IPDS Scheme

Integrated Processing Development Scheme (IPDS)

The Integrated Processing Development Scheme (IPDS) was launched to address problems faced by the textile processing industry. This scheme is designed to counter challenges such as non-availability of water for processing and environmental pollution caused by the discharge of untreated effluents. Considering the widespread prevalence of small and medium enterprises in this sector, IPDS will develop parks with common facilities such as effluent treatment plants and water supply systems that can be used by clusters of processing units.

Objectives of IPDS

Major objectives of the Integrated Processing Development Scheme are:

• To promote the textile sector so that it becomes competent on a global level.
• To facilitate the usage of eco-friendly technology in textile processing.
• To help textile processing units to meet environmental standards fixed by various agencies of the government.
• To encourage Research & Development (R&D) activities geared towards innovative and clean technology.
• To create new processing parks and upgrade existing ones for better productivity.

IPDS has these focus areas:

• Adequate and timely supply of water
• Wastewater management
• Safe treatment of effluents before disposal

Salient Features

The goal of the Integrated Processing Development Scheme is to develop 4 to 6 brownfield projects and 3 to 5 greenfield projects with modern facilities for the benefit of textile clusters.

Projects that will be developed under IPDS are of three categories:

For already existing textile processing clusters with the above-mentioned facilities, the scheme is available for the purposes of technology up-gradation and enhancement of capacity

Special Purpose Vehicle

• For each project that gets approved under the Integrated Processing Development scheme, a Special Purpose Vehicle (SPV) will be established for implementation purposes.
• It shall be a corporate body registered under the Companies Act.
• The SPV will function under the guidelines mandated by the government but will have operational autonomy.
  • It shall be collectively owned by
  • Industrial units undertaking processing in the park
  • Financial institutions
  • State government
  • Central government
• SPV shall procure the land for setting up the processing park. The cost of the land is not included in the total cost of the project, and therefore not eligible for financial assistance under IPDS.
• It is responsible for obtaining bank loans to set up processing units within the park.
• Maintenance of the facilities of the processing park fall is the responsibility of the SPV, which will also collect user fees for the same.
• SPV will also take care of any licenses or permits required to set up common facilities in the park.

Agencies Involved and Implementation Strategy

Apart from the SPV, various other agencies are involved in the implementation and overseeing of the performance of Integrated Processing Development Scheme.

• Project Management Consultant (PMC): This is an advisory panel appointed by the Ministry of textiles for assistance in the assessment of proposals, utilisation of funds, and monitoring the project progress.
• Project Scrutiny Committee (PSC): This body shall be headed by Joint Secretary to the Ministry of textiles. After submission to PMC, it will appraise the proposals for feasibility.
• Project Approval Committee (PAC): The Secretary to the Ministry of Textiles will be the head of this body. It is meant to offer administrative support to IPDS.
• Project Management Agency (PMA): Post approval from the PAC, the SPV will appoint a PMA for preparation of project plan and other implementation assistance.
• Respective state government for assistance with approvals, suitable land, labour and any other relevant schemes.
• Operation & Maintenance (O&M) agency: It is responsible for the professional maintenance of the assets of SPV for a period of at least 15 years.

Formulation of Project Proposal

• The project proposal shall be made in consultation with PMC, post conduction of diagnostic study assessing the requirement of infrastructure and other facilities.
• Based on the location of the park, PCB and environmental norms regarding water supply or waste disposal may differ. The proposal must be framed based on local guidelines.
• Choice of technology for the processing parks must be chosen based on the following criteria:
  • BAT or Best Available Technology that already has a proven track record
  • Approval of technology by an independent agency or the relevant PCB
• Reasonable cost for effluent treatment strategies
• Proposals must also include an effective technique for waste sludge management.

Quantum of Assistance

The SPV will finance the project based on funds from the following sources:

• Equity from members of the industry
• Grants from the Ministry of Textiles
• Financial support from the state government
• Loans from banks and other financial institutions
• The SPV will receive the government funds for the project through a Trust & Retention Account (TRA) of any nationalised bank.

The pattern of funding from various sources will be as follows:

The ceiling amount of central government grant is as follows:

Financial assistance under the scheme is subject to certain conditions:

• Land cost is excluded from the total project cost
• Central government grant is only meant for capital costs and not for land acquisition
• The central government will not be liable towards time or cost overruns
• The Integrated Processing development Scheme does not cover retrospective funding
• Recurring costs, operation and maintenance charges are also not covered by IPDS

Once the project becomes operational, the SPV has full discretion to fix user charges for facilities of the park. O&M charges must be fully recovered through such fees.

Criteria and Pattern of Fund Release

1. The central government grant will be released in three instalments.
2. The first instalment is 50% of the total grant from the central government, which will be released after the fulfilment of the following criteria:
   • Setting up of SPV, with one GoI representative and one PMC representative on the board of directors
   • Land procurement, issuing of shares to members, and completion of shareholders’ agreement
   • Establishment of TRA in any nationalised bank
   • Submission of DPR (Detailed Project Report) to the Ministry of textiles, validation of the same by PMC and approval from PAC
   • Confirmation from PMC regarding above-mentioned points
   • Approval from relevant state PCB and environmental clearance for the project
3. Acceptance letter from the state government for 25% contribution
4. The second instalment is 30% of the grant and shall be released after the following conditions are satisfied:
   • Utilisation certificate for the first instalment issued by statutory auditors of SPV
   • Release of state government’s share of 25% of the total project cost
   • Awarding of all contracts equivalent at least to the total project cost which does not include the land cost
5. The third and final instalment consists of the remaining 20% central grant will be released three years after the project has become operational, and utilisation certification has been issued for the previous instalment.

For Trademark in Textiles, please refer: https://www.indiafilings.com/learn/trademark-class-24-textiles-and-textile-goods/

For GST rate of apparels, refer: https://www.indiafilings.com/learn/gst-rate-for-apparel-clothing-and-textile-products/