Mega Leather Cluster scheme

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No.CLE / ILDP / MLC / 2011-12
27th March 2012

Members of the Council for Leather Exports

Dear Members,

Sub: Mega Leather Cluster scheme under ILDP – Guidelines

This is to inform that the Government of India has approved a sub-scheme titled ‘Mega Leather Cluster’ under the Indian Leather Development Programme (ILDP) for implementation during the remaining period of 11th Plan and 12th Five Year Plan period 2012-17. The Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry, Govt of India has notified the scheme guidelines of the Mega Leather Cluster vide Notification No. 5/4/2011-Leather dated 20th March 2012. The said Notification and the Scheme guidelines is enclosed herewith for your perusal.

The total fund allocation for the Mega Leather Cluster scheme is Rs.600 Crore under ILDP. As per the notified scheme, it is proposed to develop Greenfield Mega Leather Clusters in the States having large concentration of leather units and also in states having potential for growth of the leather sector. The minimum area for the cluster would be 40 acres. The Mega Leather Clusters will have core infrastructure, social infrastructure, production infrastructure (ready to use factory sheds with plug in facility for machinery / equipments), HRD & social infrastructure, capacity building, etc. Each MLC will be implemented by a SPV, which will be a corporate body registered under the Companies Act 1956 formed by stakeholders, particularly a group of willing entrepreneurs (minimum being 7 legally independent companies) that are engaged in leather tanning, manufacturing of leather goods and components and other activities associated with the leather industry and who intend to set up production units in the proposed MLC. The SPV would conceptualize, formulate, achieve financial closure, implement and manage the infrastructure. It will procure the land, and after developing the infrastructure, will allocate sites or work sheds to industry for setting up the units. It will also mobilize funds other than government grants to execute the projects.

The total project cost shall comprise the cost on land development, infrastructure, capacity building, engineering & construction supervision, project development and execution consultancy. The GOI assistance will be limited to 70% of the project cost as grant in aid for all components of the project except the cost of the land, subject to the ceilings as given below depending upon the land area of the MLC:

Land Area for the MLCGOI Assistance ceilings
40-60 acres Rs.50 Crore
61-100 acresRs.70 Crore
101-150 acresRs.105 Crore
More than 151 acres Rs.125 Crore

The SPV has to contribute 30% of the project cost, apart from providing land for the project at its own cost. The SPV / industry will have to bring in the land for the project at its own cost, and the GOI assistance will not be provided for cost of land.

Members may take note of the above scheme guidelines. The Council has already circulated the information to all the Industry Associations and SPVs operating in the leather sector.

With warm regards,
Yours sincerely,

Executive Director
Council for Leather Exports
Tel: +91 44 2859 4367-71 (5 Lines)
Fax: +91 44 2859 4363-64 (2 Lines)

Notification No.5/4/5011-Leather dated 20th March 2012 issued by DIPP

Guidelines of the Mega Leather Cluster Scheme