F.12/ 02/2016- HE&MT
Department of Heavy Industry
(HE&MT Section)
Subject: Third Meeting of the Apex Committee dated 28th January, 2016 in connection with implementation of the Scheme for Enhancement of competitiveness in the Indian Capital Goods Sector- Minutes thereof.
The Third Meeting of the Apex Committee, constituted in connection with implementation of the Scheme for Enhancement of competitiveness in the Indian Capital Goods Sector, was held on 28th January, 2016 under the Chairmanship of the Secretary (Heavy Industry). The list of participants in the Meeting may be seen at Annexure.
2. The Chairman welcomed the members of the Apex Committee and other participants in the Meeting including Applicants and representatives of Machine Tool Industry. This was followed by a brief introduction by the Joint Secretary (HE&MT) of the proposals to be considered in the Apex Committee meeting and recommendations made by the Screening Committee in its meeting held on 19.01.2016 i.e :
(1) Proposal from Karnataka Government for Machine Tool Park under Integrated Industrial Infrastructural Facility (IIIF) component of the Scheme (Project outlay: Rs.421 Crore, GoI contribution proposed: Rs.125 Crore);
(2) The issue of engagement of Global Innovation and Technology Alliance (GITA) for promoting, marketing and implementation of Technology Acquisition Fund Programme (TAFP) component of the Scheme. Proposed fee is 2% of the Project cost apart from promotional cost;
(3) Proposal for PSG College of Technology for development of 3 welding technologies (welding automation, intelligent welding power supply and welding consumables) under Centre of Excellence for technology development (CoE) component of the Scheme (Project outlay: Rs. 26.70 Crore, GoI contribution proposed: Rs.21.1Crore);
(4) Proposal from Heavy Engineering Corporation (HEC) for opening four centers for specialization in forging, welding, gear manufacturing and ESR technology under Common Engineering Facility Centre (CEFC) component of the Scheme (Project outlay: Rs.50 Crore, GoI contribution proposed: Rs.30 Crore);
(5) Proposal from HMT Machine Tools Limited for Four Guideway CNC lathe under TAFP component of the Scheme (Project outlay: Rs.4.4 Crore, GoI contribution proposed: Rs.1.1Crore);and
(6) Proposal from HMT Machine Tools Limited for Turning Mill Centre SBCNC 30 TMY under TAFP component of the Scheme (Project outlay: Rs.1.52 Crore, GoI contribution proposed: Rs.0.4361 Crore);
3. Proposal from Karnataka Government for Machine Tool Park (MTP) under IIIF component of the Scheme:-
3.1 A presentation on Machine Tool Park was made by Mrs. K. Ratnaprabha, Additional Chief Secretary, Government of Karnataka. It was emphasized that MTP would be a world-class facility and the first-ever machine tool park in the country. The park would have specifications akin to the next door Japanese Park in National Investment and Manufacturing Zone (NIMZ). The Park would be set up in around 500 acres of land, 99% of which is already in possession, costing about Rs 191 crore & environment clearance has been obtained. Interaction with Indian Machine Tool Manufacturers Association (IMTMA) members has brought out the feasibility of selling all the 117 plots measuring 0.5 acre to 5 acres. The focus will be on having the entire value chain of industries and Micro, Small and Medium Enterprises (MSME)s relating to the machine tool sector being present in the MTP. The industrial policy of the state Govt will be adopted for allocation of plots and Start-ups will be given due importance in the scheme of things. Apex Committee was requested to consider CEFC for testing facilities to also come up in the MTP so that it serves as a one stop shop for the industry.
3.2 The total project outlay is Rs.421 crore, including land valued at Rs. 191.68 crore and infrastructure of Rs. 229.32 crore. GoI grant sought is Rs.125 crore which is less than 80% limit of the Project cost (excluding land and building). As per the notification under the scheme, Central assistance envisaged is to be extended for plant and machinery, human resources but not for vehicles, greenery, roads, land and building. However, since road and boundary walls within the park are considered eligible for Common Infrastructure Facilities, the same may be included for the purpose of grant.
Asregards affordability of SMEs it was mentioned that 177 plots are proposed to be allotted to industry in the Machine Tool Park at apre DHI grant at a tentative price of Rs. 1.25 crores per acre. After the grant per acre cost is expected to come down by about Rs.0.38 crores.
3.3 It was emphasised by the Committee that the facilities in the park should be world class and should be developed in consultation with the Industry. IMTMA requested for “Single Window Clearance Facility” to make it easier for investor and world class in true sense. It was observed by AS &FA that proposal has undergone significant improvement since the last time when it was brought up in the Apex Committee Meeting wherein IMTMA was implementing the same and land was yet to be acquired from the Government of Karnataka (GoK). He stressed that prime objective of GoI grant to the Project is to ensure that the benefits of Machine Tool Park reaches the domestic Machine Tools Industry, especially those belonging to SME category. The need to catalyse innovation and start ups through this Scheme intervention was emphasised. The GoI grant should translate into subsidy for the industry and the benefit of the same should be passed on to the industry by Karnataka Government. It was stressed that the subsidy should be inversely proportional to the size of the units & the DHI grant should result in subsidising the infrastructural costs (not for land & building, as per the scheme provisions).
3.4 It was noted that DHI funding will result in reduced cost of manufacture mainly due to world class industrial infrastructure and clustering together of the entire manufacturing value chain at one location. This is as per the Scheme objective & it was emphasised by the Additional Chief Secretary, GoK and IMTMA that the Park will help the industry to double the turnover in five years, apart from enhancing employment opportunities.
3.5 The issue of formation of an Special Purpose Vehicle (SPV) under the scheme was raised, which was agreed to by the Karnataka Government. The SPV is to be formed as a Not for profit Company/ society/ Trust with representation from DHI and IMTMA. AS&FA pointed out that Utilization Certificate for the Project should reflect the ‘passing of benefits’ to SMEs as well as efforts made to incubate innovation and start ups. The grant would be released by DHI in the ratio of 80:20, excluding the cost of land &building, as stipulated in the scheme. Committee emphasised that the allotment of land has to be done in a fair and transparent manner and the land allotment should take care of judicious distribution to MSMEs/ Start ups and the entire manufacturing chain of the Machine tools units.
3.6 The Committee ‘in principle’ approved the proposal of Karnataka Government for a grant of Rs 125 crore for setting up a machine tool park at Tumkur subject to formation of SPV & linking release of funds to milestones. Government of Karnataka would ensure construction and management of industrial infrastructure of world class nature to the satisfaction of the Government of India and ensure compliance of the observations and suggestions of the Committee, as mentioned above. A suitable MOU would be proposed by GOK and finalised in consultation with DHI and industry association.
4. Proposal of engaging Global Innovation and Technology Alliance (GITA) for promoting, marketing and implementation of TAFP component of the Scheme:-
4.1 Representatives of GITA made a presentation and informed the background of GITA which was incorporated as a not for profit joint venture entity between DST (49%) and CII (51%). The main objective of GITA, inter-alia, includes developing 2 + 2 and other DST programmes for international technology transfers with the Industry, managing international science and technology programmes, providing an effective institutional mechanism for providing end to end enabling services and support for the emergence of an innovation ecosystem with demand pull for technology and innovation driven enterprises, building capacities in industry and technology start-ups. In the last four years of its existence, they have developed a number of proposals between Indian and foreign industries / research organizations. Four success stories have been created. They have created cadre, systems and processes to take up the job in a result oriented, transparent and non-controversial manner. This has led to their services being utilized by other Departments including DIPP for its TAFP recently. Their present proposal is in line with approval granted to it by DIPP for operationalising TAFP. Within a short period of two months, they have been able to generate about 15 proposals, database, online system and dedicated cadre of experts. Although DIPP TAFP proposals are much smaller in size and grants, but the basic methodology will remain the same.
4.2 Committee was informed that an allotment of Rs 50 crore for targeted ten technology acquisitions has been made under the TAFP component of the Scheme. Committee was informed that despite publicity; no proposal from any industry in private sector has been received under TAFP Component of the Scheme. So far only two proposals have been received from HMT Machine Tools which is a Public Sector company.
4.3 The services to be provided by GITA would include programme preparation, promotion, proposal evaluation, awarding and contracting, monitoring and facilitating release of fund. They would facilitate one to one dialogue, handhold and provide the matchmaking services to the MSMEs, developing a panel of subject experts for evaluating each proposal, forming a ‘knowledge grid’ and will act as ‘matchmaker’ between the industry and the technology provider/ applied research laboratories/ Institutions. GITA would develop an online platform/ marketplace where the dialogue could take place between seekers and providers of technology. To summarize, GITA will market the TAFP component of the Scheme, invite proposals through RFPs, assess the proposals and carry out due diligence for the TAFP proposal (before referring a proposal to the Screening Committee) resulting in generation of some successful proposals under the scheme. The entire database and knowledge grid so created, will be provided to DHI.
4.4 GITA has requested for grant of Rs. 96 lakhs as their management fees and Rs.136 lakhs as promotional expenses. Total amount, requested by GITA is Rs.2.32 crore which is more than 4.5% of the allocation of Rs.50 crore under TAFP component. Under the scheme 7.26 crores are allotted under the head of administrative expense (limited to 1.25% of the total GoI grant envisaged for the entire Scheme).
4.5 On the issue of whether the grant to the successful applicant be routed directly by DHI to applicant or through GITA, Chairman suggested that the model of DIPP could be looked at and may be followed.
4.6 Chairman mentioned that though GITA has been asked to focus on Internet of Things, industrial energy efficiency through equipment and additive manufacturing in the field of CG Sector, any proposal received on subjects outside the focus areas but otherwise found to be eligible as per Scheme guidelines on TAFP, should be facilitated and handled by GITA.
4.7 The Committee, ‘in principle’ approved the engagement of GITA for promoting, marketing and implementation of TAFP component of the Scheme on financial terms as applied for (DHI grant towards GITA management fees of Rs 96 lakhs and Rs 136 lakhs towards promotional activities, subject to actual. The approval was accorded, subject to milestones specifically listed and approved in the MOU, to be signed subsequently between DHI and GITA. The activities to be undertaken by GITA would include but not be limited to the activities listed above and the proposal submitted by GITA. DHI may ask GITA to take any other action, as deemed fit, for promoting, marketing and implementation of TAFP component of the Scheme.
5. Proposal of PSG College of Technology for development of 3 welding technologies (welding automation, intelligent welding power supply and welding consumables) under CoE component of the Scheme
5.1 Representative from PSG Institute of Technology made their presentation for setting up a Centre of Excellence in the field of Welding technology. They presented their proposal for development of 3 welding technologiesunder CoE component of the Scheme with two partner industries for each technology. The technologies are:-
Technology 1: Automated Welding Systems for specific Industrial Applications.
Development of technology will involve, inter alia, the following steps:
(i) Design & Development of Indigenous automated Welding system.
(ii) Development of control systems for the above.
(iii) Development of expert system for Welding Simulation & Analysis
Industry partners for technology development are Effica Automaton Limited, Coimbatore & PSG Industrial Institute and the project cost is 8.9 crores.
Technology 2: Intelligent Welding Power Supply System with waveform shaping Techniques
Development of technology will involve, inter alia, the following steps:
(i) Development of Indigenous Solid State Welding Power Sources.
(ii) Development of Wave Form Shaping Algorithms for Welding Power Sources.
(iii) Development of Special Purpose Adaptive Controllers.
Industry partners for technology development are Enerka Instruments Pvt Ltd, Bangalore and Mak Controls & Systems (P) Ltd, Coimbatore and the project cost is 5.5 crores.
Technology 3: Alloy Design by Welding Simulation and Analysis
Development of technology will involve, inter alia, the following steps:
(i) For development of new welding electrodes and filler metals Alloy Design through computational methods.
(ii) Prototype development.
(iii) Development of Welding Consumable: high/Ultra-high strength alloy steels, nickel alloys, Aluminium Alloys and Special Fluxes.
Industry partners for technology development are Omega Weld Rods Systems, Coimbatore and Thirumala Electrodes Co., Tiruchirappalli and the project cost is 12.3 crores.
A Summary Sheet of industry/technology wise breakup is placed at Annexure.
5.2 PSG confirmed that they have modified their proposal, as per the suggestions of the Apex Committee in its first meeting wherein the proposal was considered initially and was approved subject to elimination of duplication of work with Welding Research Institute (WRI), Tiruchirapalli, increasing the user industries and reducing the GoI grant. It was clarified by PSG that all review inputs given by expert reviewer have been incorporated in the revised proposal. Budget has also been revised taking into account the review suggestions. Duplication issues with WRI have been taken care of. PSG informed that it already has an agreement with WRI to share its facility for evaluation of the technology propose to be developed by PSG. Further, PSG has submitted a list of user industries for whom this technology will be beneficial. Project cost has been reduced from their last proposal to internal scrutiny group from 34.40 crores to 26.70 crores & DHI’s contribution sought is 21.10 crores.