IDLS Scheme – Investment Grant – Formalities with SIDBI

No. CLE-HO / ILDP / IDLS / 2013-14

 

May 24, 2013

Dear Sirs,

Sub: IDLS Scheme – Investment Grant – Formalities with SIDBI

As you are aware, the IDLS Scheme provides investment grant for technology up gradation, modernization, capacity creation in all segments of the Leather Industry.. The scheme provides financial assistance @ 30% of the cost of plant and machinery for SSI units and 20% of the cost of the plant and machinery for Non-SSI units, subject to a ceiling of Rs.200 lakh (@ 20% to all units above the assistance of Rs.50 Lakh). The IDLS Scheme is implemented through multiple agencies as detailed below:

Central Leather Research InstitutePIU for Tanneries
Footwear Design & Development InstitutePIU for Leather Products
Small Industries Development Bank of IndiaNodal agency for release of assistance to the sanctioned units
Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry, Govt of IndiaSanctioning Authority
Council for Leather ExportsFacilitation Agency for receipt of applications from units, and coordination with stakeholders

Once the Sanction Letter is issued by the Sanctioning Authority (DIPP), the concerned unit has to immediately approach the SIDBI and carryout the formalities with the Bank so that bank can start the process of disbursement of sanctioned grant. In this regard, SIDBI informs that units whose applications have been approved by the Steering Committee are not approaching the SIDBI within reasonable time for submitting claims. As a result of which, the SIDBI branch is not able to lodge the claim / make fund request to SIDBI Head Office, Lucknow. The SIDBI Branch make fund request with their HO only for those cases which have fully complied with the formalities and their case is fit for disbursement.

Therefore, it is a matter of concern to the Government of India and other stakeholder agencies that funds approved in the Steering Committee does not eventually translate into ‘fund disbursement’ and thus this gap could have adverse impact on the quantum of fund earmarked for the leather sector as under utilization attracts adverse remarks of the audit wing. The DIPP has already sensitized the SIDBI on the need to expedite the process at its level, so that the funds can be disbursed to the units without any inordinate delay.

In this background, the matter was discussed in the 144th meeting of the Committee of Administration of the CLE, which was held on 16.04.2013 at Kanpur, in which officials from the Ministry of Commerce & Industry, Govt of India, SIDBI, CLRI & FDDI have also participated. In the said meeting, the SIDBI informed that the members are not approaching them to avail the grant in respect of sanctioned cases. As a measure to strengthen the follow up action and monitoring on the actions taken by the unit in complying to the bank formalities, it has been suggested that the units who approach SIDBI after receipt of Sanction Letter and completes all the formalities, may intimate the same to DIPP for information and monitoring the claim status.

Accordingly, the Council hereby requests the members of the leather industry to do the following activities:

1) To immediately approach the SIDBI Branch after receipt of the Sanction Letter

After receipt of Sanction Letter(s) from the DIPP, the applicant units have to approach concerned branch of the SIDBI and enter into an agreement with the SIDBI. The units should approach SIDBI (a) through the lending banks if the case is loan financed or (b) through the bank in which working capital A/c or current A/c is maintained if the case is self-financed., and submit their claim(s) before the SIDBI. Basically, the following two processes are to be completed before the claim is lodged by the SIDBI Branch:

a) Agreement has to be entered into between the SIDBI and the unit
b) SIDBI will undertake inspection visit to the unit

2) After completing the formalities with SIDBI, inform the same to DIPP, SIDBI & CLE

Once the units complete the above formalities, the Unit may intimate the same to the DIPP, SIDBI (Head Office, Lucknow) & CLE for information and monitoring the claim status. The scanned copy of the said Letter may also be sent by E mail for quicker reach. The contact details of these agencies are given in the enclosure for your ready reference.

The units are also advised to constantly in touch with the respective SIDBI Branch and the Regional Office of the CLE till the grant is finally received from SIDBI.

Members are once again requested to please note the above and comply with the formalities with SIDBI, so that the claim can be lodged by the SIDBI., and sanctioned funds can be disbursed to your unit.

With warm regards,

R. Ramesh Kumar, IAS
Executive Director
Council for Leather Exports