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Tannery modernisation scheme launched

Our Bureau

NEW DELHI, Jan. 18

THE Government today announced a Rs. 40-crore Tannery Modernisation Fund (TMF) exclusively for the leather sector. The fund would provide financial assistance on soft terms to existing tanneries for undertaking modernisation programmes for technology upg radation and better capacity utilisation.

Launched by the Union Minister for Commerce and Industry, Mr. Murasoli Maran, the fund would be operative during the remaining three years of the Ninth Plan (1999-2002), covering around 350 extant tanneries in the country. The total outlay envisaged is R s. 4,075.70 lakhs, of which, the Centre's assistance would be Rs. 964.60 lakhs.

Under the scheme, existing tannery units undertaking modernisation programmes would be eligible for assistance. Modernisation includes measures for technology upgradation and productivity improvement, machinery facility upgradation, and waste treatment t echnologies, including primary treatment of waste at the individual tannery stage.

Financial assistance under the scheme would be available only to projects where the loan by the bank/financial institution has been sanctioned on or after the date of sanction of this scheme. In the case of self-financed modernisation efforts, assistance will be given only to projects where the order for purchase of machinery has been placed on or after the date notifying this scheme. The projects submitted by tanneries would be assessed for their financial viability and bankability.

Assistance under the scheme will be to the extent of 30 per cent of plant and machinery for small-scale units and 20 per cent of the cost of plant and machinery for other units (i.e., non-small-scale units) subject to a ceiling of Rs. 28 lakhs and Rs. 35 lakhs respectively.

For the purpose of this scheme, the definition of small-scale industry would be the same as notified by the Government on the date of sanction of the project. Installation cost and expenses for foundation and civil construction would not be included in t he cost of machines which would cover the bill value of machines, sales and excise tax, transit insurance cost and transportation and custom duty.

The Steering Committee will be responsible for the implementation of the scheme and its scope would be to lay down procedures, decide normative cost, accord sanction of financial assistance from the Government and monitor and follow up disbursal of finan cial assistance to industrial units.

Replying to queries, Mr. Maran admitted that leather exports are `static' and that the scheme would help remove obsolescence in the tannery sector by modernising them so as to realise higher value-addition for the end-product. Depending on the success of the scheme, this would be replicated in other segments too.

He said leather exports last year fetched Rs. 7,100 crores and this year it would be Rs. 7,000 crores. Last year the country imported manufactured leather items worth Rs. 700 crores. Export of hides at 15 per cent duty for a spell of six months had to be allowed as unsold hide stocks had piled up, he said.

The Minister of State for Commerce and Industry, Dr. Raman Singh, hoped the scheme would ensure availability of quality leather to the footwear, leather garments and leather goods industry and that, in turn, would result in higher exports. He said modern isation of tanneries was critical to the integrated development of the leather sector.

In her remarks, the UNDP Resident Representative, Ms. McSweeny, said UNDP would contribute $1.5 lakhs for the software development of tanneries under the scheme.

For the day-to-day implementation of the scheme, the Programme Management Unit (PMU) of Small Industries Development and Employment Programme in Leather sector (SIDE-NLDP) will be the secretariat of the Steering Committee. Small Industries Development Ba nk of India (SIDBI) would be the nodal agency for the scheme. Whenever cases are received by SIDBI which are not in the SSI sector, it would be the responsibility of SIDBI to forward the case to Industrial Development Bank of India for consideration.