What is Solar Charkha Mission?

What is Solar Charkha Mission?

The Solar Charkha Mission is a Ministry of Micro Small & Medium Enterprises (MSME) initiative introduced in June 2018. The Khadi and Village Industries Commission (KVIC) would enact the programme. A pilot project on Solar Charkha was enacted at Khanwa village, Nawada District of Bihar in 2016. Grounded on the success of the pilot project, Government of India has accorded approval to set up 50 such clusters with a budget of Rs. 550 Crore for 2018-19 and 2019-20. The program is envisaged to generate direct employment nearly to one lakh persons in the approved Fifty (50) clusters.

The goals of the scheme are as follow:

  • To safeguard inclusive growth by the generation of employment, especially for women and youth, and sustainable development through solar charkha clusters in rural areas.
  • To energy up rural economy and help in arresting migration from rural to urban areas.
  • To balance low-cost, innovative technologies and processes for sustenance

Coverage of the project:

The focus is to cover 50 solar clusters across the country, whereby approx. 1,00,000 artisans/beneficiaries are to be covered under the various scheme components. The program shall be implemented in all States of India. The geographical distribution of the clusters throughout India, with at least 10% located in the North Eastern Region (NER), J&K and hilly states, will also be kept in view. The main focus will be given to 117 aspirational districts for soliciting project proposals under the scheme.

Interventions of the project:

Capital subsidy for individual and for Special Purpose Vehicle (SPV) :

  • 2000 Solar Charkha s at the maximum price of Rs.45,000/ – per charkha and a benefit of Rs.15,750/ – per charkha works out to a cumulative subsidy of Rs.3.15 crore for 1000 spinners ;
  • The single unit of two Solar Charkhas would produce 2.0 kg of yarn on an average per day, resulting in a production of 2.0 tons per 2000 charkhas. Thus, 500 Solar Looms would be given to convert the yarn into fabric at the maximum price of Rs.1,10,000/ – per loom and subsidy @35% at Rs.38,500/ – per loom and the cumulative subsidy works out to Rs.1.93 crore for 500 weavers;
  • The capital cost of construction of workshed with a less space of 20,000 sq.ft with 100% subsidy at the maximum rate up to Rs.1.20 crore per cluster for the SPV;
  • The capital cost of Solar Grid of 50 KW capacity with 100% subsidy at the highest rate up to Rs.0.40 crore per cluster for the SPV;
  • One-time Capital Cost Subsidy for the SPV @35% works out to a maximum of Rs.0.75 crore per Cluster for the purchase of twisting machines, dying machines and stitching machines (500 in number) for making the unit self-sustainable and for value addition.

Interest subvention for Working Capital :

It is said to have a ceiling of 8% of interest subvention on working capital irrespective of the interest rates being charged by the Banks/Financial Institutions for a period of six months. Recurring Working Capital cost for a period of six months at the rate of interest subvention of 8% works out to Rs.1.584 crore for one cluster covering the cost of roving, wages of spinners and weavers.

Capacity building :

The program envisages courses for the spinners/weavers and others involved in the garment unit at a total cost of Rs 0.595 cr per cluster for a period of two years.

The foremost parameters of the scheme are as follows:

  • Solar Charkha Mission Directorate will draw up a State-wise list of potential groups.
  • An individual or a promoter agency would be selected and given a preference for setting up of Solar Charkha Clusters. Existing Khadi Institutions can also take up the work of setting up such clusters.
  • The promoter will complete the following criteria at the time of application :
  • Baseline study/research would be conducted by the promoter, and, at least, 200 members would be identified with Aadhaar numbers of which at least 50% shall be women.
  • Land of minimum 20,000 sq.ft and up to 2 acres will be given by the promoter either owned or on a long-term lease of minimum 15 years.
  • The promoter agency will submit at least 15% of the requirement of the working capital or at least three months’ projected amount of working capital in a separate dedicated account only after final selection of the promoter by the SSC and before the first release fund is made.
  • The promoter agency will make a Special Purpose Vehicle (SPV), before the release of the first instalment of funds, possibly a Section – 8 Company or a Producer company under the Companies Act, 2013 for putting up the integrated model of solar charkhas, solar looms, sewing machines etc. with one village being a focal village.

Criteria for selection of Promoter Agency/SPV:

Existing Khadi and Village Industry Institution (KVI) could set for setting up such a cluster. However, the following parameters must be fulfilled :

  • KVI having a positive balance sheet and assets in support of the institution;
  • KVI having an artisan base should have minimum 200;
  • KVI having a sales turnover of not less than Rs. 1,00,00,000 in each of the preceding three financial years;
  • Should have a rise in a number of new artisans in the last three years.

Other Institutions such as SPV, Society, Trust, Section 8 Company or LLP under Companies Act, 2013 registered under respective statutes could also relevant for setting up a new Solar Charkha Cluster, with the following criteria:

  • Vision and Mission
  • Board and Governing Structure with sufficient experience
  • Proper Management Information System (MIS)
  • Financial Resources – equity and debt
  • Financial Performance for last three years – profitability and IRR
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