Objective of the scheme

Integrated Development of Leather Sector Scheme
I. Objective
i. 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.
ii. 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
II Eligibility Criteria
i. 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 up-gradation 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
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.
III 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.
IV. Quantum and Nature of Assistance
(a) Cases prior to August 29, 2008
i. 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
(b)Cases subsequent to August 29, 2008
i.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.
ii. Subsidy amounting to more than Rs. 25 lakh would be released
in four equal annual installments.
iii. 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.
iv. The cost of upgradation under the scheme will include:
v. Bill value of machines,
vi. Sales and excise tax,
vii. Transportation and transit insurance cost,
viii. Import related duty,
ix. Installation and commissioning charges including civil and
electrical work restricted to 5% of total land cost of machine.
V.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 appraisals 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.
vii. 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.
viii. 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.
ix. The Government’s 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.
x. 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
xi. 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.
VI. Other Terms &Conditions
i. The Bank/SIDBI will get an agreement executed on behalf of
Government of India with the industrial unit prior to
disbursement of assistance.
ii. Assistance to be released by Banks concerned only on arrival
of machines at site.
iii. The amount released by the Government cannot be utilized
towards adjustment of default in repayment of principal and
payment of interest by the borrower.
iv. After completion of modernisation programme, the unit to
submit a completion certificate to SIDBI.
v. 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.
vi. 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
vii. In case of non-compliance, Bank concerned to take necessary
legal action.
VII. Additional Information
i. 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.
ii. For one upgradation /modernisation project, units are not
entitled to avail the benefit from both the CLCSS and IDLSS.
iii. 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).
iv. Govt. of India has no objection to sanctioning of bridge loan
pending receipt of investment grant, if the Lending Agency so
v. 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.
vi. 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.
VII. Roles & Responsibilities
(a) Role of Project Implementation Unit (PIU)
i. Receive applications
ii. Assigning registration numbers
iii. Assess the primary eligibility criteria
iv. Examine the existing facilities
v. Relating the proposed modernization to existing infrastructure
vi. 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
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
(b)Responsibility of PIU
i. Applicants eligibility
ii. Machines and prices
iii. Technical assessment
iv. Technical viability analysis
v. Database generation and maintenance
vi. SSI status
(c) Role of SIDBI
i. Assessing the financial viability
ii. Examining financial documents
iii. Checking SSI status
iv. Calculation of grant amount
v. Entering into agreement
vi. Checking the arrival of machines at site
vii. Disbursal of assistance
viii. Interaction with banks/ FIs / PIUs
ix. Monitoring the performance for two years, after implementation
(d) Responsibility of SIDBI
i. Check the status of the unit (SSI / NON-SSI)
ii. Financial viability
iii. Grant amount
iv. Verification of availability of Machines at site
v. Disbursal of assistance on receipt from Govt.
VIII. Progress
As on December 31, 2014, Rs. 291.69 crore have been processed/
disbursed by SIDBI for subsidy to 1759 units.