• Posted on: 3 March 2016
  • By: admin

Technology and Quality Upgradation Support


Quality and Technology Upgradation have emerged as the two important elements for enhancing competitiveness of any manufacturing industry. Cost of energy is an important component of the cost structure in any manufacturing process. As such, to reduce production costs and remain competitive, MSMEs need to focus on economising on energy use.

The scheme focuses the two important aspects, namely, enhancing competitiveness of the MSME sector through Energy Efficiency and Product Quality Certification. The present scheme will also deal with the issue relating to reduction in emission of Green House Gas (GHG) by the MSME sector, through energy efficiency. 

The first objective of the present Scheme is to sensitize the manufacturing MSME sector in India to the use of energy efficient technologies and manufacturing processes so as to reduce cost of production and the emissions of Green Houses Gases.

While the large manufacturers/users of energy in India are deriving additional income through CDM by trading with the buyers from developed economies, the MSME sector is not able to do so in the absence of suitable meachanism for aggregation. An innovative concept of cluster-based carbon credit aggregation centres (CCAs) has been planned under the scheme to initiate MSMEs to CDM benefits.

The second objective will be to improve the product quality of MSMEs and to encourage them towards becoming globally competitive. Certification of products to national and international standards is an important tool to enhance the product value of Indian MSMEs.


The above objectives of the Scheme will be achieved through the following major activities:

(i) Capacity Building of MSME Clusters for Energy Efficiency/Clean Development Interventions and other technologies mandated as per the global standards.

(ii) Implementation of Energy Efficient Technologies (EET) in MSME units.

(iii) Setting up of Carbon Credit Aggregation Centres (CCA) for introducing and popularising clean development mechanism(CDM) in MSME clusters.

(iv) Encouraging MSMEs to acquire product certification/licences from National/International bodies and adopt other technologies mandated as per the global standards.

(v) Study of Impact of the scheme, administrative and other miscellaneous items.

Capacity Building of MSME Clusters for Energy Efficiency/Clean Development Mechanism


The primary objective of this Activity is to handhold the MSME clusters in adopting energy efficient processes.

Under the activity, the following initiatives will be taken up:

(i) Conducting awareness programmes in MSME clusters on

     • energy efficient technologies

     • availability of energy efficient equipments; and

     • the need for energy efficiency and cash benefits from Energy Efficient Technologies (EFT)

        and Clean Development Mechanism (CDM).

Supporting energy audits in sample units (3 Nos. in each cluster representing the micro, small and medium enterprises respectively) in energy intensive clusters. Detailed Project Report (DPRs) for cost effective, bankable energy efficient projects. The recommendations in the model DPRs will be used with the cluster based MSMEs for demonstrating the scope, need and financial benefits from EET projects


The expected outcomes from the Activity are:

(i) Enhanced Awareness on energy efficiency in manufacturing processes,

(ii) Energy audits of MSMEs, and

(iii) Adoption of energy efficient technologies by MSMEs

Office of the the Development Commissioner (MSME) will identify MSME clusters for conducting the awareness programmes on Energy Efficiency Technologies (EET), Clean Development Mechanism (CDM), etc., on the basis of the responses received from the MSME-DIs, cluster based associations, NGOs and technical institutions. 

The interested MSMEs from the respective clusters will be invited to prepare their own Detailed Project Reports (DPRs)/Energy Audit Reports to facilitate the implementation of the energy efficient technologies (EET). 

Components of Grant:

Towards organizing the awareness programmes, the Government of India will provide financial support to the extent of 75% of the actual expenditure, subject to maximum Rs. 75,000/- per programme (Average cost of one programme is expected to be Rs. 80,000). The balance amount is to be contributed by the participants, Cluster associations, etc. The Government grant shall be utilized towards meeting the expenditure on technical inputs from faculties/experts and their course material, travel and lodging expenses, other miscellaneous expenses, etc. The maximum allowable expenditure for conducting the cluster level energy audits and model DPRs (for three selected enterprises) will be Rs. 9.0 lakh per cluster. (Average cost of preparation of one model DPR is expected to be Rs. 6.0 lakh). Out of this, 75% of the actual expenditure will be provided by GoI and the balance 25% is to be contributed by the respective MSMEs selected for preparation of the model DPRs.

Implementation of Energy Efficient Technologies and Other Technologies Mandated as per the Global Standards in MSMEs

Objective: 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.

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.

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. 

Implementation: 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.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.

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 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.

Eligibility: 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 MSME should have been audited for energy consumption and have developed a Detail Project Report on EETs.

(ii) The DPR should be prepared by a qualified Energy Manager/Auditor. 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. After completion of the EET project, the industrial unit will be required to submit a completion certificate to SIDBI in the prescribed format. 

How to Apply:

The interested MSME unit shall apply first to SIDBI/Banks/Financial Institutions for sanction of loan for the project on the basis of the DPR.

Setting Up of Carbon Credit Aggregation Centres (CCA) for Introducing and Popularizing Clean Development Mechanism (CDM) in MSME Clusters 

The concept of Clean Development Mechanism (CDM) through reduction and management of carbon footprints have been introduced under Kyoto Protocol for reduction of emission of Green House Gases like carbon dioxide, which is a common emission from industries using coal and petroleum products.

A procedure has been laid down for documentation of such projects from developing countries to ascertain reduction of Carbon Footprints (tons of carbon dioxide emitted). The ‘Carbon Credit’ released as CERs (Certified Emission Reductions) are tradeable in National & International Commodity Exchanges.  

The CCA centres will be set up as special purpose vehicles (SPVs) with participation from cluster based associations, technical institutions, NGOs, etc. The participation of State Governments in the SPVs is also permitted. Clusters for setting up of the CCA centres, will be identified on the basis of the CDM implementation potential in the cluster or applications received from the stakeholders. While setting up the CCA centres, the Government of India support will be towards setting up of the basic facilities, preparation of the cluster based Project Concept Notes (PCN) as well as PDD for CDM.

The expected deliverables of the Activity are:

• Creating awareness among the MSMEs within and around the identified Clusters about Market Transformation of Energy Efficiency, Carbon Credit Trading, etc.

• Identification of Clusters having adequate number of ongoing or emerging GHG/CDM projects for setting up of the CCAs.

• Facilitate setting up of Carbon Credit Aggregation Centres in identified clusters by the cluster-based associations, technical institutions, NGOs, etc 

Component of Grant: The Govt. of India will provide financial support to the extent of 75% of the actual expenditure, subject to a maximum Rs.15 lakh for establishing each of these centres. (Average cost of setting up of one CCA is expected to be Rs. 15.0 lakh). The remaining expenditure will have to be met by the implementing agency/SPV through collection of users’ charges. 

Eligibility: Cluster-based MSME associations, Technical Institutions and ESCOs engaged in implementation of EET and other renewable energy projects, which can be registered under CDM, are eligible to apply.

• Organizing Workshops/Seminars for Cluster Stakeholders/MSMEs on CDM.

• Hiring of Consultant for preparation of CDM Project Concept Note (PCN).

• Conducting training programmes on CDM.

• Preparation of Project Design Document (PDD).

• Validation of the CDM Project through external auditors.

• Remunerations of the CCA executives and expenditure on their TA/DA upto one year (Max.).

• Holding of meetings of the executives and governing bodies, etc.

• Miscellaneous expenditure on telecommunication, stationery, etc. upto one year (Max.) 

Encouraging MSMEs to Acquire Product Certification Licenses from National/ International Bodies

To provide subsidy to MSME units towards the expenditure incurred by them for obtaining product certification licenses from National Standardization Bodies (like BIS, BEE, etc.) or International Product Certifications (CE, UL, ANSI, etc.). Certification of MSMEs products to International Standards, CE, ANSI, UL, Energy Star, etc. would also enhance acceptability of the products in the export market.

The Activity will be implemented through MSME-DIs functioning under the Office of the DC (MSME). Total 3,000 product certification on National Standards and 1,000 on International Standards are proposed to be reimbursed under the scheme.

Component of Grant: Under this Activity, MSME manufacturing units will be provided subsidy to the extent of 75% of the actual expenditure, towards licensing of product to National/ International Standards with maximum per MSME  Rs.1.5 lacs for obtaining product licensing/Marking to National Standards and Rs. 2 lacs for obtaining product licensing/Marking to International standards.

The subsidy includes expenses for Application fee , License fee , Product Testing charges as required for licensing, Inspection fee of the certification body. 

Organizing the awareness programmes: The Government of India will provide financial support to the extent of 75% of the actual expenditure subject to maximum of Rs. 45,000 per programme. (Average cost of conducting one programme is expected to be Rs. 50,000). The balance amount is to be contributed by the participants, Cluster associations, etc. 

Initially, 50% of the sanctioned amount from GoI will be released after approval of the proposal and subject to proportionate contribution by the private units. The balance GoI contribution of 50% amount will be released after receiving the remaining contribution from the private units and based on the receipt of the audited statement of expenditure, etc. 

All the Micro, Small & Medium Enterprises in the manufacturing sector who have submitted valid Entrepreneur Memoranda (EM) and who are first time applicants for National/ International Product Standard Licenses are eligible to apply. 

For organizing the Awareness Programmes in a cluster, associations of MSMEs, NGOs and Technical Institutions working in the area of quality certification in the cluster are eligible to apply.

Detailed Scheme Document