India’s exports of leather-based products are about 10 billion dollars. India ranks 3rd in footwear production and 5th in leather goods production. Even though the leather industry has become a crucial part of the Indian economy, the country is still not much involved with it compared to countries like Italy and Japan. There are many reasons for India not taking advantage of this opportunity. Some of them have no clear vision of the future, lack technical expertise, and lack big investments that can bring more sophisticated technology to India. The government is trying its best to solve the problems by encouraging investment and opening up new avenues such as the Mega Leather Footwear & Accessories Cluster Development Scheme (MLFACDS) which will help boost exports further besides giving employment opportunities to thousands of youth in different parts of the country.
Objective
The main objective of creating Mega Leather Footwear and Accessories is to establish a world-class infrastructure and integrate the production chain so that it meets the business needs of the leather and footwear industry while catering to both domestic demand and exports. The main objective of the Mega Leather Footwear and Accessories cluster development is to address an urgent need of the industry, i.e., to improve product quality, increase production and productivity, introduce modern technology in the business, upgrade infrastructure and put in place a mechanism for quality enhancement, labelling, and marketing and generate employment opportunities in backward districts and among weaker sections of society.
Project Component
The scope of the scheme is to develop the Mega Leather Footwear and Accessories Cluster in the States having a large concentration of leather and footwear units as also States having potential for growth of the leather and footwear sector in view of the labor advantage and raw material availability.
As approved by the Empowered Committee, the following are some of the minimum common facilities to be provided in a cluster:
- Land Development Cost
- Infrastructure
- Core Infrastructure
- Social Infrastructure
- Production Infrastructure
- HRD & Social Media Infrastructure
- R&D Infrastructure
- Capacity Building
- Engagement of Consultant by SPV
- Other Expenditure
Project Cost
The total cost for the Mega Footwear and Leather scheme will be the sum of land development, infrastructure, capacity building, and consulting costs. Central government financial assistance can be as much as 70% of the total project cost for north eastern states or 50% for other regions subject to constraints depending on whether the project is in an area with a large land mass or not. The Limitations will be as mentioned below:
- Area up to 60 acres of land – GoI assistance limited to Rs 50 crore;
(b) Area up to 100 acres of land – GoI assistance is limited to Rs 70 crore
(c) Area up to 150 acres of land – GoI assistance is limited to Rs.105 crore
(d) Area more than 151 acres of land – GoI assistance is limited to Rs 125 crore
Release of Fund
The entity shall maintain a trust and retention account with any nationalized bank, and the funds from the Government will be released into that account only through an electronic clearing system. The release of funds, however, would be linked to milestones/targets identified at the time of approving the proposal. Broadly the fund release will be done by the government in 4 phases:
1st Installment: The first 25% of the installment will be released after the final approval and financial closure of the project. The award of contracts by the entity and producing a statement of project-specific TRA reflecting the proportionate contribution (i.e. 25% of the share of entity) deposited by the entity in the TRA is a must for the release.
2nd Installment: The second installment of 30% will be released after the submission of the utlization of the 2/3rd of the 1st installment. Also, producing the statement of project-specific TRA reflecting the proportionate contribution deposited by the entity in the TRA will be a must.
3rd Installment: The second installment of 30% will be released after the submission of the utilization of the 2/3rd of the 2nd installment. Also, producing the statement of project-specific TRA reflecting the proportionate contribution deposited by the entity in the TRA and specific proof of proportionate disbursement made by the entity out of its own fund will be a must for the installment release.
4th Installment: The last and 4th installment of the fund will be released successful completion of all the infrastructure of the project followed by the guideline of DPR. Also, The installment will be released after 25% of the leather and/or footwear units in MLFAC start their production, and the same is certified by the SPV and PMC.
Collateral Security: As per Norms
Processing Fees: As per Norms
Scheme Validation: Still Active