The leather industry holds promise in the Indian economy. Known for its high export value, it is an employment intensive industry. Today, it operates on low-profit margins on account of fierce competition in the international market. However, if individual leather manufacturing units form an alliance, they can avail certain benefits to better their production under the Sub-Scheme for Mega Leather Clusters.
The Sub-Scheme for Mega Leather Clusters provides additional amenities to allow smooth functioning of production of leather manufacturing units under clusters. The concept of Mega Leather Clusters (MLCs) seeks to address the constraint of large infrastructure with integrated production chains in the country.
How does a mega leather cluster benefit from this scheme?
A mega leather cluster can benefit from this scheme in the following ways:
An area designated as a mega leather cluster, following services are provided:
- A secured compound wall, wire fence and site development
- All basic amenities like roads, power supply, water supply
- A warehouse, trade/ display/ exhibition/ convention/ information center, etc.
- Ready-to-use factory sheds with plug-in facilities for machinery/equipment
- Training Center, Recruitment Center, Workflow Training Center
- Product Design & Development Support Center, Testing Laboratory, Quality Benchmark Center, Material Research, Basic Product Technology Research, Pre-competitive Collaborative Research and Market Research infrastructure
- Export services-related infrastructure including Clearing Agents, Customs/Central Excise/ Service Tax offices and DGFT liaison office
Details on funding:
Here is how the government would provide financing:
- The government would provide a maximum of 50% of project cost, subject to limitations defined by the area under the mega leather cluster:
|Mega Leather Cluster with land area (in acres)||Financial assistance to be provided by Government of India|
|25 to 60 (for the land set up with tanneries)||Limited up to ₹50 crore|
|61-100||Limited to ₹70 crore|
|101-150||Limited to ₹105 crore|
|More than 151 acres land||Limited to ₹125 crore|
- A Special Purpose Vehicle has to be set up for the Mega Leather Cluster. Trust and Retention Account (TRA) will be opened by an SPV with any nationalized bank and funds will be released by the government in four installments through Electronic Clearing System. The funds would be released as described below:
|Installment||In order to process the claim for the amount, you would need to submit:||% of|
|Installment I||1. Statement for project specific TRA indicating the proportionate contribution (25%) deposited by Special Purpose Vehicle in the Trust and Retention Account||25%|
|Installment II||1. Details as to the usage of 2/3rd of the first installment
2. Statement for project specific TRA indicating the proportionate contribution (25%) deposited by Special Purpose Vehicle in the Trust and Retention Account
|Installment III||1. Details as to the entire usage of first installment, and 2/3rd usage of the 2nd installment
2. Submitting the statement of project-specific Trust and Retention Account indicating the proportionate contribution (30%) deposited by Special Purpose Vehicle in Trust and Retention Account
3. Proof of proportionate expenditure made by the Special Purpose Vehicle out of its own fund
|Installment IV||1. Completion record of entire infrastructure of the project as per the approved Detailed Project Report
2. Completion of 25% of the leather units in MLC initiate their production activity certified by the Special Purpose Vehicle, Project Management Consultant, and Utilization Certificate (for the second and third installment) are produced
- Claims will be forwarded by Special Purpose Vehicle to DIPP along with the mentioned documents: Utilization Certificate in the format of GFR 19A, Pre-Receipt Bill, and Surety Bond
- Creation of separate accounts by SPV for the funds released by DIPP, subject to audit by the Comptroller & Auditor General of India
What is the eligibility criteria for this scheme?
The eligibility criteria for this scheme is as follows:
Units involved in production of the following are eligible to apply:
- Footwear and footwear components
- Leather goods (inclusive of gloves)
- Leather garments
- Harness items
How can mega leather clusters apply for this scheme?
The mega cluster needs to send the applications directly to Under Secretary (Leather), Department of Industrial Policy and Promotion, Ministry of Commerce & Industry, Udyog Bhavan, New Delhi.
Documents required for this scheme?
The documents required to apply for this scheme can be found here.