Scheme for ‘Development of Leather Parks’ notified under ILDP
The Department of Industrial Policy & Promotion (IPP), Ministry of Commerce & Industry, Government of India is implementing an Indian Leather Development Programme (ILDP) for the overall industrial growth of leather sector in the country during the Eleventh Five Year Plan period 2007-2012. Vide Notification No.5/17/2007 dated 29th August 2008, the sub-schemes of the ILDP has been notified with a combined outlay of Rs.912.67 Crores. The ILDP lays thrust on several areas such as modernization of production facilities, upgradation of technologies, expansion of production capacities, setting up of institutional facilities, skill development of fresh manpower, skill upgradation of existing manpower, development of rural artisans, address environmental concerns in the tanning sector, propagating India as an attractive destination for joint venture collaborations/FDIs in the foreign markets.
Further to above, the Department of IPP is now proposing to implement a scheme for ‘Development of Leather Parks’ with an objective to create additional capacities in the leather sector and assist the industry in addressing the infrastructure needs of the entire leather sector in a holistic manner. The Cabinet Committee on Economic Affairs (CCEA) in its meeting held on 22nd Oct 2009 has approved the Scheme for ‘Development of Leather Parks’ with an outlay of Rs.300 crore. Accordingly, the Department of IPP has notified the Scheme for ‘Development of Leather Parks’ vide Notification No.5/15/2008-Leather dated 05th Nov 2009.
The Extract of the Notification is given below:
The Central Government has approved a sub-scheme, titled ‘Development of Leather Park’ with an allocation of Rs.300 crores under ILDP for implementation during the 11th Five Year Plan period. The scheme targets industrial clusters / locations with high growth potential, which require strategic interventions by way of providing world-class infrastructure support. The project cost will cover common infrastructure and building for support activities, depending upon the needs of the Leather Parks. There will be flexibility in setting up Leather Park subject to a ceiling of Rs.40 Crore per park. Leather Parks would include; Tanning Parks, Leather Product Parks and Machinery Parks to manufacture machineries used in the Leather Sector as well as Integrated Parks housing both tanneries and the product units.
The benefits under the scheme shall be available to a SPV formed by a group of entrepreneurs (minimum being 7 legally independent companies) that are engaged in leather tanning, manufacturing of leather and non-leather goods and components and other activities associated with leather industry, which intend to set up production units in the proposed park. The project-specific Special Purpose Vehicle (SPV) promoted by such entrepreneurs for development and management of the proposed entrepreneurs ie., his company has to be at least Rs.,1 Crore and the combined net worth of the seven promoters forming SPV should be at least Rs.10 Crore.
Government would engage the services of an agency that has proven experience in developing, financing and executing the industrial cluster infrastructure projects, as advisor in implementation of the scheme, from the stage of approval to commissioning of the project. The agency would assist Department of Industrial Policy & Promotion in monitoring and evaluation of the projects under the scheme.
The sub-scheme is applicable in all over India. The guideline of the scheme is available on the website of the Department. Interested leather entrepreneurs can submit preliminary proposal under the scheme as detailed in the guidelines directly to the Department for approval. Department would approve the proposal on first come first serve basis.
The following are major highlights of the Scheme notified by the Department of IPP:
This scheme would be totally demand-driven and the proposal for setting up of a Park has to be first initiated by the SPV. A group of minimum 7 legally independent companies which are interested to set up production units in the Park have to form a Special Purpose Vehicle(SPV). SPV should be a non-profit company and it should be registered under Section 25 of the Companies Act. The SPV would conceptualize, formulate, achieve financial closure, implement and manage the infrastructure. The SPV should allocate sites / plots to the companies for setting-up of production units.
SPV would identify and procure land. Minimum area for a Park is 25 acres.
Role of State Government is envisaged in certain areas like assisting SPV in identification and procurement of land, providing requisite clearances etc.
Total Project cost for a Park shall be funded through GOI assistance @ 50% of the cost, subject to a maximum of Rs.40 crore per park, and equity from Industry and Loan from Banks / Financial Institutions. SPV would mobilize funds other than Govt. Grants to executive the project.
The Project cost for each Park will have the following components:
Land & Land Development Cost (Government grant is not available for procurement of Land. However land cost – Registered value of land – could be built into the total project cost and this would be taken as part of the SPVs equity in the project).
Common Infrastructure – in the form of physical and environmental infrastructure, technology infrastructure and marketing infrastructure
Capacity Building such as common marketing efforts, branding, technology sourcing, skill development, quality certifications, environmental certifications
Engineering and construction supervision, Project development & execution consultancy
Any other expenses – including pre-operative expenses, expenses for incorporation etc
The SPV so formed by the industry members may submit the ‘preliminary proposal’ directly to the Department of IPP seeking in-principle approval of the Government, in the following address:
Department of Industrial Policy & Promotion
Ministry of Commerce & Industry
Government of India
Udyog Bhawan, New Delhi 110 011
The various details required for submitting the proposal to the Department of IPP has been stipulated under Para 9.10 of the Scheme Guidelines, and these may be referred to while preparing the ‘preliminary proposal’.