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| 1 | What is the date from which the Scheme came into operation? |
03 Nov 2005 |
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| 2 | How will the date be related to actual implementation by the tanneries? |
| For tanneries availing loans from banks/ FIs , assistance will be available only after the loan is sanctioned on or after 03 Nov 2005. For self financed units, assistance will be available where orders for machines are placed after 03 Nov. 2005. |
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| 3 | What are the broad objectives of the Scheme? |
| Technology upgradation, Productivity enhancement, environmental safeguards, gaining global competitiveness, increase in employment potential are the broader objectives of the scheme. | |
| 4 | What are the activities covered under the Scheme? |
a) Modernisation of machinery facilities |
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| 5 | Who are eligible? |
| All the existing tanneries – atleast three years in existence, two years cash profit and modernization proposals after 03 Nov 2005 – are eligible. | |
| 6 | How to apply ? |
| There is a prescribed application. It is called IDLS Form -1. It could be downloaded from the websites of CLRI ( www.clri.nic.in) , CLE (www.leatherindia.org) as well as DIPP (www.dipp.net.in) and FDDI ( www.fddiindia.org) . is also available in the Scheme copy ( published by DIPP) and may be obtained from PIUs of CLRI an FDDI. | |
| 7 | Where to apply and submit the application? |
| The filled in applications relating to tanneries will have to be submitted /sent to Project Implementation Unit (PIU) in CLRI and for leather products in FDDI | |
| 8 | What are the addresses of PIUs ? |
The address for PIU – Tannery Modernisation The address for PIU- Product Units |
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| 9 | What is the contact address of SIDBI? |
| Mr Ram Nath General Manager, SIDBI SIDBI Tower 15, Ashok Marg, Lucknow 226 001 Tel : 0522-2286376 Fax : 0522- 2288457 E-mail: ramnath@sidbi.com Regional Offices at Chennai, Delhi, Kolkata, Kanpur, Ludhiana, Mumbai |
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| 10 | Who will evaluate the technical viability? |
| Technical evaluation is carried out by CLRI, Chennai for tanneries and FDDI, NOIDA for product units | |
| 11 | Who will asses the bankability? |
| For those units taking loans - their respective banks /FI s. Self finance units – SIDBI will carry out bankability. | |
| 12 | Which are the eligible banks /FI s for bank ability assessment? |
| All scheduled commercial banks (as per RBI) and State /Central FIs | |
| 13 | What is the quantum of assistance / grant? |
| The assistance/grant is to the extent of 30% for SSI units and 20% for non SSI units on the investment made on plant and machinery under modernization program, subject to the ceiling of Rs 50 lakhs per unit in both the cases. | |
| 14 | Whether multi product line units are entitled for assistance for each product line separately? |
| Yes, subject to a limit of Rs. 50 lakh for each product line . | |
| 15 | Who will sanction the assistance? |
| Assistance would be sanctioned by DIPP on the recommendation of the Steering Committee. | |
| 16 | Who constitute the Steering Committee? |
| Joint Secretary, DIPP is the Chairman. It has representatives from CLRI, FDDI, CLE and industry with Director (Leather) as the Convener | |
| 17 | Who will disburse the sanctioned assistance? |
| SIDBI will be the disbursal agency. | |
| 18 | Are the tanneries availing loan from foreign banks eligible for assistance ? |
| Yes, eligible | |
| 19 | How will the assistance be disbursed? |
| Assistance will be disbursed after arrival of machines at site and execution of agreement with banks/FIs on behalf of Govt of India. SIDBI will be remitting the amount to the bank. In the case of self-financed units, the agreement will be executed by SIDBI and disbursed by it. | |
| 20 | Is it possible to avail the assistance in phases? |
| Yes, modular efforts for modernization will be permitted on successful completion of earlier modules | |
| 21 | Whether assistance will be given directly to the beneficiary ? |
| Yes , assistance will be remitted to the bank/FI for its adjustment against loan component earmarked for modernisation program and to self financed units, directly. | |
| 22 | Whether assistance can be adjusted against any dues of bank/FIs outstanding against the beneficiary? |
| No it cannot be adjusted | |
| 23 | .Whether assistance is interest free? |
Yes, it is a grant |
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| 24 | Under what circumstances will the assistance be recovered? |
In the event the unit becomes non operational within two years of receipt of assistance and for any false information and for non-conformance to other conditions stipulated in the agreement. |
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| 25 | What is the rate of interest for recovery of assistance? |
| At the Prime Lending Rate of SIDBI / bank at the time of invoking the penal clause | |
| 26 | Whether assistance will be given on first come first served basis? |
| Yes | |
| 27 | What would be the validity period for sanction of advance? |
| The validity period for sanction of advance is six months. It can be extended by SIDBI in consultation with PIU. | |
| 28 | What are the obligations of the beneficiary? |
| Modernisation should lead to demonstrable increase in unit value realization and/or production capacity and/or better compliance of pollution norms. Assistance should be utilized for the intended purpose To report operational performance for two years |
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| 29 | How is the cost of the machine determined? |
It is arrived by adding to bill value of the machines, taxes /duties, transport and insurance. |
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| 30 | Is there any restriction on installation charges? |
Yes, it is restricted to 5% of the landed cost of the machine. |
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| 31 | What covers the 5% of installation charges ? |
Installation and commissioning charges including civil and electrical work but restricted to 5% of the landed cost of the machine. |
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| 32 | Whether imported second hand machines are eligible for assistance? |
Yes, subject to specific certificate by PIU that it leads to technological upgradation. |
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| 33 | Whether imported second hand, reconditioned machines are eligible for assistance? |
Yes, subject to specific certificate by PIU that it leads to technological upgradation. |
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| 34 | Whether second hand, indigenous machines are eligible for assistance? |
No |
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| 35 | Whether imported second hand, but indigenously reconditioned machines are eligible for assistance? |
No |
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| 36 | Whether self-fabricated machines will be eligible for assistance? |
No , except in case of tanning drum. |
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| 37 | Are changes in specifications or source of supply of machines allowed after sanction of assistance? |
SIDBI may take a decision in this regard in consultation with the PIUs. |
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| 38 | After sanction of assistance one wants to add or reduce /replace a few machines. Will it be allowed? |
SIDBI may take a decision in this regard in consultation with the PIUs. |
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| 39 | Whether machines for modernization programme taken on deferred payment basis, will be eligible for assistance? |
Yes |
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| 40 | What will happen if supplier insists on major part of the payment before the delivery of machines ? |
The payment is to be made by the banks/FIs or by tanneries from their own resources |
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| 41 | If a tannery purchases second hand imported machines from a Govt. undertaking in auction/sale, will it be eligible for assistance? |
Yes, subject to specific certificate by PIU that it leads to technological upgradation |
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| 42 | Whether machines purchased from Port/Custom authorities in auction will be eligible for assistance? |
Yes, subject to specific certificate by PIU that it leads to technological upgradation |
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| 43 | Whether machines purchased from FI/banks in auction/sale will be eligible for assistance? |
Yes, subject to specific certificate by PIU that it leads to technological upgradation |
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| 44 | Whether the assistance is available for purchase of spares for imported machines? |
Yes, in case spares are purchased along with new and second hand and reconditioned machines |
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| 45 | Whether the cost of D G set is eligible for assistance? |
Yes |
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| 46 | What is the system of determining SSI status? |
The Certificate issued by the District Industry Centre. |
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| 47 | A tannery intends to purchase certain machines from own resources and certain machines with loan from FIs/banks. What will be the procedure for availing assistance? |
Based on the sanction letter from bank/FI on loan component, Steering Committee will consider the application and on its approval, SIDBI will complete the formalities. |
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| 48 | Is it possible to install the machines in a different premise on account of paucity of space? |
Yes, provided machines are installed in a premise owned by the same firm / company. |
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| 49 | Whether a third party which has taken an existing tannery on lease/rent and wants to go for modernization will be eligible for assistance? |
Yes, provided the third party has taken the tannery on lease/rent through a registered deed and lease/tenancy is available for a minimum period five years from the date of sanction of assistance. |
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| 50 | Whether the tanner who has given his tannery on lease to a third party will be eligible for assistance? |
Not eligible |
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| 51 | A closed tannery ( not sick as per definition of RBI) which was running for more than three years but forced to close down as a result of Court orders, intends to relocate and purchase certain machines for modernisation complying with pollution norms. Whether such tanneries are eligible for assistance? |
Yes, only in Calcutta and Erode in Tamil Nadu, provided there is cash profit for two years prior to the date of closure as per court order. It also needs to be verified that tannery is in new place and is a member of CETP. |
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| 52 | In case assets of an existing tannery is divided among partners / directors of a firm / company as a result of settlement/partition, then, whether separated units will be eligible? |
Yes, subject to the existence of divided units for three years and they fulfill other conditions. |
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| 53 | When the constitution of a firm changes during the last three years then, is it eligible for assistance? |
Yes |
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| 54 | Whether a tannery which intends to set up its own effluent treatment plant is eligible for assistance? |
Yes |
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| 55 | Whether a tannery which intends to go in for modernization of existing effluent treatment plant is eligible for assistance? |
Yes |
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| 56 | Whether setting up of a water treatment plant is eligible for assistance? |
Yes, at individual tannery level. |
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| 57 | Whether building and other related infrastructure is allowed for assistance? |
No |
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| 58 | Whether IT solutions covering hardware and software are allowed for assistance? |
Yes |
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| 59 | Whether net working and e-governance will be allowed for assistance? |
Yes |
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| 60 | Whether purchase of computers, software, internet facilities for office purpose will qualify for assistance? |
No |
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| 61 | Whether the equipment relating to plant ecology qualifies for assistance? |
Yes |
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| 62 | Whether the tools and equipment relating to worker safety will be allowed for assistance? |
Yes |
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| 63 | Whether computerized process control systems will be allowed for assistance? |
Yes |
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| 64 | Whether installation of chrome recovery and reuse facilities will be allowed for assistance? |
Yes |
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| 65 | Whether testing, R&D, sample making facilities are allowed for assistance? |
Yes |
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| 66 | Whether replacement of existing machinery and /or expansion will be eligible for assistance? |
Yes |
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| 67 | Is there any provision for adding /deleting machines to/from the list of approved machines in the scheme? |
Yes, with the consent of Steering Committee |
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| 68 | Whether diversification is allowed under the scheme of assistance? |
No |
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| 69 | Whether backward /forward integration is allowed under the scheme for assistance? |
Yes, provided such integration enables the improvement in operational performance of the unit’s core business. |
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| 70 | Whether product units can establish leather finishing facilities under this scheme and claim assistance? |
Yes |
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Clarification sought by PIUS |
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| 1 | If Bank/FI sanctions loan in cases where there is no profit, can we exempt the two years profit clause? |
| No | |
| 2 | Self assembly and self fabrication of units – what stand is to be taken ? |
| No, except tanning drum. | |
| 3 | It works out cheaper to recondition imported machines in India. Can we allow such costs? |
| No | |
| 4 | Can we allow import of Embossing Plates under the Scheme and extend assistance? |
| Plate designs are continuously changing. They improve the lower grade leathers. May be allowed. | |
| 5 | In some States, there is a recurring power scarcity. Can we allow the import of D G set under the Scheme? |
| Yes allowed. | |
| 6 | Deferred payment was for a duration of one year last time. Now RBI allows for 5 years. Can we allow accordingly? |
| Yes , allowed. | |
| 7 | Some tanners in Vellore District installed R O system recently ( prior to 03 No 2005) to meet environmental obligations. Can we allow assistance under the present scheme? |
| No | |
| 8 | Tanners in Tamil Nadu made huge investments in the recent years on environmental safeguards. It was a huge cash outflow, which made some tanneries unable to earn profit. If these investments are excluded from the balance sheet, they may show profit and get eligibility for assistance under the scheme. Can we allow this? |
| No | |
| 9 | Environment related investment is largely through common efforts. Is it possible to extend the assistance under the Scheme to CETP s and SPV s created for this purpose?. |
| Each unit’s share in CETP would be taken as his cost of the project and 20% or 30% of that would be provided as Govt. of India assistance under the IDLS scheme subject to the limit of Rs. 50 lakhs. If a company owning CETP desires to upgrade its facility. The same would also be permissible subject to limit of Rs. 50 lakhs.. However, as it involves a policy decision the same will be communicated to both PIUs after the approval of the department. | |
| 10 | Buying of a technology /patent which improves the process system and reduces the pollution load/waste output. Can we allow under the Scheme? |
| Yes, allowed. | |
| 11 | Is it adequate if a unit files one application for tannery and products when doing both? |
| One application will be apprised by both PIUs and total assistance will be restricted to Rs. 50 lakhs. | |
| 12 | There are number applications pending with Govt. for assistance under the last Modernization Scheme. Tanners want that they be cleared first. |
| Not permissible under the present scheme. | |
Roles and Responsibilities of PIUs and SIDBI |
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| PIUs- Roles |
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| PIUs – Responsibilities |
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| SIDBI - Roles |
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| SIDBI – Responsibilities |
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