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									  Notice Inviting Expression of Interest (EoI) for setting-up Design and Resource Center
        under Comprehensive Handicraft Cluster Development Scheme (CHCDS) in
             Crochet Lace Cluster, Narasapuram Division, W.Godavari Dist, AP

1. Introduction
   Mega cluster approach is a drive to scale up the infrastructural and production chain at
   Handicrafts clusters which have remained unorganized and have not kept pace with the
   modernization and development that have been taking place so far. Consequently, there has
   not been any addition of fresh impetus of development and optimum realization of output in the
   handicrafts sector, which is the backbone of long traditional heritage and cultural linkages. The
   prospects of this sector lie in infrastructural up-gradation, modernization of the machinery and
   product diversification. Innovative manufacturing as well as designing know-how, furthered by
   brand building of the native products hold the key to creating a niche market for the products
   manufactured by the clusters. The proposed program is expected to support the up-gradation
   of infrastructural facilities coupled with market linkages and product diversification. With this
   background, Comprehensive Handicrafts Cluster Development scheme (CHCDS) has been
   launched. Details of the scheme is available at www.indianhandicrafts.org.in

   Narsapur cluster located in Andhra Pradesh is world renowned for handmade crocheted lace of
   Irish origin. It has the largest concentration of crochet lace artisans in the world with over
   1,00,000 women home based lace makers located in the two adjoining districts of West and
   East Godavari. Over 80% of the total production in the area is exported. There are over 40
   exporters in the area who are engaged in the production of lace products and have been
   exporting to the major world markets in USA, Europe and Japan.

2. Design and Resource Center
   2.1. Objective
       To set up a Design and Resource Centre that provides key design related technical services
       to the cluster for crochet lace products. The objectives of the Design and Resource Centre in
       Narsapur are as follows:
            To act as a centre for providing new product designs, design guides and other related
             services to the cluster
              To provide technical inputs for introduction of new tools and incubation of new
               technology for enhancement of product quality and build the efficiency of the
               production processes
              To provide an access to international and domestic market and design trends to
               artisans and manufacturers of Narsapur
              To train master artisans and trainers on various aspects of design and production
              To establish a design bank for create a depository of product designs accessible to all
               cluster stakeholders
              To set up a Resource Centre to provide a single window solution to all cluster
               stakeholders, such as artisans, exporters, designers, in various aspects of market
               information, technical information, raw material procurement, product information
               and industry best practices.

2.2. Suggested Activities
          a) To act as a common facility center for product and design development and sample
          b) To establish a design bank which will have a database of designs in both physical and
                 electronic form. These will be made available to various user groups to enable them
                 to diversify/innovate products appropriate for domestic/ international markets
          c) To conduct design development workshops for master artisans, trainers and other
                 cluster stakeholders
          d) To tie-up with and/or hire national/international designers, design houses, and
                 design institutions for
               i.    Development of new product ranges and concepts
               ii.   Conducting training/ workshop s in the cluster
          e) Set up an Incubation Centre to introduce and test new tools and techniques,
                 disseminate such information and facilitate technology transfer
          f)     Set up a Resource Centre with an exhaustive information base of industry reports,
                 trade journals, documents/ CDs on technology, tools & equipment, product
                 catalogues, buyer & suppliers’ lists, export documentation and other compliance
                 procedures. In addition, the centre will have an e-centre to enable members to
                 access information from various national/international sources.
   2.3. Suggested Infrastructure
          a) Design Studio
          b) Classrooms
          c) Conference room
          d) Workshop with required tools & equipment for product development
          e) Machines and equipments for sample development, prototype making and training
          f)      Design and product Library (in digitized form for designs and in physical form for
          g) Required IT infrastructure

3. Funding Pattern
                                              Government Share       SPV Share
       Capital Investment for creation of Up to 100% for building, Land and recurring
       common infrastructure                  machinery, equipment & expenses
       (land, building and infrastructure, misc fixed assets
       machinery, equipment & other fixed
       Cost related to soft skills            I year – up to 100%    I year – NIL
        ( Relating to core area like designer II year – up to 90%    II year –min. 10%
       fee, wage compensation, raw III year – up to 75%              III year – min. 25%
       material, tool kits distribution,
       sample       procurement,       books,
       periodicals, journals, membership of
       relevant       institutions,     buyer
       directories, software etc)

4. Release of Funds
   4.1. Fund for Capital Investment would be released in following manner:
                i.    1st installment of 40% as advance on SPV acquiring land
               ii.    2nd installment of another 40% on utilization of 2/3rd of 1st installment
               iii.   Balance as 3rd and final installment as reimbursement

   4.2. Fund for recurring costs would be released in following manner after submission of project
       proposal clearly detailing activities to be undertaken:
                i.    1st installment of 40% as advance
               ii.    2nd installment of another 40% on utilization of 2/3rd of 1st installment
               iii.   Balance as 3rd and final installment as reimbursement
     4.3. The SPV would have to submit utilization certificate in the format of GFR 19A, pre-receipt
         bill, Surety Bond etc. separately for capital investment and recurring expenditure.

     4.4. Separate accounts need to be kept by SPV for the funds released by GOI, which shall be
         subject to audit by the Controller and Auditor General of India.

     4.5. In the event of an SPV withdrawing from executing a project before utilizing the Government
         assistance, then the SPV should immediately return the Government assistance together
         with the applicable interest accrued thereon. Payment of penal interest by the SPV shall be
         decided by the Project Approval and Monitoring Committee (PAMC) on case to case basis.

5.   Implementing Agency
         The implementing agency will be a Special Purpose Vehicle (SPV) which shall be a legal
         entity, preferably a Company, with the participation of related stakeholders, particularly the
         leading exporters, manufacturers, suppliers, buyers, artisan federations/SHGs, state
         government and private investors. Reputed national level institutions in the field of design,
         fashion, entrepreneurship development, management, market promotion and trade
         promotion bodies may also form part of the implementing agency.

     5.1. Special Purpose Vehicle (SPV) Detailing:
             a) It will be a multi stakeholder cluster level legal entity, registered under Societies Act
                 or Companies Act which will be the recipient of grant support from the Ministry of
                 Textiles and other agencies to implement the project. It is suggested that SPV should
                 be as much broad-based as possible with participation from different types of
                 stakeholders. It should constitute of minimum 5 shareholders in case it is registered
                 under Companies Act. All other SPVs should constitute of minimum 5 permanent
                 members with voting rights.
             b) The majority of equity (minimum 51%) of such SPV shall be with the artisans/
                 craftsmen/ Entrepreneur of the cluster and/ or their associations/ cooperatives/
                 federations/ SHGs. The remaining stake can be held by strategic investors such as
                 buyers, market promotion bodies, design institutions, training institutes, designers,
                 large scale production units, banks, financial institutions, State Government
                 agencies, etc. However, the individual stake of the aforesaid agencies shall not
                 exceed 26%.
c) SPVs with technical tieups/ stake /partnership with reputed national level
     institutions in the field of design, fashion, entrepreneurship development,
     management, market promotion and trade promotion bodies are encouraged to
d) Such SPV shall be responsible for preparation of detailed project report (DPR)
     covering technical, financial, institutional and implementation aspect to seek grant
     support and submitting it to concerned authorities. After the approval, the SPV shall
     be responsible for ownership, execution and management of the interventions/
     facilities created under the project.
e) It is recommended that SPV should hire external subject matter experts / technical
     consultants for finalization of program content and design needs.
f)   The SPV would be the focal point for implementation of the scheme playing the
     following role:
             SPV would conceptualize, formulate, achieve financial closure, implement and
           manage the infrastructure
          SPV would procure required land/ infrastructure
          SPV would be responsible for maintaining the utilities and infrastructure
           created by collecting uniform service fee/ user charges
          The SPV has to be structured so as to attain commercial sustainability with a
           positive revenue stream
          SPV would appoint contractors / consultants in a fair and transparent manner
           to assist them in handicrafts technology, processing, designing, skill
           development, marketing, engineering, financing etc., for implementation /
           execution of the project. In order to ensure timely completion of the project,
           SPV will obtain appropriate performance guarantee from them.
          SPV will be responsible to obtain all necessary statutory approvals / clearances
           including environmental clearances, which are prerequisite to commencement
           of the project
          SPV will submit quarterly progress report of the project implementation
           including the details of the expenditure in prescribed formats.
g) In case of an SPV registered under Companies Act, it is recommended that 50% of
     the net profit should be reinvested in the facility in first 3 profitable years.
h) SPV has to develop a strong industry interface to make design development and
     training programmes market faced and relevant for the Cluster enterprises
i)   Revenue generating activities for SPV can be (indicative):
          Training programs for master artisans
          Industry sponsored training programs
          User fee for accessing the Design bank and Resource Centre
          Sample development/ new product range development based on buyer
           requirements for exporters/ manufacturers
          Fees for various consulting assignments and advisory services provided to
           various cluster artisan federations/ entrepreneurs/ exporters/ buyers and
j)   SPV may engage international designers on direct payroll or as consultants
     depending on the requirement and their best utilization
k) SPV may also tie-up with design houses for its various endeavors like establishing
     design banks, training programs etc.
l)   SPV also has to ensure regular liaison activity with government to take benefit of
     various available schemes
m) SPV shall give an undertaking stating that none of the project assets shall be sold
     without prior approval of Ministry of Textiles through office of DC (Handicrafts).
n) Any change in the constitution of SPV shall be with prior approval of Ministry of
     Textiles through office of DC (Handicrafts).
o) SPV has to maximize product and design development.
     Time frame from the date of completion Minimum number of product & design
     of the project                         development
     In first year                          200
     In second year                                 500
     Third year onwards                             1000

p) The planned activities of the SPV need to be mentioned in detail in DPR with
     estimated cost. SPV is suggested to follow the following format to detail out their
     planned activities. The following table is an example only.
     Year                 Activity              No. of times Cost
     First year           Training program 15 such training Rs. 100/artisan/day
                          for 20 artisans for 2 programs
                          weeks in design
        q) The deliverables of the project need to be mentioned with objectively measurable
            targets (wherever possible) in DPR. SPV is suggested follow the following format to
            detail out the deliverables. The following table is minimum expected.
            Deliverable                 Targets
            Training master artisans/   First year : Minimum 200 master artisans will be trained
            trainers    in    design    Second year : Minimum 300 master artisans will be
            development                 trained
                                        Third year onwards : Minimum 500 master artisans will
                                        be trained
            No. of designs created      First year                 : 200
            for          commercial     Second year               : 500
            production                  From third year onwards : 1000 each year
            No. of clients who have     First year                 : 50
            availed of the services     Second year               : 70
            offered by the Design       From third year onwards : 100 each year
            and Resource Centre

        r) A Memorandum of Understanding (MoU) need to be signed with the Office of the
            DC (Handicrafts) by the implementing agency for implementation of the project.

5.2. SPV Evaluation Criteria
        a) The SPV shall be selected by PAMC preferably through open competitive bidding
            process. In special cases, PAMC/Government reserves the right to select / constitute
            the SPV.
        b) During the technical evaluation of project submitted by SPV, following points will be
            given importance:
            1. SPV constitution and background of the SPV members
          Experience of involved key members:
            o   Autonomous bodies of Government of India/State Government in the area of
                design, fashion, management, market promotion, trade promotion and
                entrepreneurship development will be eligible.
            o   SPVs with participation/ partnership/ technical tie-up with reputed Government
                owned or private national level institutions in the area of design, fashion,
                management, market promotion, trade promotion and entrepreneurship
                development will be given preference.
            o   SPVs with participation/linkage of designers, design houses, designers’
                association and design institutes will be preferred.
          Involvement of artisans in SPV: SPVs with equity contribution from artisans, artisan
            federations and SHGs will be preferred
               2. Nature of the project
              Fit with the suggested concept: The project should be prepared in line with the
               proposed concept from the technical, operational and social viewpoint.
              Size of the Project: Projects having a larger coverage and scope will be given
              Self-sustainability of the project: The projects which achieve self-sustainability over
               a shorter period of time will be preferred
              Benefits to artisans: Projects offering better training opportunities to a larger
               number of artisans will be given preference

           c) During the financial evaluation, following points will be given importance:
              Equity share of SPV: The SPV share mentioned in point 3 (Funding pattern) above is
               the lower limit for each type of project. Priority will be given to projects with higher
               SPV share in percentage terms.

6. General terms
   6.1. An annual audit will be conducted for all the approved projects by PAMC suggested
        government body
   6.2. Submission of false information or concealment of information by SPV or entrepreneur shall
        attract penalty and / or legal action as decided by PAMC.

7. Procedure for Submission of Expression of Interest (EoI)
        It is proposed to have a 2-bid system for project approval viz. Technical Bid and Financial
        Bid. One sealed envelope should contain the Technical Bid that is a copy of proposal in CD
        along with two hard copies of the same. The other sealed envelope should contain the
        financial bid. Both these sealed envelopes should be put together in a bigger envelope duly
        sealed for submission to: The Development Commissioner (Handicrafts), Ministry of
        Textiles, Government of India, West Block-7, R. K. Puram, New Delhi-110 066. Tel: 011-
        26191569, Fax: 011-26163085. The envelope should be clearly marked ‘Proposal for setting
        up of Design and Resource Center under Mega Cluster Scheme, Narsapur’. The
        applications should reach well before the last date. The suggested content of technical and
        financial bid documents is given in annexure. Please note the contents of Financial Bid
        should not be a part of Technical bid under any circumstances.
         Process of project approval
            a) Technical bids will be opened and assessed by a committee of officers approved by
                 DC (Handicrafts)
            b) Eligible SPVs would be called for a presentation before the committee at the Office
                 of the DC (Handicrafts)
            c) The technical bids will be evaluated as per the technical evaluation criteria (refer
                 point 5.2 (b)).
            d) Financial bid shall be opened for all eligible SPVs.
            e) Final selection of the SPVs will be made by project approval and monitoring
                 committee (PAMC) based on technical criteria (refer point 5.2 (b)), financial criteria
                 (refer point 5.2 (c)) and presentation made before PAMC.
            f)   The committee reserves the right to recommend amendments in the proposed
                 project. The selection in that case will be subject to incorporation of those
            g) Decision of the committee shall be final and binding on all the applicants

8. Rights of Ministry of Textiles
    The Ministry of Textiles reserves the right to accept / reject the proposals received without
    assigning any reasons whatsoever, or may call for any additional information / clarification, if so

9. Court Jurisdiction
    This shall be subject to the exclusive jurisdiction of courts at Delhi/New Delhi

10. Miscellaneous
    In case any further clarification or information is required following may be contacted:
        1. Sh. Rohit Bhardwaj, Joint Director, Office of the Development Commissioner
            (Handicrafts), Ministry of Textiles, Government of India, West Block-7, R. K. Puram, New
            Delhi-110 066. Tel: 011-26103206, Fax: 011-26163085, email : dchejs@nic.in
        2. Ms. Sharmistha Mohapatra ,IL&FS Clusters, 2nd Floor, Niryat Bhawan, Rao Tula Ram
            Marg, Opp. Army Hospital Research & Referral, New Delhi-110 057. Tel: 011-
            46002200/01,            09910904141,        Fax:          011-46002255,       email           :
A. Project Proposal Outline
       a) Executive Summary
       b) SPV composition and members’ background
       c) Detailing of activities with timeline and cost implication
       d) Manpower planning(including organization chart)
       e) Technological Considerations (e.g. selection of software, hardware, technology,
            other infrastructure, etc.)
       f)   Infrastructure details (e.g. land and site description, civil engineering and structural
            works details)
       g) Marketing and Promotion Plan
       h) Project Cost detailing
       i)   Recurring expense detailing (for at least 5 years)
       j)   Expected Revenue generation (for at least 5 years)
       k) Financial appraisal (Profit & loss statement, balance sheet, cash flow for 5 years,
            break even period, return on equity, etc.)
       l)   Requirement of statutory clearances
       m) Project Implementation schedule
       n) Deliverables with objectively measurable targets (wherever possible)
       o) Benefits to cluster
B. Financial Proposal:
       a) Proposed Means of Finance:
            1.      SPV’s share
            2.      Funds required under CHCDS

           Attachments to be furnished
       1. Memorandum & article of association of SPV
       2. Details of SPV members (wherever applicable) like:
            a. Registration Certificate with local Central Excise authority
            b. Income Tax return for last financial year along with PAN number
            c. Sales tax / VAT payment receipts for last financial year
            d. Annual Report (latest financial year)
            e. Audited financial statements (for last 3 financial years)
            f.   Any other document establishing the credential of the SPV member
    3. Certificate by DIC / chartered engineer / any other expert verifying / vetting the
        technical feasibility of the project
Note: The approval committee reserves the right to ask for any other supporting documents
pertaining to the project report, if required

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