Financial Schemes for MSMEs and Case studies on Energy - PowerPoint PPT Presentation

Financial Schemes for MSMEs and Case studies on Energy Conservation Ananda Mohan Ghosh, Fellow, TERI 11 -13 August 2014, Indore

Contents EC Act 2001 • Nodal Banks /Agencies • Financial Schemes • NMCP (TEQUP) – CLCSS – CGS – Credit lines • JICA – KfW – AfD – CFC Schemes for foundry • Sizing of Equipment / Utility • Case Studies on ECMs • Gaps in SMEs to adopt EE technologies • 11 -13 August 2014, Indore

Energy Conservation Act - 2001 In order to promote energy efficiency in the country, Energy Conservation Act was enacted in October 2001 and became effective from March 2002. The Act provides regulatory impetus to energy efficiency activities in the country. Under the provisions of the Act, the Government of India set up Bureau of Energy Efficiency (BEE) on 1 st March 2002 with the primary objective of reducing energy intensity of the Indian economy. The Act empowers the Central Government and in some instances the State Governments to: • Notify as designated consumers (DC) • Establish and prescribe energy consumption norms and standards for DC • Direct DC to designate or appoint CEM • Direct DC to carry out DEA as per instruction • Ask to furnish status of implementation of ECMs by DCs • Comply with energy consumption norms and standards • Prescribe energy conservation building codes • Direct owners or occupiers of commercial buildings to comply EC building codes • Direct mandatory display of label on notified equipment and appliances. • Specify energy consumption standards for notified equipment and appliance. • Prohibit manufacture, sale, purchase and import of sub standard notified equipment and appliances 11 -13 August 2014, Indore

Energy Conservation Act (Amendment) 2010 Main Amendments DCs may be issued with energy savings certificate (ESC) for less • consumption DCs shall be entitled to purchase ESCs to comply with the prescribed • norms and standards for more consumption The value of ESC may be prescribed for per metric ToE of energy • consumed ECBC is applicable for commercial buildings with a connected load of • 100 kW or contract demand of 120 kVA and above 11 -13 August 2014, Indore

Nodal banks/ agencies SL NO NAMEs 1 Small Industries Development Bank of India (SIDBI) 2 National Bank for Agriculture and Rural Development (Nabard) 3 State Bank of India 4 Canara bank 5 Bank of Baroda 6 Punjab National Bank 7 Bank of India 8 Andhra Bank 9 State Bank of Bikaner & Jaipur 10 Tamil Nadu Industrial Investment Corporation 11 The National Small Industries Corporation Ltd. 11 -13 August 2014, Indore

Financial schemes for MSMEs National Manufacturing Competitiveness Programme (NMCP) • Scheme Credit Linked Capital Subsidy Scheme ( CLCSS ) • Credit Guarantee Scheme • ISO 9000 and ISO 14001 Certification Reimbursement • Scheme Financial Assistance for using Global Standard(GS1) in • Barcoding Sustainable Finance Scheme • Subsidies/schemes for undertaking energy audits by various • state governments e.g. Maharashtra, Gujarat etc. 11 -13 August 2014, Indore

National Manufacturing Competitiveness Programme (NMCP) NMCP has 10 components are being implemented through the Public-Private-Partnership (PPP) mode. 1. Lean Manufacturing Competitiveness Scheme 2. Enabling manufacturing sector to be competitive through Quality Management /Standards/Quality Technology Tools (QMS/QTT) 3. Promotion of ICT (Information and Communication Technology) in MSMEs 4. Technology and Quality Up gradation Support to MSMEs ( TEQUP ) 5. Marketing Assistance and Technology Up gradation Scheme 6. Marketing Support/Assistance to SMEs (Bar Code) 7. Design Clinic Scheme for Design Expertise to MSMEs 8. Setting up of Mini Tool Rooms 9. National campaign for building awareness on Intellectual Property Rights (IPR) 10. Support for Entrepreneurial and Managerial Development of SMEs through Incubators 11 -13 August 2014, Indore

TEQUP Scheme The Ministry of Micro Small and Medium Enterprises (MoMSME) launched the • scheme during May 2010currently in operation during the 12 th Plan The main objectives of the TEQUP scheme are to sensitize MSMEs on energy • efficiency and encourage and support adoption energy efficient technologies in the MSME sector to improve the competitiveness and provides support for • Feasibility study – 75% of the cost ( cap to 75 thousand ) • DPR preparation (set of 3) - 75% of the cost ( cap to 9 lakh @ 3/DPR ) • EE technology adoption support -25% of the capital cost ( cap to 10 lakh & 15% energy saving equipments - ONLY FOR APPROVAL ) 11 -13 August 2014, Indore

Details of CLCSS The Scheme aims at facilitating technology up gradation by providing upfront capital subsidy to SSI units, including tiny, khadi, village and coir industrial units, on institutional finance (credit) availed of by them for modernization of their production equipment (plant and machinery) and techniques ( LISTED TECHNOLOGY ) Launching capital subsidy in October, 2000 – 12% ( capital cost • cap to 40 lakh = 4.8 lakh ) and revised to 15% since September 2005 ( capital cost cap to 100 lakh = 15 lakh ) Under the scheme approximately 22000 units have availed subsidy • of Rs. 1146 crore till 31 March 2013. 11 -13 August 2014, Indore

Details of CGS launched by the Government of India to make available • collateral-free credit to the micro and small enterprise sector (August 2000) Nodal bank - Small Industries Development Bank of India • (SIDBI) established a Trust named Credit Guarantee Fund Trust for Micro • and Small Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme Covers collateral free credit facility to new and existing micro and • small enterprises for loans up to INR 100 lakh per borrowing unit ( including all – WC, Term loan etc.) 11 -13 August 2014, Indore

Details of Credit Lines Special credit line to borrow finance from banks / financial • institute at very low rate of interest broadly to promote energy efficiency and address various challenges posed by the entry of multinational companies in the domestic market. SIDBI has been identified as a Nodal Agency for the • releasing of assistance, monitoring, interface and coordination with Financial Institutions, Banks and the Government for such special line of credits scheme. List of schemes • JICA – SIDBI financing scheme • KfW – SIDBI financing scheme • • KfW-Energy Efficiency Scheme • KfW-Cleaner Production Scheme • KfW Innovation Finance Programme • AfD – SIDBI financing scheme 11 -13 August 2014, Indore

CFC Scheme for foundry cluster A group of at least 25 SME foundry unit register under MSME within a • cluster can avail financial support under this scheme to establish CFC for sand reclamation and other common facilities. SMEs are encouraged to avail the benefits under the scheme to avoid lengthy • procedure of soft intervention for establishing such facilities. • Other details  Operating authority - The office of Development Commissioner, Ministry of MSME  Eligibility criteria – member of 25 MSME registered units within cluster  Financial support - 70 % by Central Government (Investment capped to Rs 15 Crores = 10.5 crore; and balance 30 % by SPV /State Government)  DSR with assistance of professional expert or institute – 2.5 lakh (report to be submitted by 3 months)  DPR with assistance of professional expert or institute – 5 lakh • Approval on positive response from SIDBI after vetting the DPR, Steering Committee will accept the DPR for execution and release financial grant from Government to SPV through State Government Agency 11 -13 August 2014, Indore

Equipment specifications Sizing • Application • Operational parameters (maximum , minimum) • Controlling mechanism • Start from PoU to PoG/Source • Discussion with suppliers • Check for unit conversion • 11 -13 August 2014, Indore

Case study: ECM-1 Replacement of existing inefficient cupola of 2.2 TPH with efficient induction furnace of 450 kW with crucible capacity of 500 kg Parameters Unit Existing Proposed Melting furnace (type) Cupola Induction Melting rate (-) 2.2 TPH 500 kg/batch Annual melting (MT/year) 1430 1430 Specific Energy (Unit/MT) 182.5 kg coke 550 kWh consumption Energy Rate (Rs/unit) 29.5/kg 7.4/kWh Annual energy cost (Rs in lakh/year) 77 58 Monetary benefits (Rs in lakh/year) - 19 Investment Rs - 30 Payback period year - 1.6 Annual CO 2 emission tCO 2 /year 887.4 700 CO 2 avoided tCO 2 /year - 187.4 11 -13 August 2014, Indore

Case study -1: Views of furnaces Base case (Cupola) Post implementation (Induction) 11 -13 August 2014, Indore

Case study: ECM-2 Installation of EE induction furnace Parameters Unit Value Capacity kW 175 Crucible Kg 150 Specific energy consumption kWh per tonne 650 Cost benefit analysis Existing SEC kWh per tonne 850 Proposed SEC kWh per tonne 650 Baseline production tonne per year 432 Annual Saving kWh per year 86,400 Electricity cost Rs per kWh 7.03 Monetary Savings Rs lakh per year 6.07 Investment cost for Rs lakh 12.72 induction furnace and cooling tower Simple payback period Years 2.2 11 -13 August 2014, Indore