The Hindu Business Line : Guidelines for mini tool rooms likely by June

Hyderabad, May 14 The guidelines for setting up of mini tool rooms across the country on a public private partnership (PPP) mode being formulated by the Ministry of Micro, Small and Medium Enterprises is likely to be finalised by early June.

“The proposal has been cleared by the Finance Ministry and a couple of other Ministries. We are now awaiting the final approval which is likely to come very soon. Once this is obtained, the final guidelines for setting up of mini tool rooms will be issued,” Mr Jawhar Sircar, Additional Secretary and Development Commissioner, Union Ministry of Micro, Small and Medium Enterprises (MSME), told Business Line here on Tuesday.

Mr Sircar, who was in the city to address a seminar organised by the Federation of Andhra Pradesh Small Industries Associations, also said that Infrastructure Leasing & Financial Services Ltd (IL&FS) has been appointed as advisors.

At present, there are 10 major tool rooms which have been set up in collaboration with European companies. “As per the current estimates, the project cost is likely to be between Rs 210 crore and Rs 350 crore, which is to be spent in the next four years.

“There has already been an allotment of Rs 20 crore as per the Budget Estimates for 2008-09 and during the 11th Five Year Plan, Rs 135 crore has been earmarked by the Centre for the project,” he said.

The amount of investment, Mr Sircar said will depend on the number of proposals and the Union Government is ready to provide an assistance of 40 per cent under the VGF (Viability Gap Funding) Scheme.

Typically, a mini tool room may cost between Rs 2 crore and Rs 25 crore and is essential for MSMES for tools and industrial training.

Funding options

Mr Sircar also said that the Ministry is also open to the traditional Centre-State option for setting up of the mini tool rooms.

“Under this proposal, the Government of India will invest Rs 9 crore and the State Government has to invest another Rs 6 crore. The second option which has been given is while the Centre will invest Rs 9 crore, the other Rs 6 crore can be raised by the respective State governments in association with a private partner,” he said.

According to the Government estimates, close to Rs 1,200 crore will be spent on various components of the National Manufacturing Competitiveness Programme (NMCP) out of which the Government is likely to spend Rs 600-700 crore in the next four years.

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