank concerned under intimation to the applicant within a week of the decision of the Steering Committee.

In case of projects involving no loan component, the industrial unit would send the proposal to the bank in which the unit has a working capital account and in case the unit does not have a working capital account then the bank in which it has a current account for financial appraisal of the project. Simultaneously a copy of the project would be endorsed to the PIU for technical appraisal. The bank would forward the proposal to the concerned PIU along with its specific recommendation and appraisal note. The Governments financial assistance would be released through SIDBI to the working capital account / current account of the unit on the basis of site inspection report of SIDBI. The assistance to the units would be released by SIDBI to the Bank Loan Account of the units in respect of loan cases and to the working capital Loan Account of the units in case of self finance cases. PIU will be responsible to the DIPP for providing technical and other assistance in the implementation of the scheme. PIU will serve as the implementation arm of DIPP in speedy action, development of relevant database including the lists of devices, sources of machineries. Other Terms & Conditions

The Bank/SIDBI will get an agreement executed on behalf of Government of India with the industrial unit prior to disbursement of assistance. Assistance to be released by Banks concerned only on arrival of machines at site. The amount released by the Government cannot be utilized towards adjustment of default in repayment of principal and payment of interest by the borrower. After completion of modernisation programme, the unit to submit a completion certificate to SIDBI. From the date of completion, up to two years, the unit availing the assistance to submit operational and performance details in prescribed form to SIDBI who would appraise the Steering Committee of the same.

In case the industrial unit becomes non-operational within two years of the receipt of assistance, it will be liable to refund the financial assistance availed, along with the interest to be charged from the date of closure till the date of refund at the PLR of SIDBI. In case of non-compliance, Bank concerned to take necessary legal action.

Additional Information The CLCSS and IDLS are two different Schemes of the Govt. of India. Units can avail benefits under CLCSS and also IDLSS provided the technology upgradation / modernisation programme is for different machines. For one upgradation /modernisation project, units are not entitled to avail the benefit from both the CLCSS and IDLSS. For the purpose of assessment of loan, the investment grant can be treated as part of promoters contribution while arriving at the Debt Equity Ratio (DER). Govt. of India has no objection to sanctioning of bridge loan pending receipt of investment grant, if the Lending Agency so desires. Principal outstanding against this bridge loan would be extinguished on release of eligible investment grant funds under IDLSS. However, interest charged by the Lending Agency for the time gap would be paid by the unit and is not to be adjusted from the investment grant. The SSI units which are claiming investment grant at 30% of the cost of eligible plant & machinery are required to submit a certificate of SSI registration and also that the status remains unchanged from Districts Industry Centres. Roles & Responsibilities

Roles of PIU Receive applications Assigning registration numbers Assess the primary eligibility criteria

Examine the existing facilities Relating the proposed modernization to existing infrastructure Checking of machines as per list and their suitability Comparing the prices of machines in relation to those prevailing in the market. Assessing the proposed activity in tune with the stated objectives Evaluating the indicated benefits Generation of database physical and digital Preparation of Technical Appraisal Report Reporting to the Steering Committee Interaction with applicants, banks/FIs, SIDBI Responsibilities of PIU

Applicants eligibility Machines and prices Technical assessment Technical viability analysis Database generation and maintenance SSI status

Roles of SIDBI Assessing the financial viability Examining financial documents Checking SSI status Calculation of grant amount Entering into agreement Checking the arrival of machines at site Disbursal of assistance Interaction with banks/ FIs / PIUs Monitoring the performance for two years, after implementation Responsibilities of SIDBI

Check the status of the unit (SSI / NON-SSI) Financial viability Grant amount

Verification of availability of Machines at site Disbursal of assistance on receipt from Govt. Progress

As on December 31, 2012, Rs. 204.63 crore have been released by SIDBI to 1318 units. *****