Revival and Rehabilitation Scheme for Defunct MSMEs and Cashew Processing Units

DETAILS Introduction: The trend in increasing number of defunct units is a challenge to the secondary sector. The MSMEs which have become defunct due to genuine issues in the value chain and have potential needs to be revived and rehabilitated considering the role of these units play in the state economy, the Government of Kerala launched a new scheme for defunct MSMEs including cashew processing units during 2020-21. Besides the lack of improved technology, MSME units become defunct due to constraints on marketing, competition from MNCs and global challenges etc. In the field of cashew units the processing cost is comparatively higher in the state and competition from other countries is badly high. Most of the cashew units are in financial crunches. Process mechanization is the only way to revive the units. Objective: The scheme envisages supporting defunct MSMEs in the manufacturing sector including cashew processing units through assistance in the form of capital grants and working capital incentives. Definitions: Defunct MSMEs: MSMEs which are non-operational for 6 months or more but can be revivable. In the case of units which become defunct due to the plastic ban and those who wish for diversification, the above time limit is not applicable. Defunct Cashew Processing Units: The Cashew Processing Units which were defunct at least for six months/no matter whether they have received any Government assistance or bank loan within six months and are in the process of revival. BENEFITS 1. Entitlement in the scheme shall be limited to ₹15 Lakhs per applicant unit and it can avail only once. 2. Financial Assistance under the scheme provided for the following components- a) Building Renovation - 25% of the total revival project cost limited to ₹2 lakh: i) Building Renovation includes maintenance and repair of existing factory buildings, construction of fresh roofing in the factory shed, infrastructure for Waste Disposal / Treatment facilities etc. b) Plant & Machinery and Electrification - 40% of the total revival project cot limited to ₹8 lakh: i) It will be available for the purchase of new machinery, Repair and Maintenance of Existing machines, industrial electrification etc. c) Working Capital (Margin) - 50% margin of working Capital loan approved by financial institution subject to i) Assistance is limited to ₹2 lakhs for defunct MSMEs. ii) Assistance is limited to ₹5 lakhs for Cashew Units. d) Maximum Limit ₹12 lakhs for defunct MSMEs per unit. e) Maximum Limit ₹15 lakhs for defunct cashew processing per unit. Note 01: Bank Sanction of fresh working capital loan is mandatory for availing Working Capital (Margin) Assistance, but a bank loan is not mandatory for assistance for building renovation, plant and machinery, electrification etc. Note 02: The assistance under the scheme shall be released to the eligible entrepreneur by the bank on a pro-rata basis. ELIGIBILITY All MSMEs in the manufacturing sector which are defunct for at least 6 months due to genuine issues including cashew processing enterprises that have the potential to be revived and rehabilitated, are eligible for assistance under the scheme. Obligations of the Applicant Entrepreneurs: The applicant shall provide all required details and declare such information as to be true. The applicant shall provide clarifications or further details sought by the recommending/ sanctioning authority. The applicant shall allow inspection or verification of any details mentioned in the application including plant and machinery and all other assets if so required by recommending/ sanctioning authority. The applicant shall produce originals of any important documents if so required by the recommending/ sanctioning authority for verification. The applicant shall execute the requisite legal agreement on Stamp paper worth ₹200 as and when the proposal is approved for implementation and furnishes the signed hard copy to General Manager, District Industries Centre. The applicant shall utilize the amount received only in the manner agreed upon as per the revival project submitted. The applicant shall operate the unit as stipulated in the agreement in which the quantum of support received, failing which the assistance shall be resumed by restoring the provisions of the Kerala Revenue Recovery Act.