OUR ASSISTANCE FOR A GRANT OF UPTO ₹20 CRORES FOR CFC- A scheme by Central Government of India

  1. These guidelines of MSE-CDP are issued and can be seen in detail at http://www.dcmsme.gov.in/schemes/New-Guidelines.pdf
    1. Common Facility Centers (CFCs): This component would cover creation of tangible “assets” as Common Facility Centers (CFCs) like Common Production/ Processing Centre (for balancing/correcting/improving production line that cannot be undertaken by individual units), Design Centres, Testing Facilities, Training Centre, R&D Centres, Effluent Treatment Plant, Marketing Display/Selling Centre, Common Logistics Centre, Common Raw Material Bank / Sales Depot, Plug & Play facility, facilities that can support marketing systems, collective Geographical Indications (GI), development of common production & product standards, development of new product designs, improved systems for better hygiene & working conditions for workers, systems for higher overall productivity & capacity utilization of the cluster, systems for skill upgradation of the cluster, as well as supporting diversification activities of enterprises and startups in the cluster, etc. Backward/Forward linkages for value addition in bi-product/waste of cluster units would also be admissible for enhancing productivity/profitability of individual units subject to condition that CFC itself would not sell/market products/bi-products directly.
       
  2. Objectives of the Scheme
    1. To support the sustainability and growth of MSEs by addressing common issues such as improvement of technology, skills & quality, market access,etc.
    2. To build capacity of MSEs for common supportive action through formation of self help groups, consortia, upgradation of associations,etc.
    3. To create/upgrade infrastructural facilities in the new/existing Industrial Areas/ Clusters of MSEs.
    4. To set up Common Facility Centres (for testing, training, raw material depot, effluent treatment, complementing production processes,etc.).
    5. Promotion of green & sustainable manufacturing technology for the clusters so as to enable units switch to sustainable and green production processes and products.
    6. Common Facility Centres (CFCs): This component would cover creation of tangible “assets” as Common Facility Centers (CFCs) like Common Production/Processing Centre (for balancing/correcting/improving production line that cannot be undertaken by individual units), Design Centres, Testing Facilities, Training Centre, R&D Centres, Effluent Treatment Plant, Marketing Display/Selling Centre, Common Logistics Centre, Common Raw Material Bank/Sales Depot, Plug & Play facility, facilities that can support marketing systems, collective GI, development of common production & product standards, development of new product designs, improved systems for better hygiene & working conditions for workers, systems for higher overall productivity & capacity utilization of the cluster, systems for skill upgradation of the cluster, as well as supporting diversification activities of enterprises and startups in the cluster, etc. Backward/Forward linkages for value addition in bi-product/waste of cluster units would also be admissible for enhancing productivity/profitability of individual units subject to condition that CFC itself would not sell/market products/bi- products directly.
       
    1. The GoI grant will be restricted to 70% of the cost of Project of maximum Rs.20.00 crore. GoI grant will be 90% for CFCs in NE & Hill States, Island territories, Aspirational Districts/LWE affected Districts, Clusters  with more than 50% (a) micro/ village or (b) women owned or (c) SC/ST units. The cost of Project includes cost of Land (subject to maximum of 25% of Project Cost), building, pre-operative expenses, preliminary expenses, machinery & equipment, miscellaneous fixed assets, support infrastructure such as water supply, electricity and margin money for working capital.
    2. The entire cost of land and building for CFC shall be met by SPV/State Government concerned. In case existing land and building is provided by stakeholders, the cost of land and building will be decided on the basis of valuation report prepared by an approved agency of Central/State Govt. Departments/FIs/Public Sector Banks. Cost of land and building may be taken towards contribution for the Project. CFC can be set up in leased premises. However, the lease should be legally tenable and for a fairly long duration (say 15 years). In case CFC is established on leased land the Lease Period should be more than 30years.
    3. Adaptive reuse of the unutilized/partially utilized buildings and assets under Public & Private Sector would be encouraged under the scheme.
    4. It is necessary to form an SPV prior to setting up of and running the proposed CFC. An SPV should be a Section 8 company (as per Companies Act 2013). The SPV should have a character of inclusiveness, wherein, provision for enrolling new members to enable prospective entrepreneurs in the cluster to utilise the facility should be provided. In addition to the contributing members of the SPV, the organizers should obtain written commitments from „users‟ of the proposed facilities so that its benefits can be further enlarged. Bylaws of SPV should have provisions for one Central Government and one State Govt. official as members of the SPV.
    5. There should be a minimum of 20 MSE cluster units serving as members of the Special Purpose Vehicle (SPV). There is no ceiling on the maximum number of members. In special cases, where considerations of investments, technology or small size of the cluster warrant lesser number of units, a minimum of 10 MSE units may be considered for the SPV.
    6. In order to instill transparency, inclusiveness and to maximize the benefits of facilities being created through Common Facility Centres, the SPVs of above CFCs, shall communicate (through appropriate means - email, letter etc) with all the beneficiaries of the cluster, clearly intimating all details of facilities being created, expected services and benefits to the members of the clusters (SPV and non SPV) and seek their commitments and interest / intention to utilize the facilities proposed to be created. The communication should also clearly mention that SPV membership is open ended and any unit in the cluster beneficiary can become SPV member as and when they desire, however the facilities of CFC can be availed by all the units of the cluster (SPV and non SPV members). Preferably, they may also organize workshop of beneficiaries of the cluster in order to bring more clarity and awareness among them.
    7. The contribution of the cluster beneficiaries should be as high as possible but not less than 10 per cent of the total cost of CFC. State Government contribution will be considered as gap funding. However, proposals with higher State Government funding would be given preference. All the participating units should be independent in terms of their financial stakes and management. No single unit will hold more than 10 per cent in the equity capital (or equivalent capital contribution) of the SPV.
    8. Large mother manufacturing firms (whether in the public or private sector), Central or State Government Autonomous Bodies such as MSME Technology Centres, other major buyers of the MSE cluster products, commercial machinery suppliers, raw material suppliers and Business Development Service (BDS) providers will be eligible to contribute up to 49 per cent of SPV contribution, provided management of SPV remains clearly with the intended beneficiary SPV. In case, contribution is made by MSME Institutions, they may represent Government of India in the management/ Governing body. The SPV may also raise loans from banks to take care of any shortfall, expansion, etc. on the condition that the plant and machinery in the CFC purchased with Government assistance will not be hypothecated and the first right thereto will rest with the Government.
    9. Contribution by the SPV and matching share by State Government should be made upfront. Necessary infrastructure like land, building, water and power supply, etc. must be in place or substantial progress should have been made in this regard before GoI assistance is released. Where bank finance is involved, written commitment of the bank concerned to release proportionate funds will also be necessary before release of GoIassistance.
    10. The CFC may be utilized by the SPV members and as also others in the cluster.
    11. The Project (setting up of CFC) should be completed and operational within two years from the date of approval. If Project could not be completed in two years, an extension upto a period of one year can be considered and approved by State Level Steering Committee. Further extensions if needed, beyond three years would be granted for a period of six months by Steering Committee based on the justification provided by State Government. The extension is, however, subject to a reduction of 10% of GoI share which is to be borne by the SPV as additional contribution, if delays are due to reasons attributable to SPV. Escalation in the cost of Project above the sanctioned amount, due to any reason, will be borne by the SPV/State Government. However, escalation in Project Cost due to variation in statuary levies on part of Government of India would be considered appropriately for the purpose of modification in means of finance/funding pattern. The Central Government shall not accept any financial liability arising out of operation of any CFC.
    12. The SPV shall be exclusively responsible for the day-to-day running of the CFC. The aim of running the CFC shall be to provide common services to the enterprises in the Cluster at affordable cost as well as to generate enough income to meet all its running expenditure, depreciation and provision for replacement/expansion of capital assets. However, any shortfall or excess of income over expenses shall be borne or kept by the SPV only.
    13. User charges for services of CFC shall be so designed as to ensure at least meeting all the running expenses with reasonable growth close to prevailing market prices, as decided by the management of the SPV. The SPV members may be given reasonable preference in user charges.
    14. The SPV shall adopt standard accounting procedures as per Government of India guidelines.
    15. The CFC with cost higher than ceiling limit i.e. Rs.20.00 crore may also be considered under MSE-CDP. However, the GoI grant will be calculated with Project cost ceiling of Rs.20.00crore.
    16. Funds will be released in three/four installments (after approval) depending upon the implementation plan, progress made, requirements of funds,etc.
    17. A Tripartite Agreement among the GoI, the State Government concerned and the SPV shall be signed for CFC Projects. The format of the agreement is given atAnnexure-2A.