5.
Clusters of SSI units manufacturing products which fall under
the administrative purview of other Ministries of the Government
of India may also be considered for financial assistance under
this Programme, with the consent of the Ministry concerned.
6.
In case the implementing agency is not the Government of
the State in which the cluster is located or an organisation
of that State Government, the agency will also need to necessarily
consult the State Government concerned and take its views
into account while selecting the cluster and drawing up
the strategy and/or action plan for its development.
Illustrative
Steps in Cluster Development Programme
7.
The main steps are:
- Selection
of cluster(s)
- Selection
of Cluster Development Executive(s)
- Trust
building
- Diagnostic
study
- Preparation
of action plan
- Approval
of budget and leveraging of funds from various institutions
- Implementation
of the action plan
- Monitoring
and evaluation
- Handing
over and exit
- Self-management
phase
Cluster
Development Executive (CDE)
8.
An officer/executive of the cluster-based SPV or the implementing
agency (other than the SPV) has to be selected and trained
to act as the Cluster Development Executive (CDE). The CDE
is required to conduct the Diagnostic Study, prepare the
Action Plan based on the former and get the Plan implemented
with full participation of the Cluster Actors, so as to
build up the collective capacity of the units in the Cluster
to sustain and carry on the promotional as well as commercial
activities in the long run even after the project comes
to an end.
9.
In case the selected cluster is far away from the office
of the implementing agency, office space may be provided
to the CDE on rent with basic equipment and furniture, etc.,
within or near the cluster. Funds will, however, not be
provided by Ministry of SSI for construction of office building,
purchase of vehicle, costly furniture and furnishing, etc.
Provision for office expenditure and travelling expenses
at a reasonable scale, usually ranging between 10 to 15
per cent of the total project cost, may also be considered
depending on necessity.
10.
The National Resources Centre (NRC) for SSI Cluster Development
created at the
National Institute of Small Industry Extension and Training
(NISIET), Hyderabad-500 045 and the International Centre
for Cluster Competitiveness and Growth (IC3G) at the Entrepreneurship
Development Institute of India, P.O. Bhat-382428, District
- Gandhinagar, Gujarat have been established for providing
training and related services for cluster development. They
conduct courses spread over 3 to 4 weeks for training of
CDEs on the tools and methodology of conducting diagnostic
studies and implementing cluster development initiatives.
Implementing agencies may approach the NRC or IC3G for organising
training of the CDEs after their project proposals are approved
by the Ministry of SSI
Cost
of Project and Government of India Contribution.
11.
The project cost may vary from cluster to cluster
and will depend on parameters like the duration of the project
(usually 3 years), size of the cluster, nature and scope
of the proposed interventions, etc., as emerged from the
diagnostic study. However, contribution of the Ministry
of SSI will not exceed 80 per cent of the total project
cost, subject to a ceiling of Rs.10 crore per project including
Rs. 10 lakh for “soft activities” i.e. capacity
building activities in the cluster where no fixed asset
is acquired or formed.
12.
The formats of proposals for such soft
interventions are detailed in Part I of the enclosures
to these guidelines (Annex I to IV). These
need to be adhered to strictly.
13.1.a.
Wherever required, assistance under this Programme may also
be considered for setting up Common Facility Centre (CFC)
in the cluster. The Detailed Project Report (DPR) for the
CFC together with appraisal report prepared by a bank (if
bank financing is involved) or an independent Technical
Consultancy Organisation/reputed Consultant will have to
be submitted in such cases.
13.1.b.
With the grant-in-aid sought from the Government,
the proposed CFC must be financially and operationally as
viable as any commercial project. As a result,
all CFC proposals should comply with the financial norms
of appraisal that a commercial bank would seek, e.g., internal
rate of return, break-even point analysis, debt-service
coverage ratio, sensitivity analysis, etc., using basic
templates such as projected profit & loss account and
projected balance sheet for the proposed CFC. The proposed
CFC must also justify its need in terms of its likely impact
at the level of an individual representative enterprise
of the group that it intends to benefit.
13.1.c.
In keeping with the objective as stated at the beginning
of paragraph 13.1.b above , CFC projects would be classified
and the Central Government (viability gap funding) assistance
therefor would be based on the following broad norms:
- Developmental
CFC projects: Central Government support of 70 per cent
of the project cost and the remaining to be provided by
the State Government concerned and the project beneficiaries.
-
Quasi-Developmental CFC projects: Central Government support
of 50 per cent of the project cost and the remaining to
be provided by the State Government concerned and the project
beneficiaries.
- Quasi-Commercial
CFC projects: Central Government support of not more than
30 per cent of the project cost and the remaining to be
provided by the State Government concerned and the project
beneficiaries.
- However,
in case of clusters of micro and / or village enterprises,
i.e., enterprises with investment in plant and machinery
(excluding land and building) in each case not exceeding
Rs. 25 lakh, the extent of Central Government assistance
may be raised to 80, 60 and 40 per cent of the project cost
in the three types of CFCs respectively.
In all the cases stated above , the entire
cost of land and building shall be met by SPV / State Government
concerned.
13.2. Implementing agencies shall be responsible
for setting up and commissioning of the CFC on a turn-key
basis. The CFC thus established will have to be
run by the Special Purpose Vehicle (SPV) on commercial
lines, with enough current revenue surplus to meet all its
current expenses as well as cost of replacement/expansion
of assets as and when necessary. Ministry of SSI
shall not accept any financial liability arising out of
operation of any CFC.
13.3. The formats for proposals
in this regard are given in Part II of the enclosures (Annex
V and VI). The guiding principles elaborated in Part II
need to be gone through carefully.
14. Contribution of the Ministry
of SSI to the total cost of the project will be decided
keeping in view the availability and willingness of other
stakeholders and partners like State governments, industry
associations, firms in the cluster etc. For further details
of funding scales, reference is invited to Part I and Part
II of the enclosures to these Guidelines. Implementing agencies
(including State Governments, cluster beneficiaries and/or
their SPVs) are expected to mobilise resources to fund the
remaining cost, as detailed in Part I/II of the enclosures.
Linkages with Business Development
Services (BDS)
15. Development of capacities of BDS providers
to meet the needs of small enterprises and establishing
linkages between them and small enterprise clusters constitute
a priority area of the cluster development strategy. Therefore,
the proposed cluster development activities should include
establishment of linkages between the cluster units and
the BDS providers in the public and private sectors capable
of catering to the needs of small enterprises.
Dovetailing with Other Schemes of the Ministry of
SSI/ARI and Schemes of Other Ministries of the Government
of India
16. Implementing agencies will be encouraged
to dovetail the cluster development initiatives with other
Schemes of the Ministry of SSI/ARI. Similar schemes of other
Ministries of the Government of India should also be tapped.
17. Implementing agencies may, wherever
necessary, seek assistance from technical agencies like
the Product and Process Development Centres and Central
Tool Rooms of the Ministry of SSI as well as the Central
Glass and Ceramics Research Institute, Central Leather Research
Institute, Technology Information Forecasting and Assessment
Council and other similar institutions of other Ministries
and Departments of the Government of India engaged in technology
upgradation of client enterprises, including SSIs.
Formats and Approval of Project
Proposals
18.1. The proposals for seeking
financial assistance from the Ministry of SSI should be
made in the formats given in Part I and Part II of the enclosures
to these Guidelines. These formats, though quite
detailed, are still illustrative and necessary additions/amendments
to the contents may be done by the implementing agencies,
depending on the nature of the cluster and the proposed
activities.
18.2. The proposals will be considered
and approved by the Steering Committee of the Small Industry
Cluster Development Programme under the chairmanship of
Secretary, Ministry of SSI for projects costing Rs. 1 crore
and above and of the Development Commissioner (SSI) for
projects costing less than Rs. 1 crore. However, projects
costing Rs. 5 crore and above will be scruitinised on file
by the office of DC(SSI) in consultation with FA, before
putting up to the Steering Committee for approval.
Disbursement of Funds
19.1 Funds will be released by the office
of the DC (SSI) directly to the SPV/IA, under intimation
to the State Government. The disbursement schedule
of the GoI grant would generally be in accordance with the
annual installments requested in the proposal of the project,
with justification for the said schedule to be considered
and approved by the Steering Committee. However, in general,
upfront contribution by the SPV or the beneficiaries share
would be a prerequisite before release of the first installment
of GoI assistance. Where bank finance is involved, written
commitment of the bank concerned to release proportionate
funds will also be necessary before release of GoI assistance.
This will also apply to the State Government contribution,
wherever applicable.
19.2 Further releases of the GoI grant will be contingent
on furnishing of prescribed utilisation certificate(s) and
verification of release of contribution by the bank and
the State Government. DC (SSI) may also require physical
verification of the progress of works before release of
the second and subsequent installments of GoI grants.
Monitoring and Evaluation
20.1. In case of projects implemented by
the State Governments, their autonomous bodies and SPVs
with the State Government as one of the stakeholders, monitoring
of the projects to ensure satisfactory and time-bound implementation
of the activities will be the responsibility of the State
Governments concerned. Each State Government will also be
required to constitute a Project Steering Committee consisting
of representatives of all the stakeholders for this purpose.
State Governments will send Quarterly Progress Reports (QPR)
on physical and financial parameters progress as well as
utilisation certificates prescribed under the General
Financial Rules of the Central Government to the Office
of the Development Commissioner (Small Scale Industries).
20.2 In case of cluster development projects
not covered by the provisions in the preceding paragraphs,
the Ministry of SSI will directly monitor the progress through
monitoring committees constituted at the level of the Ministry
or through its State level offices.
20.3 The formats of QPR and Utilisation
Certificate are enclosed in Part- I of the enclosures.
21.
This issues with the concurrence of the Integrated Finance
Wing vide their
Dy. No. 5089 dated 07.03.2006
(SANJEEV
KAUSHAL)
JOINT DEVELOPMENT COMMISSIONER (SSI)
Enclosure
– Part I (pp. 8-22)
Part
II (pp. 23-33)
Copy to –
1.) Chief Secretaries (All States/UTs)
2.) Secretaries of State Governments, in charge of Industries
Departments
3.) Directors of Industries (All States/UTs)
4.) Directors SISIs
5.) General Managers (All Tool Rooms)
6.) Principle Director/Directors (All Autonomous Bodies
under DCSSI)
7.) Principal Director NISIET
8.) Executive Director NIESBUD
9.) IF Wing (Fin I), D/o IPP, Ministry of Commerce &
Industry, New Delhi.
10.) Joint Secretary to Govt of India, Ministry of ARI
11.) Joint Secretary to Govt of India, DIPP, Ministry of
Commerce & Industry
12.) All members of the Steering Committee of SICDP
13.) Director EDII
14.) Chairman Coir Board
15.) CEO, KVIC
16.) Chairman, NSIC
17.) CMD, SIDBI
18.) Chairman/President, National Level Industry Associations
19.) Chairman/President, State Level Industry Associations
20.) Chairman/President, Cluster Level Industry Associations
21.) PS to Minister (SSI&ARI)
22.) PPS to Secretary (SSI&ARI)
23.) PS to AS&DC (SSI)
24.) Addl. Development Commissioners
25.) Joint Development Commissioners
26.) Industrial Advisers O/o DCSSI
27.) All Divisions, O/o DCSSI
28.) Adviser (Village &Small Industries), Planning Commission
