The basic objective of this Activity is to encourage MSMEs in adopting energy efficient technologies. For this purpose, bankable DPRs for the implementation of energy efficient technologies will be invited from the MSMEs. To facilitate the initiative, MSMEs in the identified clusters will be supported in preparation of bankable DPRs under the major activity No.1. It is expected that the initiatives under the major activity No.1 will provide a shelf of bankable DPRs for financing by SIDBI/other financial institutions. DPRs on energy efficiency projects developed under the SME support schemes of BEE, PCRA or other expert agencies will also be eligible for support. Individual MSMEs may also submit their DPRs (prepared by competent agency) to the banks and financial institutions. Under the present Activity, MSMEs will be assisted in implementation of the projects through loans from SIDBI/banks/financial institutions for which subsidy upto 25% of the cost of the project will be provided.
This Activity will be implemented through SIDBI who will function as the Implementing Agency. After finalization of the DPR, the concerned MSME units can approach SIDBI directly or through their Bankers for seeking loan/subsidy for implementation of the Projects. Both technical and bankability appraisal by SIDBI/Bank will be taken into consideration
prior to the sanction of the assistance in the form of grants. The sanction of financial assistance under the Scheme will be accorded by the Steering Committee. The decision would be conveyed to SIDBI and the respective sponsoring Bank under intimation to the applicant within 10 days of the decision of the Steering Committee. SIDBI would release proportionate amount of GOI assistance to the beneficiary units. The total GOI assistance released will not exceed the amount eligible as per the scheme. The funds will be released to SIDBI after receiving the claims on periodic basis for the cases sanctioned by the SIDBI. The Steering Committee would periodically review the requirement of assistance as well as release of funds to SIDBI. A Memorandum of Understanding (MoU) between SIDBI and office of DC(MSME) will be signed for this purpose, which will also stipulate time frame for each subactivity under this component of the scheme.
It is expected that under the Activity about 390 MSMEs will be supported in enhancing their energy efficiency. Besides, reducing the energy cost, the Activity will also enable the implementing enterprises in obtaining carbon credits, which are tradable. The specific achievements from the Activity are expected to:
• develop a holistic package on energy conservation in MSME sector;
• create demonstration effect in the MSME sector for adopting energy efficient technologies;
• reduction in energy consumption in the selected MSMEs; and
• enhance profitability of the implementing MSMEs by reducing energy costs and also through possible income from carbon credits.
COMPONENTS OF GRANT:
The Government of India will provide financial support to the extent of 25% of the project cost for implementation of Energy Efficient Technologies (EET), as per the approved DPR. The maximum amount of GOI assistance from the scheme will be Rs.10 lakhs (Average subsidy for one EET project is estimated to be Rs. 5.0 lakh). The project cost may include cost of machines, sales and excise tax, transportation and transit insurance cost, import related duty etc. (which will be limited to the maximum cost of machine at F.O.R factory? of the beneficiary). While 25% of the project cost will be provided as subsidy by the Government of India, the balance amount is to be funded through loan from SIDBI/banks/financial institutions. The minimum contribution as required by the funding agency, will have to be made by the MSME unit.
IMPLEMENTATION SCHEDULE AND FUNDING PATTERN
About 390 units will be supported for implementing EETs in MSMEs in potential clusters under this activity.
The Bank/SIDBI will get an agreement executed on behalf of Government of India with the MSME unit prior to disbursement of financial assistance. The GOI financial assistance under the scheme will be released by the concerned banks/SIDBI after the installation of new machinery and equipment at site and after execution of the agreement on behalf of the Government of India. SIDBI shall furnish Utilization Certificate to the Office of the Development Commissioner (MSME) for the amount disbursed (under the Scheme) against individual projects. While submitting the Utilization Certificate to DC(MSME) office, SIDBI will also enclose a certificate from competent agency/Energy Auditor certifying that the new machinery and equipment installed are capable of giving 15% energy savings.
Any MSME unit who has filed an Entrepreneurial Memorandum with the appropriate authority or who has erstwhile DIC registration will be eligible for support under the Scheme.
The general eligibility conditions are:
1. The MSME should have been audited for energy consumption and have developed a Detail Project Report on EETs.
2. The DPR should be prepared by a qualified Energy Manager/Auditor.
3. Enterprises in the clusters intervened under the Activity 1 or identified by PCRA/BEE or any other expert agency will be given preference for support under this Activity.
4. The project should primarily focus on energy efficiency for the applicant MSME units and must lead to at least 15% reduction in the energy consumption by the enterprise. For this purpose the baseline and the projected energy consumption reflected in the approved DPR will be taken into consideration.
5. Investments in new plant, machinery and equipments focused towards enhancing energy efficiency shall only be eligible for subsidy under the scheme.
6. The Government financial assistance cannot be utilized for purposes other than for which it has been sanctioned. The amount released by the Government will not be utilized towards adjustment of default in repayment of principal and payment of interest by the borrower.
7. After completion of the EET project, the industrial unit will be required to submit a completion certificate to SIDBI in the prescribed format (to be approved by the Steering Committee).
8. From the date of completion, up to two years, the industrial unit availing the Government financial assistance will be required to submit operational and performance details to SIDBI who would apprise the Steering Committee of the same.
9. In case the industrial unit becomes non-operational within two years of the receipt of Government financial assistance, it will be liable to refund the financial assistance availed, along with the interest to be charged from the date of closure till the date of refund at the prime lending rate of SIDBI (as the case may be). In case of non-compliance, the Bank concerned will take necessary legal action.
10. At any time if it is found that financial assistance from Government has been availed on the basis of any false information, the industrial unit shall be liable to refund the amount of Government financial assistance, along with interest to be charged from the date of disbursal to date of refund. The rate of interest shall be the prime lending rate of the Bank concerned at the time of invoking this penal clause